© Kantar Worldpanel 1 The shopper landscape in 2012 and what this means to you 28 th April 2012

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What this means for you Impact on red meat 3 Agenda The current landscape as we enter Where we are now 2.Shopper behaviour 3.Influencers 4.Implications

© Kantar Worldpanel So where have we come from…….. 4 Source: Kantar Worldpanel & Nationwide Consumer Confidence Nationwide Consumer Confidence Index HSBC Warns of Subprime Losses Run on the Rock Northern Rock is Nationalised The Fall of the Investment Banks UK Cuts interest to 0.5% Obama Assumes Office Banks Announce a Return to Profits UK Slower out of Recession than other Countries Pre Budget report: Potential Tax Hikes & VAT rise Severe Weather Disruptions General Election: new Coalition government 20% VAT Rise The Royal Wedding Bailout of UK Banks London Riots BP oil Spill, threat to UK Pensions UK officially out of Recession Chancellor’s spending review Euro Zone Crisis UK Housing market picks up The end of a bad year

© Kantar Worldpanel 5 Asda Income Tracker March 2012 Families one of the hardest to be hit

© Kantar Worldpanel 6 Although inflation has fallen back as we enter 2012, it has not been enough to form parity with shopper spending so there is still pressure out there for Scottish and GB shoppers to manage their household spend through the grocery basket. *Grocery (RST) 12we 18 Mar 2012 (KWP P4)

© Kantar Worldpanel 7 So how are shoppers managing their spend? With the level of spend being given away by retailers falling back, the biggest coping strategy for shoppers out in store is to trade down (product choice). Total Grocery 12 we 18 Mar 2012 (KWP P04)

© Kantar Worldpanel Total Grocery 12 we 18 Mar 2012 (KWP P04) Value small, but thriving in the current climate

© Kantar Worldpanel 9 Some other key trends you should be aware of Older retired shoppers shopping more frequently and not just because of the economy. Discount retailers benefitting here. Multiple convenience formats expanding as local high street stores struggle Families making more frequent trips to shop as they did in the initial recession.

© Kantar Worldpanel 10 Along with other significant trends Rising fuel prices will impact larger shopping trips which involves using a car. The economic environment like our weather is becoming more unpredictable leading to caution amongst shoppers.

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© Kantar Worldpanel 12 Till Roll 12we 18 th March 2012 Average growth is +4% Share gain territory Within total GB, it is the tale of two nations as Waitrose along with Aldi prosper in Q

© Kantar Worldpanel 13 Till Roll 12we 18 th March 2012 Average growth is +5.2% Share gain territory In Scotland, the grocery sector is growing faster at +5.2% with Asda and Sainsbury’s gaining share.

© Kantar Worldpanel 14 Red meat is vital "We fully recognise that to raise our game, we must improve the shopping trip for our customers.” In Scotland, Tesco share of Food & Drink is 27.4%, yet their share of Fresh Red Meat is 25.1%. £12.6 million (if they obtained their fair share) 52 w/e 18 th March 2012

© Kantar Worldpanel What this means for you The current landscape 15 Agenda Impact on red meat 1.Changing attitudes 2.Red meat relevance 3.Key trends

© Kantar Worldpanel 16 Shape of Britain – 2011 shopper attitudes Local (30% of shoppers currently agree to ‘I try to buy local produce’) Environment (22% of shoppers currently agree to ‘Seeking out environment friendly products’) Fair Trade (10% of shoppers currently agree to ‘I actively seek out Fair Trade products’) Organic (8% of shoppers currently agree to ‘I am prepared to pay more for Organic products’) Although ‘local’ has increased by 3% in Scotland, attitudes toward ethics have not increased or declined but have remained flat over the last year.

© Kantar Worldpanel 17 Shape of Britain – 2011 shopper attitudes Brands on offer (44% of shoppers currently agree to ‘I will buy a brand I don’t normally buy if it is on offer’) Price comparison (42% of shoppers currently agree to ‘I always compare the price of items before I buy them’) Shopping around (41% of shoppers currently agree to ‘I shop around to take advantage of special offers’) Value based attitudes have grown the fastest

© Kantar Worldpanel 18 Kantar Worldpanel 12w/e 27 th November 2011 So just how important is red meat to the store overall?

© Kantar Worldpanel 19 Kantar Worldpanel 52w/e 19 th Feb 2012 Just includes raw protein (no ready meals, sausages, etc.) Fresh and Chilled accounts for 40% of spend across the grocery store (£38.6bn) Total grocery £97.5 billion across GB All customers will purchase Fresh and Chilled products Red Meat – 14.1% of fresh spend 96% of fresh shoppers will also purchase Red Meat Poultry – 6.7% of fresh spend 93% of fresh shoppers will also purchase Poultry Fish – 2.9% of fresh spend 76% of fresh shoppers will also purchase Fresh Fish £ £88.79 £57.11 Average spend per shopper?

© Kantar Worldpanel 20 Toward the end of 2011, spend across all fresh proteins was up including fish which has recovered strongly Kantar Worldpanel 12w/e 19 th Feb 2012 Just includes raw protein (no ready meals, sausages, etc.) % change in spend versus previous year

© Kantar Worldpanel 21 Only recently has volume seen an improvement – thought red meat continues to lose Kantar Worldpanel 12w/e 19 th Feb 2012 Just includes raw protein (no ready meals, sausages, etc.) % change in spend versus previous year

© Kantar Worldpanel 22 Country of Origin UK NZ Other Imported Lamb has a greater dependence on imports than other major proteins 14.3% increase in price paid per Kg And then closer to home we also have sales of fresh lamb which have been impacted in a similar way. Kantar Worldpanel 12w/e 02 Oct 2011

© Kantar Worldpanel 23 Promotions Versatility Cheaper products

© Kantar Worldpanel 24 Promotions within fresh There will be more pressure on shoppers in terms of the cost to purchase red meat in 2012 Red meat inflation +5.5% Kantar Worldpanel data ending 21 st /20 th /19 th February

© Kantar Worldpanel 25 Promotions within fresh Promotions have become much less of a coping strategy to shoppers within Red Meat So are shoppers buying more on deal? Protein % on deal Trend Buy on deal? Cheaper product? Cheaper store? Choices faced by shoppers? Red Meat 30.7% Fish 26.3% Poultry 36.2%

© Kantar Worldpanel 26 Fresh Red Meat - % discount versus % sold on deal Kantar Worldpanel 52w/e 19 th Feb 2012 Promotions within fresh The retailers are giving away less within the promotion

© Kantar Worldpanel 27 Cheaper products within fresh The growth is coming from the middle of the fresh red meat market Standard Fresh Meat 87% Of fresh meat spend 99% Of shoppers buy standard +£79m Additional spend on standard fresh meat versus 2011 (+2.9% growth) +£5.4m Switching gains mainly from Premium, but also Economy Premium Fresh Meat 4.9% of spend -3.1% 33.7% of shoppers Branded 1.1% of spend -6.9% 9.3% of shoppers buy Branded 1.1% of spend -6.9% 9.3% of shoppers buy Healthy 2.7% of spend +2.0% 26.1% of shoppers buy Healthy 2.7% of spend +2.0% 26.1% of shoppers buy Economy 4.2% of spend -1.7% 38% of shoppers buy

© Kantar Worldpanel 28 Cheaper products within fresh Scotland is different when it comes to buying premium fresh red meat 6.3% more shoppers in Scotland (40 vs. 33.7%) will buy premium fresh meat versus total GB Premium in Scotland is growing at +0.8% when at a GB level it is declining -3.1%

© Kantar Worldpanel 29 So what do you think the biggest Scottish grocery brand is within total GB? Ranking based on ‘take home’ spend over the year to May 2011

© Kantar Worldpanel 30 Cheaper products within fresh Meat balls evidence that shoppers are willing to trade up if they see a benefit 1 in 4 shoppers now buying 2.4% uplift in volume sales

© Kantar Worldpanel 31 Cheaper products within fresh As well as being incentivised to trade up through price promotions 58.9% Of premium sausage spend is sold on deal 25.3% Of premium fresh meat spend is sold on deal 37.5% of standard sausages is sold on deal

© Kantar Worldpanel 32 Versatility

© Kantar Worldpanel British (e.g. Stews, Fish & Chips, Baked Beans) 7.4 billion Italian (e.g. Pasta, Lasagne, Spaghetti) 2.0 billion Indian (e.g. Curry) 1.3 billion Chinese (e.g. Sweet & Sour, stir fry) 0.6 billion Mexican (e.g. Fajitas) 0.6 billion In Home Consumption Top Ethnic Flavours within the home in GB Long term (vs. 2007) Short term (vs. 2009) +4%+1% +4%+2% +23%+1% +3%-3% +22%+15% Versatility It is important that we maximise the relevance of red meat within core as well as emerging tastes

© Kantar Worldpanel 34 Versatility Versatility alongside price promotions is a powerful combination Economy 4.2% of spend -8.1% 34% of shoppers buy % on deal % on deal Kantar Worldpanel 52w/e 19 th Feb 2012 £ +9.0% Kg +3.1% Fresh chicken pieces

© Kantar Worldpanel 35 Versatility Versatility is a key part of winning within red meat as we enter 2012 Economy 4.2% of spend -8.1% 34% of shoppers buy Kantar Worldpanel 52w/e 19 th February 2012 (% change based on volume yr on yr) Amount paid by the shopper per trip (£) Level of versatility within the home Mince £3.43 per trip£7.48 per trip Stewing Frying/ Grilling Roasting +0.6% +1.6% -3.6% -11.0%

© Kantar Worldpanel 36 Versatility And shoppers within red meat are also taking steps down the value & versatility chain Economy 4.2% of spend -8.1% 34% of shoppers buy Kantar Worldpanel 52w/e 19 th February 2012 (Net switching flows in spend yr on yr) Mince Stewing Frying/ Grilling Roasting Amount paid by the shopper per trip (£) Net switching of shopper spend within fresh red meat in GB (2011 versus 2010) Roasting joints lost £5.7m over the last year directly to Mince Switching loss also equivalent to 2K tonnes (volume)

© Kantar Worldpanel (with knowledge and awareness) Big = versatile Sunday Roast leg of lamb Monday Leftover lamb fajita’s Tuesday Moroccan lamb with Cinnamon and Apricots

© Kantar Worldpanel This is also firmly on the agenda of the retailers

© Kantar Worldpanel The current landscape 39 Agenda Impact on red meat What this means for you 1.One size fits all? 2.Key themes and messages

© Kantar Worldpanel Family meals growing in relevance

© Kantar Worldpanel Additional key events will also provide further opportunities to engage with shoppers in 2012.

© Kantar Worldpanel 42 Shoppers are behaving in different ways, and therefore have to be targeted in different ways Kantar Worldpanel 12w/e 19 th February 2012 Mince Roasting joints Pre-family Young family Middle family Older family Older dependents Empty N Retired Fresh red meat trading index % of fresh red meat purchased on deal

© Kantar Worldpanel 43 Kantar Worldpanel Usage – 52 w/e Nov 2011 Shoppers needs change through the week Mon - WedThurs - Sat Sunday Health Indulgence Dessert Potatoes Roast beef/ chicken Alcohol Confectionery Soft drinks Crisps Cereal Scratch cooking Fruit Yoghurt

© Kantar Worldpanel 44 The time of the day will dictate when certain formats of red meat are consumed Breakfast Mid-morning Lunch Teatime Evening Meal Before bed There are rules of engagement Cost per head 43p 80p£1.08£1.09£1.4485p

© Kantar Worldpanel Homemade Savoury Occasions (Scratch Cooking) - Millions Occasions 10 minutes more preparation time per meal Total Consumption 12 m/e February 2011 A Step change in Homemade preparation - now flattening a Step Change from pre Recession… with Significant growth in meal engagement - a plateau over the last 2 periods

© Kantar Worldpanel Cooks are becoming younger across GB Average age : Homemade savoury foods Older adults moving awayFamily influx

© Kantar Worldpanel Key themes for Source: Kantar Worldpanel, 52 w/e 19 th Feb 2012 Local still ‘on message’ but increasingly alongside value for money. Shoppers with kids are cutting back harder, so we need to push the relevance of red meat across all cuts (as over 50% purchase joints as well as other cuts). Versatility of host protein vital as shoppers favourite dishes within the home continue to evolve away from traditional British

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