Snacking beyond the snacking aisle how to take a bite out of Canada’s snacking demand Carman Allison - VP Consumer Insights, Nielsen @CarmAllison

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The Challenge for growth

Let’s set the stage Canadian CPG Dollar Sales Unit Sales Trips per Shopper Source: Nielsen MarketTrack, National All Channels – YTD 40 weeks to September 20, 2014 - Total Tracked Sales excluding Fresh Random Weight Homescan Grocery Composite 52 weeks ending September 27, 2014

How do we define Snacks today? $4.9 Billion +4% Dollar growth SNACKS +2% KG growth Source: Nielsen MarketTrack, National All Channels + G&G – 52 weeks Ending October 18 2014

lifestyles are redefining HOW WE EAT ON THE GO PORTABILITY HEALTH CONVENIENCE EASE OF USE VARIETY

“ The average consumer enjoys 12 different types of snacks in a 30-day period ” …out of the 47 snacks surveyed Source: Nielsen Global Survey – Canada Q1 2014

RETHINKING WHAT “snackING” MEANS …REDEFINED Source: Nielsen Global Survey – Q1 2014

Potential Opportunity If we expand snack to reflect ‘snacking’ the market potential increases 2.5 times Potential Opportunity $12.6 Traditional Snack Definition Billion +3% $4.9 2.5 x Billion +4% Source: Nielsen MarketTrack, National All Channels + C&G - 52 week periods ending September 20, 2014

Audience Poll Which is your favourite type of snack? Sweet Tooth Salty Please Either works for me!

While the majority have a preference, 1 in 5 consumers prefers either 60% SWEET 59% SALTY 19% Source: Nielsen Global Survey – Q1 2014

Opportunities across the snacking spectrum Source: Nielsen MarketTrack, National All Channels + C&G - 52 week periods ending September 20, 2014

What’s trending in snacking? TOP - GROWTH % CHG TOP 5 SNACKING CATEGORIES ($M) Fruit & Nuts Candied Snacks Meat Sticks Dry Fruit Chips, Corn Snacks +31% +16% +7% +6% +5% Potato Chips, Corn Snacks $1,836.1 +5% Prepack Cheese $1,782.8 +3% Chocolate $1,580.1 +5% Baked Desserts $822.5 +1% Yogurt $1,492.7 +0% BOTTOM - GROWTH % CHG RTE Gelatin Frz Water Confect Puffed Cakes -9% -7% -6% -4% Marsh. Treats Puddings Source: Nielsen MarketTrack, National All Channels +C&G – 52 weeks Ending September 20, 2014

What do consumers have to say about snacking? Global: 60 Countries (30,535 individuals) Canada: 503 individuals

North Americans are chip-o-holics! Top 5 snacks consumed #1 64% Chips 63% Chips 64% Chocolate 63% Fruit 59% Chocolate 62% Fruit 63% Cheese 58% Cheese 52% Vegetables 63% Chocolate 56% Cookies 51% Cookies 58% Cookies 54% Fruit 50% Yogurt Source: Nielsen Global Survey – Q1 2014

chips, chocolate and fruit top the list for Canada's favourite snack Top 5 favourite snacks #1 13% Chips 11% Chocolate 11% Fruit 13% Chocolate 11% Fruit 11% Chocolate 13% Fruit 9% Chips 9% Bread (Sandwich) 8% Cheese 7% Sandwich 7% Yogurt 7% Bread (Sandwich) 7% Cheese 7% Cheese Source: Nielsen Global Survey – Q1 2014

Grocery stores remain the top destination for snack purchases % who source their snacks sometimes or often 93% 56% 45% 44% 43% GROCERY STORES MASS MERCH DOLLAR STORES DRUG STORES CONVENIENCE $1 MASS MERCH Source: Nielsen Global Survey – Q1 2014 – Canada

But despite the top destination for snack sales – grocery is losing share Source: Nielsen Homescan Channel Facts - 52 Weeks Ending September 27, 2014 – Snack + Confections

Consumers who are fighting temptation may be giving in to promotions 48% Only buy snacks when on sale 36% of CPG sales sold with a price cut +3 41% of SNACKS are sold with a price cut +4 5% higher than average Source: Nielsen Global Survey – Q1 2014 Nielsen MarketTrack, National GB+MM+DG - 52 week periods ending October 18, 2014

Why do Canadians snack? 86% 81% 79% 78% 62% ENJOYMENT CRAVING TREAT HUNGER BETWEEN MEALS ENJOYMENT CRAVING TREAT NUTRITION Source: Nielsen Global Survey – Q1 2014

4 out of 10 Canadians snack as a meal REPLACEMENT 42% Breakfast Alternative 43% Lunch Alternative 34% Dinner Alternative Source: Nielsen Global Survey – Q1 2014

Snacking as a meal alternative <35 <$30K 42% Breakfast Alternative 44% 48% 48% 43% Lunch Alternative 44% 47% 54% 34% Dinner Alternative 38% 46% 50% Source: Nielsen Global Survey – Q1 2014

“ Even though we love our chips, we also snack with sensible, balanced indulgence, and healthier alternatives ”

Snacking with a conscience 63% Fruit 54% 50% Nuts & Seeds 43% 50% Vegetables 43% 51% Yogurt 38% 42% Granola Bars 35% Source: Nielsen Global Survey – Q1 2014

Back-to-basics attributes % who think it is important or very important NATURAL FLAVOURS (65%) NO ARTIFICIAL FLAVOURS (60%) ALL NATURAL (60%) GMO FREE (56%) NO ARTIFICIAL COLOURS (60%) CAFFEINE FREE (36%) GLUTEN FREE (28%) Source: Nielsen Global Survey – Q1 2014 - Canada

Health attributes are important to consumers % who think it is important or very important LESS IS MORE + MORE IS MORE LOW SALT/SODIUM (63%) NO HIGH FRUCTOSE CORN SYRUP (59%) PORTION CONTROL (58%) LOW CALORIES (53%) LOW SUGAR/SUGAR FREE (61%) LOW FAT (52%) LOW/NO CARBS (50%) HIGH IN FIBRE (65%) HIGH IN PROTEIN (61%) WHOLE GRAIN (61%) Source: Nielsen Global Survey – Q1 2014 - Canada

MORE THAN 1/3 want their snack ingredients to be local, organic and sourced sustainably 38% 44% 41% SUSTAINABLY SOURCED LOCAL ORGANIC Source: Nielsen Global Survey – Q1 2014 – Canada

Different snacks for different folks

Are generations divided by snacking?

The CPG growth engine will switch gears By 2020… MILLENNIALS BOOMERS +$12.5 B +107% -$4.3 B -9% Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years – Based on older generation spend

Which CPG departments are most commonly found in a millennial’s shopping basket? Nielsen Homescan – Dollar Consumption Index – 52 wks to December 28, 2013 – Consumer Facts CPG Departments Relative Index (82 for total)

YOUNGER OLDER TOP 5 SNACKS consumed Vs. 65% Chocolate 70% Fruit 61% Chips 67% Cheese 59% Cookies 58% Chips 56% Bread 55% Nuts & Seeds 54% Cheese 55% Cookies Source: Nielsen Global Survey – Q1 2014 – Canada – Younger = 35 years, Older >55 years

YOUNGER OLDER Top 5 favourite snacks Vs. 14% Chips 13% Yogurt 13% Fruit 11% Fruit 13% Chocolate 10% Cheese 7% Bread (Sandwich) 9% Chips 7% Cheese 9% Nuts & Seeds Source: Nielsen Global Survey – Q1 2014 – Canada – Younger = 35 years, Older >55 years

Differences across generations YOUNGER OLDER Snack as a Reward/ Mood Booster (vs. 28% Older) 58% Tend to snack for nutrition (vs. 62% Younger) 66% Snack as a Meal Replacement (vs. 29% Older) 47% Prefer Back-to-Basics snacking (vs. 47% Younger) 52% Source: Nielsen Global Survey – Q1 2014 – Canada – Younger = 35 years, Older >55 years

Chick-flick versus action movie? What’s your snack of choice?

Male shoppers are often overlooked but account for 24% of primary shoppers % of Households (>50% of Shopping) 24% 60% 16% 17% are male-only households 22% are female-only households Source: Nielsen Panelviews June 2014

Ensure it’s easy for males to find what they need Avg Basket Size Avg Trips / Year Shopping Opinions % Agree I tend to buy only what I need when I go to the grocery store $32.41 161 43% 54% Given the opportunity, I like spending time browsing in the grocery or food store $37.72 152 50% 60% Source: Nielsen Homescan, National All Channels, Total Expenditures, 52 Weeks ending July 26, 2014; Nielsen Panelviews June 2014

Audience Poll – for females Which do you think males snack on the most? Chips Cookies Fruit Chocolate Cheese

Audience Poll – for Males Which do you think females snack on the most? Chips Cookies Fruit Chocolate Cheese

Females snack more than males Top 5 snacks consumed 65% Chips 72% Fruit 61% Chocolate 69% Cheese 57% Cookies 65% Chocolate 57% Sandwich 64% Chips 56% Cheese 59% Cookies Source: Nielsen Global Survey – Q1 2014 - Canada

males prefer salty and females sweet Top 5 favourite snacks 15% Chips 15% Fruit 11% Fruit 15% Chocolate 10% Chocolate 11% Chips 9% Cheese 7% Cheese 8% Sandwich 7% Yogurt Source: Nielsen Global Survey – Q1 2014 - Canada

Different snacking motivators Prefer hot/spicy flavours (vs. 33% Female) 43% Snack as a stress reliever (vs. 32% Male) 43% Only buy snacks when on sale (vs. 52% Female) 43% “Less is more” when it comes to Snacking (vs. 51% Male) 61% Source: Nielsen Global Survey – Q1 2014 - Canada

LONG TERM OUTLOOK POSITIVE GENERATIONAL SHIFTS Millennials - Indulgence Boomers - Health CONSUMER DEMANDS Variety Innovation Accessibility Portability Less is More Meal Replacement Growth from perimeter and centre of store

Canadians are changing the way we eat “ Busy, on-the-go lifestyles often dictate a need for quick meals, and many opt for fast food options that can be high in calories and low in health benefits. There is a massive untapped opportunity to gain market share in the nutritious, portable and easy-to-eat meal alternative market that snack manufacturers could fill. ” Susan Dunn, EVP, Global Professional Services, Nielsen

Questions? Stay Connected to Consumer and Media Trends For the latest insights, visit us at nielsen.com or contact us: Phone: 800.553.3727 Email: CPGSolutions@nielsen.com Questions regarding the content of this presentation, contact: Carman Allison, email carman.allison@nielsen.com @CarmAllison You will receive a link to download this webinar within 48 hours LinkedIn

Snacking segment definitions Desserts Baked Desserts Jelly Powders Puddings Dessert Powders Snack Puddings RTE Gelatin Refrigerated Natural Cheese Yogurt Frozen Ice Cream Frozen Confections Pizza Snacks Frozen Yogurt Water Based Confect. Cookies & Crackers Cookies Crackers Cookie Mixes Confectionery Chocolate Candy Confections NPF Nutritious Portable Foods Remaining Popping Corn Puffed Cakes Candied Snacks Marshmallow Treats Dips Salsa Mexican Dips Prepared Dips Salty Snack Meat Sticks Jerky Snack Foods Fruit & Nuts Snacking Nuts/Seeds Fruit & Apple Sauce Dry Fruit Source: Nielsen Strategic Planner