1. 2020 VISION CARMAN ALLISON STAYING AHEAD OF THE CURVE
VP, CONSUMER INSIGHTS
@CarmAllison
@Nielsen

2. Trends impacting 2017 and beyond
market
consumer
retail
So What is in Store for 2016?
Well, it’s a bit of a 1 step forward, two steps back scenario.
We do see dollars continuing to grow, but primarily due to rising prices with consumption remaining flat. The impact of the low Canadian dollar will continue to put more pressure on pricing in 2016.
In addition to rising prices, the Canadian consumer remains uncertain about the economy, jobs and spending power – especially in the Prairie Provinces which has seen a dramatic shift in the past year due to the declining oil industry.
The need for value will continue to define retail growth – whether it’s shopping discount retailers, e-commerce or buying in bulk, certain retail formats will continue to benefit from this shifting mindset in 2016.
So lets dig into the some of the details defining these trends
Let’s start with the consumer

3. In 2016 The rate of Cpg GROWTH slowed, especially in western Canada
National
Total West
Source: Nielsen MarketTrack, Canada National All Channels – 52 weeks to January 7, Total Tracked Sales including Fresh Random Weight

4. Slowing growth due to lower prices and lagging performance in the prairies
Dollar Growth
Tonnage Growth
Source: Nielsen MarketTrack, Canada National All Channels – 52 weeks to January 7, Total Tracked Sales including Fresh Random Weight

5. Retail price wars have resulted in lower levels of inflation for the second half of 2016
Q3-4 Inflation
Canadian CPG Inflation
CA WST
Total: % %
Reg: % %
TPR: % %
Source: Nielsen MarketTrack – All Channels, Total Tracked Sales including Fresh Random Weight – 4 weekly periods

6. The Recent Deflation in the west is REPORTED IN 12 OF 32 cpg DEPARTMENTS
Fresh Vegetables %
Processed Meat %
Condiments & Sauces %
Hot Beverages %
Snack %
Prepared Foods %
Fresh Meat %
Frozen Food %
Fresh Bread & Rolls %
Cold Beverages %
Household Products %
Source: Nielsen MarketTrack – Total West All Channels, Total Tracked Sales including Fresh Random Weight – 24 weeks to January 7, 2017

7. ALBERTA no longer leads regional growth
5 Year Sales Performance
Source: Nielsen MarketTrack, National All Channels – 52 weeks to January 7, Total Tracked Sales including Fresh Random Weight

8. Despite growth slowing, Albertans still spend 11% more per household
Households are spending less annually
% Chg
Source: Nielsen Homescan, National All Channels – 52 weeks Ending December 31, Total Expenditures

9. 2020 Vision: Staying ahead of the curve
But finding growth is difficult in this challenging and fast paced environment.

10. REACH
The shopper’s quest for value is defining retail trends 10

11. The consumer balance sheet is getting worse
Compared to year ago, consumers view their household finances as…
BETTER
MS 22%
AB 17%
BC 23%
20%
SAME
49%
MS 53%
AB 49%
BC 48%
WORSE
31%
MS 25%
AB 35%
BC 29%
Source: Nielsen Panel Views Survey, – Total West Projected Households 14,368k

12. As a result, Western SPENDING POWER IN DECLINE
# of
Households
2014
2016
$$$ $$ $
FREE SPENDERS
11% % K
LIVING COMFORTABLY
64% % k
SHOPPING BASICS
25% % k
Source: Nielsen Panel Views Survey, 2014 / 2016 – Total West Projected Households 4,542k 2016, 4459k 2014

13. The consumer’s quest to save is defining western retail trends
CAUSE
EFFECT
73%
40%
&
Trying to spend less on groceries
Shopping more at discount retailers
Source: Nielsen Economic Impact Survey April 2016 – Total West 13

14. ALBERTAN consumers are becoming more value focused – discount formats booming
Grocery Composite
$ Share & Growth
Discount Share & % Chg
Discount
+2%
Man/Sask
Alberta
B.C
Conventional
+0%
Source: Homescan Grocery Watch, Canada National All Channels - 52 weeks to October 01, 2016 Grocery Composite

15. How are western shoppers looking to save?
SALE
PROMOTIONS
SHOPPING
SELECTION
84% Stocking Up
71% Only Buy on Sale
61% Use Coupons
60% Switch Stores
46% Build Loyalty Points
45% Price Match
58% Buy Essentials
57% Buy Larger Sizes
55% Buy Store Brands
Source: Nielsen Panel Views Economic impact Survey April 2016 – Total West Canada

16. Over the past 5 years, $1.7 billion has shifted to Online, Dollar Stores and warehouse clubs
Total West
Share of Wallet
17.6%
+$1.7
+40% 78
+29%
Billion Increase
$ growth since 2012
million trips in 2016
trip increase since 2012
13.0%
Online
Dollar Stores
Warehouse Clubs
2012
2016
Total sales $
$4.2B
$5.9B
Grocery Share % %
Source: Nielsen, Cross Outlet Facts, 52 weeks ending October 1, 2016 – Total West

17. WAREHOUSE CLUBS: CPG department MOVERS and SHAKERS
MARKET SHARE
5 YR SHARE GAINS
24.4% Paper Products
21.3% Produce
19.6% Hhld Products
18.8% Snack
17.2% Condiments
+5.3 Hhld Products
+4.8 Produce
+4.6 Paper Products
+4.3 OTC
+4.0 Frozen
Source: Homescan Cross Outlet Facts: Warehouse Clubs – 52 weeks to October 10, Total Tracked Sales- Dollars – Total West

18. 84% of consumers view stocking-up as a #1 savings strategy
don’t forget about the role of larger sizes – a value play without the need to discount
84% of consumers view stocking-up as a #1 savings strategy
Is BIGGER better?
If you need to take a price increase, 72% of consumers prefer larger sizes to reduce cost per use
VS.
57% of consumers buy larger sizes in order to save money
Source: Nielsen – April 2016 Panel Views Survey – Total West

19. Promotional activity increasing faster in the west – but still less than Canadian average
52 week % Dollars Sold on TPR
Pt Chg
$ % Chg
Source: Nielsen MarketTrack, Regional GB+DR+MM - 52 week period ending January 7, 2017

20. Getting your assortment right can improve the Cannibalization effect…and profit
Item A
Item B
Item C
High
Performing
Items
$100
$90
$70
Item A
Item B
Item C
Item D
Item E
High
Cannibalization
Sales rate ($ sales per point of distribution)
Low
Cannibalization
Size of bubble: $ volume
Overlap: Level of cannibalization

21. Maximizing revenue
Promote for Win-Wins: It’s not about spending more, it’s about promoting and pricing smarter for sustainable growth and profitability for both the manufacturer and the retailer
Assortment Management: Vary assortment based on knowing which items within a category contribute to overall growth. Reducing items with high level of cannibalization will maximize revenue opportunities. 21

22. CONNECT
Online and Digital is creating new and exciting touch points along the shopper journey 22

23. WEST STORE TRAFFIC IS IN DECLINE
ANNUAL TRIPS PER HOUSEHOLD
TOTAL WEST OUTLET TRIPS (Millions)
In 2016
668.4 Million Trips
-7% Since 2012
(53 million fewer trips)
Nielsen Homescan Cross Outlet Facts: 52 weeks to October 1, 2016 Total West, Trips/ HH National All Channels 52 weeks ending April 19, 2016

24. THE FRAGMENTED PATH TO PURCHASE
SALE
DEMAND
PURCHASE
PRE-STORE
DIGITAL
IN-STORE

25. THE DIGITAL FUTURE FOR CPG IS HERE AND NOW
Online shopping for CPG in forecasted to almost triple by 2020
CPG online sales are projected to grow
7:1
20%
year over
year
Margin by which retail
e-commerce sales growth will outpace brick & mortar sales growth by 2020
5.3%
1.8%

26. WHICH CPG DEPARTMENTS ARE TRENDING ONLINE?
FOOD
HEALTH & BEAUTY
NON GROCERY
Beverages 0.7%
Condiments 0.7% Baking Needs %
Confectionery 0.5%
Prepared Foods 0.5%
Cosmetics %
Baby Care 2.3%
Body Care 1.9%
Oral Hygiene 1.5%
OTC 1.3%
Gen Merch 3.5%
Pet Needs 1.1%
Household 1.0%
Paper 0.8%
Source: Nielsen, Cross Outlet Facts, 52 weeks ending October 1, 2016 – E-Commerce $ share – Total West

27. 75% 63% 48% 48% BARRIERs TO ONLINE grocery SHOPPING
In-person experience
QUALITY AND freshness
Fulfillment and delivery
Ease of site usage
75%
63%
48%
48%
Prefer to examine the products before purchasing
Concerned over freshness and expiration dates
Concerned deliveries happen when not at home
Browsing to find products too time consuming
% who agree
Source: Nielsen Global Connected Commerce Survey, Q Canada

28. THERE IS NO SINGLE ONLINE SHOPPER
DIGITAL DODGERS
INDIFFERENT & IMPULSIVE
DIGITAL DEAL DIGGERS
CLICKING CONNOISSEURS
Technology Averse
Digital Reluctants
Grab & Go
Non-Planners
Tech Savvy Value Seekers
Researcher
Digital Advocates
LOW TRUST
LOW TECH SAVVY
LOW VALUE SEEKING
LOW SHOPPING ENJOYMENT
RESEARCH DRIVEN
TECH SAVVY
ENJOY SHOPPING ONLINE
CANADA % % % %
U.S % % % %
Source: Nielsen PanelViews, Digital Shopping survey, 2016

29. STRATEGIES FOR OMNI-CHANNEL SUCCESS
BE SHOPPER-CENTRIC
Take the time to understand what happens along the path to purchase. Prioritize initiatives around the tools and features consumers use and desire most. 1 2
PRIORITISE PERSONALIZATION
Can have big benefits for the bottom line, including increased visitor engagement and improved customer experience, as well as increased conversion rates and lead generation.
THINK DIGITAL. BUT DON’T NEGLECT IN-STORE
Physical stores maintain many key advantages over online-only channels, and retailers and manufacturers should look for ways to optimize the in-store experience by leveraging digital tools. 3

30. ENGAGE
Generational shift in spending power 30

31. Millennials and Boomers: the top 2 consumer powerhouses
<19
‘Gen Z’
16%
19-37
‘Millennials’
27%
38-47
‘Gen X’
14%
48-67
‘Boomers’
28%
68+
‘Greatest’
14%
Source: Statistics Canada – Census 2011

32. Currently millennials are under represented in purchasing power
Millennials’ Importance
27%
16%
14%
% of Population
% Household Heads
% of CPG $’s
Total West % %
Source: Source Nielsen Homescan – 52 weeks to December 31 ,2016

33. Millennials will surpass boomers by 2020
2010
2020
2030
8.9 M
9.7 M
10.0 M
9.4 M
11.0 M
8.3 M
34.2 M
38.4 M
42.1 M
Total
Canada
Millennials
Boomers
Source: Statistics Canada M: Millions

34. The CPG growth engine will switch gears
By 2024…
MILLENNIALS
BOOMERS
+$12.6 B
+107%
-$4.3 B
-9%
Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years – Based on older generation spend

35. Resulting in a shift in future shopper traffic flow
Day of Week:
Millennials
45% Sat-Sun
46% Thurs-Fri
Older Boomers
Time of Day:
Millennials
45% > 3 pm
41% < 12 pm
Older Boomers
Source: Nielsen Panel Views Survey Canada

36. Which CPG departments are most commonly found in a millennials’ shopping basket?
Tl West Relative Dollar Index
<35 years
Baby Care
336
Desserts
144
Body Care
123
Cosmetics
122
Fresh Meat
118
Produce
116
Hair Care
115
Prepared Foods
113
Snack Foods
108
Refrigeration & Dairy
Nielsen Homescan – Dollar Consumption Index – 52 wks to December 31, – Consumer Facts CPG Departments Adjusted Relative Index (85 for total)

37. Millennials are value driven and connected
73%
Price is the first thing they look at
(58% for total Canada)
42%
Of Wallet in Discount Retailers (33% for Boomers)
26%
Don’t subscribe to cable TV
(12% for Boomers)
83%
Have a smartphone
(60% for total Canada)
Source: Nielsen Panel Views Survey 2013/5

38. INNOVATE
Health and Wellness is changing and influencing in-store purchase decisions 38

39. Centre of Store Food is now outperforming Perimeter
In the past 5 years, Centre of store has lost ALMOST 3 share POINTS of food spend
$ Importance to Total Food and Growth
TOTAL WEST
CAGR
+5.4%
+2.7%
VYA
+0.7%
+1.8%
Perimeter
Centre of Store Food is now outperforming Perimeter
(+1.6 pts)
Centre of Store
2011
2016
Source: Nielsen MarketTrack, 52 Weeks to January 7, 2017 – Total West Grocery Banner + Mass Merchandisers + Drug

40. Not all in growing in the Centre of store
5 yr CAGR
Contraction
expansion
Absolute $ Chg Millions
5 yr CAGR
Absolute $ Chg Millions
-$19.7
-5%
-$16.6
-1%
-$15.4
-11%
-$14.1 0%
-$12.0
-$10.1
-2%
-$6.6
-3%
-$6.2
-$5.8
-7%
-$3.9
-0%
+$121.3
+6%
+$112.1
+9%
+$111.1
+7%
+$58.1
+$55.0
+3%
+$37.2
+$35.0
+$32.5
+$32.4
+11%
+$31.6
+13%
Margarine
SS Juice & Drinks
Frozen Fruit Beverages
Milk
Proc. Cheese Slices
Frozen Pizza
Cottage Cheese
Sugar
Canned Pasta
RTE Cereal
Snack Foods
R&G Coffee
Chocolate
Eggs
Yogurt
Dried Fruit/Nuts/Seeds
Butter
Candy
Frz. Fruit
Meat Sticks/Jerky
Source: Nielsen MarketTrack, 52 Weeks to January 7, 2017– Total West G+MM+D

41. Indulgence, convenience and health ARE driving Centre of store growth TRENDS
5 yr CAGR
Contraction
expansion
Absolute $ Chg Millions
5 yr CAGR
Absolute $ Chg Millions
-$19.7
-5%
-$16.6
-1%
-$15.4
-11%
-$14.1 0%
-$12.0
-$10.1
-2%
-$6.6
-3%
-$6.2
-$5.8
-7%
-$3.9
-0%
+$121.3
+6%
+$112.1
+9%
+$111.1
+7%
+$58.1
+$55.0
+3%
+$37.2
+$35.0
+$32.5
+$32.4
+11%
+$31.6
+13%
Margarine
SS Juice & Drinks
Frozen Fruit Beverages
Milk
Proc. Cheese Slices
Frozen Pizza
Cottage Cheese
Sugar
Canned Pasta
RTE Cereal
Snack Foods
R&G Coffee
Chocolate
Eggs
Yogurt
Dried Fruit/Nuts/Seeds
Butter
Candy
Frz. Fruit
Meat Sticks/Jerky
Source: Nielsen MarketTrack, 52 Weeks to January 7, 2017– Total West G+MM+D

42. CONSUMERS ARE PUTTING THEIR MONEY WHERE THEIR MOUTH IS
54% OF CANADIANS SAY THEY’RE WILLING TO PAY MORE FOR FOODS AND DRINKS THAT DON’T CONTAIN UNDESIRABLE INGREDIENTS.
DRIVEN BY:
Enlighten Eating
% who follow a specific diet which limits specific foods and ingredients
47%
Sensitive Stomachs
% of households with a food allergy or intolerance
28%
Source: Nielsen Global Health and Ingredient Sentiment Survey Q – Canadian respondents

43. DIETARY DIVERSITY: THE INGREDIENTS WE AVOID
LESS IS MORE WHEN IT COMES TO FOOD INGREDIENTS
DIETARY DIVERSITY: THE INGREDIENTS WE AVOID
PERCENTAGE WHO SAY THEY TRY TO AVOID SPECIFIED INGREDIENT OR ATTRIBUTE
Source: Nielsen Global Health and Ingredient Sentiment Survey Q – Canadian respondents

44. Consumer health & wellness Attitudes are shaping Centre of store category trends
FLAVOURED SOFT DRINKS
FROZEN CONFECTIONS
YOGURT
JAM
Diet/Light
Regular
-2%
+2%
-4%
+4%
-16%
+9%
-5%
+5%
Source: Nielsen MarkeTrack; National All Channels: 52 weeks to December 10, 2016 – Total West

45. BACK TO BASICS IS BACK IN DEMAND
MORE PLEASE! food products we want more of on the shelves
PERCENTAGE WHO SAY THEY WISH THERE WERE MORE OF THESE FOOD PRODUCTS ON THE STORE SHELVES +
Source: Nielsen Global Health and Ingredient Sentiment Survey Q – Canadian respondents

46. The higher the fat, the higher the sales growth
Milk
$2.6 Billion
$ % Chg %
L % Chg +1%
Fat Content $ Share L % Chg
2% %
1% %
Homogenized %
Skim %
Source: Nielsen MarkeTrack; National All Channels: 52 weeks to December 10, 2016 – Total West

47. CONSUMERS ARE SHIFTING TO PLANT BASED MILKS
$2.6 Billion
$ % Chg %
L % Chg +1%
What’s trending in Dairy Case Beverages?
Sales %
Dollars Chg
Fat Content $ Share L % Chg
Almond Milk $66M
Coconut Milk $7M
Cashew Milk $4M
2% %
1% %
Homogenized %
Skim %
Source: Nielsen MarkeTrack; National All Channels: 52 weeks to December 10, 2016 – Total West

48. Growth strategies for innovation
KEEP IT SIMPLE
Remove or replace undesirable ingredients, especially those seen as objectionable. 1 2
INNOVATE. INVEST. ACQUIRE.
New product development is critical. Don’t go at it alone. 3
MAKE IT CONVENIENT, COST EFFECTIVE AND TASTY. Combine these attributes to help time-crunched consumers.

49. Trends impacting path to purchase
REACH
CONNECT
ENGAGE
INNOVATE
Value remains an influencer so drive profit through promotional effectiveness
Online and Digital is creating new and exciting touch points along the shopper journey
The future growth engine will switch gears due to generational shifts in spending power
Health and Wellness is changing and influencing in-store purchase decisions and selection

50. Thank You! Stay Connected to Consumer and Media Trends
For the latest insights, visit nielsen.com
@CarmAllison
@Nielsen