1 Presented by Empower IT August 2008 European Market Overview Heidelberg, Germany

2 Overview of the Market Place

3 “The dollar is down, so he’s worshipping the Euro.”

4 Source: Information Service Food Marketing Institute April 2007 – ranking and sales information taken directly from Directory of Supermarket, Grocery & Convenience Store Chains *DeCA base sales adjusted by 30% DeCA ranks 15 th among America’s Top Food Retailers DeCA vs Top American Retailers

5 Consumer Packaged Goods Dollar Share by Channel The average consumer makes one less shopping trip per month today than five years ago Source: Food Industry Review 2007

6 How $100 is Spent in Supermarkets Source: Progressive Grocer, April 15, 2008 (

7 Food Safety Concerns Source: FMI's U.S. Grocery Shopper Trends 2007

8 Factors for Selecting a Grocery Store By Gender Source: Food Marketing Institute’s U.S. Shopper Trends 2007

9 Characteristics of Store Formats Retail vs Military Average weekly customer transactions are $58.57 compared to $27.34 outside the gate! Source: Willard Bishop’s Future in Food Industry Review 2007 DeCA is doing more with less!

10 Now let’s take a closer look at DeCA Europe

11 Source: 2007 Commissary Customer Service Survey (CCSS) DeCA Europe Customer Comparison 58% of Military Shoppers in Europe fall into the age group

12 Total number of stores open by year Store count includes CDCs and Nexmarts DeCA Store Count The majority of store closures during the past 6 years has occurred in Europe Source: DeCA Headquarters

13 Source: American Logistics Association Site Total DeCA Sales ConUS vs Europe Five-Year Trend (FY 2002 – 2007) DeCA Sales FY07 vs FY03 Europe: +5.3% ConUS: +9.7% Despite store closures, Europe has sustained 5.3% growth in the past 5 years

14 Europe Average Dollar Sales per Store …and average sales per store in Europe have increased dramatically Source: DeCA Headquarters & ALA Site

15 (Millions) Sales Performance ConUS vs Europe 52-Week Trends Source: TotCat 52 weeks ending 6/07/08 (Millions) Europe+0.8%-4.3% ConUS+4.8%-0.3% $ % Chg Pkg % Chg 52 Wk Trend vs YAG 4 Wk Pd. Ending:

16 Store closures had a major impact on sales from July thru December 2007 Europe $ Sales % Chg vs Year Ago Closures 2007 Bad Nauheim, GE (June 2007) McCully Barracks, GE (July 2007) Giessen, GE (September 2007) Buedingen, GE (October 2007) Gelnhausen, GE (October 2007) Sales Performance Europe 52-Week $ Sales Changes Source: TotCat 52 weeks ending 6/07/08 Europe had growth of 5.7% in the first half of 2008 versus prior period and growth of +3.1% versus year ago period Darmstadt, Hanau, and Wuerzburg scheduled to close August 2008

17 Region Summary October-May, FY 2008 Source: DeCA Sales, ALA Website The weak US dollar combined with higher fuel costs are forcing European patrons to stock up more vs a year ago

18 Europe Sales by Country In 2008, troops will be migrating from Germany to Italy Source: TotCat 52 weeks ending 6/07/08 % of Europe Dollars by Country

19 DeCA Stores in Europe

20 Store Performance Europe Store Ranking Source: TotCat 52 weeks ending 6/07/08 Top six stores accounted for 40% of Europe dollar volume Europe Store Ranking based on Dollar Volume

21 Top three categories are Beverages followed by Salty Snacks Category Performance Top 15 Categories by Dollars Source: TotCat 52 weeks ending 6/07/08

22 Top 25 European Items - Dollars Source: Empower IT, 52 Weeks End Dec 2007 Of the top 50 items… 9 Soda 5 Milk 5 Bread 5 Frz Chicken 4 Water 3 Salty Snacks 3 Infant Nutritionals 3 Chill Juice 2 Cigarettes 2 Charcoal 2 Bacon 1 Toilet Paper 1 Sour Cream 1 Frz Fish 1 Energy Drink 1 Cheese 1 Butter These 25 items generate 6.4% of all Europe dollar volume The top 50 generate 9.3% Store Performance Dollar Ranking

23 Source: Empower IT, 52 Weeks End Dec 2007 Top 25 European Items - Packages Store Performance Package Ranking

24 Most of the top European stores carry close to the full assortment of overall top items Source: Empower IT, 52 Weeks End Dec 2007 Most stores have more than 9% of their sales in the top 50 items. Only Lakenheath shows a considerably lower % of volume generated by the top items. Store Performance Assortment

25 Store Performance Fastest Growing Stores Grafenwoehr opened a new store plus an increase in troops stationed on the base Dollar Sales Change (in millions)Dollar % Change Source: TotCat 52 weeks ending 6/07/08

26 Grafenwoehr - Has a new store, 830 new families stationed there. Also eight new single soldier barracks were added. Schweinfurt - Sales will remain stable in Dagger brigade was relocated to Grafenwoehr. Patch new AFRICOM members, 700 more arrived in June. Ramstein - Sales have been increased by case lot sales, supporting the regions promo package. Aviano & Lakenheath - Sales are enhanced due to the current exchange rate. Vogelweh - Concentrating on aggressive customer outreach programs. Lajes Field & Schinnen - Tremendous effort in maintaining in-stock ratio and additional efforts on customer service and merchandising. Store Performance Growing Stores

27 Store Performance Ramstein AB, Germany Ramstein aggressively utilized region’s promotion program and took advantage of all shippers offered Source: TotCat 52 weeks ending 6/07/08 Commodities ranked on Dollar Volume

28 Store Performance Lakenheath, England Efficient stocking and merchandising strategies are proving to be successful for Lakenheath Source: TotCat 52 weeks ending 6/07/08 Commodities ranked on Dollar Volume

29 Store Performance Vogelweh AB, Germany Vogelweh’s success is attributable to outstanding service provided to patrons by the store personnel and strong growth from refrigerated section Source: TotCat 52 weeks ending 6/07/08 Commodities ranked on Dollar Volume

30 Dollar Sales Change (in millions)Dollar % Change Vilseck’s losses may be due to new store opening at Grafenwoehr Source: TotCat 52 weeks ending 6/07/08 Store Performance Fastest Declining Stores (Excluding Closures)

31 Vilseck - Some of their customers returned to shopping at Graf. Also the impending deployment of 4,000 in Sept, 2007 affected their sales. Vicenza - Sales have just leveled off from % of the troops were deployed in The impending deployment of troops from Germany to Italy will affect future sales. Bitburg - The 52 nd Airwing is on continuous deployment. In Jan. 2008, 1,500 troops were deployed. Active duty has dropped by 200 at this base. Incirlik - Major reconstruction of housing is taking place. This has delayed incoming families to this area. Mildenhall - Reduced store hours and days. Wiesbaden - Troops are on continuous deployment. Ansbach - Several troops deployed, many family members went back to the US. New troops are expected this fall. Croughton - Less troops stationed in this area. Store Performance Declining Stores

32 Let’s dive down deeper into the data!

33 Top Commodities in Europe Dollar Volume (millions) Commodity Ranking Europe Overview Source: TotCat 52 weeks ending 6/07/08

34 $ Shr Index To ConUS Baby Products are twice as developed in Europe than in ConUS Tobacco indexes only 47 compared to ConUS Commodity Performance Europe Overview Source: TotCat 52 weeks ending 6/07/08 $ % Chg EuropeConUS

35 Commodity Performance Frozen Foods Source: TotCat 52 weeks ending 6/07/08 Frozen Fish, Entrees, and Chicken categories drive the Frozen Commodity’s strength in Europe

36 Baby Products account for 4.6% of dollar sales in Europe, significantly more than its contribution in ConUS (2.2%) and growing Commodity Performance Baby Products Commodity Source: TotCat 52 weeks ending 6/07/08

37 Demographic differences in Europe drive category shares in Gourmet and Baby related categories Dollars$ Shr Category Performance Highest Category Contribution Indices Source: TotCat 52 weeks ending 6/07/08 1,660, % 1,268, % 6,120, % 1,135, % 4,906, % 6,121, % 2,450, % 4,215, % 637, % 529, % Category Contribution Index

38 Top three categories are Beverages followed by Salty Snacks Category Performance Top 15 Categories by Dollars Source: TotCat 52 weeks ending 6/07/08

39 Six of the top ten growth categories are in the Chilled Section Category Performance Fastest Growing Categories by $ Source: TotCat 52 weeks ending 6/07/08

40 Category Contribution Index Many different factors contribute to low indices for these categories (e.g., yogurt - shelf life issues, coffee – local offerings) Dollars$ Shr Category Performance Lowest Category Contribution Indices Source: TotCat 52 weeks ending 6/07/08 1,205, % 1,152, % 4,271, % 783, % 1,077, % 2,870, % 711, % 975, % 768, % 805, %

41 Fresh Vegetables* and Brooms/Mops/Cleaning Supplies were the fastest declining categories both in dollars and packages Category Performance Fastest Declining Categories by $ * Produce sales were affected by discontinuation of a contract with Fresh Express during spring and summer last year Source: TotCat 52 weeks ending 6/07/08

42 A quick look at Sales Bands, Store Class, and Case Lot Sales

43 % of Total Dollars $ % Change vs Year Ago Overall three new stores were added to Class B and two Class B stores were closed in 2007* Store Performance Europe by Store Class Source: TotCat 52 weeks ending 6/07/ # of Stores by Class * Lajes Field, Livoron, and Illesheim - Class was changed to B; Class B stores Bad Nauheim and Giessen were closed in 2007

44 % of Total Dollars $ % Change vs Year Ago Sales Bands 5 & 4 are the largest in dollar volume and had the highest growth Store Performance Europe by Sales Bands Source: TotCat 52 weeks ending 6/07/08

45 May Case Lot Performance Europe Case Lot Sales by Zone Source: Stephen J. Armbruster, Chief, Marketing Branch (DeCA/EU/DOM) 78,897 Cases Sold Ramstein led the way in case lot sales, selling 8,300 cases (32% of Ramstein Zone sales); Vogelweh followed closely behind. Napels, Incirlik, Bamberg, and Cairo sold 100% of the cases ordered.

46 Case Lot Performance Europe Case Lot Sales by Zone Bitburg Case Lot Hohenfels Case Lot Cairo Case Lot

47 DeCA Europe DeCA has sustained 5.3% dollar growth for the past five years! Their average dollar sale has increased dramatically, up 4% (Oct- May 2008) The top six stores account for 40% of Europe’s sales volume New troops and families are continuing to arrive to Europe The largest group of troops are young, active duty with growing families Many categories index much higher in Europe vs. ConUS –Baby Products, Frozen Foods, Confectionery, Household Supplies Europe sold 80,000 cases in its May Case Lot Sale Key Facts to Take Away

48 DeCA Europe DeCA’s dollar sales goal for FY 2008 is $6 billion… So what can you do to assist DeCA achieve this goal?

49 DeCA Europe Opportunities 58% of the active duty troops stationed in Europe are years of age Most of them have two or more children This is a key time to formulate brand loyalty and establish shopping patterns that will be lifelong Most shop exclusively on base for their food and other related items Bringing a taste of home means so much to them Important Market

50 So when you start putting together your marketing budget, please don’t forget this group! Support the troops when they need it most!