Confectionery Industry USA Confectionery Industry Review January 2006

USA Retail Trends

Gas pricing affecting all retailers USA Retail Trends Luxury Retailers doing well Convenience and Drug doing well Mass, dollar and supermarket struggling Overall retail is growing Gas pricing affecting all retailers

USA Confectionery Industry 2005 Confectionery Performance 2005 Seasonal Performance

2005 Retail Confectionery Sales Chuck The total market for confections was $20.0 billion, with sales composed of 55% chocolate, 32% non chocolate and 9% gum.

The 2005 U.S. Confectionery Market 2005 Confectionery Sales The 2005 U.S. Confectionery Market % $ Change Retail Sales $27.9 +1.8% Manufacturers Shipments $18.1 +1.8% Domestic Manufacturer Shipments $16.5 +1.7% Imports $2.1 +5.3% Exports $0.8 +7.1% Sales in billions NCA Shipment Data and Global Trade Atlas Import/Export Data Chuck The total market for confections was $20.0 billion, with sales composed of 55% chocolate, 32% non chocolate and 9% gum.

2005 Confectionery Sales Category Retail Sales Manf. Sales % Lb. Sales % Total $27.9 Billion $18.2 billion +1.8% 7.2 Billion +2.3% Chocolate $15.7 Billion $10.2 billion +2.0% 3.5 Billion +2.6% Non-Choc. $8.7 Billion $5.7 billion +0.9% 3.2 Billion +3.2% Gum $3.5 Billion $2.3 billion +4.1% 0.6 Billion +1.4% NCA Estimates base on 2005 U.S. Dpt. Of Commerce 311D Report and NCA Monthly Shipment Reports Chuck The total market for confections was $20.0 billion, with sales composed of 55% chocolate, 32% non chocolate and 9% gum.

Retail Landscape Changing 2005 Confectionery Channel $ Sales % Growth Supermarkets $4.3 -1.1% *Wal-Mart $2.8 +3.8% Mass X Wal-Mart $1.2 +0.7% Convenience Stores $3.8 +8.8% Drug Stores $2.3 +1.0% *Warehouse Clubs $3.2 +3.6% *Dollar Stores $.8 Even Vending $1.2 -1.9% *Bulk $1.5 -0.5 *estimates

Candy and Gum Ranked 3rd Among 2005 Food Categories IRI Food, Drug & Mass Excluding Wal-Mart 12/25/05 2

2005 Confectionery Sales Manufacturers Sales Through November, 2005 $ Lbs. Chocolate Candy +2.0% +2.6% Non-Chocolate Candy +0.9% +3.2% Gum +4.1% +1.4% NCA Monthly Shipment Reports Chuck The total market for confections was $20.0 billion, with sales composed of 55% chocolate, 32% non chocolate and 9% gum.

Candy & Gum Retail Performance 2005 IRI Sales Results As of December 25, 2005 Channel 52 Week 52 Week $ Sales % Change Supermarkets $4.3 billion -1.1% Drug $2.3 billion +1.0% Mass X Wal-Mart $1.2 billion +0.7% Convenience $3.8 billion +8.8% Total Candy and Gum $11.6 billion +2.6% Information Resources, Inc. Food, Drug, Mass & Convenience Jim Looking at channel dynamics, for supermarkets, mass and drug, experiences declines compared to last year. Supermarkets growth rate was down 1.0, mass was down 3.0 and drug was up 3.6 2

2005 Seasonal Performance

Confectionery Seasonal Sales (** in millions of dollars) 2005 Valentine’s Day - $970 Easter - $1,761 Halloween - $2,088 Christmas - $1,375 Results and Projection as of January 2006 Source: Sales figures are compiled by National Confectioners Association based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce

What Affects Seasonal Sales? Date/Day of Holiday The Economy Consumer Confidence Consumer Mood Shopping Patterns/Habits Merchandising Strength/Visibility

Holiday Dates/Days Holiday 2004 2005 2006 Valentine’s Day Saturday Monday Tuesday Easter 4/11 3/27 4/16 Halloween Sunday Monday Tuesday Christmas Saturday Sunday Monday Thanksgiving 11/25 11/24 11/23 Shopping Days 30 31 32

Seasonal Confectionery Trends 2005 2004 2003 2002 2001 VALENTINE’S -4.0% -3.0% -7.6% +6.5% -0.5% EASTER -7.6% +5.5% +2.2% -2.2% -2.4% HALLOWEEN +2.3% +2.4% +0.7% -0.4% +0.2% CHRISTMAS +2.4% -3.5% -1.4% -3.0% +1.7% * IRI FD&M NCA projects a 2.3% increase in 2006

New Trends

Trends - What's for 2005/06 Hot Limited Editions Dark Chocolate High End and Gourmet Candy High Cocoa Content Chocolates Single Origin Chocolates

Why are gourmet chocolate sales growing? A. Low Pricing B. High Pricing C. Good news –antioxidants D. They’re sexy E. Commitment at retail

Why are gourmet chocolate sales growing? The correct answer is: C. Good news –antioxidants D. They’re sexy E. Commitment at retail Everyday gourmet chocolate candy grew 32% in 2005!

Trends - What's for 2005/06 Hot Sugar Free Candies and Gums Licorice Single Serve Seasonal Offerings Breath Fresheners

New Item Introductions Going Forward Retail Sales +0.4% everyday sales Favorable 2006 Seasonal Dates New Item Introductions Strong Halloween Sales +2.3% Christmas Sales +2.4%

Confectionery Continues to Grow Consumers know what they are buying Choice of sizes Variety of nutritional choices Candy fits in a healthy lifestyle Economy Improving 3 Favorable Seasonal Dates

Thank You!