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2020 VISIONSTAYING AHEAD OF THE CURVE

@CarmAllison@NielsenCarman Allison, VP Consumer Insights, Nielsen

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THE CHALLENGE FOR GROWTH

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United States

Nielsen: MarketTrack ‐ Total Tracked Sales52 wks ending June 27, 2015

Canada

+2.9 +0.4

Dollars

Nielsen: Scantrack ‐ Total Tracked Sales52 wks ending July 4, 2015

UnitsDollars Units

+2.0 ‐0.4

CANADIAN CPG OUTPACING THE US ON DOLLARS

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0.50.1 0.2 0.5 0.2

2.4 2.5

1.52.0

3.1

2011 2012 2013 2014 YTD 2015Dollar Sales

Unit Sales

132 130 126 123 122

Trips per Shopper

Canadian CPG

Source: Nielsen MarketTrack, National All Channels – 52 weeks, YTD: 28 weeks to June 27, 2015 ‐ Total Tracked Sales excluding Fresh Random WeightHomescan Grocery Composite: 52 weeks Year End. Current 52 weeks to June 27, 20145

2015 SHOWING THE IMPACT OF RISING PRICES

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5

3 3

2

33

4

01

0

01

2

National Maritimes Quebec Ontario Prairies B.C.

$ % Chg Unit % Chg

WESTERN CANADA LEADS REGIONAL GROWTH

52 week Regional CPG Performance

Source: Nielsen MarketTrack, National All Channels – 52 weeks Ending June 27, 2015 ‐ Total Tracked Sales excluding Fresh Random Weight

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TRADITIONAL

CPG RETAIL IS BEING REDEFINED

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TRADITIONAL CPG CHANNELS KEEPING PACE WITH THE TOTAL MARKET PERFORMANCE

Mass Merch. +3%Drug +3%Grocery +2%

Source: Nielsen Homescan Channel Watch – Canada ‐ 52 weeks to June 27, 2015* Drug and C&G: MarketTrack, National All Channel, 52 weeks to June 27, 2015

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MANY RETAIL CHANNELS SUFFERING DUE TO THE SHIFT TO ONLINE AND INCREASED COMPETITION

US Cross Border ‐19%Electronic ‐17%Department ‐12%Office Supply ‐10%


Source: Nielsen Homescan Channel Watch – Canada ‐ 52 weeks to June 27, 2015* Drug and C&G: MarketTrack, National All Channel, 52 weeks to June 27, 2015

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ETHNIC, ONLINE, DOLLAR, WAREHOUSE CLUBS LEAD CANADIAN RETAIL GROWTH

Online* +21%Ethnic Grocery +16%Dollar Stores +9%Warehouse +9%Home/DIY +9%Gen Merch +7%Pet Specialty +5%Conv & Gas* +4%

Source: Nielsen Homescan Channel Watch – Canada ‐ 52 weeks to June 27, 2015* Drug and C&G: MarketTrack, National All Channel, 52 weeks to June 27, 2015 *Online Dec ember 27, 2014

US Cross Border ‐19%Electronic ‐17%Department ‐12%Office Supply ‐10%


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TOP 5 RETAILER CONCENTRATION

Top 5 CPG

Top 5 Grocery

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+3.1

+2.8+1.2

+2.3

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DISCOUNT RETAILERS ARE GAINING A LARGER SHARE OF CONSUMER WALLETS

68.358.3 60.8

31.7 41.7 39.2

Total Trip Grocery Composite* Drug Composite**

Conventional Discount

+7% +7% +4%

‐1% ‐1% ‐3%

*Categories typically sold in a Grocery Store**Categories typically sold in a Drug Store

Source: Homescan Retailer Watch, National All Channels ‐ 52 Weeks to June 27, 2015

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60.8

39.2

DISCOUNT RETAILERS REPRESENT 39% OF DRUG BASED SALES – MAJOR GAINS IN THE PRAIRIES

$ Share & Growth

Discoun

tCo

nven

tiona

l

+4%

‐3%

Discount Share & Growth

Maritimes 21.7 ‐1

Quebec 35.0 +3

Ontario 44.9 +3

Prairies 40.9 +9

B.C. 34.6 ‐1

Source: Homescan Drug Watch, National All Channels ‐ 52 weeks to June 27, 2015 Drug Composite

Drug Composite

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TRADITIONAL

CPG RETAIL IS BEING REDEFINED

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HOW ARE THE HEALTH & BEAUTY DIVISIONS PERFORMING?

Source: Nielsen MarketTrack, National All Channels – 52 weeks Ending July 25, 2015

$12.4 Billion18% of CPG

38.5

20.7

10.9

10.9

8.7

6.6

3.8

OTC

BODY CARE

COSMETICS

BABY CARE

HAIR CARE

ORAL HYGIENE

SHAVING

+5

+2

+3

+1

+2

+3

+0+3%

$ Share of HABA

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Cosmetic Kits

Foot Care

Men’s Antifungals

Children’s Bath Add.

Energy & Nutrition

+59%

+35%

+31%

+21%

+21%

TOP ‐ GROWTH % CHG

BOTTOM ‐ GROWTH % CHG

Toothache Drops

Oral Back Remedies

Enemas

‐8%

‐7%

‐6%

‐6%

‐6% Contact Lens Prep.

Feminine Wipes

MAKING THE CUT IN HABA

Source: Nielsen MarketTrack, National All Channels, 52 weeks Ending July 25, 2015 > $5 million

Face Care+1%

Headache & Migraine Relief+2%

Shampoo & Conditioners+4%

Diapers‐2%

Natural Health Supps+5%

TOP 5 HABA CATEGORIES ($M)

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DRUG STORES REMAIN THE TOP DESTINATION FOR HABA SALES – BUT LOSING SHARE

$ Share 2009 2015 Pt Chg

Drug Stores 39.6% 34.7% ‐4.9

Grocery 23.4% 23.6% +0.2

Mass Merch. 21.4% 21.8% +0.4

Warehouse 7.0% 10.2% +3.2

Health Food 1.9% 2.0% +0.1

Remaining 6.7% 7.7% +1.0

Source: Nielsen Homescan Channel Facts ‐ 52 Weeks Ending June 27, 2015

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2020 VISION: STAYING AHEAD OF THE CURVE

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Shift from traditional to digital retail


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E‐COMMERCE HAS GAINED MOMENTUM FOR CPG, BUT ON A SMALL SHARE BASE

Source: Nielsen, Cross Outlet Facts, 52 weeks ending December 27, 2014

2.0% 0.6% 1.1%

TotalExpenditures

GroceryComposite

DrugComposite

$ % Chg +21 +19 +18

+0.3

+0.1

+0.2

Penetration 43% 17% 21%

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WHICH CPG DEPARTMENTS ARE TRENDING ONLINE?

Source: Nielsen, Cross Outlet Facts, 52 weeks ending December 27, 2014 – E‐Commerce $ share and growth

Confectionery 0.7% +8

Beverages 0.6% +4

Condiments 0.6% +35

Baking 0.5% +12

Snack 0.5% +18

Cosmetics 1.9% +65

Baby Care 1.6% +28

Body Care 1.4% +22

OTC 1.2% +21

Oral Hygiene 1.2% +31

Gen Merch 3.3% +13

Pet Needs 1.0% +16

Household 1.0% +15

Paper 0.8% +18

FOOD (+17%) HEALTH & BEAUTY (+25%) NON GROCERY (+13%)

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CANADIANS LAG ONLINE GROCERY ORDERING% already using online grocery ordering:

Source: Nielsen, E‐Commerce, Digital Technology and Changing Shopper Preferences Around the World Report (April 2015)

7%

4%3%

2%3%

2%

13%

10% 10%9%

8% 8%

Delivery to Home

Virtual Supermarket

Pick‐up in Store

Auto Subscription

Pick‐up Curbside

Drive‐thru Pick‐up

Canada United States

25% 13% 12% 14% 10% 12%Global

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BUT GOOD INTENTIONS FOR FUTURE GROWTH

20%

16%

12%

Delivered to home (+3 pts)

Pick up inside the store (+1 pts)

Pick up curbside outside store (+1 pts)

Use drive‐thru pick up (+1 pts)

10%

% who would take advantage of these online options for GROCERY shopping

% Highly + Somewhat LikelySource: Nielsen 2015 Economic Impact Survey

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ONLINE IS PROJECTED TO MORE THAN DOUBLE

Source: Nielsen, Homescan Cross Outlet Facts – scanned UPC – 2020 estimates

Today 2020

2.1% 5.3%$ Share of CPG

Bricks & Mortar Share

Traditional GroceryDrug StoresLOSS

Warehouse ClubEthnic GroceryDollar Stores

GAIN

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YOUNGER URBAN HOUSEHOLDS WITH KIDS ARE MORE LIKELY TO SHOP ONLINE

<35

Age Family Urban

Source: Nielsen 2015 Economic Impact Survey

1.8X 1.5X 1.2XMore likely

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Urbanization is redefining how we live and shop



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FASTEST CPG GROWTH CITIES ARE IN THE WEST

35%

54%

TOP

3

TOP

10

Cities % of Population

Source: Nielsen PanelViews Survey, Statistics Canada – Census 2011 MarketTrack: G+D+MM 52 weeks to June 27, 2015

Top 10 CPG Growth Cities Total HABA

Vancouver +5% +6%

Calgary +5% +5%

Edmonton +5% +5%

Niagara +5% +4%

Sherbrooke +5% +3%

Abbotsford +5% +5%

Saskatoon +4% +3%

Windsor +4% +4%

Hamilton +4% +3%

Regina +4% +1%

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URBAN, SUBURBAN, RURAL

Source: Nielsen HomeScan, Grocery Composite, 52 weeks ending September 20, 2014

$3,443 $4,102 $4,357

Age <44 35‐54 >45

2‐32‐4 1‐2

<$50K>$100K $70K ‐ $100K

Urban Suburban Rural

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THE URBAN CONSUMER…

12% Less likely to own a car – shopping closer to home with smaller baskets/more trips

12% More likely to buy smaller sizes

32% Of Males are the primary shopper (vs. 19% Rural)

Source: Nielsen Panel Views Survey 2013/4

19% Read store flyers on a smartphone (vs. 10% Rural)

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The male shopper is a key decision maker



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% of Households (>50% of Shopping)

24% 16% 60%

MALE SHOPPERS ARE OFTEN OVERLOOKED BUT ACCOUNT FOR 24% OF PRIMARY SHOPPERS

Source: Nielsen Panelviews June 2014

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Male shoppers spend less but shop more often; less likely to browse and more likely to buy only what they need

Source: Nielsen Homescan, National All Channels, Total Expenditures, 52 Weeks ending July 26, 2014; Nielsen Panelviews June 2014

$32.41

$37.72

I tend to buy only what I need

I like spending time browsing

161

152

Avg Trips / Year Shopping Opinions % AgreeAvg Basket Size

43% 54%

50% 60%

ENSURE IT’S EASY FOR MALES TO FIND WHAT THEY NEED

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THE MALE SHOPPER CAN BE MORE PROFITABLE

24% Of male spend is on perceived deal (28% for female)

12% Typically prepare a shopping list (78% for female)

13% Use coupons (67% for female)

32% Are aged > 55 years (40% for female)


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Millennials will surpass Boomers as #1 consumer



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MILLENNIALS AND BOOMERS: THE TOP 2 CONSUMER POWERHOUSES

<19‘Gen Z’16%

19‐37‘Millennials’27%

38‐47‘Gen X’14%

48‐67‘Boomers’28%

68+‘Greatest’14%

Source: Statistics Canada – Census 2011

5.7 9.4 4.7 9.8 5.0 Millions

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CURRENTLY MILLENNIALS ARE UNDER REPRESENTED IN PURCHASING POWER

Millennials’ Importance

27%

Source: Source Nielsen Homescan – 52 weeks to March 29, 2014

14% 12%

% of Population

9.1 M

% Household Heads

2.0 M

% of CPG $’s

11.7 B

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37Source: Statistics Canada M: Millions

2010 2020 2030

Millennials Boomers

MILLENNIALS WILL SURPASS BOOMERS BY 2020

26%

28%

8.9 M9.7 M

26%

24%

10.0 M9.4 M

26%

20%

11.0 M8.3 M

34.2 M 38.4 M 42.1 MTotal Canada

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THE CPG GROWTH ENGINE WILL SWITCH GEARS

By 2020…

Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years – Based on older generation spend

+$12.6 B

+107%‐$4.3 B

‐9%

BOOMERSMILLENNIALS

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RESULTING IN A SHIFT IN FUTURE SHOPPER TRAFFIC FLOW

Source: Nielsen Panel Views Survey 2013 ‐ Canada

45% Sat‐Sun

46% Thurs‐Fri

45% > 3 pm

41% < 12 pm

Day of Week:

Time of Day:

Millennials

Older Boomers

Millennials

Older Boomers

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WHICH HABA DEPARTMENTS ARE MOST COMMONLY FOUND IN A MILLENNIALS’ SHOPPING BASKET?

Nielsen Homescan – Dollar Consumption Index – 52 wks to June 27, 2015 – Consumer Facts CPG Departments Relative Index (82 for total)

Relative Dollar Index <35 years

Baby Care 344

Hair Care 110

Body Care 109

Cosmetics 101

Oral Hygiene 95

OTC 69

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AGING IN AND AGING OUT

Nielsen Homescan – Dollar Consumption Index – 52 wks to December 28, 2013 – Consumer Facts CPG Departments

HH Dollar Index 55‐64 yrs 65+ yrs Trend

OTC 115 150

Oral Hygiene 105 106

Cosmetics 105 88

Body Care 94 84

Hair Care 93 66

Baby Care 30 18

As consumers age, they change their consumption of key HABA departments

+

‐

‐

‐

‐

+

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MILLENNIALS ARE VALUE DRIVEN AND CONNECTED

73% Price is the first thing they look at(58% for total Canada)

26% Don’t subscribe to cable TV(12% for Boomers)

42% Of Wallet in Discount Retailers (33% for Boomers)

83% Have a smartphone(60% for total Canada)


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Millennials will surpass Boomers as #1 consumer



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• Diversify Portfolio to meet the emerging needs of ethnic and millennial consumers.

• Get Closer to the consumer focused on local market needs: Smaller stores & less assortment

• Personalize your marketing programs through digital to build the one‐to‐one relationship as traditional media reach declines.

• Be Ready & Prepared for the disruption in retail. Online and digital will continue to grow and you need to partner with leading retailer programs.


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CHASING THE CUSTOMER … NOT THE COMPETITION!

RONALD LUNDE

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THANK YOU!

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