1. Apple Juice Justin Morgan

2. Overview Apple Juice had total sales of $616,309,900.00 in 2007 Private label excels in Apple Juice. – Wal-Mart and Kroger brands had the most SKU’s and were also the Private Label brand retailers.

3. Audited Stores The Retailers are in control – (2) Wal-Mart Supercenters – (1) Wal-Mart Neighborhood Market – (1) Kroger – (1) Walgreens – (1) Harp’s Store SKU’sDominating Brand Wal-Mart Supercenter McCain 61Great Value Wal-Mart Supercenter 107 52Great Value Wal-Mart Neighborhood Market 70Great Value Kroger 19Kroger Harp’s 28Musselman's Walgreens 9

4. Demographics Households with an income between $30,000 and $70,000 with kids less than 6 years old consumed the most apple juice. Lucky leaf really excelled with incomes under $20,000 in 2003.

5. DOLLAR VALUE INDEX CTL BR - FRUIT JUICE - APPLE - SHELF STBL LUCKY LEAF - FRUIT JUICE - APPLE - SHELF STBL MOTT'S - FRUIT JUICE - APPLE - SHELF STBL MUSSELMAN'S - FRUIT JUICE - APPLE - SHELF STBL TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL HOUSEHOLDS 100.0 INC - <$20,000 78.172.7168.957.054.347.073.446.4 INC - $20,000-29,999 84.877.385.4114.478.452.188.967.4 INC - $30,000-39,999 104.299.694.0106.167.185.2145.496.5 INC - $40,000-49,999 114.0116.9102.894.9120.786.8117.144.4 INC - $50,000-69,999 113.1123.583.9126.2130.5105.1108.8152.6 INC - $70,000+ 111.4NA64.0NA148.7NA82.7NA INC - $70,000-99,999 NA114.0NA155.5NA134.4NA122.3 INC - $100,000+ NA99.5NA58.8NA164.2NA139.2 SIZE - 1 MEM 39.742.146.249.540.839.165.572.4 SIZE - 2 MEM 67.168.962.291.873.769.786.183.6 SIZE - 3-4 MEM 145.6146.6163.0132.8156.1157.8123.6119.1 SIZE - 5+ MEM 216.2203.4165.6154.9164.0176.0159.1163.1 AGE FH - UNDER 35 165.7167.5197.2199.1146.7165.3119.091.7 AGE FH - 35-44 138.8148.7104.1101.7133.9134.4111.1164.3 AGE FH - 45-54 95.288.479.475.0110.2106.197.982.7 AGE FH - 55+ 67.062.090.491.977.069.290.693.7 AGE FH - 55-64 69.571.3137.2119.582.473.182.8128.5 AGE FH - 65+ 65.052.652.863.772.765.296.958.1 AGE FH - NO FEMALE HEAD 58.567.643.548.049.452.788.783.0 KIDS - NONE < 18 59.858.757.081.866.263.184.685.2 KIDS - ANY < 18 179.2176.8184.7133.8166.5168.7130.3127.5 KIDS - ANY < 6 235.7240.6353.3224.1214.7214.3184.4154.4 KIDS - ANY 6-12 178.6171.8128.1139.8147.6143.6124.2170.8 KIDS - ANY 13-17 161.3165.2186.987.1144.8149.2120.568.6

6. Category Role Apple Juice had a penetration percentage of 41% in 2007 with sales volume over 600 million dollars a year as a category. Apple Juice maintains margins anywhere from 20% up to 50%. – Welch’s has the highest estimated gross margins. According to Blattberg’s Category role I think Apple Juice falls in between a Cash Machine and Maintain.

7. Category assessment I audited 6 stores. – (2) Wal-Mart Supercenters – (1) Wal-Mart Neighborhood Market – (1) Kroger – (1) Walgreens – (1) Harp’s Great Value dominated the facings in Wal-Mart Nestlé's Juicy Juice was found in the most stores – Was found in 4 of the 7 stores audited

8. Category Assessment Gross margins for the retailers – Kroger – 34% – Wal-Mart Neighborhood Market – 35% – Wal-Mart Supercenter (Hwy 107) – 40% – Wal-Mart Supercenter (McCain) – 31% – Walgreens – 41% – Harps – 30%

9. Report ManufacturerKroger (Facings) Wal-Mart Neighborhood Market (Facings) Wal-Mart Supercenter (Facings) Wal-Mart SC McCain (Facings) Walgreens (Facings) Harp on Garland (Facings) Always Save% of Total Sum 10.7% % of Total N 11.1% N 1 American Brands% of Total Sum20.0%24.3%25.0%21.3%33.3% % of Total N20.0%28.6% 33.3%50.0% N22221 Harvest Classic% of Total Sum 9.6%9.8% % of Total N 14.3%16.7% N 11 Knouse Foods% of Total Sum 8.6%28.8%13.1% 42.9% % of Total N 28.6% 16.7% 33.3% N 221 3 Kroger% of Total Sum57.1% % of Total N40.0% N4 Langers Juice Company % of Total Sum 10.7% % of Total N 11.1% N 1 Nestle% of Total Sum2.9%7.1% 6.6% 10.7% % of Total N10.0%28.6% 16.7% 11.1% N12 1 1 Old Orchard LLC% of Total Sum8.6% 10.7% % of Total N10.0% 11.1% N1 1 Private Selection% of Total Sum8.6% % of Total N10.0% N1 Treetop% of Total Sum 14.3% % of Total N 22.2% N 2 Walgreens% of Total Sum 66.7% % of Total N 50.0% N 1 Wal-Mart% of Total Sum 60.0%36.5%49.2% % of Total N 14.3%28.6%16.7% N 121 Welch's% of Total Sum2.9% % of Total N10.0% N1 Total% of Total Sum100.0% % of Total N100.0% N1077629 Share of Display Space and SKU’s

10. Display Space Wal-Mart definitely had the greatest displace space and used their private label to flood the category. – Wal-Mart used up to 60% of their displace space for Great Value Harp’s also had a great deal of displace space but nothing compared to Wal-Mart. – Harp’s actually carried a larger % of Knouse Manufactured Apple Juice because of Wal-Mart’s pride in Great Value. Harp’s displayed 43% Knouse manufactured Apple Juice.

11. Gross Margins The top 5 gross margin for suppliers are – Welch’s- 56% – American Brands – 47% – Wal-Mart – 47% – Walgreens – 46% – Knouse – 37% These are not bad gross margins for any food category.

12. Gross Margins

13. Category Strategy – The retailer’s are in control of the Apple Juice category. With Great Value controlling the largest retailers sales in the category private label has become very strong. Even Kroger has a strong private label push. – Harp’s pushes the national brands in the Apple Juice category and is maintaining fair margins, up to 40%, doing so. Treetop and Musselman’s are their two stronger manufacturer brands with close to 40% gross margins. – It seems as if Apple Juice has a large entrance of private label because even Walgreens has created a private label brand. This private label has upwards of plus 40% gross margins.

14. Private Label Capabilities With Wal-Mart already having over 40 facings of Great Value in some stores I don’t see their being much room for private label expansion within the largest retailer in the world. It appears, looking at the gross margins, that any retailer could come into private labeling Apple Juice and be profitable doing so. So I definitely think there is opportunity in doing so. The Ad Hoc Demographic trial came back with little increase and decrease between 2003 and 2007 across the board with private label.

15. N=RAW BUYERS CTL BR - FRUIT JUICE - APPLE - SHELF STBL LUCKY LEAF - FRUIT JUICE - APPLE - SHELF STBL MOTT'S - FRUIT JUICE - APPLE - SHELF STBL MUSSELMAN'S - FRUIT JUICE - APPLE - SHELF STBL TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 TOTAL U.S. - 52 WEEKS ENDING 12/27/03 TOTAL U.S. - 52 WEEKS ENDING 12/29/07 N=RAW BUYERS TOTAL HOUSEHOLDS 10,117.015,100.0672.0447.03,646.05,606.0594.0301.0 INC - <$20,000 1,133.01,396.082.036.0312.0374.068.022.0 INC - $20,000-29,999 1,475.01,759.0111.058.0441.0483.082.034.0 INC - $30,000-39,999 1,482.02,084.092.066.0451.0647.0104.043.0 INC - $40,000-49,999 1,451.01,914.0104.056.0540.0674.087.032.0 INC - $50,000-69,999 2,086.03,310.0146.0104.0813.01,194.0125.060.0 INC - $70,000+ 2,490.0NA137.0NA1,089.0NA128.0NA INC - $70,000-99,999 NA2,839.0NA80.0NA1,264.0NA71.0 INC - $100,000+ NA1,798.0NA47.0NA970.0NA39.0 SIZE - 1 MEM 1,607.01,971.096.043.0541.0723.097.033.0 SIZE - 2 MEM 3,459.05,213.0216.0162.01,224.01,916.0221.0138.0 SIZE - 3-4 MEM 3,693.05,849.0260.0189.01,444.02,231.0198.0101.0 SIZE - 5+ MEM 1,358.02,067.0100.053.0437.0736.078.029.0 AGE FH - UNDER 35 1,157.01,852.077.064.0417.0715.042.031.0 AGE FH - 35-44 2,409.03,614.0166.081.0880.01,349.0122.052.0 AGE FH - 45-54 2,398.03,702.0180.0120.0870.01,359.0136.078.0 AGE FH - 55+ 3,531.05,010.0218.0162.01,296.01,860.0251.0125.0 AGE FH - 55-64 1,776.02,881.0117.096.0667.01,075.0111.071.0 AGE FH - 65+ 1,755.02,129.0101.066.0629.0785.0140.054.0 AGE FH - NO FEMALE HEAD 622.0922.031.020.0183.0323.043.015.0 KIDS - NONE < 18 6,106.08,798.0387.0269.02,179.03,219.0395.0200.0 KIDS - ANY < 18 4,011.06,302.0285.0178.01,467.02,387.0199.0101.0 KIDS - ANY < 6 1,359.02,443.0114.075.0527.01,008.071.043.0 KIDS - ANY 6-12 2,236.03,368.0143.093.0795.01,212.0105.050.0 KIDS - ANY 13-17 2,039.03,025.0155.076.0696.01,042.0108.046.0

16. Recommendations I don’t think you have to enter private label right away to make a reasonable profit in this category. Harp’s for example is pushing manufacturer brands is has profit margins over 35%, even though these are not quite as high as some private labels. This is still a reasonable profit margin. There is definitely profit and revenue to be gained by going to private label.