FINDING GROWTH FOR CANADIAN CPG BEST BETS: 2020 Carman Allison - VP Consumer Insights, Nielsen Canadian Grocery Thought Leadership CEO Conference: November 2014

Copyright ©2013 The Nielsen Company. Confidential and proprietary. 2 THE CHALLENGE FOR GROWTH

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 3 CPG STILL SPUTTERING FOR GROWTH IN NORTH AMERICA United States Nielsen: MarketTrack - Total Tracked Sale 52 wks ending September 20, 2014 Canada Dollars Nielsen: ScanTrack - Total Tracked Sale 52 wks ending September 27, 2014 Units Dollars Units

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 4 Dollar Sales Unit Sales FLAT IS THE NEW GROWTH Source: Nielsen MarketTrack, National All Channels – YTD 40 weeks to September 20, Total Tracked Sales excluding Fresh Random Weight

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 5 WHERE DO WE FIND FUTURE GROWTH IN A CHALLENGING ENVIRONMENT?

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 6 BEST BETS FOR GROWTH BY 2020 W The Prairies will continue to lead CPG growth West

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 7 SINCE 2009 Source: Nielsen, HomeScan 2009 vs % National +18% Prairies 18.0%19.2% Prairies Share % of CPG +$656M The prairies have outpaced National average Grocery Composite sales growth

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 8 BY 2020… The prairies will lead Canada’s population growth +10% Prairies +6% Ontario +4% Quebec +1% Maritimes +7% B.C. +6% Canada Source: Statistics Canada population growth estimates

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 9 BY 2020 THE PRAIRIES WILL POTENTIALLY ACCOUNT FOR 26% OF CPG GROWTH Source: Nielsen, HomeScan 2009 vs – Grocery Composite - estimates +$9.5B National +$2.5B Prairies 19.2%20.2% Prairies Estimated Share % of CPG

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 10 THE EMERGING PRAIRIES CONSUMER… +7% They spend 7% more than average and shop less on deal 19% Of household heads are <35 years old (vs 14% for Canada) 26% Of household earn >$100k, an increase of 4 points from 2009 Top 3 Of Canada’s fastest growing cities are in the Prairies (Calgary, Edmonton, Saskatoon) Source: Nielsen Panel Views Survey 2013/4 Census Canada

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 11 BEST BETS FOR GROWTH BY 2020 The Prairies will continue to lead CPG growth Urbanization is redefining how we live and shop West

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 12 SuburbanUrbanRural 35% OF CANADIANS CALL THE TOP 3 CITIES HOME Calgary+5% Saskatoon+4% Thunder Bay+4% Abbotsford+4% Quebec City+4% Vancouver+4% Edmonton+4% Regina+4% Kelowna+4% Hamilton+3% Toronto+3% % of Population Source: Nielsen PanelViews Survey, Statistics Canada – Census 2011 MarketTrack: G+D+MM 52 weeks to September 20, 2014 Top 3 Cities: 35% Top 10: 54% Top CPG Growth Cities

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 13 CONSUMERS ARE REDEFINING HOME OWNERSHIP Source: CMHC 2012 Report 67% homeownership Single Dwelling -11% Multi +14%

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 14 URBAN, SUBURBAN, RURAL Source: Nielsen HomeScan, Grocery Composite, 52 weeks ending September 20, 2014 $3,443$4,102$4,357 Age < > <$50K >$100K $70K - $100K Urban Suburban Rural

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 15 THE URBAN CONSUMER… 12% Less likely to own a car 12% Eat out more often (vs. 8% Rural) 13% Bring prepared food home or get meals delivered (vs. 8% Rural) 32% Of primary grocery shoppers are male (vs. 19% Rural) Source: Nielsen Panel Views Survey 2013/4

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 16 BEST BETS FOR GROWTH BY 2020 The Prairies will continue to lead CPG growth Urbanization is redefining how we live and shop The male shopper is a key decision maker West

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 17 % of Households (>50% of Shopping) 24% 16% 60% MALE SHOPPERS ARE OFTEN OVERLOOKED BUT ACCOUNT FOR 24% OF PRIMARY SHOPPERS Source: Nielsen Panelviews June % are male only households 22% are female only households

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 18 Male shoppers spend less but shop more often; less likely to browse and more likely to buy only what they need Source: Nielsen Homescan, National All Channels, Total Expenditures, 52 Weeks ending July 26, 2014; Nielsen Panelviews June 2014 $32.41 $37.72 I tend to buy only what I need when I go to the grocery store Given the opportunity I like spending time browsing in the grocery or food store Avg Trips / YearShopping Opinions % AgreeAvg Basket Size 43% 54% 50% 60% ENSURE IT’S EASY FOR MALES TO FIND WHAT THEY NEED

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 19 THE MALE SHOPPER CAN BE MORE PROFITABLE 24% Of male spend is on perceived deal (28% for female) 65% Typically prepare a shopping list (78% for female) 46% Use coupons (67% for female) 48% Are aged > 55 years (40% for female) Source: Nielsen Panel Views Survey 2013/4

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 20 BEST BETS FOR GROWTH BY 2020 The Prairies will continue to lead CPG growth Urbanization is redefining how we live and shop The male shopper is a key decision maker Millennials will surpass Boomers as #1 consumer West

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 21 MILLENNIALS AND BOOMERS: THE TOP 2 CONSUMER POWERHOUSES <19 ‘Gen Z’ 16% ‘Gen Y’ 27% ‘Gen X’ 14% ‘Boomers’ 28% 68+ ‘Greatest’ 14% Source: Statistics Canada – Census Millions

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 22 CURRENTLY MILLENNIALS ARE UNDER REPRESENTED IN PURCHASING POWER Millennials’ Importance 27 % Source: Source Nielsen Homescan – 52 weeks to March 29, % 12 % % of Population 9.1 M % Household Heads 2.0 M % of CPG $’s 11.7 B

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 23 Source: Statistics Canada M: Millions MillennialsBoomers MILLENNIALS WILL SURPASS BOOMERS BY M 9.7 M 10.0 M 9.4 M 11.0 M 8.3 M 34.2 M38.4 M42.1 M Total Canada

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 24 THE CPG GROWTH ENGINE WILL SWITCH GEARS By 2020… Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years – Based on older generation spend +$12.5 B +107% -$4.3 B -9% BOOMERS MILLENNIALS

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 25 TO MAXIMIZE FUTURE GROWTH OPPORTUNITIES, WE FIRST NEED TO OPTIMIZE REVENUE More than ever consumers are addicted to promotions

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 26 % OF SALES WITH A PRICE AT A RECORD HIGH % Dollars Sold on TPR Source: Nielsen MarketTrack, National GB+MM+DG - 52 week periods ending September 20, % 36% ?

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 27 TRADE EFFICIENCY % OF WEEKS ON PROMOTION Normative ROI Frequency of Promotion PROMOTION INEFFICIENCY IS GETTING WORSE % of Weeks on PromotionTrade Efficiency Source: Nielsen Trade Promotion Benchmark Database 2014 Q3

Copyright ©2012 The Nielsen Company. Confidential and proprietary % DON’T BREAK EVEN 33% MAKE MONEY WE ALL KNOW PROMOTIONS CAN BE INEFFICIENT The majority of trade promotion events don’t break even Source: Nielsen Trade Promotion Benchmark Database 2014 Q3

Copyright ©2012 The Nielsen Company. Confidential and proprietary % DON’T BREAK EVEN 33% MAKE MONEY ELIMINATING OF PROMOTIONS WOULD INCREASE SALES REVENUE 22% WE ALL KNOW PROMOTIONS CAN BE INEFFICIENT The majority of trade promotion events don’t break even Source: Nielsen Trade Promotion Benchmark Database 2014 Q3

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 30 CONSUMERS ARE STOCKING-UP – IT MAY LEAD TO BIGGER BASKETS, BUT IT’S A TRIP KILLER Source:Nielsen Homescan Cross Outlet Facts – Canada - 52 weeks to June 28, % -5% Units / Trip Trips / HH Instant Coffee+17-5 Butter Dry Pasta+13-5 Hot Cereals+13-4 Flat Water+11-9 Vegetable Juice Granola Bars+11-9 Deodorant Sticks Laundry Detergent+9-15 Fruit Drinks+8-16 Units / Trip Trips / HH

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 31 ANOTHER FIX IS TO INCREASE PROMOTED PRICES TO ALIGN WITH REGULAR PRICE INFLATION Regular Prices +4% Feature Prices -1% +5 % Price Divergence Increasing feature prices by +5% is a $1.1 billion dollar opportunity Resulting in a market growth from +1.7% to +3.4% Source: Nielsen MarketTrack, National G+D+MM 52 weeks to September 20, 2014

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 32 ” “ OUR STRATEGY NEEDS TO CHANGE Why does fewer, bigger and better always end up as just more? Fewer, smaller and better may be the promotion strategy that changes the dynamic

Copyright ©2012 The Nielsen Company. Confidential and proprietary. 33 BEST BETS FOR GROWTH BY 2020 Allocate future resources to support growth Smaller stores, shop local, meal solutions Male Shopper roles continue to evolve = profitability Younger, ethnic, baby boom echo, technology West

Copyright ©2013 The Nielsen Company. Confidential and proprietary. 34 THANK YOU! Stay Connected to Consumer and Media Trends For the latest insights, visit us nielsen.com Questions regarding the content of this presentation, contact: Carman Allison,