1. Artificial Sweeteners Caitlyn Fitzgerald Courtney Spalding Caitlin Steiner Caitlyn Fitzgerald Courtney Spalding Caitlin Steiner

2. Why Sugar Substitutes? It is a good substitute for some people when dieting, with diabetes, and preventing cavities. It’s cheaper than some natural sugars Total market sales: $606,156.1 According to market analysts Mintel, a total of 3,920 products containing artificial sweeteners were launched in the U.S. between 2000 and 2005. In 2004 alone, 1,649 artificially-sweetened products were launched. According to market analysts Freedonia, the United States artificial sweetener market is set to grow at around 8.3% per year to $189 million in 2008. [4]Mintel United States [4]

3. Depth: Category Audit Findings 15 retailers 21 brands 63 SKUs HARPS on Crossover and Marvin’s IGA had a greater variety of SKUs Wal-Mart’s PL is very competitive with Splenda (packaging, facings, prices were lower)

4. Category Demographics Ages: 55-64 Income: $100,000 Family- life cycle: No children under 18 There were a few private labels in audit (Great Value and Best Choice being the larger PLs) Most of the GM were over 50% in category Small category Retailers differentiated with SKUs

5. 15 Stores Audited

6. Category Role Sales volume: $606,156.1 Household penetration: 29.6 Suppliers are in control based on facings and gross margins GM: see next slide

7. Gross Margin % by Supplier

8. Strength of Leading, Competing Brands Dominating Brands – Cumberland Packing Corp.= Sweet n’ Low – McNeil Nutritional= Splenda – Merisant US Inc.= Equal – Walmart Distributing= Great Value Walmart's Facings (MLK) Walgreen s' Facings (MLK) Target's Facings Marvin's IGA Facings Pricecutter Facings % of Total Sum.1.3.2.1.2 % of Total N.1.3.1.2 N22155 % of Total Sum.5.6.5.3.4 % of Total N.5.6.3.4 N1044 % of Total Sum.0.2.1 % of Total N.1 N1143 % of Total Sum.2 % of Total N.1 N2 Manufacturer Cumberla nd Packing Corp. McNeil Nutritional s LLC Merisant US Inc. Walmart Distributin g

9. SKUs and Market Splenda (individual 200 packets) were found in 14/15 stores Estimated GM for brands were consistent with “role” for the category – Would categorize as cash machine based on yearly sales volume and gross margins – Small category- larger gross margins- consistent with in store audit (see GM chart on next slide) Surprise losers? Equal and Sweet n’ Low were not as present as Splenda in the stores with facings and shelf space

10. GM estimates for manufacturers Manufacturer Walmart's GM% (MLK) Walgreens' GM% (MLK) Harp's GM% (Cross)Pricecutter GM% Alberto-Culver USA Inc. Mean.646 N 22 Associate Wholesale Grocers Inc. Mean.369 N 22 Cargill Inc.Mean.912.892 N3 1 Cumberland Packing Corp. Mean.377.534.647.584 N2255 Heartland Sweetners LLC Mean.892 N 44 McNeil Nutritionals LLC Mean.444.563.604.570 N1041110 Merisant US Inc. Mean.500.703.750 N1 53 Morse Co. Inc.Mean.952.960 N1 11 Private LabelMean.471 N 1 Stadt Holdings Corp. Mean.452 N 11 Walmart Distributing Mean.332 N2 TotalMean.529.542.665.638 N1973228

11. Strength of Private Labels Wal-Mart Great Value: – is the leading private label – Facings Competitive with Splenda in Wal-Mart – Wal-Mart is very committed to their PL HARPS – Least dependent on Private Labels – They had a large assortment of SKUs – Best Choice GM was relatively small (31%)

12. PL presence in the category Wal-Mart PLs were increasing – they used the same color scheme as Splenda Helps marketing of Great Value by mimicking the Splenda packaging which makes consumers see them as the same – Offered similar SKUs as Splenda – Splenda and Great Value had equally the largest allotted display space – PL is becoming more dependent based on comparison between GM% and SKUs from previous audits

13. Recommendations to Retailers All retailers had SKUs that were related to location and consumer preferences Recommend Wal-Mart MLK – Evaluate Splenda granulated w/ Fiber 14oz (GM 5.8%) may want to drop this SKU Marvin’s IGA- keep the same amount of National Brands and SKUs, there are great GMs on all SKUs