Safeway Northern California Packaged Meat Analyses Nielsen Perishables Group December 2015

Table of Contents What We Analyzed 3 Analysis Snapshots Meat Wall Landscape 4 Promotional Best Practices 5 Price Gap 6 Recommendations 7 Source: Nielsen Perishables Group

What we analyzed… Meat Wall Landscape Gain: understanding of current trends …assessing performance and emerging trends in processed lunchmeats, bacon and dinner sausages sold in the meat department Promotional Best Practices Determine: promotional trade activity …for the processed lunchmeat category at Safeway NorCal through ad placement, promotional frequency, etc.   Price Gap Analysis Identify: optimal prices and price gaps …for Safeway NorCal by product selection (brands and protein types) for processed lunchmeats to understand typical price point and where/how consumers are reacting to different price gaps Columbus Foods has partnered with Safeway NorCal to create a merchandising test that would place Columbus deli meat products in the meat department. Source: Nielsen Perishables Group

Meat Wall Landscape Utilize strong performance in specialty meat Strong dollar share and growth in salami SFY Nor Cal Specialty Meat Segment Dollar Share and Growth Dollars per $MM ACV Sales Volume per $MM ACV Sales Average Retail Price $7.67 +1.5% vs. YAGO +6.8% 7.3% VS YAGO 7.3% VS YAGO 5.7% VS YAGO 5.7% VS YAGO +15.6% +7.7% +2.7% -3.1% The average number of unique items (SKUs) per d-store/week grew 6.4% to 27 items* in Safeway NorCal Make promotions more effective, as prices in ROM are lower than in SFY Nor Cal Opportunity in dinner sausage Take advantage of growth in flavors BBQ Spicy The average number of unique items (SKUs) per d-store/week declined 3.2% to 63 items* in Safeway NorCal Average Retail Price $4.96 +6.1% vs. YAGO 6.9% VS YAGO 5.9% Dollars per $MM ACV Sales Volume per $MM ACV Sales Smoked Limit available items to become more efficient. Safeway NorCal has more items but fewer sales per store/week than its ROM Source: Nielsen Perishables Group - Columbus Safeway NorCal Meat Wall Landscape Analysis

Promotional Best Practices Benefit the Entire Category Focus on Your Brand The more items on promotion, the bigger the impact on the category Promotions featuring multiple brands/sub-categories were most impactful – drawing more attention to the meat wall overall Run ISPR and feature promotions simultaneously for largest impact across the whole category Promotion discounts should average around 24% and no higher than 41% to impact both the item and entire category Individual items had larger impacts, when fewer items were promoted Conventional items benefited more from being promoted on their own Promote with other successful brands and sub-categories, such as Oscar Meyer and 4x6 Wallet Packs Include ‘health/better for you’ claims for items on promotion Consider ‘must buy 3’ promotions, as they had the highest category dollar and volume impacts, with lower discounts and suggest more ‘buy one get one’ promotions to drive incremental volume Source: Nielsen Perishables Group - Columbus Safeway NorCal Luncheon Meat Promo Best Practices Analysis

Leverage Optimal Price Gaps Foster Farms, Turkey, Peg, Conventional Price Gap Analysis Pinpoint Base Sales Leverage Optimal Price Gaps Avg. threshold is lower/ less ‘giving’ for conventional vs. BFY products Manage gap at or below threshold to maximize sales and minimize switching BFY shoppers not as ‘swayed’ by price differences of Conventional products BFY branded items started to see a slight drop in sales only when the gap to the conventional product widened to the $4+ dollar range Foster Farms, Turkey, Peg, Conventional Oscar Mayer Foods Corp., Ham/Turkey, Deli Tubs, Natural vs. Oscar Mayer Foods Corp., Ham/Turkey, Wallet, Conventional Organic Prairie, Turkey, Peg, ABF/No Nitrites/Organic Source: Nielsen Perishables Group - Columbus Safeway NorCal Price Gap Analysis

How we can advise… Large assortment of items in SFY Nor Cal … Assortment Strategy Pricing Strategy Promotional Strategy Large assortment of items in SFY Nor Cal … Capitalize on the growth of branded items Differentiate from everyday brands and the wide array of competitive products- be selective in the items (types/flavors/sizes/etc.) to introduce in-store Encourage higher trial rates when introducing the product line—recommend that SFY not promote competitive brands at the same time (more promotions equal more sales dispersed across individual items) as their brand (BFY/ Brands) Loyal BFY shopper base (possibly the BFY consumer has already made the decision to buy on health – less sensitivity despite price or influenced by promotions); however… Be mindful of conventional items - maintain a price gap of less than $4+, as a sales start to drop around this ‘threshold’ Capture sales outside shopper base – take advantage of when PL (BFY) is priced higher than competitive products – shoppers switched to branded Heavy promotional activity in SFY Nor Cal even without ISPR… Activate on any/all promotional activities. As in-store performs well there’s opportunity to discuss with SFY promotions not as typically/frequently run, but that had good sales in response to the promotion… ‘buy 1 get 1’ or ‘must buy 3’ Recognize BFY sales are more impacted, when conventional is promoted - although BFY is discounted more heavily, the majority of sales are conventional Source: Nielsen Perishables Group