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NORTH AMERICAN TRENDS

An overview of consumer confidence, economic perceptions, and market trends in North America. Explore the similarities and differences between Canadian and American consumers. Learn about the current state of the tea market and opportunities for growth.

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NORTH AMERICAN TRENDS

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  1. NORTH AMERICAN TRENDS

  2. Market Conditions in North America Rick Winslow, Nielsen Canada

  3. Market Trends – Canada & U.S. The Boston Tea Party Rick Winslow, The Nielsen Company August 31, 2011 Title of Presentation

  4. For Today • The Consumer • Nervous and looking for value • What’s happening in the store? • Store sales and trends • Tea Trends • U.S. / Canada Title of Presentation

  5. The Consumer Title of Presentation

  6. Global consumer confidence climbed slightly as the year started Regional Summary: Emerging Driving Growth Consumer Confidence Index Q4 2010 Results LA 90 AP 107 MEAP 106 NA 85 EU 73 Emerging Developed Source: The Nielsen Company, Global Online Survey, Q1 2011 Title of Presentation

  7. Optimism varies greatly over personal finances and job prospects Intersection: Global Legend CA Canada US United States GB Great Britain IT Italy FR France DE Germany ES Spain AU Australia CN China HK Hong Kong RU Russia BR Brazil AR Argentina % Optimistic over Personal Finances % Optimistic over Job Prospects Source: The Nielsen Company, Global Online Survey, Q1 2011 Title of Presentation

  8. US and Canadian consumers differ greatly with their levels of confidence in the economy. Source: Nielsen Consumer Confidence Survey Title of Presentation

  9. While Canadian economic perceptions are getting more bullish, U.S. Households continue to be mired in recession. % of HH that believe their country is in an economic recession at the moment? % of HH that believe their country will be out of a recession in the next 12 months? Source: Nielsen Consumer Confidence Survey Title of Presentation

  10. Canadians are more optimistic than U.S. consumers +5 +3 +3 +2 -2 0 Source: Nielsen Global Online Consumer Confidence and Opinion Survey March 2011 Change vs. Q4 11 (Dec) Title of Presentation

  11. Canadians and Americans have a mutual focus on paying off debt & saving while many report having no spare cash How Do North Americans Utilize Their Spare Cash After Covering Essential Living Expenses? Canada United States Source: The Nielsen Company, Global Online Survey, Q1 2011 Title of Presentation

  12. Canadians & Americans have similar concerns, but in different sequence Top Canadian ConcernsTop U.S. Concerns What are the top ten things consumers are most concerned with over the next six months? Source: The Nielsen Company, Global Online Survey, Q4 2010 Title of Presentation

  13. Similarities Both U.S. and Canadian consumers are concerned by rising fuel and food prices Both are hunting for value at retail – they want good everyday prices and deep features Everyone wants the uncertainty to slide into the background Differences Canadians are much more bullish on the economic turnaround Canadians feel more secure in their jobs and with their personal finances American consumers are much more concerned with the economy; personal housing Summary – Consumer Confidence Title of Presentation

  14. In Store Trends… Title of Presentation

  15. Total Receipts are flat! $ Vol % Chg Market Share $ per Trip Pt Chg Trips Per Shopper Pt Chg Penetration Pt Chg Source: Nielsen, Homescan, Channel Watch, National. Tl Receipts. 52 Weeks Ending January 1, 2011 Title of Presentation

  16. Units started to rebound while dollar growth slows Quarterly Periods Source: Nielsen MarketTrack, National All Channels – 12 wks Ending Mach 12, 2011 Total Tracked Sales excluding Fresh Random Weight Title of Presentation

  17. CPG prices rising & promotions increasing too 9 periods of price gains; 1% & 1.2% increases in last two periods All Departments Increased promotion as retailers increase efforts too 4 Weeks Ending Source: Nielsen Scantrack, (U.S. FDM w/ Walmart), 4 week increments (vs. prior year); UPC-coded Title of Presentation

  18. Weak total store performance – good prices & heightened promotions didn’t work All Departments Avg U Price Chg, 13 w/e 03/19/11: Positive: 78 Neutral: 2 Negative: 37 (major categories) 4 Weeks Ending vs Year Ago Source: Nielsen Scantrack, (U.S. FDM w/ Walmart), 4 week increments (vs. prior year); UPC-coded Title of Presentation

  19. Tea Market Title of Presentation

  20. The Tea Tale of 2 Countries…… • Canadians loves theirs hot; Americans prefer it cold • The U.S. hot tea consumer has more choices “at the shelf” – a huge irony! • Coffee is growing on both sides of the border – driven by innovation and pricing • Tea is growing too – however at a much more modest rate • S0….how do we get our current users to drink more….and convert hot beverage consumers to add tea to their daily choices? Title of Presentation

  21. Hot Beverages is leading growth in both Canada and the US Canada is more developed with Hot Beverages $ Vol (000,000s) TL Bevs 4,589 4,690 45,729 46,272 +6% $ Vol % Chg +12% 0% -1% $ Vol % Chg $ Vol Shr Source: Nielsen MarketTrack, National CAN All Channels, 52 Weeks Ending July 2, 2011 Nielsen Scantrack, National US All Outlet, 52 wks ending July 09, 2011 Shared to Close group of TL Bev based on Canadian categories for TL Beverages Title of Presentation

  22. Beverage categories have different development in Canada versus the U.S. with a skew to Coffee and Tea in Canada and FSDs, Water and RTD Iced Tea in the U.S. Hot Beverage Cold Beverage $ Share of Total Beverage Source: Nielsen MarketTrack, National CAN All Channels, 52 Weeks Ending July 2, 2011 Nielsen Scantrack, National US All Outlet, 52 wks ending July 09, 2011 Shared to Close group of TL Bev based on Canadian categories for TL Beverages Title of Presentation

  23. Cold Beverages accounts for over 75% of sales but growth is from Hot Beverages Top 10 Canadian Beverage Categories $ $ % Unit $ Sales (000’s)ShareChg% Chg Total Beverages (Hot & Cold) 4,690,815 100.0 2 1 Cold Beverages 3,563,937 76.0 -1 1 Hot Beverages 1,126,879 24.0 12 4 RankTop 10 Sales Categories 1 Flavoured Soft Drinks 29.5 -1 1 2 Juices & Drinks - Shelf Stable 22.5 -1 0 3 Coffee - Roast & Ground 14.5 19 6 4 Flat Water 9.6 -1 3 5 Tea 4.5 3 3 6 Coffee - Instant 3.4 1 1 7 Vegetable Juices 3.3 -3 -5 8 Carbonated Water 2.0 5 3 9 Extreme Energy Drinks 2.0 10 11 10 RTD Iced Tea Cans 1.4 -1 1 Source: Nielsen MarketTrack, National All Channels, 52 Weeks Ending July 2, 2011 Title of Presentation

  24. Cold Beverages accounts for nearly 85% of total beverages but is softer in its performance than Hot Beverages. Top 10 US Beverage Categories $ $ % Unit $ Sales (000’s)ShareChg% Chg Total Beverages $46,271,655 100.0 1 -1 Cold Beverages $39,292,781 84.9 0 1 Hot Beverages $6,978,875 15.1 6 -1 RankTop 10 Sales Categories 1 Flavoured Soft Drinks 40.0 0 0 2 Juices & Drinks – Shelf Stable 20.1 2 5 3 Flat Water 12.3 1 3 4 Coffee – Roast & Ground 10.7 8 -1 5 RTD Iced Tea 4.2 6 7 6 Flavoured Drink Mixes 2.3 -5 -2 7 Tea 2.1 1 0 8 Extreme Energy Drinks 1.9 -9 -11 9 Carbonated Water 1.5 7 5 10 Coffee - Instant 1.1 3 3 Source: Nielsen Scantrack, National US All Outlet, 52 wks ending July 9, 2011, Shared to Close group of TL Bev based on Canadian categories for TL Beverages Title of Presentation

  25. While Canadians like it hot, Americans prefer it cold USA : $3,342.5 Million (+2%) Total Beverages: CDA : $320.2 Million (+1%) Share of Tea categories $ % Chg 3% 50% -1% -11% $ % Chg 1% 2% 6% -10% Source: Nielsen MarketTrack, National CAN All Channels, 52 Weeks Ending July 2, 2011 Nielsen Scantrack, National US All Outlet, 52 wks ending July 09, 2011 Shared to Close group of TL Bev based on Canadian categories for TL Beverages Title of Presentation

  26. Per Caps Hot Tea Consumption – Canada Rules! Population 34,551,080 311,995,946 Tea Sales (pounds) 16,977,956 94,150,180 0.49 lbs 0.30 lbs Hot Tea consumption per capita Title of Presentation

  27. Specialty / Upscale Tea continues to gain in popularity and now holds nearly 60% of the $ market Share USA CANADA $ Share $ Vol % Chg +7% +5% $ Vol % Chg -2% -4% TL Tea % Chg +3% +1% Source: Nielsen MarketTrack, National GB+DR+MM+GM+WC, Latest 52 Wks ending July 2, 2011. Nielsen Scantrack, National US All Outlets, 52 Wks ending July 9, 2011 Title of Presentation

  28. In terms of Pounds, Regular Tea dominates but Specialty Tea has continued to gain share of the category. CANADA USA Pounds Share Tonn % Chg +8% +4% Tonn % Chg -1% -3% TL Tea % Chg +1% -1% Source: Nielsen MarketTrack, National TL GR+DR+MM+GM+WC, Latest 52 Wks ending July 2, 2011. Nielsen Scantrack, National US All Outlets, 52 Wks ending July 9, 2011 Title of Presentation

  29. While overall tea reach is down in both countries, Specialty in the US is gaining some new consumers % Households that purchased… Pt Chg -0.6 -1.9 -0.6 -0.4 -1.5 +0.9 Title of Presentation

  30. Specialty Black and Herbal Tea segments are key growth contributors. Increased health concerned consumers and many new launches are fuelling the growth. $ Share of TL Tea (Vol% Chg) 2% 27% 3% 11% -9% -25% TL Upscale/ Specialty 57.2 $ Shr (+7%) 9% 4% 3% 6% -1% -16% TL Upscale/ Specialty 59.4 $ Shr (+5%) Source: Nielsen MarketTrack, National GR+DR+MM+GM+WC, Latest 52 Wks ending July 2, 2011. Nielsen Scantrack, National US All Outlets, 52 Wks ending July 9, 2011 Title of Presentation

  31. “Functional” Tea? • Is there a co-relation between OTC and Tea? Title of Presentation

  32. Summary • While Canadian consumers are becoming more confident in the economy, US consumers have experienced a setback this past quarter • Both consumers have similar concerns and intend to continue their new “frugal” shopping behaviour • The retail market continues to fuel consumers desire for less expensive products, although there are signs that this is starting to slow • The growth is fairly static however Beverages are a key segment for retailers in size • Hot Tea for Canadians and Cold Tea for Americans • Specialty Tea is the driver of Total Hot Tea growth but volume is flat • Specialty black and Herbal are the engines of growth for the segment Title of Presentation

  33. Thank You!rick.winslow@nielsen.com Title of Presentation

  34. GREATER ASSORTMENT Title of Presentation

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