1. GROCERY INDUSTRY, PRIVATE BRANDS AND ITS EVOLUTION Joe McKie, Vice President, Private Brands Food Marketing Institute

2. AGENDA 1.Provide a brief description of FMI 2.Share FMI’s private brands efforts 3.Give a high-level view of the evolution of our industry and private brands 4.Demonstrate what’s next for private brands 2

3. FMI Members Include… THE ASSOCIATION FMI conducts programs in public affairs, food safety, research, education and industry relations on behalf of its nearly 1,250 food retail and wholesale member companies in the U.S. and around the world. More than 25,000 retail food stores Regional firms $650 billion combined annual sales volume Nearly 22,000 pharmacies 260 companies from more than 65 countries 260 companies from more than 65 countries Multi-store chains Independent operations 330 associate members that include retail supplier partners 3

4. FMI SERVES AS THE VOICE OF FOOD RETAIL Food Safety and Defense Government Relations Advocacy Educational Conferences and eLearning Platforms Information Services and Business Intelligence Industry Networking and Collaboration Industry and Consumer Research Health and Wellness Promotion Social, Environmental and Sustainability Advancement Communications Resources and Support Industry Attractiveness and Awareness Private Brands Private Brands FMI Foundation 4

5. Private Brands TOTAL STORE COLLABORATION Asset ProtectionFresh FoodsSupply ChainTechnology Engagement in the areas of loss prevention, risk management, workplace safety, crisis management, technology, and overall asset protection Emphasis on perishables and offer center-store assortments that differ from those of traditional retailers—especially in the areas of ethnic, natural and organic Global forum to exchange ideas and information on future trends, current techniques and best practices to strengthen the performance of the Private Brands industry Focus on logistics, transportation, distribution, warehousing, supply & demand planning, forecasting, purchasing and technology across the entire supply chain Approaches to mobility, payments, data security, cloud computing, in-store innovation and social commerce 5

6. FMI PRIVATE BRANDS GROUP Provides leadership and advocacy Supports a global forum to exchange ideas – knowledge and education Promotes collaboration on non-competitive industry issues Acts as a platform, supporting strategic versus transactional collaboration between retailer brand owners, suppliers and trading partners 6

7. GROCERY INDUSTRY AND ITS EVOLUTION The Evolution Private Brands Of Terminology GenericPrivate Label 7

8. GROCERY INDUSTRY AND ITS EVOLUTION Today’s Food Retail Landscape Suggests: Competition for wallet is broader and more aggressive 1995-2012 38% growth in sales 38% growth in sales 77% growth in capacity 77% growth in capacity 8 Source: Food Retailing 2013: Tomorrow's Trends Delivered Today

9. GROCERY INDUSTRY AND ITS EVOLUTION Today’s Food Retail Landscape Suggests: Consumers are in charge today Shoppers adopted new “value seeking” habits during the recession, many of which they plan to maintain: 64 percent of customers indicated they’ve always been comfortable with private brands. 78 percent of those surveyed said they will buy private brands moving forward. Source: U.S. Grocery Shopper Trends 2012 9

10. GROCERY INDUSTRY AND ITS EVOLUTION Today’s Food Retail Landscape Suggests: Communications to consumers is more complex, yet more personal Out of 1,500 Shoppers: 68 percent said their smartphone is likely to become an integral part of their shopping experience 38 percent have used it in the last month to compare prices while shopping 32 percent reported reading online product reviews 22 percent said they used their smartphone to purchase products 10 Source: Booz & Company 2013 Consumer Trends Survey; Booz & Company analysis; Nielsen analysis

11. GROCERY INDUSTRY AND ITS EVOLUTION Today’s Food Retail Landscape Suggests: Brands that connect emotionally, providing relevant solutions to customers, will win 11 Private Brands can make and are making that connection… likes and dislikes Tastes and distastes Wants and Wishes

12. GROWTH AND ACCEPTANCE OF PRIVATE BRANDS Over the past 5 years, Private Brand sales are up 21% and CPG brands are up only 3% 38% of consumers say Private Brands are better 50% of consumers say they are more aware of PB today than they were a year ago 1/3 of consumers say they are buying more PB than a year ago 8 out of 10 consumers say Private Brands are equal or better than CPG brands Sources: Nielsen/PLMA, GfK/Roper, Ralcorp, Supermarket News 12

13. TRENDS AND CRITICAL ISSUES Evolve Private Brands as a Differentiating Strategy - Regardless of Format Engage your Associates Innovate to be Different, Better & Relevant Ensure Food Safety is a Priority Optimize Supply Chain Educate your Consumers 13 Process is Critical

14. Contact me: 202-220-0719 jmckie@fmi.org FMI’S PRIVATE BRAND RESOURCE 14