4 May 2021

Global Consumer Equity Research Team Click here for contributing analysts' contact information

RBC Europe Limited Emma Letheren (Analyst) James Edwardes Jones (Analyst)

RBC Capital Markets, LLC Nik Modi (Analyst) Steven Shemesh (Associate) Mehra Romezi (Associate)

RBC Dominion Securities Inc. Irene Nattel (Analyst) Alex Carette, CFA (Associate) Martin Gravel, CFA (Associate)

Sabahat Khan (Analyst) Atul Sriram (Associate) Lee Scully (Associate) Priced as of market close on 30 April 2021 (unless otherwise stated). All values in EUR unless otherwise noted.

For Required Non-U.S. Analyst and Conflicts Disclosures, see page14.

Sustaining Momentum RBC Global Consumer Staples ESG Monitor Our view: Welcome to our monthly global review of consumer staples’ environmental, governance and social efforts. This report will be a wrap-up of April’s ESG news in the global consumer space but also a forum to discuss our take on it. Within each edition, we also highlight key pieces of RBC ESG research – this edition focuses on our key takeaways from the ‘Navigating the Energy Transition’ discussion with ABI and Loblaw. We also highlight our discussion with Rob Cameron, Nestlé’s Global Head of Public Affairs; he’s part of the leadership team tasked by CEO Mark Schneider to evolve Nestlé’s sustainability strategy.

Global Consumer: Navigating the Energy Transition. We held a discussion with representatives from AB InBev, Loblaw and EY around energy transition within consumer staples. Key topics included carbon emissions progress, hurdles within the consumer industry, stakeholder reaction and, importantly, who bears the costs. So far, the verdict for the latter seems to be the companies themselves; not all consumers are willing to pay more for sustainable products. However, this might be okay; Loblaw highlighted there is value to investors in ‘de-risking capital’ and that energy efforts so far had led to cost savings. (See page 6 for more detail).

We discussed Nestlé’s ESG strategy with Rob Cameron, Global Head of Public Affairs and part of the leadership team tasked by CEO Mark Schneider to evolve the strategy. We were impressed by Rob’s enthusiasm, knowledge and ambition and his belief in consistency between Nestlé’s corporate goals and ESG ambitions, directed at securing Nestlé’s long term future. We believe that there are a lot of good things happening at Nestlé; new quantitative targets under the Net Zero Roadmap have been published and an ESG Sustainability Council has been created to lead sustainability efforts and support execution. Nonetheless, we’re still underwhelmed by the lack of reporting against quantitative targets in the recent Creating Shared Value report and the fact that ESG measures will only affect annual bonuses, not long term incentives, for the Executive Board. (See page 7 for more detail).

Key news from Europe: Reckitt Benckiser published its 2020 Sustainability report revealing it missed nearly half of its 2020 ESG targets. However, it is ramping up its ESG strategy as highlighted at Q1 results. Heineken released a host of new shorter-term and more measurable ESG targets. Nestlé, Unilever and Danone all made acquisitions in the health and wellness space. Unilever proposed some questionable remuneration changes for this week’s AGM.

Key news from the US: General Mills announced it has entered into a sustainability linked revolving credit facility; it is the first US CPG company to do so. Colgate-Palmolive received an award for its leadership in energy efficiency across global operations (this is its 11th year of recognition). Alongside The Coca-Cola Company and Unilever, Colgate-Palmolive also joined AB InBev’s 100+ Accelerator to fund and pilot sustainable innovation in supply chains.

Key news from Canada: Loblaw’s Kevin Groh (SVP, Corporate Affairs) took part in our “Global Consumer: Navigating the Energy Transition” discussion. For Loblaw specifically, we noted that the Company has been pursuing its corporate social responsibility agenda for many years; family ownership, long-term focus, and commitment to lead by example have been critical to the process. After achieving 30% reduction in carbon emissions well ahead of its original 2030 timeline, Loblaw is actively working towards a new target to reduce corporate operational carbon emissions by 50% by 2030. Saputo Dairy Australia entereds into a 10-year large-scale renewable electricity agreement with ENGIE. Saputo expects that the PPA will offset 46% of SDA’s electricity with renewable energy inside two years, which is a big step towards achieving its promise to reduce global greenhouse gas intensity by 20 per cent by 2025. ESG titbits from RBC-held management meetings with Dollarama Inc. inside (or find the management meetings recap note here).

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

Disseminated: May 4, 2021 00:45EDT; Produced: May 3, 2021 18:49EDT

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 2

Company News: Europe We wrote a note on Unilever’s governance; we don’t like proposed changes for this week’s AGM which will pay Unilever executives more for adequate performance and less for

outstanding performance. The amount payable under the PSP for target performance for the CEO is increasing by one third whilst the amount payable for maximum performance is reducing. In addition, new ROIC and market share gain targets are not stretching in our opinion. For example, one of the thresholds for a payout is for 45% of the business to be gaining market share. Since records began in 2014, at least 50% of the business has always been gaining share. Lastly, the remuneration committee will no longer have to consider ‘quality and sustainability’ of performance plus they’ll have the discretion to ignore the outcome of variable compensation formulae if they choose to do so. This is a downgrade to Unilever’s governance in our opinion and increases our conviction in our Underperform recommendation.

Heineken announced two sets of new ESG targets under its Brewing a Better World strategy. We gave Heineken one of the lowest ESG scores in our ESG sector report therefore it’s great to see a comprehensive strategy with more quantifiable and shorter-term targets (they range from 2023-2040). Its targets focus on alcohol reduction, diversity & inclusion and climate change. We thought this target was interesting: ‘By 2023, at least 65% of country leadership teams in each region will be comprised of regional nationals’. When we discussed this topic with Heineken back in November, we were given the impression local management were already largely local. (Apr 22)

There was a notable increase in ESG rhetoric in Reckitt Benckiser and Hilton Food Group’s results this month.

o Reckitt Benckiser’s new CEO has published a new 2030 roadmap with new 2030 targets and this was highlighted at Q1 results (Apr 28). This is needed; the 2020 Sustainability Report released on the 5th April showed Reckitt missed almost half its 2020 targets. That said, the new strategy is more transparent and many of the targets are quantitative. We note particularly strong ethnic diversity statistics in the report. The last change we’d like to see at the company is the inclusion of ESG into executives’ remuneration which has not yet been included as ‘the wider strategy on ESG is currently being developed’ according to the report.

o Hilton Food Group highlighted its Science Based targets and ESG progress at its FY20 presentation. For example, 89% of packaging trays are now made from 100% recycled PET and it’s using the world’s first electrical stunning system for farmed prawns. It is also becoming increasingly involved with alternative proteins. (Apr 7)

See our recent upgrade of Hilton Food Group here.

Fever-Tree continues to advance its ESG efforts. Its 2020 Annual Report presented new ESG targets and plenty of ESG data. Although late to the game, we applaud such transparency. (Apr 19)

Nestlé and Unilever have made acquisitions in the vitamins and minerals space. With its acquisition of The Bountiful Company’s core brands, Nestlé will be the global leader in the space. (Apr 26-30)

Danone also made an ESG-friendly acquisition; its buyout of Earth Island (maker of one of the top US plant-based cheese brands Follow Your Heart) closed this month. Similarly, Nestlé ramped up its plant-based effort in Asia with the launch of diary-free Milo there and the inauguration of a plant-based meat production site in Malaysia. (Apr 7-14)

Building on from last month’s pledge to remove the word ‘normal’ from its beauty product packaging, Unilever has launched a campaign under the Dove brand to draw attention to insecurities in young women caused by photo-retouching. The Reverse Selfie campaign states 80% of girls had applied a filter or used a retouching app to change the way they look in photos by the age of 13. (Apr 21)

Henkel achieved zero waste to landfill in its Adhesives Technologies 3D printing centre in California. See our recent deep dive into the Adhesives business here (Apr 20)

When we spoke to L’Oréal about brand purpose, it told us it would step up activities in 2021. So far this has been the case; this month L’Oréal Paris announced its own sustainability programme ‘L’Oréal for the Future, Because our Planet is Worth it’. L’Oréal Paris’ targets are in line with group targets however with more of a focus on funding environmental programs that directly benefit women. There have also been further activations around Biotherm’s ‘Blue Beauty’ initiative (the brand has aligned itself with ocean pollution). (April)

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 3

Company News: US General Mills – General Mills announced it has entered into a sustainability linked revolving credit facility, and it is the first US CPG company to do so. The $2.7bn revolving credit

facility includes a pricing metric tied to environmental impact metrics. The two key metrics are greenhouse gas emissions in owned operations and renewable electricity in global operations.

Estee Lauder - Estee Lauder has joined the Global Shea Alliance, a non-profit association that promotes sustainability practices and standards for shea in food and cosmetics. Estee Lauder uses shea across its portfolio of hair, makeup, and skin care products.

Kellogg - Kellogg is partnering with GLAAD to launch a new cereal for Pride month. The two collaborated in 2019 for a cereal as well, though not in 2020. The cereal will be shaped like hearts and will be berry-flavored with edible glitter. The cereal will launch in mid May 2021, nationwide. Kellogg also announced on World Earth Day its commitment to reduce its greenhouse gas emissions by 2030.

The Hershey Company - Hershey has announced new renewable energy agreements in line with its goal to reduce emissions by more than 50% by 2030. The company announced two new partnerships to develop solar projects in the US in North Carolina and Texas. In NC, HSY has signed a 15 year power purchase agreement and construction is expected to wrap up in late July. Together, the two projects should reduce HSY’s carbon footprint by over 115k metric tons each year.

Coty - Coty’s Lancaster brand was awarded a certificate for sustainability. The C2C Certified Material Health Certificate from the Cradle to Cradle Products Innovation Institute recognizes the brand’s product chemistries are safe for consumers (“clean”) and the environment.

Newell Brands – Newell Brands announced it has donated over 2.8mm school supplies to UNICEF USA to support the organization’s education programming. UNICEF will use the donation to mitigate disruptions from COVID-19 to learning programs worldwide.

Constellation Brands – On 4/6, STZ announced a collective commitment of $1.75M to support the National Restaurant Association Educational Foundation (NRAEF) and the launch of its “Restaurants Advance” campaign. The commitment represents a multi-year collaboration with the NRAEF to rebuild the restaurant industry and create opportunities for restaurant workers from all backgrounds. In March 2020, Constellation and several of its flagship brands contributed more than $1 million to the NRAEF’s Restaurant Employee Relief Fund, which raised more than $21.5 million and helped over 43,000 restaurant workers hit hard financially by the COVID-19 pandemic.

PepsiCo – PEP announced its ambitious new Positive Agriculture strategy, which aims to impact 7 million acres of farmland and reduce an estimated 3 million tons of greenhouse gas emissions by the end of the decade. PepsiCo also aims to improve the livelihoods of more than 250,000 people in its agricultural supply chain and sustainably source 100% of the company’s key ingredients by 2030. (Apr 20)

Coca-Cola – KO announced it would be joining AB InBev’s 100+ Accelerator program to fund and pilot sustainable innovation in supply chains. Launched in 2018, the 100+ Accelerator is a global incubator program that wants to help solve supply chain challenges across water stewardship, circular economy, sustainable agriculture and climate action. Since its launch, the program has helped 36 companies in 16 countries. (Apr 26)

P&G – PG issued a press release detailing Charmin’s efforts to protect, grow and restore forests. With an ambition to promote healthy forests through its “protect, grow and restore” sustainability effort, the brand is working within its operations and through its supply chain and nonprofit partners to keep forests as forests and champion higher standards for responsible forestry. Protect: All of Charmin’s toilet paper products use pulp certified by the Forest Stewardship Council™. FSC certification is recognized by many non-governmental organizations for protecting forests, biodiversity and the rights of local and Indigenous communities. Grow: For every tree used to make Charmin toilet paper, at least two more are regrown. Charmin only sources fiber for its toilet paper from working forests, which provide a renewable supply of wood for the more than 5,000 items that people use every day. Restore: In collaboration with the Arbor Day Foundation, P&G and Charmin are planting 1 million trees between 2020 and 2025, including in areas devastated by natural disasters, such as wildfires. (Apr 8)

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 4

Mondelez – MDLZ and Olam Food Ingredients (OFI), a leading supplier of cocoa beans and cocoa ingredients, announced a new collaboration in Indonesia to create the world’s single largest sustainable commercial cocoa farm. The model builds on MDLZ’s experience with the company’s signature sustainable sourcing program, Cocoa Life, and OFI’s ambition for sustainable cocoa, Cocoa Compass, to test a scalable approach for the future of commercial cocoa farming. (Apr 21)

Colgate Palmolive – CL announced it would be joining AB InBev’s 100+ Accelerator program to fund and pilot sustainable innovation in supply chains. Launched in 2018, the 100+ Accelerator is a global incubator program that wants to help solve supply chain challenges across water stewardship, circular economy, sustainable agriculture and climate action. Since its launch, the program has helped 36 companies in 16 countries. On 4/13, CL received a 2021 ENERGY STAR® Partner of the Year Award for Sustained Excellence for its leadership in energy efficiency across global operations. This marks the 11th consecutive year that Colgate has been recognized by the U.S. Environmental Protection Agency and the U.S. Department of Energy as an authority in energy-saving practices. (Apr 26)

Campbell Company – Bayer Vegetable Seeds’ Seminis brand has collaborated with Campbell Company of Canada to celebrate sustainability and show consumers how their soups begin with real food grown by real farmers. The effort captures attention with limited-edition cans of Campbell’s Creamy Tomato and Garden Vegetable Minestrone soups that feature a plantable paper disc embedded with Seminis tomato seeds, giving consumers the opportunity to grow plum-type tomatoes in their own gardens. (Apr 22)

Boston Beer Co. – Boston Beer Co. raised over $7.5m through their Sam Adams Restaurant Fund to support bar and restaurant workers who have experienced hardships due to the COVID-19 pandemic. (Apr 22)

Clorox – Brita highlighted the brand is on track to eliminate 15 billion single-use plastic water bottles this year, working toward a 2030 goal of replacing 20 billion bottles a year. Brita is committed to have zero plastic waste to landfills by 2030 and provide 500,000 people access to clean water in vulnerable US communities by 2024. (22 Apr)

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 5

Company News: Canada Loblaw Companies Limited: This month’s global Navigating the Energy Transition series focused on the consumer staples industry. We had the opportunity to talk with Kevin Groh,

SVP, Corporate Affairs of Loblaw as well as representatives from AB InBev and EY. Loblaw highlighted the complexity, but also the opportunities inherent in doing the right thing for global climate change and the respective businesses. Key topics included carbon emissions progress, hurdles within the consumer industry, stakeholder reaction and who bears the costs. Loblaw has been pursuing its corporate social responsibility agenda for many years: Family ownership, long-term focus, and commitment to lead by example have been critical to the process. After achieving 30% reduction in carbon emissions well ahead of its original 2030 timeline, Loblaw is actively working towards a new target to reduce corporate operational carbon emissions by 50% by 2030. (Apr 12)

Saputo Inc.: i) Saputo Dairy Australia enters into a 10-year large-scale renewable electricity agreement with ENGIE. Saputo expects that the PPA will offset 46% of SDA’s electricity with renewable energy inside two years, which is a big step towards achieving its promise to reduce global greenhouse gas intensity by 20 per cent by 2025. (April 16). ii) On the Diversity & Inclusion (D&I) front, Saputo announced the appointment of Ms. Leanne Cutts as President and Chief Operating Officer (International and Europe), effective in the second half of calendar year 2021 (Apr 21).

Dollarama Inc.: ESG titbits from RBC-held management meetings include i) Corporate Sustainability report to be a) refreshed in June, b) aligned with SASB and c) contain enhanced environmental disclosures, ii) In terms of specifics, the Company noted a) it will conduct supply chain audits to ensure respect of the supplier code of conduct, b) is aiming to reduce waste as much as possible, and c) will see changes to Board with respect to gender diversity. In terms of ongoing energy initiatives, we highlight LED lighting rollout and HVAC management. Management meetings recap note here. (Apr 21)

The Canada Plastics Pact (CPP) announced its first 18 advisory council members, including: i) Canadian Tire Corporation, Kimi Walker, ii) Loblaw Companies Ltd., Ian Gordon, and iii) Maple Leaf Foods, Priya Roberts. CPP is “a multi-stakeholder, industry-led, cross-value chain collaboration platform created early this year to tackle the nation’s plastic waste and pollution problem”. (Apr 8)

Alimentation Couche-Tard: Company continues to progress on its sustainability journey i) leadership role in frictionless technologies (note here). Successful "Pay by Plate" pilot across selected Norwegian locations led to an official launch in Sweden last week, with plans for a wider rollout across the Circle K network in coming years. The license plate recognition technology allows for a completely frictionless experience for the customers, with payments being made via a mobile app. (Apr 21); and ii) commitment to becoming a more environmentally responsive retailer: Circle K became the first US national c-store chain offering 100% sustainably sourced coffee. Program's three pillars: farm productivity, environmental practices, and social development. To celebrate this accomplishment, the Company offered 40% off reusable mugs on Earth Day. (Apr 15)

Empire Company Limited: i) Farm Boy launching pilot of Danavation’s Digital Smart LabelsTM technology. Upon a successful completion of the pilot, Farm Boy’s intention is for a 2022 rollout across its entire store base. ”By implementing the Company's Digital Smart LabelsTM, Farm Boy will have the ability to update product and pricing information on-demand while standardizing store signage, avoiding costly mis-pricing errors and streamlining labour processes”. (Mar 31)

Alimentation Couche-Tard and Metro joining Canadian pharmacies in COVID-19 mass vaccination efforts. Shoppers Drug Mart and Jean Coutu have been involved in mass vaccination efforts across most Canadian Provinces since March. (Apr 8 - ongoing).

Maple Leaf Foods: MFI celebrated Earth Day with the release of a limited-edition climate change colouring kit. The “Picture a Better World Climate Change Colouring Kits” are designed to help Canadian parents educate their children about climate action. (Apr 19).

Spin Master issued its second annual Corporate Social Responsibility (CSR) report on April 6. The report outlines how Spin Master approaches ESG issues through four main pillars: 1) "Our Products"; 2) "Our People"; 3) "Our Communities"; and, 4) "Our Environment". Pertaining to the “Our Products” pillar, the company boasts a strong reputation in overall product quality and safety, with 99% of manufacturing facilities undergoing an "Ethical Toy Program" audit in 2020 and no product recalls in over a decade. Within the "Our People" pillar, the company reported that 53% of total employees are female, with 43% female representation at the “Senior Management” level (directors and above). The company also

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 6

demonstrates strong leadership from an environmental standpoint, as it offset 10,000 metric tonnes of carbon in 2020 (representing +100% of its self-generated footprint), and has committed to a 50% planned reduction in plastic packaging by 2025.

Gildan Activewear is participating in the Fashion Revolution Week #WhoMadeMyclothes campaign for the fifth year in a row, in which it highlights a member of the production staff to “lift the veil” (increase transparency) surrounding clothing supply chains and “encourage customers to think differently about the people who make their clothes”. As a vertically integrated apparel manufacturer, Gildan directly employs the majority of the people who make its clothes.

Northwest Company subsidiary, Alaska Commercial Company, announced a program to deliver 3.3 million pounds of fresh food to 115 communities as “part of its continuing effort to help Alaskans live better”. Part of the USDA’s Farmers to Families Food Box program, this initiative includes over 100,000 boxes of meat, dairy, and produce distributed evenly and free of charge to local non-profits (who distribute to families) between February 1 and May 31.

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 7

Global Consumer Staples: Navigating the Energy Transition In the eighth edition of our Navigating the Energy Transition series, we were fortunate enough to host AB InBev's Ezgi Barcenas (Global Vice President, Sustainability), Loblaw's Kevin Groh, (Senior Vice President, Corporate Affairs) and EY's Deborah Byers (EY Americas Industry Leader). We debated the energy transition within consumer staples; the complexity, but also the opportunities inherent in doing the right thing for global climate change and the respective businesses. Key topics included carbon emissions progress, hurdles within the consumer industry, stakeholder reaction and who bears the costs. Our key takeaways:

This is not a new issue - Both Loblaw and AB InBev have been pursuing their corporate social responsibility agenda for many years. For Loblaw, family ownership, long-term focus, and commitment to lead by example have been critical to the process, and for AB InBev, key contributors were local heritages and focus on business continuity. Both have already made significant progress in measuring and reducing carbon emissions. After achieving 30% reduction in carbon emissions well ahead of its original 2030 timeline, Loblaw is actively working towards a new target to reduce corporate operational carbon emissions by 50% by 2030. Carbon reduction is also central to AB InBev's overarching strategies to ensure supply security, give its employees purpose, and match consumers' increasing consciousness for environmental issues. It also thinks its local heritages give it responsibility to be part of the environmental solution for each community in which it does business.

Collaboration is key - All of our speakers highlighted the need for collaboration across the entire value chain, from indirect suppliers and transport operators to consumers, as well as with other stakeholders such as governments, regulators and investors. For AB InBev, 85% of its emissions are from Scope 3 sources (indirect suppliers). To fuel collaboration, AB InBev established 'Eclipse', a dedicated platform for suppliers to share best practice and work together on environmental concerns. It highlighted strong momentum amongst suppliers to innovate and improve energy consumption. Similarly for Loblaw, Scope 3 emissions are a major challenge. As Canada’s largest retailer, its approach involves leading by example with its largest suppliers and fleet partners by implementing innovative, carbon-friendly distribution solutions, including solar panels on trucks and autonomous electric vehicles, which is key to engaging smaller suppliers to join in the process.

Growing need for transparency - Many companies have made ambitious targets for carbon reduction, however definitions and benchmarking vary. Transparency in reporting of energy use must continue to evolve. All our representatives welcomed the TCFD's (Task Force on Climate-related Financial Disclosures) efforts allowing the forecasting of energy use.

Consumer reaction evolving - Research and Loblaw/AB InBev experiences clearly show consumers care about climate change, transparency and authenticity and want companies to do more. However, the degree to which consumers are willing to pay a premium remains unclear.

Who's going to pay? - Our EY representative, Deborah Byers, expects this question to be 'the debate of this century'. We mentioned that the jury is still out on whether consumers are willing to pay for the carbon transition. In the meantime, there is a business case for corporations funding it; Loblaw's progress has already led to efficiencies and cost savings. In addition, Loblaw highlights there is 'value in de-risking capital' for investors as well as from increased capital due to the rise in sustainable investing. AB InBev expects the costs of sustainability will come down as new technologies and processes scale.

Here’s some links to other editions of our Navigating the Energy Transition Series: Global Energy & Utilities: Carbon Capture, Use & Storage, Global Integrateds: The Role of Renewable Fuels, Global Regulated Utilities: The Role of Grids in Delivering Net Zero, Global Industrials: Exploring Hydrogen Mobility, Global Utilities: Financing & PPAs,

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 8

Nestlé SA: A discussion with Rob Cameron, Nestlé’s Global Head of Public Affairs We recently enjoyed a call with Rob Cameron, Nestlé’s Global Head of Public Affairs part of the leadership team tasked by CEO Mark Schneider to evolve Nestlé’s sustainability strategy. Rob’s public affairs team works with subject matter experts from across Nestlé to help devise positions and strategies on issues such as climate, water, biodiversity, sustainable packaging, stakeholder engagement and food/nutrition.

We were somewhat disparaging of Nestlé’s ESG efforts compared to others in the sector in our RBC ESG Stratify report Evaluating Sustainable Growth. Partly this was because Nestlé handled our questions at the investor relations level rather than putting us in touch with an ESG expert; we felt this suggested that they were less committed than some others. We misinterpreted this. When we asked Nestlé to speak to their ESG person, it became evident that there is such a variety of specialists that IR is best placed to pull it together … except for the boss. Now we’ve had that opportunity.

We were impressed. Here are our main highlights.

Rob joined Nestlé in February 2020 because he thinks Nestlé is a company ‘that can do both’. He believes there is a consistency between Nestlé’s corporate goals and ESG ambitions, directed at securing Nestlé’s long term future.

Nestlé has been careful in setting public quantified targets (one of our hang ups behind Nestlé’s lowly ranking) as they have tended to prefer to understand how to make sustainability and business goals compatible and mutually-reinforcing. This is changing with the publication of Nestlé’s net zero roadmap, the thing that Rob is proudest of after his first year.

An Environmental, Social and Governance (ESG) Sustainability Council has been established at the Executive Board level to provide governance, strategic leadership and execution support. It drives implementation of Nestlé’s sustainability strategy, including implementation of its 2050 net zero roadmap, ensuring focus and alignment on execution. The Council is chaired by the Group’s Executive Vice President (EVP) Head of Strategic Business Units and Marketing and Sales. It pulls together the geographical business scopes led by Nestlé’s three EVP Zone CEOs and functional leadership at the Executive Board level. It meets every month and reports progress to the full Executive Board monthly. To drive implementation and execution of strategies at operational level, an ESG Strategy and Deployment Unit has also been created. This new unit integrates external developments and defines Nestlé’s sustainability strategies in support of its ESG commitments. It coordinates Nestlé’s ESG sustainability activities and has oversight of internal ESG sustainability data gathering and external disclosures. The ESG Strategy and Deployment Unit reports to the EVP Head of Operations. Rob’s team work with the Council and Deployment Group.

Nestlé has a new Chief Marketing Officer, Aude Gandon. She is very aware that there is a lot of data showing that ESG is a very important component of marketing effectiveness.

The biggest legacy issues with which Nestlé has to contend are packaging, water, child labour in the supply chain and BMS (Breast Milk Substitutes – there’s been a perception problem for a long time and it hasn’t been effectively addressed).

Nature and bio-diversity are going to be the next big challenge for those who have championed climate change.

To conclude, we were very impressed by Rob’s enthusiasm, knowledge and ambition and by extension believe that there are a lot of good things happening at Nestlé. Nonetheless, we’re still underwhelmed by the lack of reporting against quantitative targets in the recent Creating Shared Value report and the fact that ESG measures will only affect annual bonuses, not long term incentives, for the Executive Board.

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 9

European Consumer Staples Valuation Summary

Source: Bloomberg, RBC Capital Markets estimates Prices at 12:30 BST, 29th April 2021

European Companies Rating 2021 E 2022 E 2021 E 2022 E 2021 E 2022 E 2021 E 2022 E 2021 E 2022 E

Danone † € 58.6 Sector Perform 64 Dec 18.9 16.9 11.6 10.7 3.4 3.8 22.3 20.4 5.2 5.8

Nestlé † CHF 109 Sector Perform 102 Dec 24.8 23.7 15.6 15.0 2.7 2.8 24.1 23.2 3.9 4.0

Unilever † £ 42.0 Underperform 37 Dec 22.1 21.2 17.6 17.1 3.4 3.6 29.3 28.6 4.6 4.6

L'Oréal ~ € 342 Sector Perform 235 Dec 42.9 41.2 24.7 23.7 1.3 1.4 42.4 40.7 2.4 2.4

Reckitt † £ 63.8 Sector Perform 68 Dec 21.4 19.9 15.7 14.7 2.7 2.9 23.0 21.7 3.3 4.7

Henkel † € 96.0 Outperform 111 Dec 22.9 20.8 13.2 12.1 1.9 1.9 22.4 20.5 4.4 4.7

Beiersdorf ~ € 93.3 Sector Perform 86 Dec 31.9 30.1 14.6 13.8 0.7 0.7 24.6 23.3 3.0 3.0

Food & HPC average 26.4 24.8 16.1 15.3 2.3 2.4 26.9 25.5 3.8 4.2

Anheuser-Busch InBev † € 59.4 Outperform 67 Dec 23.3 19.8 14.1 12.6 1.0 2.0 26.3 22.8 4.7 5.3

Britvic ~ £ 8.8 Outperform 10.3 Sep 21.3 16.6 11.9 10.9 2.6 2.7 21.6 17.6 3.5 4.9

Campari † € 9.9 Underperform 6.8 Dec 50.7 40.8 30.4 25.9 0.6 0.6 51.5 42.3 1.7 2.4

Carlsberg † DKK 1,087 Sector Perform 1,000 Dec 26.3 24.6 13.6 12.8 2.0 2.1 26.0 24.4 4.3 4.5

Diageo † £ 32.8 Sector Perform 24 June 28.0 26.3 21.2 20.0 2.2 2.4 30.0 28.7 2.5 2.7

Fever-Tree ~ £ 25.3 Sector Perform** 20 Dec 64.7 47.9 47.8 36.6 0.7 0.7 68.2 50.5 1.4 2.0

Heineken † € 97.0 Underperform 78 Dec 32.3 26.6 15.8 14.1 1.1 1.3 33.1 28.1 2.4 3.1

Pernod Ricard † € 173 Sector Perform 157 June 30.1 25.9 20.7 18.3 1.9 2.1 30.8 27.2 2.4 3.2

Beverages average 30.3 25.8 18.3 16.4 1.6 1.9 31.3 27.3 3.1 3.7

BAT † £ 26.5 Outperfom 32 Dec 8.4 8.2 8.0 7.8 7.9 8.2 11.2 11.0 11.6 11.8

Imperial Brands † £ 14.7 Outperfom 19 Sep 6.5 6.5 7.3 7.2 4.8 4.8 10.2 10.2 11.4 15.5

Tobacco average 7.5 7.3 7.6 7.5 6.3 6.5 10.7 10.6 11.5 13.7

Cranswick ~ £ 36.6 Sector Perform 39 Mar 19.2 18.6 11.2 10.9 1.8 1.9 20.3 19.8 5.9 6.9

Hilton Foods ~ £ 12.1 Outperform 15 Dec 18.7 17.4 9.5 9.1 2.3 2.4 19.7 18.7 5.3 5.9

Processors average 18.9 18.0 10.3 10.0 2.0 2.1 20.0 19.3 5.6 6.4

Divi yield (%) EV/NOPAT FCF yield (%)

Share price

Price

Target

Year

end

P/E EV/EBITDA

European Companies Rating 2021 E 2022 E 2021 E 2022 E 2021 E 2022 E 2021 E 2022 E 2021 E 2022 E

Danone † € 58.0 Sector Perform 64 Dec 18.8 16.7 11.5 10.6 3.4 3.8 22.2 20.1 5.2 5.9

Nestlé † CHF 96 Sector Perform 96 Dec 22.3 21.4 14.3 13.7 3.0 3.1 22.0 21.2 4.3 4.4

Unilever † £ 38.2 Underperform 37 Dec 20.4 19.5 13.7 13.3 3.8 4.0 22.8 22.2 5.0 5.0

L'Oréal ~ € 307 Sector Perform 231 Dec 40.0 37.6 22.5 21.1 1.4 1.5 39.3 36.9 2.7 2.7

Reckitt Benckiser † £ 59.5 Sector Perform 68 Dec 20.3 18.9 15.0 14.1 2.9 3.2 22.1 20.8 3.5 5.0

Henkel † € 82.6 Outperform 104 Dec 18.9 17.5 11.3 10.5 2.2 2.2 19.0 17.6 5.4 5.6

Beiersdorf ~ € 84.6 Sector Perform 86 Dec 29.4 27.1 13.0 12.1 0.8 0.8 22.0 20.4 3.2 3.3

Food & HPC average 24.3 22.7 14.5 13.6 2.5 2.7 24.2 22.7 4.2 4.6

Anheuser-Busch InBev † € 50.5 Outperform 67 Dec 20.0 16.9 12.9 11.6 1.2 2.4 24.1 20.8 5.5 6.2

Britvic ~ £ 8.3 Outperform 10.3 Sep 20.2 15.7 11.4 10.5 2.8 2.9 20.6 16.8 3.7 5.1

Campari † € 9.7 Underperform 6.8 Dec 49.4 39.8 29.7 25.3 0.6 0.6 50.3 41.3 1.7 2.4

Carlsberg † DKK 993 Sector Perform 1,000 Dec 24.1 22.5 12.7 11.9 2.2 2.3 24.3 22.8 4.7 4.9

Diageo † £ 29.3 Underperform 24 June 24.3 23.0 18.8 17.8 2.5 2.6 26.6 25.5 2.8 3.1

Fever-Tree ~ £ 23.7 Outperform** 26 Dec 48.0 36.7 38.6 30.0 0.9 1.2 51.0 39.1 2.0 2.7

Heineken † € 85.5 Underperform 75 Dec 30.7 24.5 14.9 13.1 1.2 1.5 31.9 26.4 2.6 3.4

Pernod Ricard † € 160 Sector Perform 153 June 26.8 23.9 18.9 17.1 2.0 2.2 28.0 25.4 2.8 3.5

Beverages average 27.9 23.8 17.0 15.3 1.8 2.1 29.4 25.6 3.4 4.1

BAT † £ 25.5 Outperfom 32 Dec 8.1 7.9 7.8 7.6 8.2 8.5 11.0 10.7 12.0 12.2

Imperial Brands † £ 13.8 Outperfom 19 Sep 6.2 6.1 7.1 7.0 5.1 5.1 9.9 9.9 12.2 16.5

Tobacco average 7.2 7.0 7.4 7.3 6.6 6.8 10.4 10.3 12.1 14.4

Cranswick ~ £ 35.0 Sector Perform 39 Mar 18.3 17.8 10.7 10.4 1.9 2.0 19.5 19.0 6.2 7.3

Hilton Foods ~ £ 11.0 Sector Perform 12 Dec 17.7 16.9 9.3 9.1 2.1 2.2 18.2 17.7 3.3 3.6

Processors average 18.0 17.3 10.0 9.7 2.0 2.1 18.9 18.4 4.7 5.4

US companies

General Mills § US$ 56.2 Sector Perform 65 May 14.5 14.3 14.6 14.4 4.3 4.4 18.1 17.9

Mondelez § US$ 54.3 Outperfom 66 Dec 19.4 18.2 16.1 15.2 2.7 2.8 25.2 23.8

Food average 16.9 16.3 15.3 14.8 3.5 3.6 21.7 20.9

Clorox § US$ 183.3 Sector Perform 226 June 23.3 22.8 16.7 16.2 2.3 2.3 24.1 23.0

Colgate Palmolive § US$ 76.6 Sector Perform 90 Dec 24.2 22.0 16.3 15.3 2.5 1.3 23.7 22.1

Estee Lauder § US$ 294.3 Outperform 314 June 56.6 48.1 30.9 27.3 0.5 0.6 50.1 44.3

P&G § US$ 127.7 Sector Perform 130 June 23.0 21.3 16.4 15.5 2.6 2.7 23.9 22.6

HPC average 31.8 28.6 20.1 18.6 2.0 1.7 30.4 28.0

Coca-Cola § US$ 50.7 Sector Perform 55 Dec 25.1 23.2 21.3 20.1 3.4 3.5 31.5 29.5

PepsiCo § US$ 132.1 Sector Perform 153 Dec 22.1 20.4 15.6 14.7 3.0 3.3

Molson Coors * US$ 47.0 Dec 11.4 10.8 8.3 8.0 4.4 4.7

Constellation Brands § US$ 223.9 Outperform 262 Feb 22.2 19.3 17.4 16.4 1.5 1.5 22.9 21.5

AmBev * BRL 14.7 Dec 18.8 16.0 9.3 9.0 4.6 6.1

Brown-Forman § US$ 75.0 Sector Perform 72 Apr 39.0 36.6 28.6 26.8 0.9 1.0 37.0 34.9

Beverages average 23.1 21.0 16.7 15.8 3.0 3.4 30.5 28.6

Altria § US$ 45.0 Outperform 56 Dec 9.8 9.1 9.1 8.7 7.9 8.4 12.0 11.3

PMI * US$ 87.6 Dec 13.5 12.7 10.7 10.2 5.8 6.0

Tobacco average 11.6 10.9 9.9 9.4 6.8 7.2 12.0 11.3

Other

Hindustan Unilever * IR 2,163 Mar 52.5 45.3 37.5 32.6 1.7 1.9

United Spirits * IR 544 Mar 41.7 34.2 24.9 21.3 0.0 12.5

Yakult Honsha * JPY 5,420 Mar 22.8 21.8 12.3 12.0 1.0 1.0

* Based on Bloomberg Consensus estimates † Covered by RBC Europe Limited analyst James Edwardes Jones (+44 207 002 2101)

**Fever-Tree is Speculative Risk ~ Covered by RBC Europe Limited analyst Emma Letheren (+44 207 002 2100)

All figures are time weighted to calendar year end § Covered by RBC Capital Markets LLC analyst Nik Modi (+1 212 905 5993)

Divi yield (%) EV/NOPAT FCF yield (%)

Share price

Price

Target

Year

end

P/E EV/EBITDA

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 10

US Consumer Staples Valuation Summary

Source: FactSet, RBC Capital Markets estimates Prices at 08:00 EST, 30th April 2021

RBC

Rating

Mkt Cap

($US MM)

Current

Price

RBC

Target

Upside/

Downside

YTD

Perf.

52Wk

High

52Wk

Low

Fiscal

Year-End

3 Yr Cons.

EPS Grwth

RBC FY21

EPS

FY21 Cons.

EPS

RBC FY22

EPS

FY22 Cons.

EPS

NTM

P/EPEG

Target

P/E

Target

PEG

CL SP $67,732 $80 90 13% -7% $86 $66 Dec 6% $3.30 $3.28 $3.51 $3.50 23.8x 3.7x 25.6x 4.0xEL OP 114,904 317 348 10% 19% 318 158 Jun 26% 5.97 6.01 6.74 7.03 46.2x 1.8x 51.6x 2.0xNWL SP 11,475 27 22 -18% 27% 27 11 Dec 3% 1.63 1.64 1.84 1.86 15.8x 4.9x 12.0x 3.7xENR OP 3,399 50 55 11% 18% 53 36 Sep 20% 3.40 3.34 3.63 3.73 13.9x 0.7x 15.2x 0.7xEPC OP 2,107 39 45 16% 12% 42 25 Dec 4% 2.79 2.74 3.01 2.95 13.6x 3.1x 15.0x 3.5xPG SP 324,415 133 130 -2% -5% 147 111 Jun 8% 5.65 5.64 6.03 5.97 22.4x 2.9x 21.6x 2.8xCLX SP 23,390 186 226 22% -8% 240 177 Jun 4% 8.28 8.37 8.07 8.08 22.9x 5.2x 28.0x 6.3xCHD SP 21,073 86 88 2% -1% 99 68 Dec 8% 3.03 3.04 3.19 3.26 27.6x 3.7x 27.6x 3.7xCOTY OP 7,806 10 12 18% 45% 10 3 Dec -183% 0.11 0.10 0.39 0.21 54.1x -0.3x 30.8x -0.2xKMB SP 44,754 133 137 3% -2% 160 128 Dec 2% 7.40 7.42 7.90 7.94 17.5x 7.4x 17.3x 7.4xREYN OP 6,240 30 35 18% - 36 27 Dec - 2.02 2.01 - 2.10 14.6x - - -SPB OP 3,828 90 95 6% 14% 92 35 Sep NM 5.76 5.68 5.81 6.04 15.3x - 16.4x -

Avg. $52,594 10% -10% 4.1x 4.1x 4.6x 4.4x 24.0x 3.3x 23.7x 3.4x

MO OP 86,312 47 56 20% 14% 53 35 Dec 6% 4.62 4.59 4.94 4.89 9.9x 1.7x 11.3x 2.0x

Avg. $86,312 14% 6% 4.6x 4.6x 4.9x 4.9x 9.9x 1.7x 11.3x 2.0x

KO OP $233,952 $54 60 11% -1% $55 $43 Dec 5% 2.16 $2.17 $2.33 $2.36 24.3x 4.8x 25.8x 5.1xBF.B SP 37,381 78 72 -8% -2% 83 60 Apr 6% 1.97 1.89 - 2.06 41.3x 6.6x - -STZ OP 46,300 242 262 8% 10% 243 152 Feb 10% 10.15 10.07 11.93 11.66 23.4x 2.4x 22.0x 2.3xMNST OP 51,726 98 104 6% 6% 99 59 Dec 9% 2.65 2.69 3.01 3.04 34.9x 3.7x 34.6x 3.7xPEP SP 198,872 144 153 6% -3% 149 127 Dec 5% 6.07 6.08 6.47 6.58 23.1x 4.2x 23.6x 4.3xKDP OP 50,577 36 40 11% 12% 36 26 Dec 11% 1.61 1.60 1.77 1.75 21.8x 2.1x 22.6x 2.1xSAM OP 14,869 1,210 1538 27% 22% 1,350 452 Dec 39% 25.61 25.12 - 33.35 43.5x 1.1x - -PRMW OP 2,703 17 19 13% 7% 18 9 Dec - 0.58 0.51 0.62 0.62 31.0x - 30.6x -NAPA SP 2,138 19 19 2% - 21 16 Dec - 0.38 0.38 0.43 0.43 44.7x - 44.2x -

Avg. $70,946 6% 12% 32.0x 3.6x 29.0x 3.5x

HSY OP $33,980 $164 171 4% 8% $166 $126 Dec 2% 6.92 $6.86 $7.26 $7.28 23.5x 14.5x 23.6x 14.5x

MDLZ OP 85,585 61 69 13% 4% 62 49 Apr 9% 2.89 2.91 3.08 3.13 20.4x 2.3x 22.4x 2.6x

K SP 21,350 63 67 7% 1% 73 57 Feb 2% 4.01 3.99 4.26 4.16 15.5x - 15.7x 9.0x

GIS SP 37,471 61 65 6% 4% 66 54 Dec 2% 3.86 3.70 - 3.83 16.6x 8.3x - -

CAG SP 17,739 37 38 3% 2% 39 32 Dec 7% 2.62 2.63 2.88 2.77 14.1x 2.1x 13.2x 2.0x

BGS SP 1,905 29 29 -1% 6% 48 19 Dec 3% 2.24 2.25 2.45 2.33 12.9x 3.8x 11.8x 3.5x

CPB OP 14,550 48 59 23% -1% 54 45 Dec 2% 3.07 3.07 3.12 3.05 15.7x 6.8x 18.9x 8.2x

Avg. $30,369 4% 4% 17.0x 6.3x

Household Personal Care

Tobacco

Beverages

Packaged Food

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 11

Canadian Consumer Valuation Summary: Irene Nattel

Source: Company filings, S&P Capital IQ pricing, RBC Capital Markets estimates Prices at 4:00 pm EST, 29 April 2021

Market Price RBCCM Dividend Implied P/E EV/EBITDA

COVERAGE UNIVERSE Ranking Cap 4/29/2021 Target Yield Return 19A 20A 21E 22E 19A 20A 21E 22E

IFRS16 BASIS FOR ALL COMPANIES

CONSUMER STAPLES

FOOD PROCESSORS

Maple Leaf Foods O $3,472 $28.17 $36 2.6% 30% 42.7x 27.9x 22.0x 15.7x 13.6x 11.0x 9.9x 7.8x

Saputo O $16,271 $39.46 $46 1.8% 18% 23.2x 23.8x 20.6x 17.5x 13.8x 13.2x 11.9x 10.9x

CONVENIENCE STORES & FUEL RETAILING

Alimentation Couche-Tard O $45,171 $41.78 $55 0.8% 32% 19.2x 14.2x 16.8x 15.5x 10.7x 8.8x 9.8x 9.3x

Casey's General Stores (US$) SP $8,237 $222.94 $213 0.6% -4% 36.4x 24.9x 27.0x 22.7x 16.5x 13.2x 12.9x 11.1x

FOOD & DRUG RETAILERS

Loblaw Companies O $23,273 $68.16 $94 2.0% 40% 16.5x 16.0x 14.2x 12.0x 8.2x 8.0x 7.9x 7.4x

Metro Inc. SP $13,727 $55.86 $66 1.8% 20% 19.4x 16.7x 15.3x 14.3x 11.3x 10.2x 9.7x 9.4x

Empire Limited SP $10,348 $38.82 $43 1.3% 12% 20.7x 13.9x 14.7x 13.2x 9.7x 7.8x 7.8x 7.4x

George Weston Limited O $16,561 $108.85 $134 2.0% 25% 9.0x 10.0x 8.5x 6.9x

Consumer Staples Average 1.6% 25.5x 19.6x 18.6x 15.9x 11.6x 10.3x 9.8x 8.8x

CONSUMER DISCRETIONARY

RETAILERS

Canadian Tire Corporation O $11,928 $196.15 $215 2.4% 12% 18.4x 19.6x 14.4x 11.8x 7.3x 6.8x 6.6x 6.1x

Dollarama O $17,890 $57.66 $68 0.3% 18% 33.0x 32.8x 25.9x 22.0x 18.1x 17.9x 15.0x 13.6x

Aritzia O $3,428 $31.15 $35 0.0% 12% 39.4x NMF 37.5x 24.7x 15.7x 23.2x 14.4x 11.7x

SPECIALIZED SERVICES

Park Lawn Corporation O $1,023 $34.48 $39 1.3% 14% NMF 36.7x 27.6x 22.8x 27.0x 17.8x 14.8x 12.9x

Consumer Discretionary Average 0.9% 30.3x 29.7x 26.3x 20.3x 17.0x 16.4x 12.7x 11.1x

Overall Average 1.4% 26.9x 22.6x 21.4x 17.5x 13.4x 12.3x 10.8x 9.5x

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 12

Canadian Consumer Valuation Summary: Sabahat Khan Exhibit 1 - EV/EBITDA and P/E trading multiples

Source: Company reports, RBC Capital Markets estimates for TOY (Outperform), FactSet consensus for remaining peers

Exhibit 2 - EV/EBITDA and P/E trading multiples

Source: Company reports, RBC Capital Markets estimates for NWC (Sector Perform), FactSet consensus for remaining peers Prices at 16.30 EST, 29th April 2021

29-Apr-21 Market Cap EV EV/EBITDA EBITDA Growth (%) P/E EPS Growth Net Debt/ Dividend

Company Ticker Price ($) ($MM) ($MM) 2020 2021E 2022E 19 - 20 20 - 21E 21E - 22E 2020 2021E 2022E 19 - 20 20 - 21E 21E - 22E EBITDA Yield

Spin Master Corp - RBC TOY-CA $41.40 $4,314 US$3,188 18.8x 11.8x 10.6x (18.5%) 59.0% 3.7% n.m. 29.5x 24.7x (43.2%) 124.2% 6.1% n.m. 0.0%

U.S. ToysHasbro, Inc. HAS US$99.09 US$13,684 US$17,110 16.8x 14.5x 13.1x 11.3% 4.9% 3.4% 26.5x 22.1x 19.2x (8.3%) 6.2% 4.7% 3.1x 2.7%Mattel, Inc. MAT US$21.73 US$7,584 US$10,063 14.0x 12.5x 11.0x 58.7% 3.8% 4.4% 40.2x 24.6x 18.7x n.m. 17.9% 9.6% 2.8x 0.0%

Average 15.4x 13.5x 12.1x 35.0% 4.4% 3.9% 33.4x 23.3x 19.0x (8.3%) 12.1% 7.2% 3.0x 1.4%

U.S. Media

Walt Disney Company DIS US$185.33 US$337,857 US$393,048 n.m. 39.6x 24.2x (42.9%) 0.6% 17.8% n.m. n.m. 36.8x (65.0%) (0.0%) 35.7% 5.6x 0.0%

ViacomCBS Inc. VIAC US$41.50 US$25,647 US$45,124 8.8x 9.4x 9.1x (7.7%) (2.1%) 1.1% 9.9x 10.4x 9.8x (16.2%) (1.6%) 1.8% 3.6x 2.3%

Fox Corporation FOXA US$37.77 US$22,586 US$26,774 9.6x 9.6x 9.2x 0.6% 0.0% 1.5% 15.0x 14.1x 12.9x 1.6% 2.1% 3.1% 1.3x 1.2%

Average 9.2x 19.5x 14.2x (16.7%) (0.5%) 6.8% 12.4x 12.2x 19.8x (26.5%) 0.1% 13.5% 3.5x 1.2%

Broadcasters / Other

Cineplex Inc. CGX-TSE $13.02 $825 $2,705 n.m. 19.3x 7.1x n.m. n.m. 39.2% n.m. n.m. n.m. n.m. (33.7%) n.m. n.m. 0.0%

Corus Entertainment Inc. CJR.B-TSE $5.90 $1,231 $2,883 5.7x 5.5x 5.4x (13.6%) 1.4% 0.6% 7.9x 6.7x 6.6x (11.8%) 5.6% 0.3% 3.0x 4.1%

Iconix Brand Group, Inc. ICON US$2.00 US$25 US$588 n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. 0.0%

Sanrio Company, Ltd. 8136-TKS ¥1,781.00 ¥146,671 ¥138,089 n.m. n.m. 24.7x n.m. n.m. 27.6% n.m. n.m. 47.1x n.m. n.m. 52.7% n.m. 0.0%

Average 5.7x 12.4x 12.4x (13.6%) 1.4% 22.5% 7.9x 6.7x 26.8x (11.8%) (14.0%) 26.5% 3.0x 1.0%

29-Apr-21 Market Cap EV EV/EBITDA EBITDA Growth (%) P/E EPS Growth Net Debt/ Dividend

Company Ticker Price ($) ($MM) ($MM) 2020 2021E 2022E 19 - 20 20 - 21E 21E - 22E 2020 2021E 2022E 19 - 20 20 - 21E 21E - 22E EBITDA Yield

The North West Company Inc. - RBC NWC-CA $35.65 $1,758 $2,111 7.6x 9.3x 9.0x 60.6% (18.7%) 1.4% 11.6x 14.4x 13.8x 109.4% (19.3%) 1.5% 1.5x 4.0%

Grocery/Convenience

Alimentation Couche-Tard Inc. ATD.B-CA $41.78 $46,372 US$44,557 10.3x 9.7x 8.6x (9.5%) 2.1% 4.0% 17.2x 15.6x 13.4x (13.4%) 3.4% 5.1% 1.4x 0.8%

Loblaw Companies Limited L-CA $68.16 $24,415 $39,438 7.9x 7.7x 7.4x 2.4% 0.7% 1.5% 16.0x 14.6x 12.9x 3.4% 3.1% 4.3% 2.9x 2.0%

Metro Inc. MRU-CA $55.86 $13,864 $18,172 10.7x 10.3x 10.1x 25.4% 1.2% 0.9% 17.1x 15.9x 15.0x 15.1% 2.5% 1.8% 2.5x 1.8%

Empire Co. Ltd. EMP.A-CA $38.82 $10,445 $16,836 7.6x 7.2x n.m. 4.6% 1.8% n.m. 13.9x 12.3x n.m. 9.9% 4.1% n.m. 2.9x 1.3%

Average 9.1x 8.7x 8.7x 5.7% 1.5% 2.1% 16.0x 14.6x 13.8x 3.8% 3.3% 3.7% 2.4x 1.5%

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 13

Contributing authors RBC Europe Limited

Emma Letheren (Analyst) +44 20 7002 2100 Emma.letheren@rbccm.com

James Edwardes Jones (Analyst) +44 20 7002 2101 james.edwardesjones@rbc.com

RBC Capital Markets, LLC

Nik Modi (Analyst) (212) 905-5993 nik.modi@rbccm.com

Steven Shemesh (Associate) (212) 428-2390 steven.shemesh@rbccm.com

Mehra Romezi (Associate) (212) 266-4099 mehra.romezi@rbc.com

RBC Dominion Securities Inc.

Irene Nattel (Analyst) (514) 878-7262 Irene.nattel@rbccm.com

Alex Carette, CFA (Associate) (514) 878-7254 alexandre.carette@rbccm.com

Martin Gravel, CFA (Associate) (514) 878-7264 martin.gravel@rbccm.com

Sabahat Khan (Analyst) (416) 842-7880 sabahat.khan@rbccm.com

Atul Sriram (Associate) (416) 842-7826 atul.sriram@rbccm.com

Lee Scully (Associate) (416) 842-9988 lee.scully@rbccm.com

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 14

Required disclosures Non-U.S. analyst disclosure One or more research analysts involved in the preparation of this report (i) may not be registered/qualified as research analysts with the NYSE and/or FINRA and (ii) may not be associated persons of the RBC Capital Markets, LLC and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Conflicts disclosures This product constitutes a compendium report (covers six or more subject companies). As such, RBC Capital Markets chooses to provide specific disclosures for the subject companies by reference. To access conflict of interest and other disclosures for the subject companies, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1. These disclosures are also available by sending a written request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7 or an email to rbcinsight@rbccm.com.

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated by investment banking activities of the member companies of RBC Capital Markets and its affiliates.

Distribution of ratings For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories - Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same because our ratings are determined on a relative basis.

Conflicts policy RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. To access our current policy, clients should refer to https://www.rbccm.com/global/file-414164.pdf or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 15

Dissemination of research and short-term trade ideas RBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, having regard to local time zones in overseas jurisdictions. RBC Capital Markets' equity research is posted to our proprietary website to ensure eligible clients receive coverage initiations and changes in ratings, targets and opinions in a timely manner. Additional distribution may be done by the sales personnel via email, fax, or other electronic means, or regular mail. Clients may also receive our research via third party vendors. RBC Capital Markets also provides eligible clients with access to SPARC on the Firm’s proprietary INSIGHT website, via email and via third-party vendors. SPARC contains market color and commentary regarding subject companies on which the Firm currently provides equity research coverage. Research Analysts may, from time to time, include short-term trade ideas in research reports and / or in SPARC. A short-term trade idea offers a short-term view on how a security may trade, based on market and trading events, and the resulting trading opportunity that may be available. A short-term trade idea may differ from the price targets and recommendations in our published research reports reflecting the research analyst's views of the longer-term (one year) prospects of the subject company, as a result of the differing time horizons, methodologies and/or other factors. Thus, it is possible that a subject company's common equity that is considered a long-term 'Sector Perform' or even an 'Underperform' might present a short-term buying opportunity as a result of temporary selling pressure in the market; conversely, a subject company's common equity rated a long-term 'Outperform' could be considered susceptible to a short-term downward price correction. Short-term trade ideas are not ratings, nor are they part of any ratings system, and the firm generally does not intend, nor undertakes any obligation, to maintain or update short-term trade ideas. Short-term trade ideas may not be suitable for all investors and have not been tailored to individual investor circumstances and objectives, and investors should make their own independent decisions regarding any securities or strategies discussed herein. Please contact your investment advisor or institutional salesperson for more information regarding RBC Capital Markets' research.

For a list of all recommendations on the company that were disseminated during the prior 12-month period, please click on the following link: https://rbcnew.bluematrix.com/sellside/MAR.action

The 12 month history of SPARCs can be viewed at https://www.rbcinsightresearch.com/.

Analyst certification All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of the subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

Third-party-disclaimers The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”) and is licensed for use by RBC. Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

RBC Capital Markets disclaims all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any statements made to the media or via social media that are in turn quoted in this report, or otherwise reproduced graphically for informational purposes.

References herein to “LIBOR”, “LIBO Rate”, “L” or other LIBOR abbreviations means the London interbank offered rate as administered by ICE Benchmark Administration (or any other person that takes over the administration of such rate).

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf

ESG Stratify™- Sustaining Momentum: RBC Global Consumer Staples ESG Monitor

4 May 2021 16

Disclaimer RBC Capital Markets is the business name used by certain branches and subsidiaries of the Royal Bank of Canada, including RBC Dominion Securities Inc., RBC Capital Markets, LLC, RBC Europe Limited, RBC Capital Markets (Europe) GmbH, Royal Bank of Canada, Hong Kong Branch and Royal Bank of Canada, Sydney Branch. The information contained in this report has been compiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty, express or implied, is made by Royal Bank of Canada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute RBC Capital Markets' judgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. RBC Capital Markets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, which includes profits attributable to investment banking revenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this report may not be eligible for sale in some jurisdictions. RBC Capital Markets may be restricted from publishing research reports, from time to time, due to regulatory restrictions and/ or internal compliance policies. If this is the case, the latest published research reports available to clients may not reflect recent material changes in the applicable industry and/or applicable subject companies. RBC Capital Markets research reports are current only as of the date set forth on the research reports. This report is not, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the full extent permitted by law neither RBC Capital Markets nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct, indirect or consequential loss arising from, or in connection with, any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior written consent of RBC Capital Markets in each instance.

Additional information is available on request.

To U.S. Residents: This publication has been approved by RBC Capital Markets, LLC (member FINRA, NYSE, SIPC), which is a U.S. registered broker-dealer and which accepts responsibility for this report and its dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting in a broker or dealer capacity and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, should contact and place orders with RBC Capital Markets, LLC.

To Canadian Residents: This publication has been approved by RBC Dominion Securities Inc. (member IIROC). Any Canadian recipient of this report that is not a Designated Institution in Ontario, an Accredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBC Dominion Securities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada. To U.K. Residents: This publication has been approved by RBC Europe Limited ('RBCEL') which is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority ('FCA') and the Prudential Regulation Authority, in connection with its distribution in the United Kingdom. This material is not for general distribution in the United Kingdom to retail clients, as defined under the rules of the FCA. RBCEL accepts responsibility for this report and its dissemination in the United Kingdom. To EEA Residents: This material is distributed in the EU by either RBCEL on an authorised cross-border basis, or by RBC Capital Markets (Europe) GmbH (RBC EG) which is authorised and regulated in Germany by the Bundesanstalt für Finanzdienstleistungsaufsicht (German Federal Financial Supervisory Authority) (BaFin).

To Persons Receiving This Advice in Australia: This material has been distributed in Australia by Royal Bank of Canada, Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been prepared for general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting on this material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition or possible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product and consider that document before making any decision about whether to acquire the product. This research report is not for retail investors as defined in section 761G of the Corporations Act. To Hong Kong Residents: This publication is distributed in Hong Kong by Royal Bank of Canada, Hong Kong Branch, which is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission (SFC) in Hong Kong, RBC Investment Services (Asia) Limited and RBC Global Asset Management (Asia) Limited, both entities are regulated by the SFC. This material is not for general distribution in Hong Kong to persons who are not professional investors (as defined in the Securities and Futures Ordinance of Hong Kong (Cap. 571) and any rules made thereunder. To Singapore Residents: This publication is distributed in Singapore by the Royal Bank of Canada, Singapore Branch, a registered entity licensed by the Monetary Authority of Singapore. This material has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of any recipient. You are advised to seek independent advice from a financial adviser before purchasing any product. If you do not obtain independent advice, you should consider whether the product is suitable for you. Past performance is not indicative of future performance. If you have any questions related to this publication, please contact the Royal Bank of Canada, Singapore Branch. Royal Bank of Canada, Singapore Branch accepts responsibility for this report and its dissemination in Singapore.

To Japanese Residents: Unless otherwise exempted by Japanese law, this publication is distributed in Japan by or through RBC Capital Markets (Japan) Ltd. which is a Financial Instruments Firm registered with the Kanto Local Financial Bureau (Registered number 203) and a member of the Japan Securities Dealers Association (“JSDA”) and the Financial Futures Association of Japan (“FFAJ”).

® Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license. Copyright © RBC Capital Markets, LLC 2021 - Member SIPC

Copyright © RBC Dominion Securities Inc. 2021 - Member Canadian Investor Protection Fund Copyright © RBC Europe Limited 2021

Copyright © Royal Bank of Canada 2021 All rights reserved

606924_b47558c6-6e3e-4881-a715-aa0c02485bb8.pdf