- Breakout Session - Closeout Sales & Donations Joint Industry Unsaleables Management Conference July 2011

Agenda Introductory Comments Manufacturer Process Retailer/Wholesaler Process Secondary Market Process Hunger Relief Concluding Remarks Q&A

Jim Spaight Land O’Lakes

Land O’Lakes Closeout Sales and Donations Land O’Lakes from farm to table – Farmer owned co-op – Stewards in the communities we live and work Types of products for closeout sale/donation – Retail – Foodservice – Industrial

Land O’Lakes Closeout Sales and Donations Closeout Sale, Donation process – First run donations – What is wrong with the product – Where is it located – What is the value (our cost, in closeout market)

Jeff Thune Retailer/Wholesaler Process

Donations – Retail Perishable Programs – Cash Donations – Resource Commitments Building design, purchasing; etc. Equipment and materials Committee involvement – Volunteer efforts

Retailer/Wholesaler Process Donations and Close-out Sales – Damage Reclamation Centers Vendor option Swell allowances – Distribution Centers Remaining shelf life Manufacturer direction – Private Brands Out-of-bounds Out-of-market Rebranding

Jeff Thune 2ndMarket Solutions

Closeout Sales Manufacturer – Obsolete Inventory Aged Excess Damaged Quality Discontinued Packaging/Formula Change Seasonal

Closeout Sales Retailer – Obsolete Inventory Aged Excess Damaged Discontinued Seasonal DRC product Swell product

Closeout Sales Closeout Sale Approved Closeout Customer – Application process  Capabilities  Services – Restrictions or guidelines  No returns  Remain in secondary market  Private Brands  Regionality

Closeout Sales Considerations – Days of remaining shelf life – Quantities – Item(s) – Product categories – Brand integrity

Closeout Sales Supply Chain Solution (Resource Recovery) Partnership Collaborative effort working together Centralized process Reporting capability Recall tracking Maximize return on unsaleables Reduce unsaleables

Rod Lanier Convoy of Hope

Kurt Welz Feeding America

Who is Feeding America? Feeding America is: The nation’s largest hunger relief organization Over 200 food banks and food-rescue organizations, supporting more than 60,000 local charitable agencies Distributing more than 3 billion pounds of food and grocery products each year Feeding America’s Network serves 37 million hungry Americans every year A Vision to Create a Hunger-Free America Nearly 1 in 6 people within the United States do not know where their next meal will come from- over 50 million Americans.

Donation Trending National Manufacturer Food Donations are Declining Changing Dynamics in Supply Chain Past opportunities were based on traditional food waste model Greater Efficiencies- lean process, waste reduction, cost control Economic/ Consumer Demand- less volume and inventory movement Increased Focus on Sustainability and alternative dispositions Manufacturer Donations opportunities are highly variable on a month over month basis, with less opportunities due to current trending Companies have dramatically different approaches to donating product driven by differing business objectives and capacities

Donation Opportunities Dry, Frozen, Refrigerated Short-coded Outdated (w/ approv. ext.) Discontinued Mislabeled Unlabeled / Brites Test product Promotional Items Private label / Licensed Packaging changes Damages Line start up waste Reformulations Seasonal Items Overruns Customer returns Food service sizes Bulk Product Low weights / Short fills Excess Ingredients Boxes, Containers Shelving & Equipment

Donation Identification Partnering in the Disposition Process Source: A. T. Kearney analysis Identify and Quantify the Waste Explore Ways to Reduce the Waste Recover and Donate the Remainder QuantifyReduceDonate Where is food waste occurring? Why is there waste? How much waste is there? Who owns the waste? How can we reduce the amount of waste? How much waste will remain? What kind of waste is it? Is the waste edible? Can it be donated “as is”? If not, are there steps that can be taken to recover the waste? What is the cost of these steps?

Donation Management Define Corporate Policy -Product (Off-spec, Code Dating, Damages, Returns) -Distribution (Warehouses, Stores, 3PLs) -3PLs (Licensed, Co-pack, Shipping, Unsaleables) -Transportation (Freight Damages, Refusals) Identify Manufacturer Process Decision Points -Off-Spec -Bulk / Ingredient -Inactive / Excess Create Corporate Culture -Clear Visibility to Opportunities -Timely Decision Making on Disposition -Product Donation Action Teams

Donation Benefits Centralized, Streamlined Process Local Goodwill & Community Support Brand Integrity, Security Savings- Storage, Transportation, Trash Recall Tracking, Reporting Capability Good Samaritan Act- Liability Protection Potential Tax Benefits Supports Sustainability Initiatives

Closeout Sales and Donations Closeout Sale and Donations – Product Condition – Financial Accountability – Corporate Citizenship – Maximize Closeout Sales and Donations Unsaleables Conference opportunity

Closeout Sales and Donations Questions?