1. Convenience Store Trends 2017

2. Agenda 1 Snacking Overview 2 Foodservice Trends 3
Bundling / Meal Deals 4
Innovation 5
McCain Solutions

3. Snackification:
The tendency of modern consumers to substitute a series of snacks over the course of the day in place of the traditional "three square meals" schedule
Source: CSP Industry News 2016

4. What makes it a snack?
Although today, anything can be a snack. But consumers increasingly define snacks based on portion size. It’s important to them that snacks aren’t too large.
Source: 2016 Technomic Snacking Occasion Trend Report

5. 2.7 46% of consumers snack 3 or more times per day
Consumers are increasingly snacking, while still eating three meals during a typical day
46% of consumers snack 3 or more times per day
Up 5 pts in one year
2.7
Avg number of snacks consumed per day
Source: IRI 2016 Snacking Survey

6. The acceleration of snacking is expected to continue1
Busier lifestyles 2
Foodservice snacks more readily available 3
Increased role of snacks in everyday lives
Source: 2016 Technomic Snacking Occasion Trend Report

7. % of consumer snack consumption by daypart
Growth in snacking is driven by morning occasion, but afternoon represents the largest percentage of consumer snacking
% of consumer snack consumption by daypart
2010
2016
Early Morning 7%
20%
22%
37%
Morning
51%
69%
Afternoon
44%
57%
Evening
Late Evening
24%
45%
Source: IRI 2016 Snacking Survey

8. % of consumers eating snacks in the early morning
Younger generations are driving the majority of early morning snacks consumption
% of consumers eating snacks in the early morning
52%
Ages 18-24
69%
Ages 25-34
Consumers are far more likely to replace meals with snacks earlier than later in the day
Younger consumers are slightly more likely to skip breakfast than lunch, while the opposite is true of older consumers
Younger consumers’ busy lifestyles may mean that they don’t have enough time to eat breakfast, while older consumers tend to have smaller appetites and may prefer smaller portions at lunch
vs. 31% for all other age groups
Source: IRI 2016 Snacking Survey
% of consumers eating at least 1 or more per week

9. Breakfast fare expands into snacking occasion
All-day breakfast is a major industry trend; as a result, research suggests breakfast fare to emerge as snacks
Consumers find breakfast items more appealing throughout the day over foods from other dayparts
Lower price and smaller portion size make breakfast items suitable for snack occasion
41% of consumers agree that any food can be a snack if the portion size is small
Source: 2016 Technomic Snacking Occasion Trend Report

10. Breakfast items often appeal to consumers as afternoon and evening snacksAM
Afternoon
Evening
Late Night
70%
40%
23%
10% AM
Afternoon
Evening
Late Night
63%
52%
40%
14%
When asked at what time of day consumers purchase these items as snacks?
Source: 2016 Technomic Snacking Occasion Trend Report

11. In addition to breakfast items, younger consumers purchase a wide array of items as snacks more often than their older counterparts
Appetizers
Baked Goods
Small entrée
73%
63%
63%
60%
39%
37%
Sides
Beverages
Younger consumers’ greater affinity for appetizer and beverage snacks aligns with their broader definition of snacks compared to those of their older counterparts and their greater likelihood to eat what they want, when they want it, no matter the time of day
Positioning offerings as suitable for snacks may help drive incremental traffic and sales
Ages 18-34
Ages 35+
65%
66%
68%
63%
Source: 2016 Technomic Snacking Occasion Trend Report

12. Hungry consumers have many choices
A shift is occurring in terms of where consumers purchase snacks
Hungry consumers have many choices

13. Fast Food restaurants are leading source of snacks, but down from 2014
As consumers grow more reliant on foodservice and snack more often, they seek less traditional locations for their purchases
Foodservice Segment Growth
Fast Food / QSR
Fast Food restaurants are leading source of snacks, but down from 2014
2016
+1.8%
2017
+2.0%*
Supermarket
Grocery Store snack purchases from prepared foods section are associated with quality
2016
+6.0%
2017
+6.0%*
C-Stores
More consumers say they’re satisfied with the value they receive at c-stores
2016
+1.2%
2017
+1.3%*
Source: 2016 Technomic Market Intelligence Report
*2017 Forecast

14. 14% of C-Store combos feature foodservice sides3
As part of their value proposition, bundles and combo deals can help C-Stores compete with fast food restaurants
14% of C-Store combos feature foodservice sides3
25%
of on-the-go snacking growth in restaurants was from combo item deals1
71%
of Millennials prefer sides in their combo meal2
“Combo deals” beyond the standard “combo meal” may be more appealing to c-store visitors as snacking continues to rise
Source: 2016 NPD Group1; C-Store Products Online2; Q Technomic C-Store Marketbrief3

15. Improved Foodservice offerings will cause C-Stores to continue gaining share from restaurants
25% of customers have increased foodservice purchases over the past month at the expense of fast food restaurants
75% of consumers purchase snacks at C-Stores on a monthly basis
Foodservice snack items account for almost 50% of purchased snacks
30% of consumers say they’ve increased their foodservice spending at C-Stores
Source: 2016 Technomic Convenience Store Consumer Marketbrief

16. Foodservice also benefits the operator as the most profitable category within C-Stores
77% of operators say foodservice is profitable, while 43% say it is VERY profitable to their stores
The most profitable foodservice items include traditional foods such as pizza, breakfast sandwiches, and hot dogs, as well as non-traditional foods with higher price points like veggie burgers
Operators indicate the most profitable foods are unique products like veggie burgers (due to higher price points) or traditional foods such as pizza, breakfast sandwiches, and hot dogs due to higher volume
Source: 2016 C-Store Datassentials

17. As the core consumer, it is vital that C-store retailers understand what millennials want, how they want it, and how best to fulfill the needs
Consumers’ eating norms and attitudes towards snacks are shifting
Opportunity to position an ever-widening array of foodservice options to fill snacking needs
Consider offering breakfast fare in handheld form to meet consumers snacking need
Competition may require C-Stores to reposition foodservice programs
Availability of snack sizes or more bundled snack options to meet the wide variety of snack need states

18. Millennial Preferences Drive Potato & Snack Innovation and Profits

19. Business Opportunities
McCain can help you expand your snack options to appeal to your target consumers all throughout the day

20. Breakfast Lunch and Dinner Snacks
McCain delivers on restaurant quality products across all dayparts
Breakfast
Add a consumer favorite hash brown selection to warmers during the morning meal daypart
Create add-on combos with breakfast items or as a morning snack side with coffee or hot beverage purchase
Lunch and Dinner
Add classic potato wedges or tater tots to warmers during the lunch and PM Snacking dayparts
Create add-on combos with burgers, sandwiches, hot dogs and even pizza to create complete meal deals
Snacks
Add products like mozzarella sticks, jalapeno bites or onion rings to warmers as a side or snack during all snacking dayparts
Make it easy to satisfy consumer cravings on the fly