1. Private Label Manufacturers Association Feb 2013

2. agenda Customer and Manufacturer Mindset The Market
Private Label Performance
Christmas Snap Shot

3. CUSTOMER AND MANUFACTURER MIND SET

4. Consumer Confidence continues to erode, with bleak outlook for coming year
Manufacturer Outlook is divided, but pessimistic about current trends and activities
Retailer Relationships are being damaged by perceived power and cost imbalances
Trade Spend is reaching saturation point and no longer delivering on its promise

5. 38%
of consumers think we are in a recession – 6% more than in Q
39%
of manufacturers feel that business conditions have declined since this time last year
65%
feel they need to cut back on Trade Spend, compared to 38% who see it boosting ROI.
25%
of manufacturers consider their relationship with Woolworths to be “Poor” or “Very Poor”.

6. THOSE who feel we are in recession has doubled since the same time in Q4 2009
First time confidence has been below 100 at year’s end
Call out for presenter: what is odd about this slide? Why is confidence lower than post-GFC?
Q: Do you think your country is in an economic recession at the moment?
Source: Nielsen Global Survey, Q4-2012, Base: All respondents (Australia), Field Dates: November , 2012

7. People perceive Future job prospects to be bleak almost doubling compared to Q4, 2010
Q: What are your perceptions of Local Job Prospects over the NEXT 12 Months?
Source: Nielsen Global Survey, Q4-2012, Base: All respondents (Australia), Field Dates: November , 2012

8. This is Compounded by cost of living pressures and health concerns
Health ties into money woes – could it devastate you.
Q: What are your major top two concerns over the next 6 months?
Source: Nielsen Global Survey, Q4-2012, Base: All respondents (Australia), Field Dates: November , 2012

9. The market

10. Australia continues to experience a slowing rate of FMCG price inflation, which is a recurring pattern in other countries in the region.
Australia
Fast Moving Consumer Goods market dynamics | Scan Data
Nielsen Scan Data based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels. In most cases this reflects 60 – 80% of all Longlife categories. For Australia, this is 75% of categories.

11. Regional Summary (Quarter 4)
The region continues to see strong growth, with volumes up 7% and overall dollar sales growth of 12.7%
Regional Summary (Quarter 4)
Fast Moving Consumer Goods market dynamics | Scan Data
Nielsen Scan Data based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels. In most cases this reflects 60 – 80% of all Longlife categories. For Australia, this is 75% of categories.

12. Supermarket $ Growth 2.5% excl PL/Tobacco
Suppliers
$ Growth
Top 5
+1.5%
Next 100
+3.6%
Top 101 – 200
+7%
$122M
$663M
Absolute contribution to $ growth is about the same for the Top 100 versus next 100 suppliers!
$92M
Source: Nielsen | ScanTrack Australia MAT to 23/12/2012 vs Yr Ago
Retail Barometer

13. 87% will change promotional activities
2 out of 5 will change depth
3 out of 5 will change frequency
Only 1 in 6 will change number of items on promotion
Mfr’s seem to think so with 9 out of 10 indicating they will take action to adjust components to reduce trade spend or at least make promotional tactics a amjor focus going forward
Source: Nielsen Retail Barometer, Q4-2012, Base: All respondents (n=92), Field Dates: November , 2012

14. Coles Aldi WW is leader on consumer focused activities.
is leader on strategic, and manufacturer focused activities.
Aldi
is leader on supply chain. WW
Source: Nielsen Retail Barometer, Q4-2012, Base: All respondents (n=92), Field Dates: November , 2012

15. in-market success as Coles continues to close the gap on woolworths
38.2%
+ 0.1
29.0%
+ 0.5
7.7%
- 0.5
7.6%
+ 0.6
Market Share % by Retailer 2012 (vs. 2011)
Source: Nielsen | Homescan, Total Australia, MAT to 15

16. RETAILER GROWTH % AHEAD OF TOTAL AUS
Coles enjoying broad success across all socio-demographic clusters followed by aldi
RETAILER GROWTH % AHEAD OF TOTAL AUS
Families
Singles & Couples
High Income
Med Income
Low Income
HIGH
Income
Density
LOW
Income
Density
Total $ Growth AUS: +5%
Total $ Growth WW: +3% Total $ Growth Coles: +8% Total $ Growth IGA: -1% Total $ Growth Aldi: +23%
Retailer % Growth Vs Total AUS – 2012
Source: Nielsen | Homescan, Total Australia, MAT to 16

17. LETS TALK PRIVATE Label!

18. % Value Share of Private Label to Total Packaged Grocery Sales
Private Label has gained an increase in Share in WOW.
Small decrease in PL Share for Coles.
Branded products highly increasing their share in Aldi
% Value Share of Private Label to Total Packaged Grocery Sales
Growth stronger vs last Xmas quarter but tapering off for Coles PL Ww
Product T Grocery, T. P Label
MK AuS, coles, ww, aldi
WW PL as a % of Total Aus T Grocery 18

19. Families Share on Private Label Trended, Total Supermarkets
Start up families increasing their spend on private labels faster than other demographic groups
Families Share on Private Label Trended, Total Supermarkets

20. CUSTOMERS BUYING MORE , PENETRATION INCREASES and overall SHARE increasing
AWOP
PL VAL Share
+4.6%
+2.8%
-3.4%
+0.0%
+8.4%
+6.0%
+1.0%
+2.1%
+0.9%
Penetration - %chg v YA
AWOP - %chg v YA
PL VAL Share – % chg in PL Share (Value Market Share for Total PL)
-4.2%
-6.0%
-5.6%
Source: Nielsen | Homescan (Australia) – Issue# /600654
Homescan QTR to 26/01/2013
Q Nielsen Private Label Report

21. WHICH PRODUCTS DO SHOPPERS WANT IN PRIVATE LABEL

22. There are 20 categories which account for 50% of the Heavy Private Label Buyers spend over a year in Australia
Shopping list
Pet Food
Coffee
Milk
Ice Cream
Block Cheese
Convenience Frozen
Soft Drinks
Medicinal Products
Biscuits And Cookies
Frozen Vegetables
Chilled Desserts
Vitamins
Confectionery
Toilet Paper
Cereal
Chilled Spreads
Snacks
Heat And Eat Frozen
Packaged Bread
In store Bread 8
Purchased in National brands 5
Purchased primarily in Private Label 7
Promotional Vulnerable PL

23. What turns on THE PRIVATE LABEL SHOPPER

24. … to purchase Food, Grocery and Toys
Attitudinal, Media and Lifestyle pen portrait of a Heavy Private Label Buyer
They keep an eye on their children eating habits
They like to try new brands
They watch family movies together
In-Store advertisement influence their purchase decisions
… to purchase Food, Grocery and Toys
They use internet …

25. Christmas snap shot

26. Christmas Themes Strong Christmas Theme: Fun and Lowest Prices
Fresh and Value
All Your Needs for Christmas
Strong Christmas Theme:
Quality and Fresh
All Your Needs for Christmas

27. Aldi performing ahead of expectation over the Christmas period.
Christmas Shopper trends
37.7%
29.0%
8.1%
Share of Trade
-4.9%
+14.3%
+143.8%
Growth in Media Spend
At which of the following supermarkets did you complete the majority of your Christmas shopping?
1st (28%)
2nd (24%)
3rd (14%)
Thinking about your overall experience (including out-of-store marketing), who do you think should ‘win’ the best Overall Supermarket for Christmas 2012?
1st (37%)
2nd (30%)
3rd (10%)
Share of Trade: Source: Nielsen Homescan, 13 weeks to 29/12/2012. Media Spend: Source: Nielsen Media, 8 weeks to 29/12/2012, data derived from free-to-air channel rate cards after discounts applied. Discounts are derived on a per advertiser basis, based on industry body information. Nielsen aims for this measure to be as accurate as possible, but deviation from the total universe may occur. Shopper Trends: Source: Nielsen Customized Research (CR), based on January telephone survey from a CR Panel (separate to the Homescan panel) (n = 3007 for location of shopping question, n = 3358 for best supermarket winner question).

28. Christmas Shopper trends
Aldi’s performance over Christmas has been driven in some area’s that aren’t traditional Aldi strengths.
Christmas Shopper trends
Which of the following reasons describe why you chose to shop at your chosen retailer for the majority of your Christmas shop?
Shopper Trends: Source: Nielsen Customized Research, based on January questionnaire (n = 2953).

29. Switching: Total Business (rolling quarters)
While switching to Coles and ALDI has tapered back, the switching to these two retailers was worth $53m in lost sales in the Christmas Quarter.
Switching: Total Business (rolling quarters)
Lost sales = $53m
Source: Nielsen Homescan

30. WOW shoppers increased their spend in WOW stores, but lagged behind Coles (by $4.50) and ALDI (by $3.70).
Shopper key metrics
More shoppers in stores
(+0.7%)
Shoppers spending more in Total Quarter
(+$15.30)
+0.0%
+$19.80
+2.5%
+$19.00
Shoppers visiting less frequently
(-0.1%)
Shoppers spending more per visit
(+$1.10)
+0.1%
+$0.40
+0.2%
+$0.50
Time periods are 13 weeks to week ending 29/12/2012 vs 13 weeks to week ending 31/12/2011. Source: Nielsen Homescan

31. ALDI’s Christmas

32. Perceived % Value on Promo
ALDI stocked more branded items this Christmas than ever before – offerings which were on average 75c cheaper than WOW and $1.19 cheaper than Coles.
Retailer share amongst Aldi’s branded Christmas stock
-7.8%
The New ALDI Buyer
Penetration
AWOP ($)
Avg Price ($) Per Unit
Perceived % Value on Promo
2011
2012
+/-
Australia
76.5
83.2
6.7
21.84
25.14
3.30
4.37
4.48
0.11
48.9
52.1
3.1
Woolworths
45.9
47.9
2.1
16.72
16.73
0.01
4.32
-0.15
50.7
52.8
Coles
38.5
41.7
3.2
15.81
18.18
2.37
4.20
4.76
0.57
48.6
56.7
8.1
ALDI
0.0
16.8
0.00
11.36
3.57
24.4
Time periods are 13 weeks to week ending 29/12/2012, 2011 to week ending 31/12/2011, 2010 to week ending 01/01/2011. Source: Nielsen Homescan

33. ALDI’s New Shoppers demographic profile
The new ALDI shopper is predominantly families, notably Small Scale Families. This links in with the longer term trend seen at an All Shopper level, where families are switching out of WOW and into Coles and ALDI.
ALDI’s New Shoppers demographic profile
Families
Main Shopper <44yo
Medium Income HHs
Time periods are 13 weeks to week ending 29/12/2012, 2011 to week ending 31/12/2011, 2010 to week ending 01/01/2011. Source: Nielsen Homescan

34. Aldi 300 stores 50% of household’s shopping
10% share of eastern seaboard
Strength is price
Range = 1200 items
Basket size is 90% of WW / Coles
Strong in fresh
Skewed towards families
Strongest rel’ship with suppliers
Brightest future according to Aust. Suppliers
Plans to open in South & Western Australia
300 stores
Why wait – why not launch your own equivalent?
50% of household’s shopping

35. Summary of trends

36. Summary of trends
Consumer and Manufacturer confidence continues to erode, with bleak outlook for coming year.
Coles & Aldi winning in the market – both attracting Woolworths key shoppers
PL continuing to grow in the Australian market, but growth slowing as market becomes more mature
Private Label growth opportunities increasingly focused on more premium non- traditional areas
Balancing both Private Label & Branded important to retailers in winning Christmas
Aldi growth into SA & WA likely to increase the acceptability of Private Label within the Australian market

37. ThankYOU