GRANOLA Fall 2010 Steven Lung

Demographics Smaller households with a size of one or two members and no kids. Independent singles and established couples receive the largest share - targeted to younger adults The two strongest brands (Cascadian and Sunbelt) have an average price of 15 cents/once, while the third strongest brand has a range of 29 to 52 cents/once Private Label Strategy, does provide flexibility for lower income families to receive a better quality product Archer Farms is the only private label

Demographics BEAR NAKED CASCADIAN FARMCTLR CATEGORY DISTRIBUTION PANEL DOLLAR VOLUME INDEX INC - <$20, INC - $20,000-29, INC - $30,000-39, INC - $40,000-49, INC - $50,000-69, INC - $70,000-99, SIZE - 1 MEM SIZE - 2 MEM SIZE MEM SIZE - 5+ MEM AFFLUENT SUBURBAN SPREADS PLAIN RURAL LIVING START UP FAMILIES OLDER BUSTLING FAMILIES EMP - FH EMP. FULL TIME EMP - FH NOT EMPLOYED

$/oz Sun Belt$0.16 Cascadian Farm$0.16 Bear Naked$0.29 Archer Farms/CTLR$0.16 Bakery on Main's$0.68 Back to Nature$0.42

Marsh - “Cereal/other breakfast foods”, – Average weekly sales of $9, – 17.72% of gross margin Granola category has a lesser amount of sales and penetration. Average 2.18% item penetration, Higher gross margins per item sold and lower penetration of the category

Audits StoreLocationSKUsUnique SKUs* WalMartMall144 WalMart MLK Blvd (6 th ) 100 TargetNorth Shiloh149 Ozarks Natural Food Colllege2717 Harp’sWedington135 Marvin’s IGALafayette2412 Complete Audit *Not found at any competing retailer No prior Audits

Archer Farm’s is the only private label

Stocking Rate MFRBrandRate Small PlanetCascadian Farm5.42 McKee FoodsSun Belt2.06 Bear nakedBear Naked1.69 Quaker OatsQuaker4.5 Bob's Red Mill 1.5 -Quaker presents an impressive 4.5 stocking rate due to its unique SKU Cascadian and Sunbelt as the strongest brands Highest Stocking Rate Store Availability Gross Margins 68 SKUS

Manufacturer IGAHarp'sTargetWalmart Bear NakedGM32.00%36.80%38.30% SKUs345 Facing% Inv.% Small Planet FoodSGM6.60%13.60% SKUs16 Facing% Inv.% Mckee FoodsGM13.10%12.60% SKUs35 Facing% Inv.%

Gross Margin estimates do not show consistency across retailers Ozark Natural Foods different target market that is able to price their items at a higher price alongside their exclusive brands – Cascadian Farm a high margin item($3.01) ; furthermore, Walmart’s lower prices create a gross margin ($0.71) differentiation with stores such as Target ($0.53). Bob’s Red Mill is one of the weakest brands in the market

Target’s Archer Farms is the only private label in the audit Premium quality target Price highly competitive with both Sunbelt and Cascadian Farm – Packaging, position – Gross margin makes Hard to beat competitor. – Unique variety of SKU with its competitive price among both young and older demographics.

Private labels seem to have a good opportunity to enter this market. The high prices and increasing demand on younger demographics appear to be attractive for private label.