1. 1 Insert client logo in master here Trends and Insights From Grain Based Categories Bill Goergen ACNielsen

2. 2 A Brief Word from our Sponsor… A VNU Company… Active in over 100 countries around the world  tracking sales in retail outlets  measuring purchases in households  (online) consumer surveys, interviews, focus groups VNU Advisory Services  integrate information from multiple sources  transform raw data into strategic insights and tailor-made recommendations  advise on winning business decisions for complex sales and marketing issues

3. 3 What are we going to look at today? Consumer Sales Trends of a variety of grain based categories Focus on Bread, Cereal, Pasta, and Rice Regular vs Whole Grain Trends Consumer take away and purchase dynamics Summary and Conclusions

4. 4 Today’s Presentation Covers Fixed Weight products, with a UPC Code ­ Fresh Bakery Products not included ­ Any Product that does not have a UPC Does not cover fresh or random weight items Generally, from the Grocery Channel (Outlets noted on each slide) ­ Wal-Mart is not included

5. 5 Fun Facts to Know and Tell Low Carb diets first appeared in the 19 th Century Robert Atkins published his first diet book in 1972 Through the first 6 months of 2004, 994 new low carb products have been launched Low Carb industry sales will top $25 Billion in 2004

6. 6 A few thoughts for consideration.. Can we separate trends within “Grains” from trends impacted by “Low Carb”? ­ Yes, but… Many factors impact Category Trends ­ Pricing ­ Promotion ­ New Product Innovations ­ Demographic Trends ­ Consumer & Historical trends ­ Etc…

7. 7 High Carb Categories have clearly had recent declines in Categories Sales This includes Grain Based categories as well. Some categories, like Cereal, may have been impacted but have been declining for years. Source: ACNielsen Strategic Planner – FDM (Food, Drug and Mass Combined xWal-Mart) TOTAL US - FDM 52 weeks ending 04/21/01 TOTAL CEREAL (-2.4)(-1.5)(-0.9)(-5.0) TOTAL BREAD & BAKED GOODS (-0.2)0.3(-0.1)(-2.9) TOTAL PASTA (-1.3)0.6(-1.0)(-5.5) DEHYDRATED POTATOES (-2.6)4.12.2(-8.6) SW. POTATOES & YAMS - CANNED (-2.5)(-7.8)(-4.3)1.7 POTATO - FROZEN 1.50.5(-1.8)(-4.1) TOTAL PIZZA/SNACKS - FROZEN 4.64.9(-0.5)2.1 SALAD DRESSING - REDUCED/LOW CAL (-5.5)(-4.5)(-3.2)(-4.7) TOTAL CRACKERS2.1 (-1.4)0.3(-3.0) TOTAL JUICES DRINKS - SHELF STBL(-1.5)1.21.60.8 Unit Pct Chg vs YAG 52 weeks ending 04/20/02 52 weeks ending 04/19/03 Latest 26 weeks thru 01/24/04 TOTAL PREPARED FOODS - DRY MIXES ORANGE JUICE - REFRIGERATED 1.5 4.6 (-0.4) (-1.7) (-2.1) 0.3 (-4.7) (-2.9)

8. 8 Some Trends Point Consumers Away from Grain Based Foods Monday, August 30, 2004

9. 9 Declines in Grain Based Categories accelerated after the death of Mr. Atkins RTE Cereal Pasta Rice Fresh Bread 52 WK 4/12/0352 WK 4/10/0418 WK 8/7/04 Source: Strategic Planner Pre April ‘03 Post April ‘03 Current Trend

10. 10 Fresh Bread Sales declined dramatically beginning in the Spring of 2003 Total US FDM X WM Rolling 4 wk % Chg vs YA

11. 11 On a long term basis, we do not see signs of recovery in Total Bread Sales Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis Total Bread

12. 12 Whole Wheat/Oat Bread Represents a Significant Portion of Total Bread Sales and… Total Bread

13. 13 …Whole Wheat Bread continues to grow on a consistent basis Total US Food/Drug/Mass Ex Wal Mart - Eq Vol Change - Rolling 52 Week Basis Total Bread

14. 14 Flavor Buyers Household Penetration More Households purchase non-white Bread than White Bread Wheat penetration gains were greater than White bread losses Pt. Chg -0.2 -1.7 +0.4+2.9-0.7 -0.9 +0.0-0.9 Segments 52 weeks April 24, 2004 Total Bread

15. 15 Quarterly Penetration Total Fresh Bread is declining very slowly over time # of Households buying White and Wheat bread are nearly the same – White declining and Wheat growing Household Penetration Total Bread

16. 16 Where did the White Bread Buyers Go? In total, White bread declines were almost equal across three factors – but the largest percent was lost Baked good purchases However volume was also shifted to other breads and other (non-bread) baked goods Percent of Volume Loss Total Bread

17. 17 RTE Cereal Volume Trends have been in long term decline Total US Food $2MM Eq Volume Change - Rolling 52 Week Basis Total RTE Cereal

18. 18 The Rate of volume decline for Ready to Eat Cereal quickened in early 2003 Total US FDM Rolling 4 wk % Chg vs. YA Total RTE Cereal

19. 19 10-Year Penetration Trend Like Bread, Penetration Trends on RTE Cereal have been in decline for years % of Households Purchasing RTE Cereal Total RTE Cereal Source: Consumer*Facts 1999 - 2003

20. 20 10-Year Buying Rate Trend In addition to penetration declines, Buying Rate Trends for RTE Cereal have been softening for years The annual decline between ’03 and ’04 is the largest in 10 years Pounds Purchased per Household - RTE Cereal Total RTE Cereal Source: ACNielsen Homescan Consumer Panel

21. 21 Pasta Trends are Similar to Bread and Cereal Total US FDM Rolling 4 wk % Chg vs YA Total Pasta

22. 22 Long Term Pasta Declines pre-date the Post Atkins acceleration Total US Food $2MM Eq Volume Change - Rolling 52 Week Basis Total Pasta

23. 23 Total Whole Wheat Pasta sales, while still strong, are moderating Total US Food $2MM Eq Volume Change - Rolling 52 Week Basis Total Pasta

24. 24 +8% Source: ACNielsen RMS Data; Total US; 52 w/e 4/19/04 vs YAGO; $2MM+ Grocery Stores Health oriented Dry Pasta types are driving the Specialty pasta increases Dry Pasta Dollar Shares & Change vs YAGO Flavored -19% Wheat +28% Organic/Soy +52% Filled +30% All Other -1% HEALTH CONSCIOUS -3% -2% -3% Total Pasta

25. 25 Some Types of Pasta Appeal to Different Types of Households Spaghetti & other Long Pasta Elbows Lasagna Hispanics Empty Nesters Families w/ Kids Total Pasta

26. 26 Do we see Recovery in Recent Rice trends? Total US FDM Rolling 4 wk % Chg vs YA Total Rice

27. 27 Total Rice Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis Total Rice

28. 28 Total Brown/ Wild Rice Volume Trends are softening in recent months - in contrast to whole grain segments of Bread, Cereal, and Pasta Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis Total Rice

29. 29 Total Brown/ Wild Rice vs Other Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis Total Rice

30. 30 Summary and Conclusion Grain trends are clearly impacted by the Low Carb trends ­ General Mills believes ~ 1% Long Term trends are impacting overall category performance ­ Not just a low carb phenom Whole Grain Segments are generally much stronger than white/processed ­ Good Carbs vs Bad Carbs? ­ “Net Carbs” the next Marketing Buzz? ­ An opportunity for Manufacturers?

31. 31 Insert client logo in master here Thank You!

32. 32 Insert client logo in master here Appendix

33. 33 Regular vs Whole Wheat Pasta Total US Food $2MM Eq Volume Change - Rolling 52 Week Basis Total Pasta

34. 34 Penetration Over 60% of Low Carb Diet households still purchase White ­ They are no less likely to purchase Bread than other households, but fewer purchase White and more purchase Wheat Wheat is increasing and White declining over all households Percent of Households Purchasing -0.1+0.3-0.2-2.2-3.4-2.0+3.0+2.8+5.6 Point Change: 6 months 11/03 Vs 11/02 Total Bread