WHAT GIVES A RETAILER A STRONG PRODUCE DEPARTMENT?

1 WHAT < STRONG >GIVESSTRONG > A < STRONG >RETAILERSTRONG > A STRONG < STRONG >PRODUCESTRONG > < STRONG >DEPARTMENT?STRONG > Copyright 2013 The nielsen Company. Confidential and FACTORS DRIVE STRONG < STRONG >PRODUCESTRONG > PERFORMANCEBUT COMPETITION HAS FIERCELY INCREASEDHEALTHCONVENIENCELOW PRICESFRESHNESSWIDE ASSORMTNETGLOBALBULK AND BAGGEDBRAND MIXTUREQUALITYC opyright 2013 The nielsen Company. Confidential and SHARE201320142015*DOLLAR : nielsen Advanced Fresh Perspective Database, *2015 YTDFRESH SHARE OF TOTAL STORE IS INCREASINGC opyright 2012 The nielsen Company. Confidential and PURCHASE FRESH EVERYWHERES ource: Source: nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 6/25/15 SHARE OF CHANNEL SHOPPERS PURCHASING FRESH WITHIN EACH CHANNEL 94% VALUE GROCERY85% PREMIER FRESH DRUGCONVENIENCE/GASMASS/SUPERCENTERWAREH OUSE/CLUBGROCERYGROCERY SEGMENTS35%88%84%99%20%Copyright 2013 The nielsen Company.

2 Confidential and ,487 5,688 3,412 3,144 1,320 Trip increases suggest a shift in how consumers are shopping across multiple channelsSALES AND TRIP GAINS ARE HAPPENING OUTSIDE OF CONVENTIONAL GROCERYS ource: nielsen Perishables Group via Homescan TSV Specialty Panel 52 weeks ending 12/27/14+1%+11%+3%+7%+4%Spend per HH % Chg. vs. YA, Total FreshTrips per HH % Chg. vs. YA, Total FreshMass+ SuperCenterWarehouse ClubPremier Fresh GroceryConventional GroceryValueGroceryStore Counts +3%+1%+6%+3% 2%+4%+1%+1%+2%Copyright 2013 The nielsen Company. Confidential and IS EVOLVING TO MEET CONSUMER PRIORITIESS ource: nielsen Perishables Group FreshFacts Historical Projected Database ending 12/27/2014; KEY CONSUMER TRENDS$$HEALTHQUALITY/VALUECONVENIENCEVE RSATILITYP roduce department leading fresh sales growthSIX OF THE TOP TEN FASTEST GROWING CATEGORIES ACROSS THE ENTIRE STORE SINCE 2009 ARE < STRONG >PRODUCESTRONG > CATEGORIESC ooking GreensAvocadosValue Added VegetablesValue Added FruitsPineappleSpecialty FruitGLOBALIn retailing we should cater to the individualrather than the masses.

3 Specialize by product, lifestyle, pursuit, service or Times, Oct 17, 1985 WHAT PERCENTAGE OF FRESH < STRONG >PRODUCESTRONG > SALES DO BRANDS REPRESENT?Copyright 2013 The nielsen Company. Confidential and < STRONG >PRODUCESTRONG > GROWTH OUTPACES NON BRANDEDFrom 2010, branded < STRONG >PRODUCESTRONG > has climbed from 27% to 34% in dollar share of produceSource: nielsen Perishables Group FreshFacts Historical Projected Database ending 12/27/201412%5 YEAR DOLLAR CAGR(compound annual growth rate)27%34%64%55%9%11%20102014 Fresh < STRONG >PRODUCESTRONG > Branded vs. Unbranded2010 2014, Dollar ShareBrandedUnbrandedPrivate Label2%10% < STRONG >PRODUCESTRONG > BeveragesCitrusBerriesPackaged SaladCategories with Highest Branded Dollar SalesCopyright 2013 The nielsen Company. Confidential and OF BRANDSS ource: nielsen Perishables GroupTRUST is a foundational element of building and maintaining brand health and achieving STRONG in market competition is intense; shelves are crowdedThousands of new products a year Increased competition from private labelShopping fragmentation due to rise of e commerceCopyright 2013 The nielsen Company.

4 Confidential and BRING OPPORTUNITY TO CONNECT AND ENGAGE WITH THE CONSUMERS ource: nielsen Perishables GroupWHEN BRANDS WIN High innovation rate High product differentiation STRONG brand equityWHEN PRIVATE LABEL WINS Minimal differentiation and low brand equity High price sensitivity and high purchase frequency Low innovation rateUse packaging to communicate and spread messages such as health claimsCreate a sense of trusted quality no matter where the product is purchasedUse social media and online presence to engagewith shoppers Copyright 2015 The nielsen Company. Confidential and ASPECT SHOULD REVOLVE AROUND SOLVING A CUSTOMER NEED Shift focus from product attributes to consumer experience1 Trade OffsDissatisfied DabblingSurprising Product CombinationsNonconsumersCircumstances of NonconsumptionComplex Problem SolvingHiring and Firing MomentsWorkaroundsSource: nielsen breakthrough innovation report , June 2015 JOBC opyright 2015 The nielsen Company.

5 Confidential and : MAKING CARROTS COOL ACCESSIBILITY AVAILABILITY AFFORDABILITYFor more information: Harvard Business Review, photos sourced from WebYOUR BRAND S SALES HAVE BEEN STAGNANT. WHAT ARE SOME TACTICS TO SPUR GROWTH?Copyright 2013 The nielsen Company. Confidential and THAN JUST THE TRADITIONAL LEVERS Source: nielsen Perishables GroupPRICEPROMOTIONDISTRIBUTIONBUT YOU CAN T ALWAYS PULL THESE LEVERS Some products are more sensitive to price changes Over promotion can train a shopper to only buy when it s on sale Some products already have national distributionJOINTLY THESES CONTRIBUTE TO THE BREADTH OF REACH AND FREQUENCY OF PURCHASEC opyright 2013 The nielsen Company. Confidential and CAN WE USE DIFFERENT ADVANTAGES TO DRIVE MUTUAL GROWTH?

6 Source: nielsen Perishables Group, Total Store Connectivity Study 2014 Creative Cross Store partnershipsHousehold PenetrationPurchase FrequencySales GrowthProduct and Shopper ConnectionsValue to StoreCopyright 2013 The nielsen Company. Confidential and ARE ALREADY OCCURRINGO pportunity to go beyond intuition and guess work and base solutions in consumersSource: Photo credit nielsen Perishables Group, company websitesOccasion based advertising DRIVING CONNECTIONS OUTSIDE THE STOREDRIVING CONNECTIONS INSIDE THE STORECoke Effortless Meals Program Solution Center (BLT)Mariano s apple promotionFresh and center cross promotionsCopyright 2013 The nielsen Company. Confidential and Engagement with MillenialsGreater Buyer ConversionsHigher Cross Category SalesNew Category Buyers for Both PartiesSOME CPG COMPANIES ARE PARTNERING WITH FRESH CATEGORIES TO SPUR SALES GROWTHAnd the results have been extremely : nielsen Homescan Total Shopper View: 9/1/2013 8/30/14 versus year agoCASE STUDY: Global Soft Drink Company Partnered with A Deli CategoryCopyright 2013 The nielsen Company.

7 Confidential and CATEGORIES MAY BE FRIENDS, NOT FOESBUYER OVERLAPS ource: nielsen Homescan 52 Weeks Ending 12/27/14; nielsen ScanTrack Ending 4/25/15; nielsen FreshFacts Ending 3/28/1588%6%<1%4%CANNED Vegetables$ Billion Vegetables$ Billion Vegetables$ Billion+ categories should work together to drive sales through STRONG overlapping category connectionsCopyright 2013 The nielsen Company. Confidential and IS OUT THERE, FOR THOSE WILLING TO WORK FOR IT FRESH AND PACKAGED CAN BE FRIENDS OR FOES62%of all Grocery/Club/Mass trips have both fresh and center store items in the basketTHE OPPORTUNITYHBCF rozenNon FoodFloristCafeDry GroceryBeverage CenterProduceDeliSeafoodMeatDairyBakeryR xSource: nielsen Homescan Total Shopper View Specialty Panel including non UPC category purchases for the Grocery, Club and Mass channels , 52 weeks ending September 2014 TRUE OR FALSE?

8 PRICE IS THE ONLY COMPONENT TO CONSIDER WHEN FACED WITH CROP AND SUPPLY LIMITATIONS?Copyright 2013 The nielsen Company. Confidential and : VALUE EQUALS MORE THAN PRICES ource: nielsen Perishables Group PRICEVALUECONVENIENCEOCCASIONMust understand consumer needs in order to understand their value equationCopyright 2013 The nielsen Company. Confidential and < STRONG >PRODUCESTRONG > HAS LIMITATIONS DUE TO CROP CYCLESR esponding to consumer trends and priorities in < STRONG >PRODUCESTRONG > can take longer than other areas of the many years/4 6 years2 5 years3 7 years2 3 yearsTime to grow a cropThe time to start responding to consumer needs was yesterdayCopyright 2012 The nielsen Company. Confidential and COMMODITY DRIVEN, THE APPLE INDUSTRY SHIFTING FOCUS TO MEET CONSUMER NEEDSMARKETING TO KIDS:PACKAGING, SMALLER FRUIT SIZE, NEW FLAVOR PROFILESSNACKING:ON THE GO AND ACCOMPAINMENTSCONVENIENCE:NEW PACKAGING, SMALLER annual growth rate 2010 2014 Value added apple volume growth outpaced value added fruit growth by percentage points over the last 5 years APPLESS ource: nielsen Perishables Group FreshFacts Historical Projected Sales, 2010 2014 Copyright 2012 The nielsen Company.

9 Confidential and MATURE CATEGORIES CAN EVOLVE TO STAY RELEVANT BY INTRODUCING NEW VALUES ource: nielsen Perishables Group FreshFacts 52 weeks ending 3/28/2015; Historical Stable Sales 2010 2014, Total PACKAGED SALAD$ BILLION Average volume growth+3% COMPLETES/KITS$700 MILLION Average volume growth+29%Despite the higher price tags, salad competes/kits have revolutionized the packaged salad category and DOUBLED share since 2010 Copyright 2013 The nielsen Company. Confidential and linked to could end growing season for immature farmland doubles during California freeze damages citrus : various online article headlinesINDUSTRY MUST COMBAT SUPPLY ISSUES WHICH OCCUR FOR A NUMBER OF REASONSC opyright 2013 The nielsen Company.

10 Confidential and CALIFORNIA DROUGHT WILL IMPACT EACH CATEGORY DIFFERENTLYS ource: 1: nielsen Perishables Group and Dr. Tim Richards, Arizona State UniversitySources: nielsen Perishables Group FreshFacts 2013 2014; nielsen Perishables Group Drought Research 20152015 Price Elasticity Predictions1 Critical to understand a product s sensitivity to price changesCopyright 2013 The nielsen Company. Confidential and ADAPT IN CROP SITUATIONS THAT ARE OUT OF THEIR CONTROLS ource: Artichokes are Frost Kissed when the temperature drops below 32 degrees. California winter frosts can yield Frost Kissed Artichokes that are available in stores for a limited time. Suppliers/Growers turn a freeze into a new way to gain new buyersRe adapt products to gain new shoppers and incremental salesCopyright 2013 The nielsen Company.