1. Energy Drinks Hannah Mertz & Art Guillen

2. Breakdown of the presentation will include discussing the following three areas for our category of energy drinks:  Importance of Depth  Strength of Leading, Competing Brands  Private Label Opportunities  Supplier Control -Leading brands are still dominating the category.  Retailer Control -There is an increase in private label that is expected to grow. -Category has reached maturity, which increases the opportunity for private label. Overview

3. Fayetteville  Wal-Mart Mall Ave.  Harps Garland  E-Z Mart MLK Boulevard  Wal-Mart MLK Boulevard  Walgreens Township  White Oak Station Gregg  ALDI’s Rogers  Pinnacle Neighborhood Market  Target Springdale  Dollar General Sunset Ave. Stores Audited

4. Importance of Depth Spring 2012 Total # of SKUs: 153 **The table to the left shows all 10 stores that we audited with total # of SKUs found at each store, along with the SKUs that were ONLY found at each individual store. Spring 2010 Total # of SKUs: 68 **The category has substantially grown by 85 SKUs in the past two years. For instance... Harps Garland: 27 SKUs to 64 SKUs Walmart 6 th : 14 SKUs to 39 SKUs Target (Rogers): 38 SKUs to 60 SKUs **Unique SKUs from similar audited stores have increased from 18 to 30.

5. TOTAL U.S. AMP R - ALL REM. CARB. BEVERAGES- REGULAR MONSTER R - ALL REM. CARB. BEVERAGES- REGULAR RED BULL R - ALL REM. CARB. BEVERAGES- REGULAR ROCKSTAR R - ALL REM. CARB. BEVERAGES- REGULAR DOLLAR VOLUME INDEX 52 WEEKS ENDING 12/27/03 52 WEEKS ENDING 12/29/07 52 WEEKS ENDING 12/27/03 52 WEEKS ENDING 12/29/07 52 WEEKS ENDING 12/27/03 52 WEEKS ENDING 12/29/07 52 WEEKS ENDING 12/27/03 52 WEEKS ENDING 12/29/07 TOTAL HOUSEHOLDS 100.0 NA100.0 NA100.0 INC - <$20,000 128.3113.0NA38.363.360.5NA113.5 INC - $20,000-29,999 124.5106.3NA44.189.562.7NA39.2 INC - $30,000-39,999 44.8122.5NA167.843.8118.8NA94.6 INC - $40,000-49,999 112.272.9NA87.293.0134.8NA56.3 INC - $50,000-69,999 38.3100.2NA78.9148.2110.7NA114.4 SIZE - 1 MEM 126.035.5NA29.792.044.7NA58.5 SIZE - 2 MEM 46.568.1NA70.293.1100.0NA105.9 SIZE - 3-4 MEM 153.3132.0NA137.1107.0149.3NA122.8 SIZE - 5+ MEM 46.5264.1NA257.3120.494.3NA118.6 AGE FH - UNDER 35 118.8171.3NA168.4137.4167.9NA149.8 AGE FH - 35-44 125.3178.1NA197.391.5111.5NA154.8 AGE FH - 45-54 55.176.4NA83.780.5128.4NA131.4 AGE FH - 55-64 16.6100.5NA64.0115.643.5NA40.0 AGE FH - NO FEMALE HEAD 214.459.4NA59.0132.896.1NA82.4 KIDS - NONE < 18 99.563.4NA55.4100.580.8NA82.5 KIDS - ANY < 18 101.1168.1NA182.999.0135.7NA132.5 KIDS - ANY < 6 47.5158.5NA216.675.9146.2NA185.3 KIDS - ANY 6-12 67.0142.6NA196.878.0109.2NA149.2 KIDS - ANY 13-17 145.9231.0NA207.0137.7123.2NA113.0 EMP - FH EMPLOYED 98.691.2NA144.5121.3120.4NA144.7 EMP - FH EMP. FULL TIME 88.789.3NA143.9148.8132.0NA145.3 EMP - FH EMP. PART TIME 124.196.5NA146.449.788.1NA143.1 EMP - FH NOT EMPLOYED 39.7133.3NA67.053.376.7NA53.8 EMP - NO FEMALE HEAD 214.459.4NA59.0132.896.1NA82.4 ED - FH NOT HIGH SCH GRAD 83.9121.9NA54.162.950.4NA116.5 ED - FH HIGH SCH GRAD 86.9100.2NA108.364.1114.6NA130.0 ED - FH SOME COLLEGE 61.6165.6NA120.6111.2134.0NA100.6 ED - FH COLLEGE GRAD 68.055.6NA111.4116.052.9NA69.8 ED - NO FEMALE HEAD 214.459.4NA59.0132.896.1NA82.4 RACE - CAUCASIAN 108.8106.8NA102.896.989.2NA101.1 RACE - NON-CAUCASIAN 66.876.1NA90.1111.7137.7NA96.1 RACE - AFRICAN AMER. 73.154.2NA32.591.689.1NA23.4 RACE - ASIAN 5.548.4NA57.489.1254.2NA284.4 RACE - OTHER RACE 72.6116.5NA183.9149.1172.7NA144.1 ETH - HISPANIC 87.3115.3NA146.3127.8131.8NA95.9 JOB - PROF/MANAGERIAL 124.896.3NA124.8114.688.4NA72.6 Importance of Depth

6. According to our Ad Hoc Base exhibit…  Sales volume is substantial (i.e. Red Bull total U.S. sales $170,066,000.61)  Household (or item) penetration is high with Monster (2.9 total U.S) and Red Bull (2.8 total U.S.)  High gross margins are averaging 40% based on the store audits FLAGSHIP or CASH MACHINE!!! Importance of Depth

7. Strength of Leading, Competing Brands Red Bull and Monster are the leading brands because… Greatest share of display space Greatest share of SKUs Highest store penetration Starbucks and Rockstar are also found at every store.

8. The category strategy involves giving top brands the most shelf space with minimal deals for the larger retailers. According to the Ad Hoc Base, % item $ on deal are biggest with…  Rockstar (21.4%)  Rockstar Diet & Full Throttle (18.7%)  Rip It (15.5%) Strength of Leading, Competing Brands

9. The category, as a whole, is operating at high gross margins. The leading brands having the highest share of shelf space and accumulating high gross margins are Monster, Red Bull, and Rockstar.

10. Strength of Leading, Competing Brands Flagship (high GM%, high sales $ volume) Cash Machine (high GM%, medium sales $ volume) Top manufacturers’ average GM%s

11. Private labels present in our category include:  ALDI’s Gridlock and Red Thunder brands  Target’s Archer Farms brand  E-Z Mart’s Yikes brand **Target’s private label Archer Farms SKUs doubled since spring of 2010, and their GM’s naturally have decreased due to the increase in depth in the category (4 SKUs to 8 SKUs). Private Label Opportunities

12. ALDI’sSizeGM$GM% Gridlock (Lo carb)16 OZ$3.0043% Gridlock (Regular)16 OZ$0.5628% Red Thunder (Sugarfree)33.6 OZ (4 pack)$0.9616% Red Thunder (Regular)33.6 OZ (4 pack)$1.9628% Private Label Opportunities

13. TargetSizeGM$GM% Archer Farms (Sugarfree Raspberry)12 OZ$0.5933% Archer Farms (Sugarfree Raspberry)48 OZ (4 pack)$1.6728% Archer Farms (Sugarfree Tangerine)12 OZ$0.5933% Archer Farms (Pomegranate Blueberry) 12 OZ$0.5933% Archer Farms (Sugarfree Grapefruit)12 OZ$0.5933% Archer Farms (Sugarfree Grapefruit)48 OZ (4 pack)$1.6728% Archer Farms (Mocha Coffee Energy)11 OZ$0.1711% Archer Farms (Vanilla Coffee Energy)11 OZ$0.1711% Private Label Opportunities

14. E-Z MartSizeGM$GM% Yikes (Watermelon)16 OZ$0.1112% Yikes (Blue)16 OZ$0.1112% Yikes (Grape)16 OZ$0.1112% Yikes (Orange)16 OZ$0.1112% Private Label Opportunities  ALDI’s private label strategy is testing to see whether or not energy drinks can be successful as a private label category in their store (GM competitive w/ similar products/sizes).  Target’s private label strategy is to compete with the national brands by having fairly competitive energy drinks with excellent depth and strong GM.  E-Z Mart’s private label strategy is either a product “phase off” or inducing competition among its suppliers due to limited shelf space.

15. Private Label Recommendations Recommendations for Target They should maintain their use of private label because their competitive with the national brands. Recommendations for ALDI’s They should probably introduce some national brands to grow the category but maintain their private label and grow it as needed based on the leading trends. Recommendations for E-Z Mart They should phase their private label out completely because of poor GM’s and lack of product depth. Recommendations for the energy drink category The category is very mature, but there is room for improvement with sizes and flavors, and private labels are competitive enough that they might be able to grow in the category in the future.