1. Fresh Ground Chubs Jennie-O® Fresh Ground Chubs
Building a bridge to ground turkey

2. Brand Overview
Consumer & Category Trends
Products
Table of Contents

3. Brand Overview

4. We believe that eating well shouldn’t come at the expense of taste.
Who We Are
We believe that eating well shouldn’t come at the expense of taste.
From ground turkey and sausages to deli meat and tenderloins, we offer more than 1500 products with a taste people love.

5. Our Brand Mission
Jennie-O Turkey Store is on a mission to show people that turkey is as lean as it is delicious.
Using our bold MAKE THE SWITCH™ theme, we’re asking people to switch to turkey in their favorite foods.

6. Our Consumer Personality Demographics The Good Intender W 25-54
Upscale, with HHI $60K+
Likely to have graduated college
Works on a part-time basis
Principal shopper in a large HH
65% have children, typically several
Personality
Have good intentions but find it hard to make good choices when it comes to eating better
Cook meals frequently
Trying to eat healthy and watch their nutrition
78% will recommend a food product she likes to friends
Our Consumer
The Good Intender
Source: MRI Doublebase 2010

7. Value of Our Consumer
The Good Intender spends almost twice as much at checkout when we are in the basket.
Source: Nielsen Basket Facts – Syndicated, Total US – All Outlets, 8/14/11-8/25/12

8. We experience growth year after year in our key categories
Consistent Growth
We experience growth year after year in our key categories
5 Year CAGR:
Frozen Burgers: 9%
Fresh Ground: 13%
Fresh Tray Pack: 9%
Source: Nielsen, Market Summary Data, Sept 2012

9. 1.2 M more households purchasing JENNIE-O fresh ground in 2012
Growing Penetration
We continue to bring new consumers to the category by consistently increasing Household Penetration and are the brand driving the growth in the category
1.2 M more households purchasing JENNIE-O fresh ground in 2012
Source: Nielsen, Market Summary Data, Sept 2012

10. Leader in Category
We spent 3 times more in advertising efforts in 2011 than any other turkey company and are the most recognized brand in the category
Brand
Unaided Awareness
Aided Awareness
Purchase Intent 54
(+32%) 90
(+13%) 53
(+27%) 29
(-17%) 98
(-1%) 63
(+15%) 9
(+5%) 59
(+20%) 27
(+16%) 2
(-2%)
(+7%) 16
(+2%) 5
(+1%) 72
(+4%) 30
Source : Marketing Evolution, Reports December 2009, November 2010, November 2011

11. Consumer & Category Trends

12. Meat & Poultry Production
Total U.S. meat and poultry output topped out in 2008 and has maintained total production levels
Source: CME Group, Daily Livestock Report, 9/7/12. & Livestock Marketing Information Center in Denver

13. Meat & Poultry Consumption
While production has remained steady, consumption has been falling since 2008
It is projected that next year consumption will drop below 200 pounds per person
Source: CME Group, Daily Livestock Report, 9/7/12. & Livestock Marketing Information Center in Denver

14. Meat & Poultry Expenditures
Why the decline?
Higher prices
U.S. consumers cannot afford as much meat and poultry as they once could
They have continued to spend more each year and get less
Source: CME Group, Daily Livestock Report, 9/7/12. & Livestock Marketing Information Center in Denver

15. Prices Will Remain High
Input costs will remain high
In August, the USDA dropped its corn crop estimate and predicted corn prices would average $7.50 to $8.90 per bushel in the coming year
USDA is also forecasting alfalfa production at 20% less and other hay products at 12% less than their 5-year averages resulting in record high prices
Source: CME Group, Daily Livestock Report, 9/6/12 & Meatingplace, September 2012.

16. Prices Will Remain High
U.S. pork, beef and chicken industries all set annual export records in 2012
A growing and, more importantly, an increasingly affluent world population continues to draw more and more product out of the U.S. market
U.S. consumers will have to compete with buyers in other countries for these products
Source: CME Group, Daily Livestock Report, 9/7/12..

17. Prices Will Remain High
Production will decline
“Losses in animal industries will be enormous over the next year,” warns Purdue University Ag Economics Professor Chris Hurt. Their primary option is to reduce production.
Beef
In July, USDA reported the smallest U.S. cattle herd since the agency started tracking the data nearly 40 years ago. And they expect beef production to fall nearly 4% in 2012 and another 2.4% in The bulk of the drought-related decline in beef supply won’t kick in until 2014 and beyond
Pork
Pork supplies are very likely to decline, year-on-year, in the second half of 2013.
U.S. per capita pork consumption/availability is already sharply lower than just a few years ago. As recently as 2007 it was 50.8 lbs. per person. It is forecast to be 46.0 lbs. this year and 44.6 next year, declines of 10% and 12% respectively.
Source: Meatingplace September 2012 & CME Group, Daily Livestock Report, 9/26/12.

18. Prices Will Remain High
Supply
Demand
Prices

19. How are consumers managing higher prices?
Price takes on an ever-greater role in the meat purchasing decision.
In addition to price per pound solidifying its #1 ranking as the most important decision factor, total package cost is now the second most important, surpassing product appearance
Source: The Power of Meat 2012, AMI/FMI/Cryovac

20. How are consumers managing higher prices?
The two predominant trends in money-saving behaviors specific to meat and poultry are:
Simply buying less, as we saw in consumption charts
Finding ways to purchase the product less expensively
Source: The Power of Meat 2012, AMI/FMI/Cryovac

21. And in 2012 there was similar or even less interest
How are consumers managing higher prices?
Buying Less Expensively
Interest in volume-based discounts remain subdued. Last year, participation in volume discounts plummeted
Buying in bulk: %
Stocking up when on sale: -5%
Buy large quantities to freeze: -8%
However, interest in other money-saving measures grew
Buying Private Brands +14%
Coupons +8%
Total Package Cost +7%
Less expensive cuts +5%
And they are comparing prices…
And in 2012 there was similar or even less interest
Source: The Power of Meat 2012, AMI/FMI/Cryovac

22. Ground Turkey Solution
Consumers are looking for ways to buy less expensively
Brand switching, comparing prices between stores and comparing prices between items in stores
Opting for a less expensive cut, price/lb. or total package price
Protein prices will continue to rise
The Solution:
A high quality, value option

23. Category Trends Ground Turkey Chub Segment Outpacing Category Growth
The majority of ground turkey is sold in trays – 93%
But chubs are gaining share and are outpacing the category growth rate
24 wks 12 wks
Ground Turkey Category: +12% +9%
Ground Turkey Trays: +11% +8%
Ground Turkey Chubs: +28% +29%
Jennie-O is driving the ground turkey chub growth
Jennie-O Grnd Turkey Chubs +84% +75%
And increasing brand share, at 36% in the most recent 12 weeks
Source: Nielsen, weeks ending 1/05/13

24. Category Trends Jennie-O SKU performance
Source: Nielsen, weeks ending 1/05/13

25. Cannibalization of Tray Pack?
Loyalty and Cross Purchase interactions show that tray buyers are more loyal to package form
Tray Buyers meet 95% of their Fresh Ground Turkey Purchases with trays
Chub buyers meet 56% of their Fresh Ground Turkey Purchases with chubs
Overlap between Tray and Chub purchases remained at 8% over the past several years
8% of Tray Buyers also Buy Chub
49% of Chub Buyers also Buy Tray
Main demographic difference between buyers is income
Tray buyers indexing high at $75,000+
Chub buyers indexing high at $40,000 - $49,999
Conclusion:
Chub buyers are more likely to “trade up” to trays, than Tray buyers are to “trade down” to chubs
Source: Nielsen Market Summary

26. Cannibalization of Tray Pack?
Jennie-O Account Case Studies: No Erosion of Ground Turkey Trays
52 Week
Chg in Volume
12 Week
Chg in Volume
12 Week
Share in Volume
Northeast Account
Trays
+18%
+12%
84%
Chubs
+34%
+48%
16%
Southeast Account
+17%
+6%
85%
+27%
+33%
15%
West Account
+60%
+4%
+119%
+53%
Source: Nielsen, weeks ending 1/05/13

27. Creating a Value Bridge
Recommendation
Merchandise fresh Ground Turkey Chubs with ground beef to give the consumer value options when price comparing at shelf

28. Products

29. Ground Turkey Chubs Lean Ground Turkey, 90/10 1 lb. and 3 lb.
High Pressure Processed (HPP)
The Math of HPP: 4 log reduction
Presumed infective dose of Salmonella is 5 cells
Maximum observed Salmonella count of 4 cells/gram
At 4 cells/gram a 149 gram serving of ground turkey would contain 596 cells
4 log kill => cells
25 days of shelf life on arrival guaranteed

30. Product Specs

35. Appendix

38. Ground Beef down 19 M lbs. in the most recent 13 weeks
Chubs gaining share

39. 93/7 users shifting down to 90/10 80/20 users shifting down to 70/30
TOTAL VOLUME
AVERAGE RETAIL
SHARE OF VOLUME
% Lean
13 Weeks Ending 10/27/12
13 Weeks Ending 10/29/11
% Chg
Pnt Chg
80-84% Lean (80/20)
182,255,798
195,751,602
-6.9%
$3.24
$2.96
9.6%
37.9%
38.9%
-1.0
Up to 79% Lean (70/30)
133,260,518
131,716,294
1.2%
$2.69
$2.55
5.4%
27.7%
26.2%
+1.5
93 & Above % Lean (93/7 +)
55,556,392
64,844,567
-14.3%
$4.61
$4.14
11.2%
11.6%
12.9%
-1.3
85-89% Lean (85/15)
61,031,988
65,041,959
-6.2%
$3.93
$3.67
7.0%
12.7%
-0.2
90-92% Lean (90/10)
46,958,314
44,683,334
5.1%
$4.15
$3.77
10.1%
9.8%
8.9%
+0.9 NA
1,682,575
715,490
135.2%
$3.16
$3.32
-5.1%
0.3%
0.1%
+0.2
Total
480,745,584
502,753,247
-4.4%
$3.42
$3.17
8.0%
100.0%

40. Fresh Ground Beef Tray Fresh Ground Beef Chub TOTAL VOLUME
TOTAL VOLUME
AVERAGE RETAIL
SHARE OF VOLUME
% Lean
13 Weeks Ending 10/27/12
13 Weeks Ending 10/29/11
% Chg
Pnt Chg
80-84% Lean
128,896,966
137,547,340
-6.3%
$3.27
$3.00
9.1%
38.9%
39.2%
-0.4
93 & Above % Lean
46,835,563
54,084,616
-13.4%
$4.63
$4.19
10.6%
14.1%
15.4%
-1.3
85-89% Lean
49,099,435
51,325,750
-4.3%
$3.86
$3.62
6.7%
14.8%
14.6%
+0.2
Up to 79% Lean
61,750,432
65,848,573
-6.2%
$3.01
$2.79
8.0%
18.6%
18.8%
-0.2
90-92% Lean
43,451,203
41,236,615
5.4%
$4.09
$3.71
10.4%
13.1%
11.8%
+1.3 NA
1,682,163
598,445
181.1%
$3.16
$3.28
-3.7%
0.5%
0.2%
+0.3
Total
331,715,762
350,641,338
-5.4%
$3.61
$3.32
8.8%
100.0%
Fresh Ground Beef Chub
67,145,707
61,315,814
9.5%
$2.35
$2.27
3.6%
56.9%
50.7%
+6.1
38,242,529
44,593,917
-14.2%
$2.89
$2.65
32.4%
36.9%
-4.5
6,745,394
8,809,946
-23.4%
$4.32
$3.72
16.0%
5.7%
7.3%
-1.6
4,902,191
4,816,747
1.8%
$3.83
$3.50
9.6%
4.2%
4.0%
1,026,921
1,206,831
-14.9%
$4.71
15.1%
0.9%
1.0%
-0.1
118,062,742
120,858,795
-2.3%
$2.72
$2.58
5.3%

41. (Food Demand Anaylsis, USDA, ERS, June 2012)
About half of the beef volume lost in the category due to higher prices is captured by other proteins in the meat case.
(Food Demand Anaylsis, USDA, ERS, June 2012)
(See next two slides)
In the past 5 years, household penetration on value grinds (85/15) has grown twice as fast as premium grinds as consumers migrate into the turkey category and then trade up.
Loyalty and cross purchase analysis show 49% of value (chub) buyers “trade up” to tray pack grinds.
Food Demand Analysis: USDA, ERS June 2012
For every 1% increase in beef prices:
* Beef volume will drop by 0.621%
* Pork volume will increase by 0.192%
* Chicken volume will increase by 0.103%
* Turkey volume will increase by 0.089%
Based on per capita consumption, the increases in pork, chicken and turkey only make up for about 48% of the beef loss.

42. ERS's ordinary food demand system for the United States contains 1,640 estimated demand elasticities covering 39 food categories and an aggregate nonfood sector. The demand system, in which food quantities demanded are functions of food prices and per capita income, is an effective model for forecasting food consumption and analyzing the effects of retail price changes on quantities of food purchased. For an outlook projection, information about changes in prices and income can be used to forecast food quantities demanded. For a program analysis, various scenarios of changes in prices and income can be used to evaluate the program effects on food quantities demanded. In table 1, each estimate of price elasticity shows the percentage change of a food quantity demanded in response to a 1-percent change in a food price or per capita income. For example, the own-price elasticities show that for a 1-percent increase in a food price, the demand for its own quantity would decrease by percent for beef, percent for pork, and percent for chicken. The estimates of income elasticities in the last column show that for a 1-percent increase in per capita income, for example, the quantities demanded would increase by percent for beef, percent for pork and percent for chicken.
For the estimates of cross-price elasticities, the positive signs imply substitution relationships and the negative signs imply complementary relationships. For example, the cross-price elasticity of beef in response to a 1-percent increase of the price of pork is 0.114, which means that the quantity of beef would increase by percent to substitute for a decrease of pork because of its higher price. On the other hand, the cross-price elasticity of beef in response to a 1-percent increase in the price of cheese is , which means that the quantity of cheese would decrease causing beef consumption to decrease by percent because of their complementary relationships.
Food Demand Analysis: USDA, ERS June 2012
For every 1% increase in beef prices:
* Beef volume will drop by 0.621%
* Pork volume will increase by 0.192%
* Chicken volume will increase by 0.103%
* Turkey volume will increase by 0.089%
Based on per capita consumption, the increases in pork, chicken and turkey only make up for about 48% of the beef loss.

43. Selected price increase by 1-percent of
Table 1-Price elasticity estimates
Food quantity of
Own price
Selected price increase by 1-percent of
Income
Beef
Pork
Chicken
Cheese
Milk
Oranges
Tomatoes
Percent
-0.621
0.114
0.018
-0.026
-0.011
0.000
-0.012
0.392
-0.728
0.192
0.013
-0.006
0.002
-0.021
-0.005
0.659
Other meats
-1.874
0.818
0.355
0.280
0.358
-0.071
0.200
0.068
-0.574
-0.372
0.103
0.047
-0.039
-0.058
0.001
0.097
0.077
Turkey
-0.535
0.089
0.141
-0.077
0.222
0.432
-0.056
-0.099
-0.127
Fresh and frozen fish
0.121
-0.113
0.256
-0.049
0.011
-0.431
-0.013
-0.141
0.429
Canned and cured fish
0.009
0.104
0.059
0.129
0.198
-0.110
0.060
0.394
Eggs
0.092
0.012
0.042
0.004
0.287
-0.247
-0.227
-0.069
0.032
-0.070
0.418
Food Demand Analysis: USDA, ERS June 2012
For every 1% increase in beef prices:
* Beef volume will drop by 0.621%
* Pork volume will increase by 0.192%
* Chicken volume will increase by 0.103%
* Turkey volume will increase by 0.089%
Based on per capita consumption, the increases in pork, chicken and turkey only make up for about 48% of the beef loss.
For full chart go to:

44. Tier 2 Targets Tier 1 Targets Tier 3 Targets
(1M+ lbs. of JA in 2012)
Ralph’s
Meijer
Target
Publix
Safeway Nor Cal
Safeway Von’s
Tier 2 Targets
(700K+ lbs. of JA in 2012)
Smart & Final
HEB
Roundy’s
Tier 3 Targets
(Add 85/15 Chub to Mix)
Kroger Fry’s & Smith’s
SV Oregon
SV Utah
Brookshire