Climate change: Consumers’ views Jonathan Banks Business Insight Director April 18, 2007

Agenda Global consumer worries Great Britain concerns attitudes behaviour

What is your biggest concern over the next 6 months? Source: ACNielsen – Global Online Survey Nov 2006 Global results

What is your biggest concern over the next 6 months? Note change on y axis scaling – and concerns in different order More concerned about terrorism have to be less concerned about other things…. Shown in UK rank order. UK debt levels At the end of February 2006 the total UK personal debt was £1,174bn. The growth rate remains strong at 10.3% for the previous 12 months which equates to an increase of £100bn. Total secured lending on homes in February 2006 was £981.8bn. This has increased 10.6% in the last 12 months. Total consumer credit lending to individuals in February 2006 was £192.6bn. This has increased 8.7% in the last 12 months. Total lending in February 2006 grew by £9.5bn. Secured lending grew by £8.1bn in the month and consumer credit lending grew by £1.4bn in the month. Average household debt in the UK is approximately £7,796 (excluding mortgages) and £47,546 including mortgages.  Average owed by every UK adult is approximately £25,195 (including mortgages). This grew by ~ £200 last month. Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,131 per average UK adult at the end of February 2006. This has grown 52% in 5 years. Britain's personal debt is increasing by ~ £1 million every four minutes. Source: ACNielsen – Global Online Survey Nov 2006 UK results

Global Warming is my biggest/second biggest concern Top 20 countries US = 26 Males report that they have heard or read something about the issue of global warming as much or more than females in 21 of these 24 selected countries (the exceptions are Thailand, India and United Arab Emirates) Females express global warming as biggest/second biggest concern as much or more than males 67% of the time (32 of 48 cases) Males attribute causes of global warming to ‘natural changes’ slightly more frequently than females, in these selected countries People in their 30s and 40s in these countries were least often the ages groups who considered global warming as biggest/second biggest concern over the next 6 months (evident in 7 of 48 cases, or 15%) People in their teens and 20s appeared to be the least informed about the issue of global warming in these selected countries. People over the age of 40 most frequently stated ‘natural changes’ as the cause of global warming in these countries (12.5%; the exceptions were Japan, Korea and Thailand) While respondents under 20 in Japan are the group who express most concern over global warming in the next 6 months, they are also the group least informed about it (61% have heard or read about it), or misinformed (see bullet point above). This draws attention to both the apparent opportunity and need to reach younger Japanese with accurate information on climate change. The two countries in Phase I of Kyoto Protocol who have not ratified – Australia and United States – do not show evidence that their populations are least concened; Australians actually had the highest percentage of people who expressed global warming as their biggest/second biggest concern Bottom countries: China, South Korea, Czech, Lithuania, Poland, Russia, Hungary Source: Nielsen Global Online Survey November 2006

Source: Nielsen Global Online Survey November 2006 Consumer Confidence Index: a large spread 100 = neutral; Global Average = 99; India 137; USA 108 Calculated on responses to: Do you think job prospects in the next 12 months will be: Do you think the state of your own personal finances in the next year will be: Considering the cost of things today and your own personal finances, would you say at this moment the time to buy things you want and need is: excellent (200), good (133), not so good (67), bad (0) Excellent 200 Good 133.3 Not so good 66.6 Bad 0 Portugal: Very high rates of loans, specially for buy house, with the interest rising every month. But consumer loans are also increasing Unemployment rates raising Production flat Factories closing and going to Eastern Europe,… Government asking for  sacrifices. Small salaries compared with rest of Western Europe, and increases lower than the inflation rate Few expectations for change the down cycle, although things are becoming a little better than 1 or 2 years ago. Source: Nielsen Global Online Survey November 2006

Mostly up, most move slowly – some exceptions! Our persoanl finances seem to need to be in resonably good order Portugal:Hi Jonathan, Nice to ear from you.   Yes, I have seen this numbers in the past and they seem correct, we are in a down cycle, due to: -          Very high rates of loans, specially for buy house, with the interest rising every month. But consumer loans are also increasing -          Unemployment rates raising -          Production flat -          Factories closing and going to Eastern Europe,… -          Government asking for  sacrifices. Small salaries compared with rest of Western Europe, and increases lower than the inflation rate -          Few expectations for change the down cycle, although things are becoming a little better than 1 or 2 years ago.   Only football is helping now Hopes it helps, António Source: Nielsen Global Online Survey November 2006

Source: Nielsen Global Online Survey November 2006 No correlation between consumer confidence and concern re climate change high confidence high global warming concern 140 high confidence low global warming concern 0% 15% Explain R squared Cross hairs = global total: Cons conf 99, global warming 7% 50 low confidence low global warming concern low confidence high global warming concern Source: Nielsen Global Online Survey November 2006 Cross hairs = global total: Cons conf 99, global warming 7%

Do you think global warming is: Aware of the issue: 96% 92% 92% 95% 84% 91% QF1. Have you heard or read anything about the issue of global warming? Source: Nielsen Global Online Survey November 2006 Base: Those respondents who are aware of the issue of global warming

Source: Nielsen Global Online Survey November 2006 From what you have heard or read about global warming, what do you think is causing it? Source: Nielsen Global Online Survey November 2006 Base: Those respondents who are aware of the issue of global warming

A very serious problem? Caused by human activities? caused by human activity 60 not very serious caused by human activity 20 90 Base: Those respondents who have heard/ read anything about the issue of global warming, 23755/25408: Do you think global warming is... A very serious problem, A fairly serious problem, Not a serious problem, Not a very serious problem, Not at all a serious problem, Not sure. QF3. From what you have heard or read about global warming, what do you think is causing it? Human activities like driving cars and burning fuel, Natural changes in the climate, Both, Don’t know 30 not very serious not caused by human activity serious problem not caused by human activity Source: Nielsen Global Online Survey November 2006 Cross hairs = global total: very serious problem 57% caused by human activity 50%

Consumer confusion “Salad options are less fattening” “Organic is better for me” “Organic pollutes the environment less” “Organic production = lower carbon emissions” “GM is bad for me” “Nanotechnology is dangerous” “Banning ads to kids will reduce obesity” “I’m too busy to eat/exercise properly” “Vegetarian options are healthier” “I need to eat more fruit and veg, but: an apple contains 4 tsp of sugar a third of all produce contains pesticide residue the fruit looks unappetising” “If it’s cheap it must be rubbish” “Moving food half-way round the world is wrong” “Fair trade can only be a good thing” Presented in SotN Carbon emissions from NZ produced lamb/dairy lower than UK local. Easy low production costs, shipping is very cheap and efficient way of moving things. Flowers airfreighted from Africa to UK lower emissions than NL hot housed. and it provides lots of employment (1m people) and export earnings.

Source: Nielsen Media Research Retail advertising Whilst others changed their emphasis from price to quality, Tesco addressed sustainability... Source: Nielsen Media Research

Which of these environment and related issues concerns you the most? Source: Nielsen Homescan survey February 2007 – Great Britain

Climate change is the environmental issue that concerns me the most Source: Nielsen Homescan survey February 2007 – Great Britain

Climate change is the environmental issue that concerns me the most Source: Nielsen Homescan survey February 2007 – Great Britain

Climate change is the environmental issue that concerns me the most North South Source: Nielsen Homescan survey February 2007 – Great Britain

Organic is becoming a mainstream part of fresh and chilled categories, and still demonstrating strong growth. % sales growth 2006 v 2005 +18% 24% 20% 21% 18% 12% 1% 11% 7% +21% Source: ACNielsen ScanTrack Grocery Multiples Total Store Read

“It’s worth paying extra for organic products” The debate continues as to whether organic foods are worth a premium price. As an additional 500,000 people have decided they have a preference for natural foods, the same number have also decided Organic products are too expensive. “It’s worth paying extra for organic products” Source: ACNielsen Homescan Survey

Fairtrade publicity has been successful as 86% of people now claim to know what Fairtrade products are. However, we see less inclination from people to buy them and a general, though improving, perception that they are too expensive. % respondents that agree Source: ACNielsen Homescan Survey October 2006 vs. November 2005

“I prefer to buy Fairtrade products” Waitrose, Co-op and Sainsbury have high proportion of main shoppers that prefer Fairtrade. “I prefer to buy Fairtrade products” % respondents who “agree strongly” Indexed on All Households Glass half full or half empty elsewhere? Fish where the fish are? Or target ASDA’s shoppers? Tesco sheer numbers mean they’ll have more in absolute terms Source : ACNielsen Homescan Survey October 2006

Summary UK consumer (financial) confidence levels neutral UK environmental concern: low in absolute terms but relatively high No correlation between confidence and concern for environment 16-24s now expressing highest levels of concern No major demographic skews (E’s lowest) No great regional skews (TyneTees and SouthWest lowest) Fairtrade and Organic continue to grow but don’t always justify their premium Waitrose, Co-op and JS main shoppers over-index