Wellness…

1. Wellness… the next frontier

2. Overview • Artful Philosophy and Approach • Evolving Consumer Landscape(wellness in the sweet-spot) • Application to Beverages

3. Artful Enterprises, Inc.

4. Overview • Artful Philosophy and Approach • Evolving Consumer Landscape - wellness in the sweet-spot • Application to Beverages

5. P C M Perform, Counsel, Mentor

6. The Traditional Choice in New Business Creation vs. Build Buy In-house new product development Strategic acquisition of brands and businesses

7. A New Choicein New Business Creation • New business focus • New business expertise • Variable cost structure • Superior results Early Life-stage Outsourcing vs. vs. Build Buy

8. Artful Enterprises, Inc. • Specialists in new business creation • Serving the beverage and food industries since 1989 • Vertically integrated new business creation/management . . Artful Sodas Artful Spirits Artful Edibles Conception Validation Market Preparation & Incubation Transfer

9. New Business Conception • The Artful difference: • Practicing the “art” of new business creation • Marketing “science” alone is not enough • Designing brands as “wholes” • “Virtual reality” products vs. disembodied concepts • Aiming ahead rather than sideways (or behind) • “What’s next” vs. “me too”

10. Aiming Ahead • Artful Enterprises aims to create beverage and food businesses just slightly ahead of the curve. • Leapfrogging rather that matching competitors. • To do so, we make it our practice to “stay in touch with the future” • The marketplace is dynamic; the future can be glimpsed by looking in the rightplaces and at the rightpeople right now. ...this represents Artful Enterprises’ R&D “Some skate where the puck is … I skate where it’s going to be.” -Wayne Gretzky

11. Anticipating the Future Many incremental new products appear in “niche” venues and are tried by innovators and early adopters; over time mainstream consumers become aware, intrigued and eventually try those with “staying power.” Focus here for products Phase: Incubation Early Acceptance Mainstream Acceptance • Gourmet and specialty stores • Health food stores • Restaurants • International • Perimeter locations in select supermarkets • Delis • Supermarkets • Convenience stores • Vending • Mass Merchandising Retail Venues: Consumer Type: Early Majority Late Majority Laggards Innovators/Early Adopters Middle Majority Bracket Consumer Reactions Over Time

12. Designing Brands as “Wholes” • The common practice of separating “core concept” from “execution” in new product development is not just flawed but dangerous. • Consumer behavior is based on fully-formed brands. • “Core concepts” make poor proxies for final products. • “Execution” merits more than window dressing treatment. • Brands that are “born whole” have a head start on life. • They provide a more accurate stimulus for consumer response. • “Core concept” and “execution” are more apt to be integrated.

13. The Integrated Brand Model • Artful Enterprises designs every brand as a system of mutually reinforcing elements. • This discipline governs all facets of Artful Enterprises brand development: branding, product formulation, packaging, etc. “What it is” “What it does” “What it means” “Who it is” Attributes Benefits Values Personality Traits

14. Haagen Dazs (Original Ice Creams) “What it is” “What it means” “Who it is” “What it does” High butterfat ice creams made from premium quality ingredients Tastes exceptionally rich & creamy Hedonistic pleasure Discriminating Sophisticated Self-Indulgent

15. Examples of “Dis-integrated” Brands • Red Dog Beer • Crystal Pepsi • V-8 Splash • Smartfood Popcorn

16. New Business Validation • The Artful difference: • The right stimulus: • “Virtual reality” products: branded, packaged and (usually) formulated vs. more abstract/disaggregated product stimuli • The right respondents: • Selective use of 1st round chef input • Rigorous selection of target consumers based on 1) relevant category experience/commitment and 2) culinary fluency • Heavy users to optimize; typical users to quantify • Optional use of bracketing product behavior and attitudes methodology as appropriate • “Category innovators” to gauge future vitality; “category mainstreamers” to gauge closeness of opportunity • The right questions: • Preference for competitive as well as stand alone (monadic) measures • Emphasis on behavior (simulated purchase) over speculation (purchase intent) • “Real-time” approach to depth of repeat when ever possible

17. The Artful Process Nature of Feedback CONCEPTION “Whole” concepts: name, packaging, formulation • Informal consumer reactions • Initial taste panel assessment • Quali-Quant Phase • Chef screening / assessment • Consumer interviews; product concept fit • Further chef / taste panel assessment as needed • Quantitative Phase • Competitive and monadic measures • Real-time depth of repeat • Broker/trade reactions • Lead market performance • Qualitative consumer research (trier-acceptors, trier-rejecters, aware non-triers) VALIDATION Optimization Trial Assessment Depth of Repeat Assessment MARKET PREPARATION INCUBATION TRANSFER

18. The Consumer Landscape: A Putative Mapping of Based Perceptions of Foods and Beverages Today

19. Two Powerful Dimensions • Consumers’ perceptual orientation to food, reflecting their knowledge and actual choices based on its nutritional content • Consumers’ experiential orientation to food, reflecting their actual behaviors based on physical needs or desires NUTRITIONAL VALUES AN AFTERTHOUGHT NUTRITIONAL VALUES A PRIORITY FOOD FOR PLEASURE FOOD FOR SUSTENANCE

20. Four Distinct Consumer Types Based on Attitudes and Behavior FOOD FOR PLEASURE 1 4 NUTRITIONAL VALUES A PRIORITY NUTRITIONAL VALUES AN AFTERTHOUGHT 2 3 FOOD FOR SUSTENANCE

21. The “HEDONISTIC” Consumer FOOD FOR PLEASURE • May have nutritional awareness; actual behavior is driven by the pleasure principle • Span the socioeconomic gamut from Junk Food Junkies to upscale Epicureans • Shop across channels: traditional grocery, Gourmet Specialty, Natural Foods, Club, and C-stores “Live For Today!” NUTRITIONAL VALUES AN AFTERTHOUGHT Nutritional Values a Priority Food for Sustenance

22. The “INDISCRIMINANT” Consumer Food for Pleasure • “Indiscriminant” consumers are most likely single and male • Span a broad socioeconomic range, from street people to frat boys • “ Infrequent and impulse shoppers”; C-stores, fast food, “where ever” NUTRITIONAL VALUES AN AFTERTHOUGHT Nutritional Values a Priority “Whatever” FOOD FOR SUSTENANCE

23. The “CONTROLLING” Consumer Food for Pleasure • Variety of subtypes: bodybuilders/ athletes, dieters, medically restricted and the alternative lifestyle crowd…vegans, macrobiotics, etc. • Often first to adopt new nutritional approaches, ingredients, and products • “Mom and Pop” health food stores / natural food stores, organic markets, grow-their-own, wellness practitioners, GNC’s, etc. Nutritional Values an Afterthought NUTRITIONAL VALUES A PRIORITY “No pain, No gain!” FOOD FOR SUSTENANCE

24. The “QUALITY OF LIFE” Consumer FOOD FOR PLEASURE • “Good to themselves,” in all senses, seek: good taste, good nutrition, good energy and the good feelings they all impart • Choose balance over sacrifice, and naturally delicious wholesome foods over modified or engineered “health foods” • Represents the center of “wellness” “Live well, be well.” Nutritional Values an Afterthought NUTRITIONAL VALUES A PRIORITY Food for Sustenance

25. The “QUALITY OF LIFE” Consumer • Shop across channels • Natural Food • especially for produce, breads, home meal replacement, unique items, supplements • Gourmet Specialty • imported items, unique items, home meal replacement • High End Supermarkets • general shopping needs, some unique items • Club Stores • staples / bulk, also new items • Traditional Grocery • location driven

26. The Expanding “Quality of Life” Sector and … The Sweet Spot for Wellness Foods FOOD FOR PLEASURE “Hedonistic” “Quality of Life” “Live well, be well.” Education NUTRITIONAL VALUES A PRIORITY Nutritional Values an Afterthought Economic Improvements Adverse experience with modified foods “Indiscriminant” “Controlling” Food for Sustenance

27. Adoption of Nutritionally Based Food Trends FOOD FOR PLEASURE Active Seekers Passive Receptives NUTRITIONAL VALUES AN AFTERTHOUGHT NUTRITIONAL VALUES A PRIORITY FOOD FOR SUSTENANCE

28. The World of Wellness Body Spirit Nutrition & Hydration Emotional Fulfillment* Stress Reduction Exercise Sleep • Wellness is well-rounded; traditional “health” is more one-sided • True Wellness foods and beverages nourish the spirit as well as the body *Includes personal relationships, job satisfaction, spiritual life, etc.

29. The World of Wellness Body Spirit • Wellness is well-rounded; traditional “health” is more one-sided • True Wellness foods and beverages nourish the spirit as well as the body *Includes personal relationships, job satisfaction, spiritual life, etc.

30. Health & Wellness Associations • Health • Specific • Body-based (localized) • Physiological • An objective state (standard measures) • An attainable goal • Regimens (diet, exercise) • Controlled • Functional • Traditional • Reactive • Avoiding disease • Wellness • General • Body, mind, spirit (holistic) • Physiological and psychological • A subjective idea (personally defined) • An ongoing process • Lifestyle (all facets) • Balanced • Experiential • Contemporary • Proactive • Achieving well-being

31. “Sweet Spot” for growth and “Wellness” is the same “Wow” Sushi Smoothies Juice Bar Juices Premium Indulgences (Steaks,Premium Ice Cream, Chocolate, Desserts, Coffees, Gourmet Pizza) Tropical/Exotics Fruits/ Veggies Gourmet Salads Proprietary Grainy Breads Wraps Pasta Junk Food and Fast Food (Doritos, Twinkies, Oreos, Big Mac, Slurpee) Cup Yogurt Oatmeal Green Teas Juice drinks Nutritionally Empty Nutritionally Valuable Staples (Milk, processed bread, rice, ordinary fruits and veggies: apples, carrots, juice, chicken, cheese, eggs, etc. ) Commodity Junk Food and Fast Food (Taco Bell, Jack –in-the-Box, frozen pizza, private label, etc.) Health Modified Foods (Low Fat, Low Cal, Low Taste) Fringe Foods/ “Health” Foods (soy / tofu, wheat gluten wheat grass, protein powder) “Yawn”

32. Application to Beverages: Mainstream Emerging

34. Beyond “Nutritionally Valuable” • Wellness Promoting Beverages–two key defining dimensions related to: • The nature of the drinking experience (implicitly usage-driven)Substantial / Light / Satiating Refreshing • The nature of the perceived “goodness” (implicitly user-driven)“Natural State” / Enhanced viaAbsence of Negatives Fortification

35. Defining Ingredients / Attributes ofWellness Promoting BeveragesCould include individually or in combination: Substantial / Light / Satiating Refreshing Protein Dairy Soy Vegetable juice Slow-burn complex carbs et cetera Water Tea Juice Light carbonation et cetera

36. Defining Ingredients / Attributes ofWellness Promoting BeveragesCould include individually or in combination: “Natural State”/ Enhanced via Absence of Negatives Fortification Organic No GMO’s Freshness Dated (refrigerated or produce) 100% juice--not from concentrate No sugar added Probiotic et cetera Vitamins Minerals Phytonutrients Isoflavins Energy/Perform. herbs Nutriceuticals et cetera

37. Examples: Wellness Promoting Beverage Brands “Natural State” Odwella, Naked Bolthouse Farms Silk Dannon, Stoneyfield Farms Ito En, Honest Tea Knudsen After the Fall Crystal Geyser Juice Squeeze Substantial Light Select Odwella items Juice Bar Power Shakes Protein Powders / Liquid meal Glaceau Sobe Fuze Red Bull, et al Fortified

38. Wellness Promoting Beverages:Opportunity Areas • Based upon: • Product Gaps • “Better” juice • cider • fruit and vegetable blends • “Wow” vegetable juices, going beyond “red” • the “Odwella of vegetable juice” • More pleasurable – “Wow” water • with “natural state” sensory complexity

39. Wellness Promoting Beverages:Opportunity Areas • Based upon: • Platform Opportunities • Target to the sensory and nutritional wants and needs of Women • Fully leverage the product and experiential benefits of tea • The “Starbucks of Tea” • Pioneer Phytonutrients • Pioneer Probiotic beverages and foods

40. Wellness Promoting Beverages:Opportunity Areas • Based upon: • Intriguing Idea Starters: • Mental Gatorade • Liquid Power Bar • Sunrise Smoothies • Green Tea Smoothie • et cetera • Brands to Watch: • ITO EN • Bolthouse Farms • Naked

41. Ways to Work with Artful Enterprises • Source of new business idea • From the Artful Enterprises, Inc. portfolio of brands • From scratch to client specifications • Scope and tenure of Artful Enterprises involvement • Short term (1 year maximum) • Conception only • Conception, Optimization, Validation • Optimization, Validation • Conception, Optimization, Validation, Market Prep • Medium - long term (2-3 years) • Conception, Optimization, Validation, Market Prep, Incubation, Transfer

42. Seize the Artful Advantage • New business-building brands that are: • Strategically Sound • Executionally Exciting • Born Whole • Consumer Validated • Professionally Nurtured • Portfolio Compatible