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Page 1: JUNE 2018 TOTAL CONSUMER REPORT - Nielsen · throughout frozen, dairy and grocery aisles account for nearly 2X the dollars spent across all fresh departments. So, relative to their

TOTAL CONSUMER REPORTCopyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

JUNE 2018

Page 2: JUNE 2018 TOTAL CONSUMER REPORT - Nielsen · throughout frozen, dairy and grocery aisles account for nearly 2X the dollars spent across all fresh departments. So, relative to their

2Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

WELCOMEThere is no dispute that the fast-moving consumer goods (FMCG) industry is living up to the term “fast.” A few years ago, would rice manufacturers have guessed they’d be fighting cauliflower for share? Could U.S. deli counters have predicted the 26% surge of meal kit sales in one year?

Since the first grocery store opened 100 years ago, brands and retailers have managed their business category-by-category because it was understood, expected even, that consumers shop the store aisle by aisle. After all, that’s how it was always done.

Not anymore.

Today, nearly 30% of Americans buy groceries online. That number is expected to grow to 70% in less than 10 years. Nearly a quarter of Americans (24%) shop for consumer goods on their phone, and that number spikes to 40% of millennial shoppers, who are now the largest generational consumer segment. Three percent of millennials are already shopping on their connected, smart home devices—and that number only continues to grow.

As the lines between categories, channels and brands have blurred, if you’re trying to find growth managing your category via conventional methods, you’re missing the forest for the trees. Shoppers today buy according to their current needs—meal planning, health, value and convenience—and those needs will change across consumers, life stages and even moments throughout the day.

More than ever, more consumers are turning to fresh foods in more of those moments. In fact, Americans have spent nearly $178 billion on fresh foods this past year. And, I’m proud to announce that Nielsen now offers a way for you to see fresh foods in the context of the rest of the FMCG universe, through the launch of Nielsen Total Food View. This new offering gives you the highest quality and broadest measurement of fresh available in the U.S.

We’ve dedicated Nielsen’s latest Total Consumer Report to diving deeper into the impact that fresh foods are having across the FMCG landscape. I hope you’ll take advantage of this new Nielsen offering and, more importantly, I can’t wait to see how you put this data to work for your company so that you can continue to help people live better lives.

JOHN TAVOLIERIChief Technology and Operations Officer and U.S. Buy PresidentNielsen

Page 3: JUNE 2018 TOTAL CONSUMER REPORT - Nielsen · throughout frozen, dairy and grocery aisles account for nearly 2X the dollars spent across all fresh departments. So, relative to their

3Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

CONTENTSOVERVIEW ............................................................... 4

TOTAL STORE .......................................................... 7

HEALTH & WELLNESS ........................................... 19

E-COMMERCE ....................................................... 28

RETAIL ................................................................... 33

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4Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

OVERVIEWWhen it comes to analyzing the U.S. market in its entirety, we’ve made great strides. The overall market is valued at more than $1 trillion*, and this measurement encompasses Nielsen’s read on traditional FMCG retail channels, as well as our robust coverage of convenience, pet, e-commerce and alcoholic beverages.

While much of the store has fared well in 2018 relative to the slowdowns we addressed a year ago, performance remains flat. But when we factor in the additional volume of online, fresh and perishable foods, the overall picture expands, and growth appears healthier, increasing by over 3% year-over-year.

Source: Nielsen Retail Measurement Services via Nielsen Total Food View, 52 weeks ended May 5, 2018, and Nielsen BevAl Suite, 52 weeks ended April 21, 2018, and Nielsen Total Store Report on e-commerce measurement, 52 weeks ended Mar. 31, 2018.

*Note: For a subset of retailers, some duplication of click and collect volume exists in the total FMCG market valuation.

> OVERVIEW

TOTAL FMCG DOLLAR PERFORMANCEGrowth bolstered by e-commerce and fresh foods

$ SalesCurrent

(Trillions)Year-Ago (Trillions)

Growth

TOTAL FMCG MARKET*Nielsen All Outlets Combined (xAOC) including grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and Nielsen-covered measures of Convenience, Pet, Military, BevAl & E-commerce

$1.054T $1.019T +3.47%

4Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

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5Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

Of the 3% growth we’ve seen across the market this year, e-commerce channels are responsible for 82% of the influx in sales. While all companies will need to develop and implement digital strategies, today’s digital opportunity isn’t the same for everyone.

Notably, e-commerce isn’t yet as significant for food and beverage. In fact, food and beverage sales represent just 13% of the overall dollar volume we’ve seen online in the past year. While there’s never been a more important time to go digital, the trends in food and beverage indicate that there may be some untapped opportunities closer to home for FMCG edibles.

TOTAL FMCG - SHARE OF GROWTHE-commerce drives 82% of total market growth

Source: Nielsen Retail Measurement Services via Nielsen Total Food View, 52 weeks ended May 5, 2018, and Nielsen Total Store Report on e-commerce measurement, 52 weeks ended Mar. 31, 2018

E-commerce Traditional Retail

Non-Food

Food

87%

13%

E-commerce $ Share

18%

82%

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6Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> OVERVIEW

Fresh and perishable foods generated sales of more than $177 billion in the latest year. That’s nearly 14 times as high as all food and beverage sales online this year. Across the FMCG brick-and-mortar landscape, fresh categories have driven nearly 49% of all dollar growth this year. Furthermore, many fresh ingredients have been the starting point for category reinvigoration across both packaged food and non-food items. When so many retailers are struggling to get people in store, it’s no surprise that so many are placing a heavier emphasis on fresh categories throughout the perimeter.

SIZING THE OPPORTUNITIESE-commerce is still maturing within food & beverage, Fresh perishables are an opportunity in stores today

Source: Nielsen Retail Measurement Services via Nielsen Total Food View, Total US xAOC, 52 weeks ended May 5, 2018, and Nielsen Total Store Report on e-commerce measurement, 52 weeks ended Mar. 31, 2018

Fresh Foods E-commerce Food & Beverage

$177.9B

$13.0B

FRESH & PERISHABLE FOODS REACHED SALES NEARLY

14XTHAT OF ALL FMCG

FOOD & BEVERAGE ONLINE.

With added visibility from Nielsen’s Total Food View, retailers can unlock and analyze the true potential across bakery, deli, produce, seafood and meat departments. Shoppers don’t shop departments. They shop needs. And this new view of the market can eliminate blind spots to fresh opportunities never seen before. Analyzing a unified view of the food space provides flavor and ingredient inspiration, the ability to realize product synergies across departments and even leaves room for innovation and cross-promotional opportunities between food and non-food categories across the store. The brands and retailers that can nimbly collaborate to uncover and action against previously unseen opportunity will win. Prime yourself for success through a focus on the potential your brands have in stores today.

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7Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

TOTAL STORE> TOTAL STORE

FMCG BRICK & MORTAR - TOP LINE PERFORMANCE

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data

$789.0B +0.7% VS. 2017

250.9B -0.9% VS. 2017

Dollars Units

2015 2016 2017 2018

7Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

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8Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

As we can see across a three-year period, dollar performance rebounded in first-quarter 2018 to rates we enjoyed back in 2015, while unit volume hit a plateau. Though the first quarter of 2017 saw the steepest of declines over the past few years, it’s important to note that the shifting volume associated with the later Easter holiday was partially to blame for the dip in performance; it has also exaggerated the relative growth we’re seeing now in 2018.

> TOTAL STORE

4.1

1.4

0.4

2.3

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Dollar Growth Unit Growth

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 13 weekly periods, latest period ended Mar. 31, 2018, UPC-coded and random-weight/Non-UPC data

QUARTERLY GROWTH TRENDS ACROSS THE STOREStrong rebound compared to Q1 2017, but unit volume consumption still lags

The start of 2018 was a positive one relative to the slowdowns in early 2017. However, while dollar sales have returned to a state of modest growth, up 2% compared to a year ago, unit volume remains flat. This highlights a fundamental shift across the FMCG brick-and-mortar landscape, where consumers are buying fewer products, irrespective of the impact of monetary factors like inflation or pricing in many cases.

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9Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

TRIP DYNAMICSAverage spend per trip has grown relative to unit consumption

> TOTAL STORE

0.20.4

-0.5-0.2

% Growth - Dollars Per Trip % Growth - Units Per Trip

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Source: Nielsen Homescan, trip projected data, 52 week periods, latest period ended Mar. 31, 2018 vs. year-ago, UPC-coded

Nevertheless, our market is still challenged by slowed volume consumption. In the 52 weeks ended July 1, 2017, the average basket size had grown in unit volume, but declined in terms of its dollar value from a year ago. Today, the situation has reversed. Americans are spending more per trip in terms of dollars, but they’re buying fewer items (down 0.2%) compared to a year ago.

In the face of declining unit volume, it becomes more important than ever to understand and even reinvigorate how the consumption occasion is triggered. The best way to do this is to view how your category manifests itself across the store. That’s where you’ll find key learnings, points of inspiration and opportunities for innovation beyond your immediate horizons.

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10Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data, excludes Alcohol

Fresh and perishable foods have continued to assert themselves as key growth drivers of FMCG brick-and-mortar performance. In the last year, however, center of store edibles have also contributed to our top line, seeing dollar growth of $2.9 billion. But center-of-store-categories throughout frozen, dairy and grocery aisles account for nearly 2X the dollars spent across all fresh departments. So, relative to their overall size, fresh categories are driving outsized growth.

By thinking of the food landscape as one connected entity, we can create efficiencies, areas of focus, ideas for innovation and cross promotional opportunities. Are there synergies to be had when it comes to edibles across the store? Knowing what’s driving fresh food growth can inspire and reinvigorate packaged foods. Conversely, knowing where demand is shifting to frozen, dairy or packaged grocery categories can help you differentiate, and therefore, minimize cannibalization of sales from fresh foods. That doesn’t even begin to touch on the opportunities for fresh foods to influence the non-food sector. With an all-encompassing perspective, the sum of 1+1 can equal to more than just 2.

2017 Non Edibles Fresh Perishables Center Store Edibles 2018

> TOTAL STORE

DRIVERS OF GROWTH - FMCG BRICK & MORTARCenter of store packaged foods grew, but relative to overall size, fresh foods have thrived this year

+0.7%

-$0.6B +$2.2B+$2.9B

$755B$750B

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11Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> TOTAL STORE

PERIMETER AND CENTER OF STORE EDIBLES - DEPARTMENT PERFORMANCE

Meat and deli departments drive growth from the perimeter

CENTER OF STORE: $344B$ Vol

(Billions)$ %

GrowthUnit Vol (Billions)

Unit % Growth

Dairy 66.2 0.5 24.8 -1.6

Frozen 51.2 1.8 14.2 0.2

Grocery 227.0 0.8 96.2 -0.6

PERIMETER OF STORE: $178B$ Vol

(Billions)$ %

GrowthUnit Vol (Billions)

Unit % Growth

Bakery 12.9 1.2 4.7 2.4

Deli 32.7 2.8 7.3 3.4

Meat 66.8 1.5 19.0 0.1

Produce 60.4 0.3 35.7 -2.9

Seafood 5.1 1.5 0.7 -1.3

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data

In the last year, the perimeter has been bolstered by strong performance across the board, but particularly among deli and meat sections of the store. Rising prices have stimulated inflationary growth for meat sales, as the average unit prices in the first quarter of 2018 were 4.5% higher than in first-quarter 2017. Looking more granularly, the deli department shines as a true growth engine for the store, having posted dollar growth of over $875 million and an increase of over 240 million in units in the last year.

When it comes to diagnosing the key drivers of this performance, it’s important to keep a broad perspective. There are similarities—and maybe even synergies—that exist when expanding our scope across the entire food universe. Take prepared foods as an example. Among ready-made options for consumers that fulfill their needs for convenient meal solutions, we’ve seen a plethora of hearty dishes top our list of high-performing deli-prepared foods. From fresh prepared meal kits to protein-centric main course dishes containing chicken or pork, the allure of having an entire meal occasion taken care of, seems to be driving performance here.

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WHAT’S NOT

Category $ % Growth

Unit % Growth

Bean Salad -17.6 -14.7

Pork Sandwiches -14.4 -24.1

Value Added Rice -11.6 -11.7

Tuna Salad Sandwiches -7.5 -14.4

Fruit Salad -7.3 -9.7

Cocktail Sausage Appetizers -7.1 -10.9

Tuna Salad -6.6 -5.8

Sausage - Prepared Sandwiches -6.1 -9.1

Egg Salad -5.0 -13.2

Cold Cuts Sandwiches -4.4 -7.5

GROWTH TRENDS IN PREPARED FOODS - DELI DEPARTMENTMeals and main courses thrive in fresh deli prepared food aisles

WHAT’S HOT

Category $ % Growth

Unit % Growth

Ready To Eat Stew 40.6 78.3

Meal Kits 26.8 26.0

Tacos 23.6 11.4

Meatballs 18.4 9.1

Main Course - Chicken 18.0 16.6

Breakfast Meals & Combos 17.0 17.9

Ready To Eat Soup 16.5 13.2

Chicken Salad Sandwiches 15.6 13.1

Burgers 14.7 39.5

Main Course - Pork 14.5 18.7

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, annual sales of more than $15 million, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data

Conversely, we’ve seen struggling performance among many dishes that could be considered as sides or supplementary to a greater meal occasion. Protein-rich salads containing beans, tuna or eggs have seen steep sales declines, while ready-to-eat soups and stews remain among the top-performing deli prepared foods. Another factor that may be driving purchase trends here, is the perceived complexity and time-savings associated with purchasing prepared foods compared to making them at home. Where a stew, prepared chicken dish, or even fresh meal kit may take quite a bit of time and effort to prepare at home, there is perhaps, a relative ease associated with preparing a bean salad, cold cuts sandwich or fruit salad. To this end, presentation may be key to turning around low-performing categories. Consumers are seeking to fulfill an entire meal occasion in many cases. Therefore, converting that purchase may come down to whether a dish can appear elevated enough to warrant the tradeoff of purchasing it pre-prepared, in exchange for time-savings and convenience of an in-home effort.

> TOTAL STORE

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13Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

ONLY A FRACTION OF THE PICTURETruthfully understand your category by expanding

the universe across the store

> TOTAL STORE

$62.6B

$43.4B

$10.9B

$ Sales

Prepared Foods including adjacent categories

Prepared Foods across departments

Deli Prepared Foods

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/non-UPC data, Note: Adjacent categories considered include pizza and fully cooked meat

THE LANDSCAPE OF PREPARED FOODS EXPANDS NEARLY

6XWHEN INCORPORATING

ITEMS ACROSS THE STORE.

Of course, prepared foods do not exist solely in freshly prepared formats. From meal starters, to chilled or packaged versions of meals and side dishes found in the store perimeter, prepared foods exist across frozen, dairy and packaged grocery worlds as well. Expanding the prepared foods definition in this way, to center of store edibles, the category amassed over $43 billion in the last year. But there’s still room to expand the boundaries of this playing field. With the popularity of items like rotisserie chicken or pizza, the prepared foods umbrella broadens even further when incorporating adjacent categories. Extending scope across the store brings new meaning to the ideals of making a meal “at home.” When we incorporate this inclusive view, and think broadly about prepared foods, the size of prize grows six-fold. Prepared foods of all sorts generated sales of more than $62 billion in the last year.

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14Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

$ SHARE - PREPARED FOODS ACROSS THE STORELooking across a unified view of food and beverage...

40% FROZEN FOODS

31% DELI

22% GROCERY

3% DAIRY

2% MEAT

1% PRODUCE

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data

> TOTAL STORE

It’s no secret that the center of the store has faced some challenges in the past few years, but in many cases, there are variants of products across other aisles that are winning. Regular measurement of these adjacent opportunities enables an accurate assessment of your product portfolio. Making business decisions without a full picture of the store, can be a costly mistake. With a full view of the food landscape, those blind spots can be eliminated.

Despite the buzz in the fresh areas, frozen foods and center-of-store grocery items represent about 62% of the $63 billion dollars accounted for in our expanded valuation of prepared foods. Through analyzing how versions of the same product coexist across store departments, opportunities begin to come to life.

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15Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

+12.4%+12.6%

-14.7%

Grocery

Deli Prepared

Frozen

$105.9M

$70.2M

$60.6M

EXPANDING YOUR OPTIONSDon’t stay blind to the impacts of fresh prepared foods

> TOTAL STORE

HEAT & EAT PASTA $ Sales and Growth

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/non-UPC data

Heat and eat pasta is an example of a prepared food that has seen a turbulent few years across the frozen food department. In the last five years, this quickly prepared meal solution hit its peak between 2015 to 2016, growing at 12% in dollars and 21% in unit volume. This year, however, sales are down over $10 million. Within the world of frozen products, the opportunity seems cold. But, analyzing a broader perspective of heat and eat pasta varieties, helps demonstrate that there is still demand for this product, but the consumer needs are being met in alternative formats. Across the store, fresh and packaged versions of pasta are growing, proving that when it comes to prepared pasta, more sales are being concentrated outside of the freezer—coming from either the pantry section or the store perimeter. This is perhaps driven by a need for immediacy, or, more tellingly, consumers regarding non-frozen products as a “healthier” alternatives to frozen.

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16Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

+0.9% 75%

24%

1%

+16.5%

+18.3%

Grocery

$ Share of Total Ready-to-Eat Soup

Deli Prepared

Frozen

$1,738.0M

$544.6M

$33.9M

> TOTAL STORE

READY TO EAT SOUP $ Sales and Growth

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/non-UPC data

Consumer dollars and interests have moved in all directions, shifting the balance of opportunities along with them. Take ready to eat soup as an example. The staple varieties found within grocery aisles of the store have performed moderately, with sales increasing by 1% and reaching sales over $1.7 billion this year. This is a telling trend in isolation, but a broader total store view adds invaluable context. Where the deli-prepared soup space could be perceived as a relatively small opportunity in comparison, without a data-driven picture into that sector of the store, one could remain blind to accurately sizing or recognizing it as a competitive threat.

There are quite a few alternatives available to soup consumers. Where they may be limited in pantry space or desiring a fresh alternative, consumers are looking beyond center-of-store grocery aisles for their soup needs. In fact, over $1 in $4 spent on ready-to-eat soup occurs within the deli-prepared perimeter of the store. So manufacturers and retailers should be actively monitoring all avenues for growth with soup consumers. On the one hand, deli prepared soups are valued at over $500 million and are seeing double-digit growth of over 16% compared to this time last year. Furthermore, frozen soups are seeing outsized growth, and though they represent just $34 million in sales, performance has accelerated.

Taking a deeper look at what’s driving the impressive growth in fresh prepared soups, we can see that three varietals in particular (broccoli & cheddar, baked potato and chicken noodle) lead in terms of dollar contribution and share of growth.1 Knowing that grocery shelf sets permit a wider variety of flavor options to be available at a given moment, timing offerings against or even alongside what is already available from a fresh perspective in stores, can ensure differentiation. On the flip side, where there are fresh options doing well, packaged ready-to-eat soups can use fresh insight, to nurture the right varieties within the grocery aisles.

1 Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/non-UPC data, based on type of “Soup Course”

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17Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> TOTAL STORE

From an innovation perspective, the performance of fresh prepared foods can help prescribe where flavors and key ingredients are already driving growth compared to what may already be saturated and shouldn’t be replicated. In the mac and cheese category, some interesting distinctions emerge that help confirm the importance of unflavored dry packaged products to the category and to grocery aisles in particular. Mac and cheese has exhibited pockets of growth across all of frozen, grocery and deli departments, but flavored varieties have been a mixed bag in terms of year-over-year performance.

While share of sales remains small, flavored mac and cheese has seen 14% dollar growth across freshly prepared formats. Comparatively, flavored mac and cheese has struggled across packaged and frozen variants. This broader context helps to confirm the importance and strength of unflavored mac and cheese to the packaged grocery portfolio. But it also points to an in-store flavor think tank. Investing in measurement of fresh impacts of this category can allow insight and inspiration into what flavors are driving mac and cheese in the store perimeter. This can, in turn, guide and open consideration for what to nurture from a packaged product perspective.

+2.3%

0.0%

+10.8%+14.1%

-1.0%

-3.2%

Grocery

Deli Prepared

Frozen

$1,334M

$87.6M

$83.6M

$15.1M

$297.5M

$219.2M

MAC AND CHEESE $ Sales and Growth

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/non-UPC data

Unflavored Flavored

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18Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

Source: Nielsen Product Insider, powered by Label Insight, Total US xAOC including Pet, 52 weeks ended Mar. 3, 2018, UPC-coded and random-weight/non-UPC data

> TOTAL STORE

INGREDIENT TRENDS IN PET FOODFresh superfoods drive growth in pet food

PET FOOD $ % Growth

PET FOOD WITH

SUPERFOOD INGREDIENTS

-0.5%

12.0%

30.1%

26.8%

-0.4%

2.1%

9.7%

12.7%

Total Pet Food

Blueberry

Cranberry

Sweet Potato

vs. 2 Years Ago vs. Year-Ago

Fresh ingredients have influenced more than just the food and beverage domain. In fact, we’ve seen incredible growth across many non-food departments where fresh superfood ingredients are at the forefront. Pet care products provide a perfect example of this. When it comes to their pet companions, consumers demand many of the same healthful ingredients they know and trust for themselves. Across all pet foods, we’ve seen high growth among those that contain fresh ingredients like sweet potato, cranberries, and blueberries. For pet foods containing sweet potato as an ingredient, dollar sales are up nearly 27% compared to two years ago, and they’re up over 12% in the last year alone. So, regardless of your product purview, be it food and beverage focused or not, maintaining a keen eye on fresh commodities in the store can help capitalize on synergies with key ingredients.

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HEALTH & WELLNESS> HEALTH & WELLNESS

WHAT’S DRIVING WELLNESS CONSIDERATIONSConsumers are complex, and as education of healthful eating rises, so does the complexity of our personal wellness — and shopping — regimes. Our FMCG needs have transformed into a matrix of habits, dietary needs and preferences. Some are parallel and allow for food and non-food categories to align synergistically to support consumer needs from end-to-end. Others are paradoxical and born out of a consumer’s desire to have the best of many worlds. In both cases, label claims and ingredient trends can be used as tools to position your products at the forefront of consumers’ interests. And in order to accurately understand label claims and ingredient trends, holistic measurement of the food landscape is essential to ensure all opportunities remain in scope.

Parallels in consumer mindfulness

Paradoxes in consumer demand

Fresh growth drivers

THIS QUARTER, WE’LL UNCOVER AND HIGHLIGHT EXAMPLES OF THE FOLLOWING:

19Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

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TOP WELLNESS CLAIMS - Q1 2018Carb-conscious consumers drive sales across low-glycemic foods

including edible seeds, and products with calorie claims

LATEST 52 WEEKS VS. YEAR-AGO

H&W Claim Dollars $ % Growth

Grain free 974M 48.0

Calorie claim 1.28B 31.3

Cruelty free 1.04B 29.2

Corn free 1.61B 22.6

Grass fed 888M 20.7

Q1 2018 VS. Q4 2017

H&W Claim Dollars $ % Growth

Chia 72M 20.2

Quinoa 179M 18.4

Low glycemic 297M 16.5

Stevia 590M 16.1

Calorie claim 318M 15.3

FASTEST GROWING HEALTH & WELLNESS CLAIMS BY DOLLAR GROWTH

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 12, 2018 and 13 weeks ended Mar. 31, 2018, UPC-coded and random-weight/non-UPC data

A common theme emerges when we analyzed the top-growing health and wellness claims made on products this quarter. As sales associated with low-glycemic product claims have skyrocketed, we’ve seen paralleled growth among various edible seeds like chia and quinoa, the continued performance of alternative sweeteners like Stevia and across both quarterly and annual horizons a general concern for carbohydrate consumption through calorie-counting product claims. Whether by necessity or by choice, consumers are currently demanding products that support low-glycemic diets.

> HEALTH & WELLNESS

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21Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> HEALTH & WELLNESS

WHAT’S DRIVING PRODUCE CONSUMPTIONStandard “fruit bowl” declines, snack-friendly produce drives volume gains

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data

Fruits and vegetables are considered essential to any diet. But with blood glucose levels top of mind, the concept of simply eating healthfully now revolves around more than just your intake of fresh produce.

As the data illustrates, produce sales remain flat at +0.3%, and volume consumption has slowed to a halt, with unit volume contracting by nearly 3% year-over-year. When analyzed at a category level, the major culprits of the decline are what could be described as your standard, garden-variety fruit basket. Apples, oranges and bananas are among the produce items driving the majority of unit volume declines. However, there are some produce variants that have sustained what volume gains we have seen this year. Interestingly, fruits that are easily snackable have performed best, including cherries, mandarins and avocados.

But as we venture into the snack-friendly world of produce, we approach one of the nonsensical paradoxes affecting FMCG foods today. That is, the desire for both good and bad in snacking.

63.3M 60.0M 53.2M $60.4B DOLLARS

+0.3%35.7B UNIT VOL.

-2.9%48.0M

29.8M

-231.6M

-120.3M -114.7M -99.3M -85.1M

Limes Cherries Mandarins Avocados Pre-Packaged

Salads

Apples Oranges Tomatoes Bananas Watermelons

Unit Growth

Total Produce

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22Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

NOT SO “A-PEELING”On-the-go fresh produce fails to keep pace this year

-1.8%

-3.3%

$2.6B

+1.1%

+0.8%

-6.7%

-2.0%

Total “On-the-Go” Segment

Cantaloupe

Pineapples

Apples

Watermelons

Mixed Fruit

% Chg

$45.7M

-$4.7M

-$36.1M

-$11.8M

$2.0M

$3.0M

“ON-THE-GO” FRESH PRODUCE Absolute Dollar Growth

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/non-UPC data, based on “snacking” segment within applicable produce categories.

To start with, snack-friendly and snackable on-the-go produce are not one in the same. While cherries and mandarin sales have grown year-over-year, these fruits are naturally snack-sized offerings and should not be confused with value-added or pre-cut produce that has been portioned intentionally for snacking purposes. Sales of this snackable sub-set of value-added produce, which we’ll refer to as “on-the-go” fresh produce, have declined by nearly 2% in dollars and 6% in unit volume over the last year. Although Americans would rank eating more fruits and vegetables as the top factor for healthy eating2, they are not flocking to on-the-go fresh produce offerings as much as they are to other snack options.

> HEALTH & WELLNESS

2 Nielsen Homescan, online survey of 1,163 respondents, April 2017

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> HEALTH & WELLNESS

SNACKING CATEGORY PERFORMANCEIndulgent snacks lead better-for-you categories

Absolute Dollar Growth

Salty snacks are a prime example of an indulgent category that’s seen growth amidst countless healthful consumer crazes. Seeing nearly $1 billion in growth year-over-year, salty snacks are proof that consumers are seeking indulgence in their snacking purchases too. Especially when compared to the relative flatness of jerky and value-added fruits and vegetables, there is certainly a desire to indulge.

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data

$ % Chg

+3.4%+0.9%+0.9%+11.0%+1.4%

+0.6%+1.1%

+0.7%+3.2%+0.5%-1.3%

Salty Snacks

Sweets & Desserts

Candy, Gum, Mints

Snack & Variety Packs

Bars

Cookies & Crackers

Nuts & Seeds

Value Added Fruits & Veg.

Fruit Snacks

Jerky

Cheese & Yogurt

$944.4M

$250.2M

$228.1M

$117.5M

$84.9M

$86.9M

$56.8M

$37.0M

$32.7M

$6.8M

-380.1M

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24Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> HEALTH & WELLNESS

SMART SNACKINGConsumers seeking “cleaner” side of indulgence

Clean Label Dollar Share & Growth vs. Year-Ago

+1.1%

+4.4%

+10.7%

+5.6%

+29.2%

Salty Snacks

Cookies & Crackers

Candy, Gum & Mints

Desserts

Sweet Goods

35.8%

16.3%

6.4%

3.1%

2.8%

20%CONSIDER FOOD PRODUCTS WITH

NO ARTIFICIAL INGREDIENTS TO HAVE INFLUENCED THEIR PURCHASE.

Source: Nielsen Category Shopping Fundamentals 2017, and Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC including Convenience, 52 weeks ended May 5, 2018, UPC-coded and random-weight/Non-UPC data, See end notes

But indulgence can be achieved with minimal guilt or neglect of one’s diet. The path to this middle ground of good and bad is guided by transparent products manufactured in simple, sustainable and clean ways. In fact, “clean” products are driving outsized growth across many indulgent snack categories.

Where consumers can feel reassured that they are avoiding undesirable or artificial ingredients, they can be enticed to treat themselves. Retailers and manufacturers that can demonstrate cleaner practices through their labelling can capitalize on the wave of consumer interest around snacking responsibly. Consumers do have a sweet tooth, but the best way to capitalize on it is through the sweet spot of appealing to the smart snackers of today.

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> HEALTH & WELLNESS

Not all indulgent foods have diverged from fresh food beginnings in the way that snacking trends have affected on-the-go produce. In fact, the impressive performance of burgers, an American favorite, has much of its success grounded in fresh perspectives. On the whole, burger sales across the store have reached $3.3 billion. Compared to a year ago, burger sales have grown a healthy 5% in dollars and 6% in unit volume. While 94% of sales are attributed to meat-based burgers, the last year has seen a complete reversal in performance for burgers made from meat alternatives. Sales of alternative-protein burgers are growing at nearly 21% in dollars. As the popularity of plant-based foods continues to rise, the importance of meat alternatives in the burger space is expected to rise with it.

BURGER TRENDS: GETTING DOWN TO THE MEAT OF IT

Meat-based burgers still command the category, but alternatives are on the rise

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 12, 2018, UPC-coded and random-weight/non-UPC data

$3.3B +5% vs. Year-Ago

594M UNITS +6% vs. Year-Ago

MEAT-BASED 94% $ Share

$ Growth

TOTAL BURGER CATEGORY:

ALTERNATIVE PROTEIN 6% $ Share

2 Years Ago Year-Ago Current

3.8

-2.9

20.9

-18.5

0.04.3

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26Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> HEALTH & WELLNESS

In identifying where the growth in burgers originates, it’s clear that fresh uncooked and prepared burgers are asserting their importance to the future of the category. While the size of alternative protein burgers leaves much room to grow, the impacts of fresh categories within the meat-based burger space can’t be overlooked. The presence of uncooked fresh meat and fresh prepared burgers is made known through strong dollar growth year-over-year. Conversely, where meat-based burgers may be facing competition from fresh perimeter options, the growth of frozen burgers in the alternative protein space highlights an area for potential expansion.

DEPARTMENT TRENDS - BURGERS ACROSS THE STORE

Fresh uncooked and prepared burgers see outsized growth relative to frozen variants

MEAT-BASED BURGERS

ALTERNATIVE PROTEIN BURGERS

Deli +15%

Meat +95%

Meat +8%

Frozen +2%

Frozen +17%

$ Growth by Department

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 12, 2018, UPC-coded and random-weight/Non-UPC data

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27Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

> HEALTH & WELLNESS

As we see in the burger category example, consumers seeking to fulfill their needs for meat can find meal solutions throughout the frozen and fresh sections of the store. But it’s important to understand what differentiates frozen and fresh meat shoppers, as they’re not one in the same. Through analyzing the demographic profile of frozen and fresh meat shoppers, we’ve used Nielsen’s Spectra tool to uncover the categories that each group will most likely purchase. We did this by matching the demographics of our target shoppers, in this case, either frozen or fresh meat buyers, with the demographics of other category buyer groups. Ultimately, the analysis enables us to determine which categories the same types of consumer groups are most likely to purchase, therefore creating an opportunity to promote and display commonly purchased complementary categories.

In comparing and contrasting the categories most complementary to frozen and fresh meat consumers, it’s interesting to see that child-related products have a higher correlation with purchasers of fresh meat. In fact, eight of the top ten categories most likely to be purchased by fresh meat consumers, are specifically intended for babies or children. Conversely, while frozen meat consumers do over-index with child medications or vitamins, there are many other influences at play among the top complementary categories here. This indicates that there is likely an opportunity to relate family ideals with meat product consumption, but the opportunity is more likely to succeed among fresh over frozen meat products.

CO-PROMOTIONAL OPPORTUNITIESFresh meat consumers are more likely to purchase child-related products

FRESH MEAT CONSUMERS ARE MORE LIKELY TO PURCHASE THE FOLLOWING

Complementary Categories Index

Baby Cereal & Biscuits 135

Junior Foods 134

Disposable Diapers 134

Children’s Chewable Flavored Vitamins 133

Children’s Liquid Pain Remedies 133

Baby Milk And Milk Flavoring 133

Children’s Cold Remedies 130

Strained Baby Food 130

Corn Dogs 130

Combination Lunches 129

FROZEN MEAT CONSUMERS ARE MORE LIKELY TO PURCHASE THE FOLLOWING

Complementary Categories Index

Ethnic Hair Preparations 129

Canned Green Vegetables 121

Children’s Chewable Flavored Vitamins 121

Children’s Cold Remedies 120

Children’s Liquid Pain Remedies 120

Frozen Unbreaded Crab 119

Snacks Variety Packs 118

Cooking Bags With Seasoning 118

Frozen Corn On The Cob 118

Charcoal 117

Source: Nielsen Spectra, Best Products Report via Homescan Product Library, May 2018, Note: Frozen Meat includes unprepared and frozen poultry, meat and seafood.

Interpreted as: Fresh meat consumers are 35% more likely to purchase baby cereal compared to the average American.

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E-COMMERCEAs we reviewed earlier, the food landscape online has yet to fully mature. While food in-store remains a huge opportunity at present, consumers are more likely to buy certain categories online than others. One such example is snacks. In fact, two in five (42%) have purchased snacks online before, and that number is poised for growth.

> E-COMMERCE

SNACKS AMONG TOP PURCHASED CATEGORIES ONLINERelative to other categories, snacks are an online opportunity when it comes to food

Source: Nielsen Digital Shopping Fundamentals, 2017

Ever Purchased Online

89%

57%42%

32%25% 20%

12% 11% 9%

Total Non-food

Total Food

Snacks Fresh FrozenGrocery Beverages Baby Care

Meal Kits

28Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

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Snacks of all sorts have dug their digital roots into e-commerce channels, and for many, the payoff has already been quite substantial. In the last year, salty snacks have seen an additional $207 million in sales via online means.

Relative to comparable metrics across traditional retail channels, wholesome snacks and nuts have surpassed expectations. These two better-for-you snacks have amassed online dollar growth over $149 million and $61 million, respectively. This proves there’s appetite for both indulgent and health-conscious snacks in offline and online worlds.

> E-COMMERCE

CATEGORY PERFORMANCE ONLINEE-commerce delivers outsized growth for snacking categories

Source: Nielsen Total Store Report, E-commerce measurement, 52 weeks ended Mar. 31, 2018 vs. year-ago

Candy Soft Drinks

Salty Snacks

Crackers GumCookies Wholesome Snacks

Nuts

Absolute Dollar Growth by Channel

E-Commerce Traditional Retail

$1,738M

$1,116M$932M

$41M$61M $45M $16M

$74M $64M$271M $201M $170M$149M

$141M

$363M

$207M

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30Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

When it comes to the fundamentals of how snacks are purchased online, consumers indicate a preference for the routine and orderly across a sizable proportion of their snack purchases. In fact, in 2017, we estimate 12% of all snack purchases online were made via a subscription service.3 This automates the replenishment of consumer needs, while enabling one’s familiarity with the digital means of product fulfillment. It’s a great way to entice trial, influence the discovery process and encourage adoption of online purchasing. Already growing in popularity, subscription services represent 16% of online purchases for nuts, 16% for coffee pods and 13% for granola bars.

> E-COMMERCE

SUBSCRIPTION PURCHASES ONLINEOnline snack purchasing is made routine and

regimented via subscription services

Source: Nielsen Digital Shopping Fundamentals, 2017

Nuts

Granola Bars

Coffee Pods

Energy Drinks

Crackers

Juices & Mixes

Drink Mixes

Cookies

Chips

Candy

Percentage of Online Category Purchased on Subscription

16%

16%

13%

13%

12%

11%

10%

9%

8%

7%

3 Nielsen Digital Shopping Fundamentals, 2017

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However, an even larger proportion of consumers choose to leverage online snack orders for stock-up purposes. Despite the presence of snacks among online subscription orders, stock up trips remain a primary trip type for snack purchases online. In fact, 27% of online snack orders were considered stock up trips and this is the realm of snack purchases that fosters impulsive, exploratory and open-minded consumer behavior.

Through comparing the planned elements of online and in-store snack purchases, it’s evident that impulsive behavior is equally manifested across both landscapes. So, despite perceptions that the immediacy of in-store purchases would more readily entice consumers, the data would indicate the contrary. When it comes to snacks, consumers are no more guilted into a treat when pushing a shopping cart down an aisle than they would with their digital carts behind their screens.

> E-COMMERCE

PLANNED ELEMENTS OF SNACK PURCHASES

Online snack purchases are often impulse-driven and not brand-specific

Source: Nielsen Category Shopping Fundamentals and Digital Shopping Fundamentals, 2017

Total FMCG Snacks

IN-STORE ONLINE

Impulse/Unplanned

Impulse/Unplanned

No brand in mind

No brand in mind

18% 18%14%

36%

16%18%

34%

22%

ONLINE SNACK BUYERS ARE MORE OPEN-MINDED

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The key differentiator in the snack realm is brand. While 22% of consumers shop online for snacks with no brand in mind, only 14% of consumers remain brand-agnostic while snack shopping in stores. Knowing that snack consumers are more open-minded online, it’s not surprising that we see private label has a bigger presence across salty snacks online, compared to offline.

In fact, across a sample of five retailers, dollar share is 5-points higher for retailer branded salty snacks online compared to in stores. Comparatively, the top salty snack brands within our analyzed retailers hold a lower share of sales across e-commerce channels. Perhaps due to retailers’ ability to prominently feature and ensure distribution of their own online items, private labels have made headway in the heavily branded salty snack category.

> E-COMMERCE

PRIVATE BRANDED SNACKS CAN BE FAVORABLY POSITIONED ONLINE

Store brands from retail analysis occupy a great share of snacks online

Source: Nielsen ePOS & traditional retail measurement across a sample of five cooperating retailers, 52 weeks ended May 5, 2018

$ Share of Salty Snacks

Online Brick & Mortar

Top 5 Brands

Private Label 10.3%

15.5%

31.8%26.3%

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RETAILSlowed consumption is challenging our industry top line, and though dollar growth has been modest, there is less FMCG volume moving from shelves and into homes this year. Analyzing this dynamic across channels helps us understand where this contraction is hitting the hardest, as well as where there is opportunity to nurture and capitalize on growth in consumer spending.

Yet again, dollar stores have demonstrated strength in converting more consumer trips. They have also encouraged growth in basket size. In the last year, dollars spent per trip have increased by 1.2%, and unit volume per trip is up 0.4%, highlighting dollar stores as among the few channels to escape volumetric declines this past year. Interestingly, while online channels lead growth in consumer trip traffic, the tendencies to purchase in bulk online have likely driven the 7% growth in units purchased per trip, while dollars spent, have contracted.

> RETAIL

TRIP ANALYTICS BY CHANNEL Dollar stores continue to see growth in purchase size and frequency

Total Channels Online Drug

StoresDollar Stores

Ware-house Club

Pet Stores

Mass Merch & Supers

Value Grocery

Conven-tional

Grocery

Premiere Fresh

Grocery

Trips/Shopper 165 6 20 30 14 7 37 18 59 14Trips/Shopper % Change -0.6 7.1 -1.1 1.1 -0.2 -2.1 2.2 -0.1 -1.8 -1.5$ Spend/Trip 31 41 20 13 68 34 40 28 33 22$ Spend/Trip % Change 0.4 -0.8 1.4 1.2 0.0 -4.5 -1.0 2.1 0.9 2.0Units/Trip % Change -0.2 7.3 -4.9 0.4 1.0 -0.3 -0.6 -1.3 -0.6 0.4

Source: Nielsen Homescan, Trip Projected Data, Total U.S., 52 weeks ended Mar. 31, 2018 vs. year-ago, UPC-coded

33Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

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The market as a whole struggles to maintain consumption levels of years past. But private-label products have actually dodged this phenomenon, experiencing an increase of nearly 3% in unit volume, to accompany dollar growth of over 4% year-over-year.

As we reviewed in the case of snacking, many online purchases are being made without a brand in mind. This element of brand fluidity has resulted in a continued consumer shift toward private-label products, and has likely driven much of the shifts we’ve seen toward store-brand centric channels like dollar stores.

> RETAIL

PRIVATE LABEL PERFORMANCEStore brands accelerate growth trajectory

BRANDED PRODUCTS0.0% in Dollars

-1.8% in Unit Vol.

PRIVATE LABEL+4.1% in Dollars

+2.6% in Unit Vol.

2015 20152016 20162017 20172018 2018

$443.1B $458.4B $457.6B $459.5B$93.5B $93.7B $93.1B $97.0B

$191.9B $194.6B $195.2B $193.2B

$35.8B $37.4B $38.1B $39.6B

Food Non-Food

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 12, 2018, UPC-coded and random-weight/Non-UPC data

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35Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

But which categories have driven consumers to store brands the most? Well, many food categories have experienced a significant impact of new store brand buyers within the category in the last year, particularly prepared food options like frozen pizza snacks, soup and spreads. In fact, nearly 4% more of the American population are purchasing private label frozen pizza snacks today than they were a year ago.

> RETAIL

TOP PRIVATE LABEL CATEGORIES - BY GROWTH IN SHOPPER PENETRATION

Many food categories have seen a large influx of new store brand buyers this year

Private Label Categories % PenetrationPt. Change vs.

Year-Ago

Buckets, Bins, Bathroom Accessories 38.6 +4.9

Frozen Pizza Snacks 37.4 +3.6

Grooming Aids 35.8 +3.1

Soup 57.6 +2.8

Fruit Salad 13.1 +2.7

Baking Supplies 58.4 +2.7

Coffee 38.2 +2.7

Baking Mixes 23.4 +2.5

Snacks, Spreads and Dips 31.0 +2.3

Nuts 57.8 +2.0

Source: Nielsen Homescan, Trip Projected Data, Total U.S., 52 weeks ended Mar. 31, 2018 vs. year-ago, UPC-coded, where penetration is at least 10% of U.S. population

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36Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

Interestingly, only two of the top 10 categories to see private-label penetration growth are non-food related. When we dissect brand performance across food and non-food sales, we see that store brands have more consistently outperformed name brands across non-food categories over the last four years. In fact, private-label sales among non-food product growth reached 4.3% between May of 2015 and 2016. Comparatively, private-label sales of food products were flat at just 0.1% dollar growth during that same period. Sales growth has only more recently shifted in favor of retailer-branded products across the food landscape, where in the latest year ended May 2018, private-label sales are up 4.2% and exceeding branded product sales growth. This helps to explain why we’ve seen an influx in shopper penetration particularly among private-label food categories.

> RETAIL

BRANDED GROWTH DISSECTED BY FOOD AND NON-FOOD CATEGORIES

Private label has led growth more consistently among non-food categories

NON FOOD

FOOD3.5

1.40.3

-1.0

0.4-0.2

-0.6

0.1

4.2

3.82.0

4.3

2016

Branded Private Label

2016

2017

2017

2018

2018

$ Growth vs. Year-Ago

Source: Nielsen Retail Measurement Services, Total Food View, Total U.S. xAOC, 52 weeks ended May 12, 2018, UPC-coded and random-weight/Non-UPC data

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37Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

While we’ve asserted the rising importance of private-label products, many consumers still value branded products. In fact, over one in four (26% of) surveyed Americans believe that name brands are worth the extra price. When analyzed by ethnic cohort, this sentiment is particularly evident among Black consumers, as nearly one in three (32%) see the value in purchasing name brands.

> RETAIL

BRANDED MINDSET OF MULTICULTURAL CONSUMERS

Double-edged sword: opportunity for brands to capitalize, and retailer brands to nurture and convert

“NAME BRANDS ARE WORTH THE EXTRA PRICE” % Respondents

2014 2018

Source: Nielsen Homescan survey of 43,663 and 45,880 respondents, surveyed between January and February of 2014 and 2018, reported by National Consumer Panel

26%

25%

23%

24%

30%

32%

32%

30%

26%

27%

Total U.S.

White

Black

Asian

Hispanic

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38Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

In addition to their willingness to pay more for name brands, Black consumers indicate a preference for brands they are familiar with. Brand identity is important among this cohort, and 52% of surveyed Black consumers agree that they stick to the brands they know and trust. Compared with the average American, Black consumers spend less per trip on both branded and private-label products.

Knowing this, there’s an opportunity to engage and strengthen the branded connection these consumers have to their favorite products. Conversely, for store brands, it’s important to have an identity associated with products, as 46% of Black consumers would prefer private labels to have the store’s name actually on the product itself.

> RETAIL

BRAND PREFERENCES AMONG BLACK CONSUMERSBrand-name matters for black consumers and manufacturers need to capitalize

Private Label Branded Products

I always buy the same name brands I know and trust

Store brands should always have the store’s

name on the product

Dollars per Trip

% Respondents

Total U.S. Black Consumers

$11.84$9.83

$26.16

$21.30

44%

52%

41%

46%

Source: Nielsen Homescan, Trip Projected Data, Total U.S., 52 weeks ended Mar. 31, 2018 vs. year-ago, UPC-coded and Nielsen Homescan survey of 45,880respondents, surveyed between January and February of 2018, reported by National Consumer Panel

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39Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

Looking at consumer behavior across branded and private label products, Asian consumers are driving the most growth in trip traffic to stores. While they are making more trips in general, growth is concentrated in their trips to purchase private-label goods. In fact, Asian Americans are making 2.3% more trips to purchase store branded products than they were a year ago, and this growth surpasses that of all other ethnic cohorts.

> RETAIL

GROWTH IN PURCHASE FREQUENCY BY ETHNIC COHORTAsian consumers are making more trips to purchase private-label products

Total FMCG Branded Products Private Label

0.1 0.0

-0.1

Source: Nielsen Homescan, Trip Projected Data, Total U.S., 52 weeks ended Mar. 31, 2018 vs. year-ago, UPC-coded

Total U.S. White Black Asian Hispanic 2.3

0.90.7

-1.2-1.3

-0.6-0.8-1.1

0.8

-1.2

-0.5-0.6

Trips per Shopper - % Growth vs. Year-Ago

39Copyright © 2018 The Nielsen Company (US), LLC. All Rights Reserved.

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The growth in purchase frequency among Asian buyers of private label products is certainly an opportunity for retailers to capitalize on. However, in order to effectively convert and benefit from this trend, the current perception of private label products will need to be nurtured. Asian consumers are more likely than others to perceive store brands as lesser in quality, packaged cheaply and unsuitable to serve to guests. And more than any other cohort, Asian consumers indicate they don’t know enough about store brands to want to try them. While purchase trends indicate a potential opportunity for private labels among Asian consumers, the opportunity cannot be fully realized until the stigma around these products can be lifted.

> RETAIL

NEED TO NURTUREAsian American consumers still have a stigma around how they perceive private-label products

Where quality really matters, store brands

aren’t suitable products

of Asian consumers say they don’t know enough about store

brands to want to try them

of Asian consumers would try more store brands if they came with a money-back guarantee

Store brands have cheap looking packaging

Store brands are really for people on tight budgets and can’t afford the best brands

I don’t feel comfortable serving store branded prodicts to my guests

% Respondents

MORE THAN ANY OTHER ETHNIC COHORT...13%

19%

17%

26%

14%

20%

10%

15%

Total U.S. Asian Consumers

Source: Nielsen Homescan survey of 45,880 respondents, surveyed between January and February of 2018, reported by National Consumer Panel

18%

43%

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END NOTESTotal U.S. All Outlets Combined (xAOC) retail measurement includes: grocery, drug, mass merchandisers, select dollar stores, select warehouse clubs, and military commissaries (DeCA)

Except where denoted as UPC-coded only, data reflects UPC + Non-UPC products (which includes fresh random-weight retailer-assigned PLU (price look-up code) and system 2 sales volume).

Except where otherwise denoted, references to “fresh” or “perishable” foods encompass the inclusive view of UPC-coded and Non-UPC products found throughout the store, but most predominantly in produce, bakery, deli, meat and seafood departments.

References to clean label in this report include the sum of products classified within Nielsen’s “Clean” (free of undesirable ingredients), “Simple” (clean and fewer than 10 ingredients) and “Sustainable” (simple and clean) segments. “Clean Label” products do not include ingredients such as BHT ( Butylated Hydroxytoluene), Potassium Benzoate, High Fructose Corn Syrup, Monosodium Glutamate (MSG), Sodium Nitrate, Partially Hydrogenated Oils, Potassium Bromate, Yellow 5, etc. ”Conventional” products include one or more of those ingredients.

> ENDNOTES

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ABOUT NIELSENNielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with Nielsen Total Audience measurement services for all devices on which content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen also provides its clients with analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries, covering more than 90% of the world’s population. For more information, visit www.nielsen.com.

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