1. Bags of Tea Audit Project Rebecca Elliott Spring 2010

2. Supplier is in control of the tea market Strong Brands, Low Private Label

3. Leading Brand Demographics Lipton Income: $20,000-$99,999 (pretty even) Household Members: +5 members Age: 35-65+ (pretty even) Race: Caucasian

4. Private Label Demographics Private Labels Income: less $20,000-$49,999 (highest in $20,000) Household Members: 3-4, +5 (pretty even) Age: 45-54 (highest) Race: Caucasian

5. Importance of Depth SKUs: 101 WalMart- Joyce: 59 Target: 38 Harps- Weddington: 35 Walgreens- 6th: 6 Walgreens- School: 7

6. Importance of Depth Does store depth seem to follow a store location’s trade area demographics? No, Walgreens tend to be more expensive in price compared to Walmart, and they have at least twice as many SKUs.

7. WMSCJ-GM WMSCJ-FMEANN 10.3515 20.23127 30.3783 40.356 50.3112 60.3084 80.3642 TOTAL0.29459 TRGT-GM TRGT-FMEANN 10.25533 20.4215 TOTAL0.27738 WLGR6-GM WLGR6-FMEANN 10.4734 20.4132 TOTAL0.4536

8. Importance of Depth Appropriate Role: Maintain/Grow Sales Volume: $628,502,000 Household Penetration: 46.2 % Item Sold on Deal: 21.2%

9. Strength of Leading/Competing Brands Dominate Brand: Litpon Share of Facings by Manufacturer WalMart: 55.9% Target: 41.9% Harps: 42.5% Walgreens-6th: 50.0% Walgreens-School: 50.0%

10. Strength of Leading/Competing Brands Facings NPercentN N WMSCJ-F MANUFACTURE S 5958.4%4241.6%101100% TRGT-F MANUFACTURE S 3837.6%6362.3%101100% HRPSW-F MANUFACTURE S 3534.7%6665.3%101100% WLGR6-F MANUFACTURE S 65.9%9594.1%101100% WLGRS-F MANUFACTURE S 76.9%9493.1%101100%

11. MANUFACTURE S WMSCJ-FTRGT-FHRPSW-FWLGR6-FWLGRS-F AWG BRANDS% OF TOTAL N14.9% % TOTAL SUM11.4% CAIN’S INC.% OF TOTAL N7.2% % TOTAL SUM3.4% CELESTIAL% OF TOTAL N6.6%18.6%4.6% % TOTAL SUM8.5%21.1%5.7% GOOD EARTH% OF TOTAL N2.3% % TOTAL SUM5.7% LEYENDAS% OF TOTAL N0.7% % TOTAL SUM1.7% NATIONAL CUP% OF TOTAL N2.6% % TOTAL SUM1.7% R.C. BIGELOW% OF TOTAL N7.2%11.6%5.7%50% % TOTAL SUM10.2%13.2%11.4%50%57.1% REILY FOOD CO% OF TOTAL N5.9%11.6%17.2% % TOTAL SUM6.8%7.9%11.4% SALADA% OF TOTAL N2.3% % TOTAL SUM5.7% TARGET% OF TOTAL N4.7% % TOTAL SUM5.3% TAZO INC% OF TOTAL N2.0%11.6% % TOTAL SUM3.4%10.5% TETLEY COMP% OF TOTAL N4.6% % TOTAL SUM2.9% STASH TEA% OF TOTAL N3.4% % TOTAL SUM8.6% TWININGS% OF TOTAL N2.3% % TOTAL SUM5.7% UNILEVER% OF TOTAL N55.9%41.9%42.5%50% % TOTAL SUM57.6%42.1%31.4%50%42.9% WALMART% OF TOTAL N11.8% % TOTAL SUM6.8% TOTAL% OF TOTAL N100% % TOTAL SUM100% Bags of Tea Facings

12. Strength of Leading/Competing Brands Gross Margins consistent with your “role” for the category? Yes

13. Importance of Depth Gross Margins NPercentN N WMSCJ-GM MANUFACTURES 5958%4241.6%101100% TRGT-GM MANUFACTUR ES 3837.6%6362.4%101100% HRPSW-GM MANUFACTUR ES 3534.7%6665.3%101100% WLGR6-GM MANUFACTUR ES 65.9%9594.1%101100% WLGRS-GM MANUFACTUR ES 76.9%9493.1%101100%

14. MANUFACTURE S WMSCJ-GMTRGT-GMHRPSW-GMWLGR6- GMWLGRS-GM AWG BRANDSMEAN0.550 N4 CAIN’S INC.MEAN0.419 N2 CELESTIAL INC.MEAN0.1970.2730.390 N582 GOOD EARTH COMP. MEAN0.490 N2 LEYENDAS INC.MEAN0.329 N1 NATIONAL CUPMEAN0.275 N1 R.C. BIGELOW, INC. MEAN0.1590.1390.2640.398 N65434 REILY FOOD COMP. MEAN0.4170.3410.462 N434 SALADAMEAN0.338 N2 TARGETMEAN0.447 N2 TAZO INC.MEAN0.6480.445 N24 TETLEY COMPANY MEAN0.298 N1 THE STASH TEA COMP. MEAN0.095 N3 TWININGS & COMP MEAN0.446 N2 UNILEVERMEAN0.2760.2480.3810.508 N34161133 WALMARTMEAN0.397 N4 TOTALMEAN0.2940.2770.3770.4530.445 N59383567 Bags of Tea GM

15. Strength of Leading/Competing Brands SKU found in every store: Lipton Hot or Cold 48 pacK

16. Private Label Opportunities Private labels are not very strong in this category. Stores that carry private labels: Harps (Best Choice): margins around 60% Walmart (Great Value): around 45% Target (Market Pantry): around 40%

17. Private Label Private Label SKUs: 10 Total SKUs: 101 Private labels make up less than 1% of the total SKUs

18. Private Label Opportunities Walmart, Target and Harps carry private label brands, but I would not say they are really committed to them. While Walgreens, doesn’t carry any private labels at all.

19. Private Label Opportunities Private Labels are going to have a decreasing presence in this category Although margins are good, Brand Names have to much power in the category. Lipton takes up half of shelve space. Tea is an inexpensive product, which means having a private label, known for their low prices, would have little effect on the customers decision. Might as well by a well known tea like Lipton.

20. Private Label Opportunities Recommendation for: Walmart I would recommend that Walmart increase their emphasis on national brands. Although, private label have decent margins, the national brands, especially Lipton, dominate this category. Because it is such an inexpensive item, buying private labels will not save the customer. Might as well get the well-known brand.