1. Granola Bars Fall, 2011 Aaron Buffington

2. Overview Suppliers are in control Nature Valley and Quaker dominate Few private label Evidence of Supplier Category Management Facing don’t go down with lower margins Brands are kept together

3. Category Audit StoreLocationSKUs Unique SKUs Wal-MartMLK Blvd (6 th )52 42 WalgreensSchool9 1 Harp’sFiesta Square6 0 AldiCollege10 Marvin’s IGALafayette8 1 Complete Audit69 54 Only 7 Brands/Manufactures found plus 2 private label. 5 stores were audited

4. Category Demographics Large household High income Young members and kids Early stages of the family life cycle

5. Category Demographics Annual Income CASCADIAN FARM - GRANOLA & YOGURT BARS KASHI - GRANOLA & YOGURT BARS NAT VAL - GRANOLA & YOGURT BARS QUAKER - GRANOLA & YOGURT BARS QUAKER CHEWY - GRANOLA & YOGURT BARS QUAKER CHEWY DIPPS - GRANOLA & YOGURT BARS DOLLAR VOLUME INDEX INC - <$20,000 63.632.136.842.344.078.0 INC - $20,000-29,999 28.942.267.162.062.675.7 INC - $30,000-39,999 70.459.879.673.285.2106.2 INC - $40,000-49,999 73.192.992.893.4103.5118.1 INC - $50,000-69,999 179.385.5117.8113.1107.9112.9 INC - $70,000-99,999 105.6182.2123.1137.0140.0136.9 INC - $100,000+ 141.6173.4161.9156.3143.580.9

6. Category Demographics Age and Member Size SIZE - 1 MEM 58.360.750.937.942.352.8 SIZE - 2 MEM 88.8136.0122.870.868.466.5 SIZE - 3-4 MEM 149.3103.5118.0152.0147.4152.5 SIZE - 5+ MEM 95.177.099.8192.6202.4167.4 AGE FH - UNDER 35 222.7103.674.4167.5164.8178.4 AGE FH - 35- 44 118.2117.5121.1173.5164.5155.3 AGE FH - 45- 54 107.3132.0121.1114.4106.986.4 AGE FH - 55+ 35.672.294.158.954.283.8 AGE FH - 55- 64 43.9102.0109.472.163.482.1 AGE FH - 65+ 27.241.778.545.444.985.5 CASCADIAN FARM - GRANOLA & YOGURT BARS KASHI - GRANOLA & YOGURT BARS NAT VAL - GRANOLA & YOGURT BARS QUAKER - GRANOLA & YOGURT BARS QUAKER CHEWY - GRANOLA & YOGURT BARS QUAKER CHEWY DIPPS - GRANOLA & YOGURT BARS DOLLAR VOLUME INDEX

7. Category Demographics Kids and Life Stage CASCADIAN FARM - GRANOLA & YOGURT BARS KASHI - GRANOLA & YOGURT BARS NAT VAL - GRANOLA & YOGURT BARS QUAKER - GRANOLA & YOGURT BARS QUAKER CHEWY - GRANOLA & YOGURT BARS QUAKER CHEWY DIPPS - GRANOLA & YOGURT BARS DOLLAR VOLUME INDEX KIDS - NONE < 18 79.0102.298.360.360.060.5 KIDS - ANY < 18 139.196.0103.1173.8174.3173.5 KIDS - ANY < 6 150.4101.574.3185.8179.6182.8 KIDS - ANY 6- 12 131.292.693.8191.0192.8180.4 KIDS - ANY 13-17 118.789.5122.0164.7181.4159.6

8. Category Role Based off of an (item $) of $1,586,118,100 and relatively high gross margins, the category fits the role of a flagship.

9. Category Role Category has a penetration of 60% both nationally and in the West South Central region. ITEM $ (000)DOLLAR SHARE ITEM BUYERS (000) ITEM PENETRATION DEPT- DRY GROCERYTOTAL U.S. 150,066,179.236.5116,061.4100.0 WEST SOUTH CENTRAL 15,430,104.835.312,982.699.9 GRANOLA & YOGURT BARSTOTAL U.S. 1,586,118.1100.070,534.560.8 WEST SOUTH CENTRAL 160,744.8100.07,814.560.1

10. Dominating Brands Nature Valley and Quaker are brand leaders Typically have the highest Facings % and Gross Margin % Even when they have lower GM%, there is a higher number of facings. Evidence of supplier control

11. Dominating Brands Highest stocking rates: Nature Valley= 28/(16x5) = 35% Quaker = 25/(17x5) = 29% Cliff = 3/(93x5) = 20% Millville (PL) = 10/(10x5) = 20% No brand was found at every store. Nature Valley and Quaker found at 4 out of 5 stores

12. Dominating Brands Gross Margins, SKUs, and Facings Manufacturer Wal-MartAldiWalgreensMarvin’sHarps Nature ValleyGM %37.70%0.00%63.20%68.30%58.10% SKUs120583 Facing%23.10%0.00%55.60%57.10% 50.00% QuakerGM %11.20%0.00%36.80%22.50%41.90% SKUs140443 Facing %26.90%0.00%44.40%28.60% 50.00% KeeblerGM %2.90%0.00% 9.20%0.00% SKUs20020 Facing %3.80%0.00% 14.30% 0.00% Private Label GM %7.90%100.00%0.00% SKUs5 10000 Facing% 9.60%100.00%0.00%

13. Estimated Gross Margins Gross margins are consistent with the category’s role Private Label’s absence is noticeable There is evidence of supplier control with dominating brands.

14. Private Label Private label is weak in this category Wal-Mart and Aldi are the only two stores carrying PL Aldi is committed to PL with average to lower then average GM%

15. Recommendations PL will increase in this category only if retailer can gain more control If Retailers remain heavy on national brands, they need to increase assortment. Walgreens specifically needs to increase merchandising- not enough shelf space for increase in assortment