1. A HARTMAN GROUP SYNDICATED STUDY Resolving Confusion in Marketing Foods and Beverages A HARTMAN GROUP SYNDICATED STUDY | FEBRUARY 2010 Beyond Organic & Natural 2010

2. 2 2  2010 The Hartman Group, Inc. 1.A Bit of Context 2.Stabilization of Organic: Organic Consumers 3.Organic and Natural are Complementary Attributes 4.“Clean” Food Goes Beyond Organic and Natural 5.Consumers Seek Authenticity 6.Categories: Similarities and Differences 7.Six Key Recommendations Discussion Topics i

3. 01 A Bit of Context

4. 4 Beyond Organic & Natural 2010 4  2010 The Hartman Group, Inc. The Hartman Group: Looking Through the Consumer Lens 1 As the premier consumer culture consultancy in America, The Hartman Group blends leading-edge primary research with a unique brand of customized analysis to deliver the most comprehensive insights into how consumers live, shop and use products. This influential work informs and inspires innovation, strategy and tactics. We are an organization of more than 40 passionate (yet disciplined) social scientists, ethnographers, analysts, and marketers. Each year, we literally spend thousands of hours immersed in consumers’ and shoppers’ lives and lifestyles.

5. 5 Beyond Organic & Natural 2010 5  2010 The Hartman Group, Inc. We’re Food Obsessed… 1 …But our passion for food goes way beyond eating We’re on a journey with consumers to understand the where, when, what, how—and more importantly—the “why” behind their purchase decisions and consumption behaviors. This comprehensive report draws on more than 20 years tracking consumers’ lifestyle, shopping and usage behaviors of organic and natural food and beverage products.

6. 6 Beyond Organic & Natural 2010 6  2010 The Hartman Group, Inc. Methodology 1 D a t a M i n i n g In addition to in-house expertise in food and in health and wellness trends, previous Hartman Group studies tapped for context and insights included: Health & Wellness 2005, 2007Organic 2006, 2008 Sustainability 2007, 2009Healthy Eating 2009 Private Label 2010 Q u a l i t a t I v e R e s e a r c h Ethnographic qualitative consumer immersions in two major US market locations—including in-home ethnographic interviews, social network parties, shop-and-talks or dine and talks Q u a n t i t a t i v e R e s e a r c h Online survey of nationally representative sample of 1,679 adult US consumers

7. 02 Stabilization of Organic: Organic Consumers

8. 8 Beyond Organic & Natural 2010 8  2010 The Hartman Group, Inc. Three Quarters of U.S. Consumers Use Organic 2 Q14. How often have you used ORGANIC foods or beverages in the PAST THREE MONTHS? If you use some organic products more often than others, please indicate the greatest frequency. For example, if you used organic milk daily and organic fruit occasionally, choose daily. Source: Beyond Organic & Natural report, The Hartman Group, Inc. February 2010

9. 9 Beyond Organic & Natural 2010 9  2010 The Hartman Group, Inc. One-third of Consumers Now Use Organic Foods at Least Monthly 2 Q14. How often have you used ORGANIC foods or beverages in the PAST THREE MONTHS? If you use some organic products more often than others, please indicate the greatest frequency. For example, if you used organic milk daily and organic fruit occasionally, choose daily. Source: Beyond Organic & Natural report, The Hartman Group, Inc. February 2010

10. 10 Beyond Organic & Natural 2010 10  2010 The Hartman Group, Inc. The Hartman World Model 2 Source: Beyond Organic & Natural report, The Hartman Group, Inc. February 2010 Core is most intensely involved - early adopters, trendsetters, evangelists Mid-level is the majority of consumers and can be split in to the inner Mid-level and outer Mid-level Periphery is where consumers begin their journey

11. 11 Beyond Organic & Natural 2010 11  2010 The Hartman Group, Inc. The Consumer Segments Have Differing Purchase Criteria 2 Source: Beyond Organic & Natural report, The Hartman Group, Inc. February 2010

12. 12 Beyond Organic & Natural 2010 12  2010 The Hartman Group, Inc. Most Consumers are Buying the Same Amount or More Organic, Natural, Local and Fair Trade Products than a Year Ago 2 Q25. Compared to a year ago, would you say you are purchasing more of, less of, or about the same of the following types of products listed below?

13. 13 Beyond Organic & Natural 2010 13  2010 The Hartman Group, Inc. The Economy Is not Stopping Organic Purchases 2 Q25. Compared to a year ago, would you say you are purchasing more of, less of, or about the same of the following types of products listed below?

14. 03 Organic and Natural are Complementary Attributes

15. 15 Beyond Organic & Natural 2010 15  2010 The Hartman Group, Inc. Organic & Natural are Seen as Complementary Attributes by Consumers All the Way From the Periphery to Core 3 vs. Organic is understood as pertaining to what happens to food at origin (e.g. the farm, the plant, the animal). Consumers think of organic as making a product “more natural” Natural is understood as what happens to the food after it is grown (e.g., reducing processing steps).

16. 16 Beyond Organic & Natural 2010 16  2010 The Hartman Group, Inc. Top 6 Associations with Natural and Organic are the Same 3 Q11. From the following list, what properties do you think are implied or suggested by the term "ORGANIC"? Q10: From the following list, what properties do you think are implied or suggested by the term "NATURAL"? “No Artificial Flavors/Colors/ Preservatives” is more strongly associated with natural

17. 17 Beyond Organic & Natural 2010 17  2010 The Hartman Group, Inc. Organic Means More than “No Pesticides” 3 Organic is a term that refers to the farming practices and in its simplest form for consumers is “Grown without pesticides” Organic can also mean a variety of other things to consumers in different segments as well as for a variety of categories No Herbicides No Synthetic Fertilizers Non-GMO No Hormones No Antibiotics Which imply for consumers: Safe Healthy Sustainable

18. 18 Beyond Organic & Natural 2010 18  2010 The Hartman Group, Inc. As the Meaning of Organic Becomes Diluted, Specific Motivations to Buy Organic Have Declined 3 Q19. What are the main reasons you buy ORGANIC foods and beverages?

19. 19 Beyond Organic & Natural 2010 19  2010 The Hartman Group, Inc. Price is the Key Barrier to Purchasing Organic; Other Barriers Are Declining 3 Q20. Why don't you purchase more ORGANIC foods/beverages than you currently do?

20. 20 Beyond Organic & Natural 2010 20  2010 The Hartman Group, Inc. Meanings of Natural: Consumers are Seeking an Ideal 3 Consumers are seeking an ideal of natural that would mean that the food and beverages they buy are healthy, whole, real, and minimally processed. There are a variety of attributes that are necessary for “natural” Nothing Artificial (e.g. colors, flavors, etc) No Preservatives No Additives or Fillers Minimally Processed Short (Clean) Ingredient Line Recognizable (Real) ingredients

21. 21 Beyond Organic & Natural 2010 21  2010 The Hartman Group, Inc. Meanings of Natural – Ideals vs. Reality 3 Consumers do not believe that the word “natural” ensures that foods and beverages live up to the ideal that they are seeking

22. 04 “Clean” Food Goes Beyond Organic and Natural

23. 23 Beyond Organic & Natural 2010 23  2010 The Hartman Group, Inc. Consumers are Continually Redefining Quality 4 Clean WholeReal Pure Fresh Natural OrganicLocal The notion of “Clean” encompasses a wide variety of attributes that communicate quality to consumers including farming, production, processing and ingredients

24. 24 Beyond Organic & Natural 2010 24  2010 The Hartman Group, Inc. To Consumers Clean Has Both Symbolic and Objective Associations 4 SymbolicObjective Fresh Safe Local Healthy Responsible Real Simple Sustainable Higher Quality Less Processed No Chemicals Nothing Artificial Few Ingredients Whole Ingredients Recognizable Ingredients Certified

25. 25 Beyond Organic & Natural 2010 25  2010 The Hartman Group, Inc. Language Map: Clean Encompasses a Variety of Attributes 4 Source: Beyond Organic & Natural report, The Hartman Group, Inc. February 2010

26. 26 Beyond Organic & Natural 2010 26  2010 The Hartman Group, Inc. Communicating Clean*: Key Packaging Elements 4 Consumer created packages illustrate key packaging elements Mission Statement Provides a personal connection High Quality Imagery Of the product itself Representing production Raw ingredients The farm Tell the product’s and company’s stories Specific attributes of the product (e.g., no artificial colors, no preservatives, organic, etc.) Production, processing, company narratives to differentiate the brand Certifications Consumers are often unclear about what certifications mean, but they are reassuring and seen as positive elements on packages *Clean represents a constellation of attributes and is not meant to be used in marketing messages

27. 27 Beyond Organic & Natural 2010 27  2010 The Hartman Group, Inc. Periphery Packaging 4 This package created by a Periphery consumer illustrates: The desire for imagery connecting to the farmer The desire for a connection to the growing process and the raw ingredients The confusion regarding organic, natural and certification The benefit of a seal of any kind The desire for explanation and understanding Build a package exercise where consumers were asked to create an ideal natural or organic package during their in-home interview

28. 28 Beyond Organic & Natural 2010 28  2010 The Hartman Group, Inc. Outer Mid-Level Packaging 4 This package created by an Outer Mid-Level consumer illustrates: Preference of 100% natural Focus on health through nutrition facts Desire for the USDA organic certification Association with juice as a natural beverage Desire for clear information on attributes Build a package exercise where consumers were asked to create an ideal natural or organic package during their in-home interview

29. 29 Beyond Organic & Natural 2010 29  2010 The Hartman Group, Inc. Inner Mid-Level Packaging 4 Desire for organic + natural attributes (artificial preservatives, flavors, colors) Focus on health through whole grains Interest in Social Responsibility Prioritization of the USDA certification, but inclusion of others Build a package exercise where consumers were asked to create an ideal natural or organic package during their in-home interview This package created by an Inner Mid-Level consumer illustrates:

30. 30 Beyond Organic & Natural 2010 30  2010 The Hartman Group, Inc. Core Packaging 4 Focus on local Desire for specifics (no artificial preservatives, no hormones) Nature/Farm imagery Skepticism of the USDA organic certification Connections to social and environmental sustainability Build a package exercise where consumers were asked to create an ideal natural or organic package during their in-home interview This package created by a Core consumer illustrates:

31. 31 Beyond Organic & Natural 2010 31  2010 The Hartman Group, Inc. Social Responsibility & About the Company 4 Social Responsibility is increasingly important to consumers. While social responsibility is not implied by natural or organic, consumers believe that companies that care about their consumers’ health are likely to care about their employees, treatment of animals and producers as well. Consumers from the Periphery to the Core desire information about the companies they buy from and what they stand for Providing a company narrative, the who, why and how surrounding a product coming to be is essential