1. 1 Culture and Convergence: Ethnic Food Trends Crossover To The Mainstream Food Industry Business Roundtable Federal Reserve Los Angeles, CA May 17, 2007

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3. 3 Ethnic Purchasing Power More Than Doubled Since 1990 Source: Selig Center for Economic Growth, Terry College of Business, University of Georgia (2004) Spending Power by Ethnic Groups (in Billions) 1990 – 2004 with 2009 projections African American U.S. Hispanic Asian/Pacific Islander

4. 4 Gross Product Comparisons, 2003 (in Billions) World rank 1 1 2 2 3 3 (6) 4 4 5 5 6 6 7 7 United States Japan Germany United Kingdom France U.S. Ethnic Italy China $10,882 $4,326 $1,795 $2,401 $1,748 $1,685 $1,466 $1,410 Source: World Bank Indicators database, World Bank, September 2004 and Selig Center for Economic Growth, University of Georgia “The Multicultural Economy 2003” If the U.S. ethnic purchasing power was represented separately, it would be the 6th largest national economy in the world

5. 5 Gross Product Comparisons, 2003 (in Billions) World rank Source: World Bank Indicators database, World Bank, September 2004 and Selig Center for Economic Growth, University of Georgia “The Multicultural Economy 2003” If the U.S. Hispanic purchasing power was represented separately, it would be the largest Latin American economy in the world. 10 15 35 (1) 40 44 46 U.S. Hispanic Mexico Brazil Argentina Venezuela Colombia Chile Peru $653 $626 $130 $492 $85 $78 $72 $61 51

6. 6 Acculturation and Food Less Acculturated Traditional dishes Cook from scratch daily Shopping is social Seldom eat out Large mental cookbooks More Acculturated Traditional + American dishes Prepared foods Shopping is utilitarian Eat out often Cookbooks help for special occasions

7. 7 Retailers need to drive sales by increasing: –Customer count –Amount spent per customer Ethnic food products help them do both Why Are U.S. Food Retailers So Interested in Ethnic Products?

8. 8 Why Should U.S. Food Retailers Be Interested in Ethnic Products? Convenience Stores Clubs Drug Stores Mass Merchandisers Supermarkets are like “leaking buckets”

9. 9 All retailers are looking for a point of difference Mass Merchants Limited Assortment Stores Price- Driven Wholesale Clubs Supercenters Supermarkets Marketing- Driven C-Stores Chain Drug Health Food Supermarkets Unsustainable Middle Ground Why Are U.S. Food Retailers So Interested in Ethnic Products?

10. 10 Reduce Unnecessary Vulnerabilities New Business Model FOCUS ON NEW GROWTH PLATFORMS FOCUS ON KEY CUSTOMERS DEVELOP & RETAIN THE RIGHT ASSOCIATES ALIGN WITH KEY SUPPLIERS Why Are U.S. Food Retailers So Interested in Ethnic Products?

11. 11 Ethnic products are a solid growth platform –Fast-growing demand with long-term potential –Large number of small outlets Why Are U.S. Food Retailers So Interested in “Ethnic” Products?

12. 12 Hispanics Are Huge Grocery Spenders 41% Total Weekly Dollars Spent on Groceries SOURCE: El Mercado 2005, Food Marketing Institute

13. 13 General MarketAsian Trips / Household176166 Total Ring $ / Trip $37$39 Items / Trip 6.95.6 ACNielsen Homescan Panel – Annual 2004 Asian American Shopping Patterns In supermarkets, Asian Americans make fewer shopping trips, but spend more per trip (while purchasing fewer items in each trip).

14. 14 Hispanics Are Frequent Shoppers 26 Trips per Month! SOURCE: El Mercado 2005, Food Marketing Institute

15. 15 Primary Store Secondary Store Secondary Grocery Channels Attract Greater Hispanic Spending SOURCE: El Mercado 2005, Food Marketing Institute

16. 16 Who Shops Where Percent of respondents who have shopped at the following in past month SOURCE: El Mercado 2005, Food Marketing Institute

17. 17 ACNielsen Homescan Panel – Annual 2004* Includes Kmart, Target & Wal-Mart Supercenters Asian American Shopper Penetration

18. 18 Cultural Crossover: Consumers Drive the Trends All ethnic cuisines begin with immigrants who create the initial demand for a cuisine Early this century, Europeans, especially Italians helped build popularity for Italian foods in the US – Now it’s mainstream Since the 60’s, strong Asian/Latino immigration spurred the market for ethnic foods – still young market – will continue to mature In recent decades, Caribbean, Central/South Americans and Asians immigration has grown and is reflected in the growing presence of these cuisines Source: PROMAR Int’l.

19. 19 Immigration Fuels Growing Ethnic Population Ethnic Consumers Drive the Demand Second Generation Continues to Fuel Demand Crossover Audience Begins to Drive Demand First effects of cross over begin with key influencers: trendsetters and second generation immigrants This audience tends to live in proximity to ethnic enclaves or is dispersed. These groups play a vital role in introducing ethnic foods to a mainstream audience -- they function as the bridge to greater mainstream acceptance to ethnic foods. INFLUENCERS The Crossover of Ethnic Foods

20. 20 SOURCE: El Mercado 2005, Food Marketing Institute From Niche To Mainstream Niche CrossoverMainstream

21. 21 The Mainstreaming Of Ethnic Food Demand for ethnic foods will increase by 50% over the next decade During that time, ethnic food sales will reach $75 billion. –1 out of every 7 food dollar will be an ethnic food dollar Robust 4-6% ethnic food growth rate has far outpaced the 2% overall food industry growth rate Three quarters of ethnic food spending will come from mainstream American, not core ethnic consumers Mainstream awareness levels are significantly increasing for numerous ethnic cuisines

22. 22 The Maintreaming of Ethnic Food— Awareness Levels of Cuisine Type National Restaurant Association

23. 23 Industry Implications Mainstream’s hunger for ethnic foods represents volumes that far outpace ethnic consumer demand As the ethnic markets continue to grow, the demand for fresh and authentic offerings will increase exponentially, providing new product development and processing opportunities

24. 24 Industry Implications Remember that $1 in every $7 food dollars is spent on Ethnic foods Not pursuing this market means you will concede $1.00 to the competition before the competition even starts.

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39. 39 Thomas Tseng, Principal and Co-Founder 6955 La Tijera Boulevard, Suite B Los Angeles, CA 90045 PH: 310.670.6800 FX: 310.670.7158 www.newamericandimensions.com Thank You!