Private Label Manufacturers Association Feb 2013

agenda Customer and Manufacturer Mindset The Market Private Label Performance Christmas Snap Shot

CUSTOMER AND MANUFACTURER MIND SET

Consumer Confidence continues to erode, with bleak outlook for coming year Manufacturer Outlook is divided, but pessimistic about current trends and activities Retailer Relationships are being damaged by perceived power and cost imbalances Trade Spend is reaching saturation point and no longer delivering on its promise

38% of consumers think we are in a recession – 6% more than in Q4 2009. 39% of manufacturers feel that business conditions have declined since this time last year 65% feel they need to cut back on Trade Spend, compared to 38% who see it boosting ROI. 25% of manufacturers consider their relationship with Woolworths to be “Poor” or “Very Poor”.

THOSE who feel we are in recession has doubled since the same time in Q4 2009 First time confidence has been below 100 at year’s end Call out for presenter: what is odd about this slide? Why is confidence lower than post-GFC? Q: Do you think your country is in an economic recession at the moment? Source: Nielsen Global Survey, Q4-2012, Base: All respondents (Australia), Field Dates: November 10 - 27, 2012

People perceive Future job prospects to be bleak almost doubling compared to Q4, 2010 Q: What are your perceptions of Local Job Prospects over the NEXT 12 Months? Source: Nielsen Global Survey, Q4-2012, Base: All respondents (Australia), Field Dates: November 10 - 27, 2012

This is Compounded by cost of living pressures and health concerns Health ties into money woes – could it devastate you. Q: What are your major top two concerns over the next 6 months? Source: Nielsen Global Survey, Q4-2012, Base: All respondents (Australia), Field Dates: November 10 - 27, 2012

The market

Australia continues to experience a slowing rate of FMCG price inflation, which is a recurring pattern in other countries in the region. Australia Fast Moving Consumer Goods market dynamics | Scan Data Nielsen Scan Data based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels. In most cases this reflects 60 – 80% of all Longlife categories. For Australia, this is 75% of categories.

Regional Summary (Quarter 4) The region continues to see strong growth, with volumes up 7% and overall dollar sales growth of 12.7% Regional Summary (Quarter 4) Fast Moving Consumer Goods market dynamics | Scan Data Nielsen Scan Data based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels. In most cases this reflects 60 – 80% of all Longlife categories. For Australia, this is 75% of categories.

Supermarket $ Growth 2.5% excl PL/Tobacco Suppliers $ Growth Top 5 +1.5% Next 100 +3.6% Top 101 – 200 +7% $122M $663M Absolute contribution to $ growth is about the same for the Top 100 versus next 100 suppliers! $92M Source: Nielsen | ScanTrack Australia MAT to 23/12/2012 vs Yr Ago Retail Barometer

87% will change promotional activities 2 out of 5 will change depth 3 out of 5 will change frequency Only 1 in 6 will change number of items on promotion Mfr’s seem to think so with 9 out of 10 indicating they will take action to adjust components to reduce trade spend or at least make promotional tactics a amjor focus going forward Source: Nielsen Retail Barometer, Q4-2012, Base: All respondents (n=92), Field Dates: November 10 - 27, 2012

Coles Aldi WW is leader on consumer focused activities. is leader on strategic, and manufacturer focused activities. Aldi is leader on supply chain. WW Source: Nielsen Retail Barometer, Q4-2012, Base: All respondents (n=92), Field Dates: November 10 - 27, 2012

in-market success as Coles continues to close the gap on woolworths 38.2% + 0.1 29.0% + 0.5 7.7% - 0.5 7.6% + 0.6 Market Share % by Retailer 2012 (vs. 2011) Source: Nielsen | Homescan, Total Australia, MAT to 15

RETAILER GROWTH % AHEAD OF TOTAL AUS Coles enjoying broad success across all socio-demographic clusters followed by aldi RETAILER GROWTH % AHEAD OF TOTAL AUS Families Singles & Couples High Income Med Income Low Income HIGH Income Density LOW Income Density Total $ Growth AUS: +5% Total $ Growth WW: +3% Total $ Growth Coles: +8% Total $ Growth IGA: -1% Total $ Growth Aldi: +23% Retailer % Growth Vs Total AUS – 2012 Source: Nielsen | Homescan, Total Australia, MAT to 16

LETS TALK PRIVATE Label!

% Value Share of Private Label to Total Packaged Grocery Sales Private Label has gained an increase in Share in WOW. Small decrease in PL Share for Coles. Branded products highly increasing their share in Aldi % Value Share of Private Label to Total Packaged Grocery Sales Growth stronger vs last Xmas quarter but tapering off for Coles PL Ww Product T Grocery, T. P Label MK AuS, coles, ww, aldi WW PL as a % of Total Aus T Grocery 18

Families Share on Private Label Trended, Total Supermarkets Start up families increasing their spend on private labels faster than other demographic groups Families Share on Private Label Trended, Total Supermarkets

CUSTOMERS BUYING MORE , PENETRATION INCREASES and overall SHARE increasing AWOP PL VAL Share +4.6% +2.8% -3.4% +0.0% +8.4% +6.0% +1.0% +2.1% +0.9% Penetration - %chg v YA AWOP - %chg v YA PL VAL Share – % chg in PL Share (Value Market Share for Total PL) -4.2% -6.0% -5.6% Source: Nielsen | Homescan (Australia) – Issue# 600652/600654 Homescan QTR to 26/01/2013 Q4 2012 Nielsen Private Label Report

WHICH PRODUCTS DO SHOPPERS WANT IN PRIVATE LABEL

There are 20 categories which account for 50% of the Heavy Private Label Buyers spend over a year in Australia Shopping list Pet Food Coffee Milk Ice Cream Block Cheese Convenience Frozen Soft Drinks Medicinal Products Biscuits And Cookies Frozen Vegetables Chilled Desserts Vitamins Confectionery Toilet Paper Cereal Chilled Spreads Snacks Heat And Eat Frozen Packaged Bread In store Bread 8 Purchased in National brands 5 Purchased primarily in Private Label 7 Promotional Vulnerable PL

What turns on THE PRIVATE LABEL SHOPPER

… to purchase Food, Grocery and Toys Attitudinal, Media and Lifestyle pen portrait of a Heavy Private Label Buyer They keep an eye on their children eating habits They like to try new brands They watch family movies together In-Store advertisement influence their purchase decisions … to purchase Food, Grocery and Toys They use internet …

Christmas snap shot

Christmas Themes Strong Christmas Theme: Fun and Lowest Prices Fresh and Value All Your Needs for Christmas Strong Christmas Theme: Quality and Fresh All Your Needs for Christmas

Aldi performing ahead of expectation over the Christmas period. Christmas Shopper trends 37.7% 29.0% 8.1% Share of Trade -4.9% +14.3% +143.8% Growth in Media Spend At which of the following supermarkets did you complete the majority of your Christmas shopping? 1st (28%) 2nd (24%) 3rd (14%) Thinking about your overall experience (including out-of-store marketing), who do you think should ‘win’ the best Overall Supermarket for Christmas 2012? 1st (37%) 2nd (30%) 3rd (10%) Share of Trade: Source: Nielsen Homescan, 13 weeks to 29/12/2012. Media Spend: Source: Nielsen Media, 8 weeks to 29/12/2012, data derived from free-to-air channel rate cards after discounts applied. Discounts are derived on a per advertiser basis, based on industry body information. Nielsen aims for this measure to be as accurate as possible, but deviation from the total universe may occur. Shopper Trends: Source: Nielsen Customized Research (CR), based on January telephone survey from a CR Panel (separate to the Homescan panel) (n = 3007 for location of shopping question, n = 3358 for best supermarket winner question).

Christmas Shopper trends Aldi’s performance over Christmas has been driven in some area’s that aren’t traditional Aldi strengths. Christmas Shopper trends Which of the following reasons describe why you chose to shop at your chosen retailer for the majority of your Christmas shop? Shopper Trends: Source: Nielsen Customized Research, based on January questionnaire (n = 2953).

Switching: Total Business (rolling quarters) While switching to Coles and ALDI has tapered back, the switching to these two retailers was worth $53m in lost sales in the Christmas Quarter. Switching: Total Business (rolling quarters) Lost sales = $53m Source: Nielsen Homescan

WOW shoppers increased their spend in WOW stores, but lagged behind Coles (by $4.50) and ALDI (by $3.70). Shopper key metrics More shoppers in stores (+0.7%) Shoppers spending more in Total Quarter (+$15.30) +0.0% +$19.80 +2.5% +$19.00 Shoppers visiting less frequently (-0.1%) Shoppers spending more per visit (+$1.10) +0.1% +$0.40 +0.2% +$0.50 Time periods are 13 weeks to week ending 29/12/2012 vs 13 weeks to week ending 31/12/2011. Source: Nielsen Homescan

ALDI’s Christmas

Perceived % Value on Promo ALDI stocked more branded items this Christmas than ever before – offerings which were on average 75c cheaper than WOW and $1.19 cheaper than Coles. Retailer share amongst Aldi’s branded Christmas stock -7.8% The New ALDI Buyer Penetration AWOP ($) Avg Price ($) Per Unit Perceived % Value on Promo 2011 2012 +/- Australia 76.5 83.2 6.7 21.84 25.14 3.30 4.37 4.48 0.11 48.9 52.1 3.1 Woolworths 45.9 47.9 2.1 16.72 16.73 0.01 4.32 -0.15 50.7 52.8 Coles 38.5 41.7 3.2 15.81 18.18 2.37 4.20 4.76 0.57 48.6 56.7 8.1 ALDI 0.0 16.8 0.00 11.36 3.57 24.4 Time periods are 13 weeks. 2012 to week ending 29/12/2012, 2011 to week ending 31/12/2011, 2010 to week ending 01/01/2011. Source: Nielsen Homescan

ALDI’s New Shoppers demographic profile The new ALDI shopper is predominantly families, notably Small Scale Families. This links in with the longer term trend seen at an All Shopper level, where families are switching out of WOW and into Coles and ALDI. ALDI’s New Shoppers demographic profile Families Main Shopper <44yo Medium Income HHs Time periods are 13 weeks. 2012 to week ending 29/12/2012, 2011 to week ending 31/12/2011, 2010 to week ending 01/01/2011. Source: Nielsen Homescan

Aldi 300 stores 50% of household’s shopping 10% share of eastern seaboard Strength is price Range = 1200 items Basket size is 90% of WW / Coles Strong in fresh Skewed towards families Strongest rel’ship with suppliers Brightest future according to Aust. Suppliers Plans to open in South & Western Australia 300 stores Why wait – why not launch your own equivalent? 50% of household’s shopping

Summary of trends

Summary of trends Consumer and Manufacturer confidence continues to erode, with bleak outlook for coming year. Coles & Aldi winning in the market – both attracting Woolworths key shoppers PL continuing to grow in the Australian market, but growth slowing as market becomes more mature Private Label growth opportunities increasingly focused on more premium non- traditional areas Balancing both Private Label & Branded important to retailers in winning Christmas Aldi growth into SA & WA likely to increase the acceptability of Private Label within the Australian market

ThankYOU