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Confidential & Proprietary • Copyright © 2009 The Nielsen Company
Winning the Confectionery Consumer
March 5, 2009
Todd Hale
SVP Consumer & Shopper Insights
James Russo
Vice President Marketing
Page 2 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
• Economic Update
• How Are Consumers Reacting?
• What Are Consumers Doing Differently?
• Manufacturer & Retailer Actions
• What to Watch
• The Outlook
• What to Do Now
Agenda
Page 3 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Executive Summary:Implications & Opportunities
• Global economies mired in a consumer spending driven recession
• Since 1948, nine U.S. recessions averaging 11 months
• Each recession has been followed by economic expansions averaging four years
• The system is ridding itself of excesses & we are on the verge of a potential fundamental shift in how consumers shop & buy
• Consumers fulfilling basic over discretionary needs
• Pervasive trading down
• Companies best positioned for growth will deliver value in the short term & innovation in the long term
• The ability to understand consumers, categories, channel, media in increasingly granular levels will deliver insights & reveal opportunities to drive success
Page 4 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Overheard Across the Globe…
I now go to Aldi’s. It’s so cheap my girlfriends have also changed, so it’s not
just me… Also I buy the cheapest in everything except foods & shampoo
Down trading on stores & brands
We eat out less & cook more… still buy chocolate & wine thoughThe Netherlands
Struggling for a sense of normality
We watch more movies at home, more board games – I
bake a lot more. It’s really hard to eat healthy though, when you
are trying to save money
More cocooning in home
Controlling usage- Back to basic, familiar
brands
I try not to stock up. Just buy what I need
for the month… Across countries
I buy more frozen foods… I can control how much I use & I don’t
waste anything UK
I used to have 2 cups of coffee at Starbucks everyday. I’ve stopped
that as well as my weekly manicure.
The Latte Effect
I make inventories of what’s in the kitchen & try to use
everything I have before buying more. I wait for the sales & stock
up.
Depleting Inventories
Lateral shifts in categories
I don’t experiment with new items… which I used to
before. I just buy something familiar..
Across countriesSource: Nielsen DeltaQual: Qualitative Feedback from around the globe, 4Q2008
Page 5 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Forces at Work…Consumer Wallet Pressures
Lower Spending Power
•Home/stock portfolios losing value
•Tighter credit
•Existing job income flat
•Unemployment rising
Rising Costs
•Personal debt servicing•Home energy•Transportation•Household expenditure•Medical•Education
Page 6 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Weakening Labor Market:Over 3.5 Million Job Losses Since Dec 2007
41,000
-72,000
-144,000-122,000-160,000
-137,000-161,000
-128,000-175,000
-321,000
-380,000
-597,000-577,000
-598,000-650,000
-550,000
-450,000
-350,000
-250,000
-150,000
-50,000
50,000
Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09
U.S. Total Non Farm Employment(Seasonally Adjusted Change from Previous Mos)
U.S. Total Non Farm Employment(Seasonally Adjusted Change from Previous Mos)
Unemployment surges to 7.6%; highest monthly loss since 1974
Page 7 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
How Are Consumers Reacting?
Page 8 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
20
40
60
80
100
120
140
Apr-0
1Ju
l-01
Oct-
01
Jan-
02
Apr-0
2Ju
l-02
Oct-
02
Jan-
03
Apr-0
3Ju
l-03
Oct-
03
Jan-
04
Apr-0
4Ju
l-04
Oct-
04
Jan-
05
Apr-0
5Ju
l-05
Oct-
05
Jan-
06
Apr-0
6Ju
l-06
Oct-
06
Jan-
07
Apr-0
7Ju
l-07
Oct-
07
Jan-
08
Apr-0
8Ju
l-08
Oct-
08
Jan-
09
Source: The Conference Board – Nine census regions, 5,000 US households
20012001 20022002 20032003 20042004 20052005 20062006 20072007 20082008
Recession,9/11 Corp
Scandals
War
War War ReboundRebound
Spike In Gas prices
Huge job gains
Fall in gas prices Housing,
Energy,Credit,
Economy
Katrina
Declining Consumer Confidence: Current Expectations at Record Lows: Feb Plummets
Page 9 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
More At-Home Meal Preferences
20
24
24
32
23
28
37
16
20
22
26
20
24
31
Choose a Less Expensive RestaurantMuch More Often
Bring Prepared Meal or Home DeliveryMuch Less Often
Eat Fast Food Much Less Often
Eat Dinner at Restaurant Much Less Often
Bring Lunch to Work/Pack Lunch MuchMore Often
Eat Breakfast at Home Much More Often
Eat Dinner at Home Much More often
% U.S. Households Claiming
Oct '08 Apr '08
Source: Homescan®, a service of The Nielsen Company – Panel Views Survey
Page 10 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Retail Sales Stalled in 4th Quarter of 2008
8.2%
2.7%3.8%
5.5%
8.9%8.3%
7.3%
4.6%
3.0%
-5%
-3%
-1%
1%
3%
5%
7%
9%
Source: Dept of Commerce: % Chg vs. previous year
% change in retail sales (ex-auto)% change in retail sales (ex-auto)
200820072006200520042003200220011999
-1.2%
-3.1%-2.0%-2.7%
-5%
-3%
-1%
1%
Sep
vs prior monthvs prior month
Oct Nov Dec
Jan
+1.0%
Page 11 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Same Store Sales Reflect Consumer Actions
-20 -15 -10 -5 0 5 10 15
BJ's
Costco
Sams
Kroger
Safeway
Dollar General
Family Dollar
Dollar Tree
Walmart
CVS
Rite Aid
Walgreens
TargetTarget
NordstromNordstrom
JCPenneyJCPenney
Home DepotHome Depot
KohlsKohls
Stock Up & SaveStock Up & Save
Discretionary SpendingDiscretionary Spending
Value & ConvenienceValue & Convenience
Source; Jan ‘09 results (excl fuel) for all but Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Dollar Tree, CVS, Whole Foods, Home Depot – latest report
Same Store Sales GrowthSame Store Sales Growth
Latest Reported Quarter
Carrefour +3.2%
Metro C&C +3.2%
Delhaize U.S. + 2.5%
Delhaize Belgium + 2.2%
Loblaws + 3.0%
Latest Reported Quarter
Carrefour +3.2%
Metro C&C +3.2%
Delhaize U.S. + 2.5%
Delhaize Belgium + 2.2%
Loblaws + 3.0%
SuperValuSuperValu
MacysMacys
Whole FoodsWhole Foods
Page 12 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 12
What Are Consumers Doing Differently?
TH
Page 13 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Behavioral Shifts are Gradual & Immediate
Trips to value channels growing
since 2001
Coupon Usage
increasing
PL unit sales outpacing Branded
Source: Nielsen Homescan and RMS, Label Trends, Nielsen Online through Sept. Nielsen Entertainment through Sept, PL 11/1/08
H&W slowing, but still strong
TV viewing up; movie going flat
Consumers increasingly using
internet to find ways to save
Page 14 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Dramatic Declines in Discretionary Trips
2008 versus 2007Percent Change
Trip GeneratorsTrip Generators Trip AvoidersTrip AvoidersSource: Homescan®, a service of The Nielsen Company Excludes gas only trips
-8
-6
-4
-2
0
2
4
6
8O
n-Li
ne
Dol
lar
Sup
ercn
trs
Clu
b
Dru
g
Pet
Sto
res
Gro
cery
Liqu
or
Ttl
Out
lets
Ele
ctro
nic
App
arel
Con
v/G
as
DIY
Off
ice
Sup
Toy
Mas
s
Dep
t
Shopping Trips
Basket Ring Per Trip
Page 15 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
-25
-20
-15
-10
-5
0
5
10O
n-Li
ne
Dol
lar
Sup
ercn
trs
Clu
b
Dru
g
Pet
Sto
res
Gro
cery
Liqu
or
Ttl
Out
lets
Ele
ctro
nic
App
arel
Con
v/G
as
DIY
Off
ice
Sup
Toy
Mas
s
Dep
t
< $30k$30 - $69.9K$70k +
Low Income Taking More Drastic Trip Cuts, More Affluent Driving Trips to Value Channels
Source: Homescan®, a service of The Nielsen Company Excludes gas only trips
Shopping Trips by Household Income
2008 versus 2007Percent Change
Page 16 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Good Start to 2009, but 1st Period in ’09 Includes Two Additional Days Before New Years Eve
Trip GeneratorsTrip Generators Trip AvoidersTrip AvoidersSource: Homescan®, a service of The Nielsen Company Excludes gas only trips
% Change in Shopping Trips
-20
-15
-10
-5
0
5
10
15
20D
olla
r
Sup
ercn
trs
On-
Line
Gro
cery
Clu
b
Dru
g
Ttl
Out
lets
Pet
Sto
res
Liqu
or
Off
ice
Sup
Con
v/G
as
DIY
App
arel
Mas
s
Dep
t
Ele
ctro
nic
Toy
4th Qtr '08Last 4-weeks '081st 4-weeks '09
Page 17 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Edible Departments Driving Dollar Growth
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
% Dollar Growth (FDM w/WM)
3.6
8.9
6.2 6.2 5.95.3 5.3 5
3.9 3.8
2.52
1.3
-4.5
Page 18 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
% Unit Growth (FDM w/WM)
-1.5
4.6
2.5 2.2
0.5 0.4
-0.2-0.9
-1.3-2.2
-2.9
-3.9-4.6
-6.9
Unit Sales Off 1.5% Across the Store – Largest Declines from Non-Edibles, Candy & Gum
Inflation & weakening economy driving
consumers to make trade-offs or buy less
Inflation & weakening economy driving
consumers to make trade-offs or buy less
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
Page 19 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
% Dollar Growth (FDM w/WM)
-10
-5
0
5
10
15
52 wk 13 wk 4 wk
Worsening Sales in Recent Quarter & 4-week Period as Inflationary Pricing Eased
LatestLatestUnit prices for fresh eggs & milk down 12% & 8% in
latest period
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
Page 20 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Sales Within Non-Edibles, Candy & Gum Leading Unit Decline
LatestLatest
TotalTotal DairyDairy
FreshMeatFreshMeat
DeliDeli
FreshProduce
FreshProduce
AlcoBevAlcoBev
DryGrocery
DryGroceryFrozenFrozen
PkgdMeatPkgdMeat
HBAHBANonFoodNonFood
GeneralMerch
GeneralMerch
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
GumGum CandyCandy
% Unit Growth (FDM w/WM)
-10
-8
-6
-4
-2
0
2
4
6
8
52 wk 13 wk 4 wk
Page 21 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Boom vs. Bust:Consumers Actions Tell the Story
2005 vs. 2004% Chg Unit Sales Leaders
Desserts - Dairy 18%Mens Toiletries 14%Tea 13%Yogurt 11%Bottled Water 10%Dressings / Salad 9%Seasonal Merchandise 9%Cough & Cold 8%Wine 7%Grooming Aids 6%Personal Bath Needs 6%Frozen Prepared Foods 5%Breakfast Foods 5%Frozen Vegetables 5%Skin Care 5%
Canning & Freezing Supp 11%Wine 7%Vitamins 5%Fresh Meat 5%Dry Vegetables & Grains 5%Dry mix Prepared Foods 4%Flour 3%Ref Juice & Drinks 3%Salads, Prep Foods & Deli 3%Frozen Novelties 3%Frozen Vegetables 3%Yogurt 2%Jams & Jellies 2%Liquor 2%Cough & Cold 2%
2008 vs. 2007% Chg Unit Sales Leaders
Source: Scantrack, a service of The Nielsen Company
Page 22 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Consumers Increasingly Turning to Store Brands as Economy Weakens
Total Store Brand Items
Avg Unit Sales Growth: 4.5%
Driver of growth: Consumables
Departments: Fresh Produce, Bev-AL, Fresh Meat, Frozen Foods, Deli, Dairy, Dry Grocery
Total Store Brand Items
Avg Unit Sales Growth: 4.5%
Driver of growth: Consumables
Departments: Fresh Produce, Bev-AL, Fresh Meat, Frozen Foods, Deli, Dairy, Dry Grocery
3.2
4.2
4.75.0 5.0 4.9
-3.2 -3.2
-4.0
-2.7
-3.8
-4.7
Store BrandsStore
Brands
BrandedBrandedTotal Branded Items
Avg Unit Sales Declines: -3.6%
Driver of decline: Discretionary
Departments: General Merchandise, Non-Food, HBA & Many Food Departments
Total Branded Items
Avg Unit Sales Declines: -3.6%
Driver of decline: Discretionary
Departments: General Merchandise, Non-Food, HBA & Many Food Departments
% Unit Sales Growth for last 6 (4wk) periods
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
Page 23 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 23
Retailers & Manufacturers Facing Significant Decisions
JR
Page 24 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Forces at Work: CPG Pressures
• Slowing sales• Consumer Trends• Growth of value retailers
• Long term private label trends• Deflationary Trends
Retail PricesRetail Prices
Marketplace factorsMarketplace factors
Margin Pressures on bothCPG Manufacturers & Retailers!
• Trading Out & Trading Out• Transportation costs• Sustainability trends –renewable energy• Commodity prices• Media Shifts
Page 25 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
“most valuable card in your wallet” - buy 1 get 1; 10 for $10; Good ‘til; Winn-Dixie brands; locked in low price this month
“have a restaurant-quality meal at home once a month and save $425 a year”
Retailers: Extending Discounts & Delivering Value
“Ways to $ave with Walgreens” via on-line ads, rebates & coupons
Customers who sign-up for $40 annual membership get $10 gift card
“Save $3,000 with Meijer brand” on-line link to Today Show video on how to save w/store brands
“The Whole Deal value guide … over $30 in coupons, 13 budget recipes, money saving tips and more!”
Offering ways to feed a family of four for $8 or less. Similar programs: HEB, Food Lion, Kroger
Fuel Your Family Meal Solutions – on-line contest for shoppers to enter & win year’s worth of groceries
Source: Company Websites
Page 26 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Manufacturers: Pitching “Value” & Increasing Ad Spending
Search-engine optimization when consumers type "cereal" plus "deals" or "value", Kellogg's Web site will pop up
The original dollar menu campaign. 10 cans soup for $10
Jointly promoting with Kraft: soup & grilled-cheese sandwiches
Local word-of-mouth campaign "So good for so little“
First time in more than a decade, advertising Banquet frozen dinners
15-second TV commercial for Kool-Aid showing how four pitchers of Kool-Aid cost same as a two-liter bottle of soda
Planning increase in ad spending & expanding number of brands it advertises, including Dinty Moore stews
Announced plans to increase consumer marketing 8% to 12% in its new fiscal year as part of a two-year growth plan
Advertising expected to top $1.55 billion it spent last year
"DiGiornonomics”
Multimillion dollar campaign
Using online & targeting individuals to a narrower focus of consumers
Source: Company Websites
Page 27 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 27
Impact onAdvertising
Page 28 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 28
Media Shifting:Decline in Ad Spending Widening
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008). - Internet advertising expenditures account for CPM-based, image-based advertising.Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008). - Internet advertising expenditures account for CPM-based, image-based advertising.
Cable TV
Cable TV
Syn. TVSyn. TV Hisp
CableTV
HispCable
TV
FSIFSI
LocalMag
LocalMag
SpotRadioSpot
Radio
NatMagNatMag
Total Ad SpendingTotal Ad Spending
NatNewspr
NatNewspr
HispTV
HispTV
In-ternet
In-ternet
Net-work radio
Net-work radio
NatSun Supp
NatSun Supp
SpotTV
SpotTV
Out-doorOut-door
B2BB2BLocal
NewsprLocal
NewsprLocalSun Supp
LocalSun Supp
Jan – Sept 2008 vs. YAGO
Next >< Back Main Menu
19%Of Tlt
19%Of Tlt
2%2% 1%1%
.2%.2% 4%4% 17%17%.4%.4% .3%.3% 2%2% 3%3% 1%1% 14%14% 6%6% 1%1% 3%3% .4%.4% .07%.07%
Page 29 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Top 10 US Categories
Product Category % ChangeAutomotive (Factory & Dealer Assoc) -8%
Pharmaceutical -4%
Auto Dealerships – Local -3%
Quick Service Restaurants 11%
Motion Picture 1%
Wireless Telephone Services 0%
Department Store 8%
Direct Response Product 27%
Restaurant 9%
Furniture Stores 0%
Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)
Page 30 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Top 10 US Companies
Product Category % ChangeProcter & Gamble -7%
General Motors -4%
AT&T -2%
Verizon Communications 10%
Toyota Motor -4%
Ford Motor -23%
Johnson & Johnson 5%
Time Warner -11%
General Electric 19%
PepsiCo -3%
Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)
Page 31 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Which Levers Do You Pull?
Analytics & InsightsAnalytics & Insights
Packaging Packaging Pricing Pricing Private Label Private Label Promotion Promotion
AdvertisingAdvertising In-Store In-Store AssortmentAssortment Innovation Innovation
TH
Page 32 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Most Preferred Response
4
7
8
3
7
7
7
11
18
46
8
9
17
47
Produce slightly lower quality products, but keep pricethe same
Offer the same number of sales, but at less of asavings
Offer fewer sales
Raise prices of existing items proportionately
Modestly reduce packaging size of products (alsocalled downsizing), but keep price the same
Introduce new, smaller pack sizes at lower prices
Offer larger economy sizes with lower price perusage/serving
If Raw Material Costs Rose Substantially, Would You Prefer Manufacturers:
Oct '08 Apr '08
Consumers Generally Prefer Larger Sizes with Lower Price per Serving
Source: Homescan®, a service of The Nielsen Company – Panel Views Survey
Page 33 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
% of $ Sales (FDM w/WM)
1% 0%
40%
25%
20%
15% 15% 15% 14% 13%
4%
8%
13%
Da
iry
De
li
Fro
zen
Fre
sh
Me
at
Dry
Gro
ce
ry
Fre
sh
Pro
du
ce
No
n-F
oo
d
HB
A
Pa
ck
ag
ed
Me
at
Ge
n M
erc
h
Ca
nd
y
Alc
oh
oli
cB
ev
era
ge
s
Gu
m
Retailer Brand $ Share Varies by Department
16.6% AVG ( + 1.0 pts)
> Development in food & beverage; share growth in all dept’s but Bev/Al
(+1.1 +1.0 +1.2 +0.5 +0.9 +1.7 +0.7 +0.9 +0.2 +0.2 -0.1)
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
+0.2 0.0
Page 34 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
% of Unit Sales (FDM w/WM)
1% 1%
40%
21% 21%19%
18% 16%15% 14%
5%
13%14%
Da
iry
Fro
zen
No
n-F
oo
d
Dry
Gro
ce
ry
De
li
HB
A
Fre
sh
Me
at
Ge
n M
erc
h
Fre
sh
Pro
du
ce
Pa
ck
ag
ed
Me
at
Ca
nd
y
Alc
oh
oli
cB
ev
era
ge
s
Gu
m
Retailer Brand Unit Share Varies by Department
20.9% AVG ( + 0.9 pts)
> Development in food & beverage; share growth in all dept’s but Bev/Al
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)
(+1.4 +1.1 +0.9 +0.8 +0.3 +0.8 +0.3 +0.5 +1.3 +0.3 0.0 0.0) +0.5
Page 35 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Stronger $ Growth from Store Brands & Overlap in Four Mega-Categories
Branded* Store Brands*
Flour 25% Flour 60%
Dry Vegetables & Grains 24% Pasta 40%
Pasta 22% Shortening & Oil 37%
Canning & Freezing Supplies 19% Dry Vegetables & Grains 36%
Season Gen Merchandise 14% Frozen Breakfast Foods 34%
Butter & Margarine 12% Baby Food 31%
Cough & Cold Remedies 11% Salad Dressings & Mayo 29%
Pet Food 11% Cheese 23%
Fresh Eggs 10% Crackers 23%
Yogurt 9% Coffee 22%
Dry Mix Prepared Foods 9% Detergents 22%
Fresh Meat 8% Syrup & Molasses 21%
Baking Mixes 8% Frozen Pizza & Snacks 21%
Shortening & Oil 8% Fresh Produce 19%
Car Accessories 8% Canned Vegetables 19%
Categories on both lists
Non-edible Categories
Top 15 Fastest Growing Categories
(% $ Change)
Food dominates both lists
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year) –*minimum $100 million in sales
Page 36 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Stronger Unit Growth from Store Brands & Minimal Duplication in Categories
Branded* Store Brands*
Canning & Freezing Supplies 11% Baby Food 47%
Wine 7% Candles & Incense 24%
Vitamins 6% Flour 22%
Fresh Meat 4% Frozen Breakfast Foods 12%
Dry Mix Prepared Foods 4% Shortening & Oil 12%
Puddings/Desserts - Dairy 4% Detergents 11%
Refrigerated Juices & Drinks 3% Breakfast Foods 11%
Frozen Novelties 3% Fresh Produce 11%
Dry Vegetables & Grains 2% Ice Cream 11%
Bottled Water 2% Frozen Pizza & Snacks 11%
Dressing, Salad, Prep Foods 2% Cheese 10%
Liquor 2% Nuts 9%
Packaged Milk & Modifiers 2% Coffee 9%
Baking Supplies 1% Canned Vegetables 9%
Pasta 1% Salad Dressings & Mayo 8%
Top 15 Fastest Growing Categories
(% Unit Change)
Categories on both lists
Non-edible Categories
Non-edible success for Store Brands
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year) –*minimum $100 million in sales
Page 37 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Store Brand Growth – Linked to Downturn or Long-term Trend?
Don’t let price gaps get too large & drive declining category sales
Don’t de-list high penetration, high frequency or strong niche brands & drive shoppers to retailers who carry them
Do promote store brands with brands where there is limited shopper overlap to drive category sales
Do promote store brands along with non-competitive or complimentary branded offerings to build larger baskets
Do select credible suppliers & hold them to high standards
Retailer Do’s & Don’ts:
Page 38 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Manufacturer Do’s & Don’ts:
Store Brand Growth – Linked to Downturn or Long-term Trend?
Be current in branded versus store brand pricing analytics
Be proactive in assortment analytics to show why your brand assortment aligns well w/store brand assortment
Provide retail partners with analytics to show which of your branded offerings make good promotional partners
Take a collaborative approach to how you assess branded versus store brand risks & opportunities – retailer focus has never been greater
Explore options for using excess capacity for store brand production
Page 39 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
• During the early 1980s recession, companies that maintained aggressive sales & marketing efforts during recessions enjoyed more growth after the recession
• Greater successes to those who keep their foot on the gas, despite – or even because of – the economy
Revenue Growth % in First Five Years After Recession
275%
19%
Companies thatmaintained sales &
marketing efforts duringrecession
Companies that cut sales& marketing efforts
during recession
Source: McGraw-Hill Research
Investing During a Recession Helps You Emerge in a Stronger Position
Page 40 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 40
What To Watch
JR
Page 41 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Developments Which Could Help Avert Deep Recession
Decreasing Demand for Crude Oil
Since July Highs:
Crude -73%
Retail Gas -53%
Decreasing Demand for Crude Oil
Since July Highs:
Crude -73%
Retail Gas -53%
Aggressive Fiscal and monetary
policy
Aggressive Fiscal and monetary
policy
Sources: EIA, Euro: Belgium, France, Germany, Italy, Netherlands, UK S&P GSCI returns qtr 2/11/09
Strengthening U.S. Dollar
Dollar vs. Euro: +25.13%
Strengthening U.S. Dollar
Dollar vs. Euro: +25.13%
Decreasing Commodity Prices
Latest 3 mths
Agri -2%
Indust.Metals -22%
Live-stock -9%
Decreasing Commodity Prices
Latest 3 mths
Agri -2%
Indust.Metals -22%
Live-stock -9%
Page 42 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Record Numbers of Store Closings?
• Starbucks closing nearly 1,000 underperforming stores worldwide in less than 2 years
• Circuit City closing all 567 store
• Linens ’n Things – closing all 571 stores & shifting to online model
Page 43 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Record Numbers of Store Closings?
• SuperValu – 50
• Sear’s Holding – 24
• Bruno’s – 10
• Penn Traffic – 8
• Sweetbay – 7
• Sam’s Club (Canada) – 6
• Bashas’ – 5
• A&P SuperFresh – 5
• …………
• Lane Bryant/Catherine's – 150
• Sprint – 133 stores
• FYE – 130
• Office Depot – 112 stores
• Zales – 105
• Macy’s – 10
• ………
Page 44 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Store Closings – How Will they Impact Your Business?
Opportunity for retailers to grab cheap property, expand store count & enhance market share
Threat to retailers relying on traffic draw from closed site(s) – be prepared to relocate quickly
Threat to manufacturer sales – be prepared to shift sales efforts to winning retailers
Page 45 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
2009 Convenience Channel Industry Forecasts
Categories to Watch in 2009:Forecasted % Change in 2009 Dollar Sales
-2%
0%
2%
4%
6%
8%
10%
Chocola
te
Non Cho
cola
te
Min
tsGum
Cigar
ette
s
Other
Tob
acco P
rodu
cts
Cigar
s
Mal
t Bev
erag
es
Carbon
ated B
evera
ges
Bottled
Wat
er
Sports
Drin
ks
Energy
Drin
ks
Salty
Sna
cks
CandyCandy TobaccoTobacco BeveragesBeverages SNKSSNKS
CSNews Industry Forecast Study
Page 46 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
The Chocolate Candy Category:Impacted by Higher Pricing & Economic Pressures
4.3 4.4 4.2 4.1 3.7
6.3
3.1 3.2 3.3 3.2 2.9 2.8 2.8 2.6 2.6 2.7 2.8
1.3 1.2 1 0.80.2
1.8
-0.7 -0.8 -1.1 -1.5 -2 -2.5 -3.2 -4 -4.6 -5.1 -5.6
-8
-6
-4
-2
0
2
4
6
8
1052
w/e
11/
3/07
52 w
/e 1
2/1/
07
52 w
/e 1
2/29
/07
52 w
/e 1
/26/
08
52 w
/e 2
/23/
08
52 w
/e 3
/22/
08
52 w
/e 4
/19/
08
52 w
/e 5
/17/
08
52 w
/e 6
/14/
08
52 w
/e 7
/12/
08
52 w
/e 8
/9/0
8
52 w
/e 9
/6/0
8
52 w
/e 1
0/4/
08
52 w
/e 1
1/1/
08
52 w
/e 1
1/29
/08
52 w
/e 1
2/27
/08
52 w
/e 1
/24/
09
Do
llar
& U
nit
% C
han
ge
$0.02
$0.03
$0.04
$0.05
$0.06
$0.07
$0.08
$0.09
$0.10
$0.11
$0.12
Avg
Pri
ce C
hg
$ % Chg vs YA U % Chg vs YA Avg Unit Price - Chg vs YA
Eco Conditions Worsen
Source: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores
Page 47 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
The Premium Chocolate:The “Wave” Has Crashed as Unit Decline in Latest Periods
28.6 27.3 25.4 24.3 21.625.7
19 17.3 16.1 14.9 13.1 12 11.2 10.1 7.31.7 0.8
14.113.3
12.5 12.512.9
19
1513.5
1210.6
8.77.3 6.2
4.6
1.9
-1.5 -2.7
-10
0
10
20
30
40
5052
w/e
11/
3/07
52 w
/e 1
2/1/
07
52 w
/e 1
2/29
/07
52 w
/e 1
/26/
08
52 w
/e 2
/23/
08
52 w
/e 3
/22/
08
52 w
/e 4
/19/
08
52 w
/e 5
/17/
08
52 w
/e 6
/14/
08
52 w
/e 7
/12/
08
52 w
/e 8
/9/0
8
52 w
/e 9
/6/0
8
52 w
/e 1
0/4/
08
52 w
/e 1
1/1/
08
52 w
/e 1
1/29
/08
52 w
/e 1
2/27
/08
52 w
/e 1
/24/
09
Do
llar
& U
nit
% C
han
ge
$ % Chg vs YA U % Chg vs YASource: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores
Page 48 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Dark Chocolate: Signs of Leveling Off After Two Years of Strong Growth
$0
$250
$500
$750
$1,000
2003 2004 2005 2006 2007 2008
Mill
ions
Dark Chocolate
$290M
$816M$746M
$517M
$370M$327M
+9.
4%
+44
.3%
+39
.7%
Source: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores
Page 49 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Chocolate Singles:Unit Sales Continued Declines As Pricing Increases
1.6 1.9 2 2.1 1.7 2 2.3 2.5 2.6 2.6 2.4 2.1 1.6 1.5 1.6 1.9 2.2
-0.9 -1.3 -1.3 -1.5-2.7 -2.9 -3 -3.2 -3.6 -4 -4.6 -5.4
-6.6-7.7 -8.2
-9 -9.6
-12
-10
-8
-6
-4
-2
0
2
452
w/e
11/
3/07
52 w
/e 1
2/1/
07
52 w
/e 1
2/29
/07
52 w
/e 1
/26/
08
52 w
/e 2
/23/
08
52 w
/e 3
/22/
08
52 w
/e 4
/19/
08
52 w
/e 5
/17/
08
52 w
/e 6
/14/
08
52 w
/e 7
/12/
08
52 w
/e 8
/9/0
8
52 w
/e 9
/6/0
8
52 w
/e 1
0/4/
08
52 w
/e 1
1/1/
08
52 w
/e 1
1/29
/08
52 w
/e 1
2/27
/08
52 w
/e 1
/24/
09
Do
llar
& U
nit
% C
han
ge
$0.02
$0.03
$0.04
$0.05
$0.06
$0.07
$0.08
$0.09
Avg
Pri
ce C
hg
$ % Chg vs YA U % Chg vs YA Avg Unit Price - Chg vs YASource: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores
Page 50 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 50
The Outlook
Page 51 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 51
Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Index of Leading Indicators: Composite of ten indicators
Equity Markets (Dow, NASDAQ, S&P)
Consumer Expectations Index
Building Permits
New Factory Orders
Capacity Utilization
Productivity: Output per man-hour worked
Weekly Jobless Claims: 4 wk moving avg
Avg weekly hours worked
Help wanted Ad Indexes
Leading Indicators Remain Near Record Lows:Near term recovery (3-6 mths) not expected
Positive Neutral Negative
Sources: U.S Leading Economic IndicatorsSources: U.S Leading Economic Indicators
Next >< Back Main Menu
Page 52 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 52
Jul 08
Aug 08
Sept 08
Oct 08
Nov 08
Dec 08
Jan 09
Feb 09
Mar 09
Apr 09
May
09
Jun 09
Nielsen Market Index Volume*
Nielsen Market Index Value**
Are consumers moving to Store Brands?
Are shoppers shifting to value channels?
Are retailers selling more on promotion?
Are consumers shopping more frequently?
Are consumers spending more per trip?
Nielsen Global Consumer Confidence^
Rising unemployment & declining consumer expenditures has US economy in worst shape in at
least a quarter century As economy stalls, consumers shifted to store brands, while
reducing their spending per trip
2008 2009(E) 2010 (E)
GDP 1.3% -1.2% 2.2%
ConsumerSpending 0.3% -1.6% 1.9%
InflationRate 3.8% 0.1% 2.3%
Unemploy.Rate 5.8% 8.0% 8.1%
SavingsRate 1.7% 5.1% 5.2%
USA Summary
Page 53 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023 Page 53
What to Do Now
TH
Page 54 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
15
21
11
18
11
8
9
6
15
20
10
18
12
8
9
7
Recession Indifferent
Recession Insensitive
Switch to Private Label
Light Coupon & Sales
Stock-up & Save
Switch Stores for Deals
Disloyal/Promotion Sensitive
Panic Stricken
% Dollars
% Hhlds
Source: Homescan®, a service of The Nielsen Company 52 weeks ending 12/27/08
Not All Shoppers Use the Same Coping Strategy During Down Economy
Economic Impact Shopper Segments
Page 55 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Category Sales Opportunities to Win in Down Economy Varies by Segment
Nielsen Economic Impact Segmentation:
Wine Candy Gum
Recession Indifferent 119 98 103
Recession Insensitive 109 97 100
Switch to Private Label 87 90 96
Light Coupon & Sales 101 96 102
Stock-up & Save 103 116 103
Switch Stores for Deals 91 101 97
Disloyal/Promotion Sensitive 66 104 88
Panic Stricken 86 107 110
$ Buying Rate Index
Source: Homescan®, a service of The Nielsen Company 52 weeks ending 12/27/08
Page 56 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Promotion Support Required to Win in Down Economy Varies by Segment
Nielsen Economic Impact Segmentation:
Wine Candy Gum Wine Candy Gum
Recession Indifferent 119 98 103 114 80 73
Recession Insensitive 109 97 100 85 73 66
Switch to Private Label 87 90 96 44 44 46
Light Coupon & Sales 101 96 102 127 113 117
Stock-up & Save 103 116 103 105 153 155
Switch Stores for Deals 91 101 97 119 120 124
Disloyal/Promotion Sensitive 66 104 88 80 106 124
Panic Stricken 86 107 110 77 133 128
$ Buying Rate Index Deal Index
Source: Homescan®, a service of The Nielsen Company 52 weeks ending 12/27/08
Page 57 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Challenging but Opportunistic Times in 2009
• Existing behavior will intensify: - Greater at-home related opportunities
- Fulfillment of basic over discretionary needs
- Pervasive trading down
- Variety & convenience take a back seat to value
• Don’t assume consumers are not willing to pay a premium
• Utilize advertising to communicate why your brand should be bought exactly at the point when consumers are thinking about every purchase
•More than ever, the ability to understand consumers, categories, channel, media at an increasingly granular level will deliver the insights to drive success
Page 58 Confidential & ProprietaryCopyright © 2009 The Nielsen Company
April 10, 2023
Nielsen Economic Advisor:What You Need To Know
March 5, 2009
Todd Hale,SVP, Consumer & Shopper Insights
James RussoVice President, Marketing
Todd Hale,SVP, Consumer & Shopper Insights
James RussoVice President, Marketing
Confidential & Proprietary • Copyright © 2009 The Nielsen Company
Thank You