Bowl Appetit Strategy & Concept Development

1. Bowl Appetit Strategy & Concept Development Jason Carlock Dawn Eagle Heather McGlone Dave Nagel Matt Shaulis Kevin Stephen

2. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Agenda • Overview • Current Situation • Recommendations – Sumptuous Sides • Recommendations – Bowl Appetit for Kids • Next Steps and Summary

3. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Goal June 2000 2003 2004 2002 Bowl Appetit Launched Generate the maximum level of sustainable growth in single-serve, shelf-stable food product revenues for the next three years

4. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Recommendation • Sumptuous Sides • Specially prepared microwaveable rice, potato, and vegetable side dish combinations that compliment any entrée. • Projected incremental revenue = $86.17 million • Bowl Appetit for Kids • Specially prepared microwaveable pasta bowls with flavors and shapes of characters your children love. • Projected incremental revenue = $37.93 million

5. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Current Situation • Consumer • Food Industry • Competition • Bowl Appetit • Product Performance • Consumer Research

6. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Consumer Trends

7. 38% cook main course in microwave** 62% buy pre-cut, cleaned, ready to cook vegetables 41% eat frozen, prepared meals** 23% don’t have the time to prepare and eat healthy meals Nearly 39% buy frozen side dishes 48% bought pre-cut, cleaned, bagged salads 26% buy pre-cut, marinated or seasoned meat that’s ready to cook 26% buy pre-cooked meat/poultry 71% of adults believe “they never have enough time in the day to do the things they need to do” Consumer Key Learnings Source: Food Marketing Institute Trends survey, 2001; Roper reports, 12/00

8. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Consumer Key Learnings Use of meal shortcuts and “speed scratch” cooking is rising • “Speed-scratch” cooking trend – consumers like to cook, but don’t want to do extensive prep work or lacked cooking skills to do so • 75% consumers prepare home-cooked meals 3 times/week • Less than 50% of those make meals from scratch • Less than 1/3 of those under the age of 40 are “scratch cooks” • Nearly ½ weekday dinners are prepared in less than ½ hour • Impact of pre-prepared foods: • Fresh-cut, cleaned and packaged salads and ready to cook veggies are the most frequently used meal solution purchased in the supermarket. • Fresh cut, marinated or pre-seasoned ready to cook poultry and meat are among the top 10 supermarket products shoppers purchase for meal solutions Source: Food Marketing Institute Trends Survey 2001, NPD Group survey

9. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Consumers are cooking less at home because they are not confident Consumer Key Learnings

10. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Consumer Key Learning • More than 40% of consumers do not know at 4 PM what they will eat that night • 60% of late afternoon planners do not know what they will buy when they go to the grocery store that evening • Consumers do not have top of mind sources for meal solutions The Home Meal Replacement Opportunity: A Marketing Perspective, Working paper 98-01, Ron Larson, University of Minnesota, January 1998.(68 p)

11. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Consumer Key Learnings • Adults believe “they never have enough time in the day to do the things they need” – especially prepare a healthy meal • Consumers like to cook, but don’t want to do extensive prep work • Consumers are cooking less at home because they are not confident • Consumers are often unsure of what they will have for dinner

12. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Food Industry Trends

13. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Macro Trends • Rise of dual income & single-parent homes drive companies to address lack of free time • Movement toward improved products with higher margins Source: Standard & Poors Industry Surveys Household Nondurables

14. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Supermarket Trends • Retailers continue to offer more ready-to-eat meals and preparation time/step solutions • Slight decline in sales from 1999 to 2000 • Men, single shoppers, one-person households, and those living in the West are most likely to use supermarket for prepared foods Food Marketing Institute, Meal Solutions

15. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Supermarket Trends • Food Marketing Institute Trends survey. At least once a month: • 62% of respondents bought pre-cut, cleaned and ready-to-cook vegetables • 48% bought pre-cut, cleaned and bagged salads • 39% bought frozen side dishes • 37% bought main dishes • 32% bought pre-cooked meat and other main dishes The Partnering Group, Beyond Foodservice: How Consumers View Meals

16. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Food Industry Key Learnings • Supermarkets recognizing dual income demographic shifts and benefit from higher margins • Supermarkets continue to provide more ready to eat meals • Supermarket consumers are responding to these offerings The Partnering Group, Beyond Foodservice: How Consumers View Meals

17. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Competitor Data Analysis

18. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Category Analysis • Category is defined as Convenient Meals • Category is divided into Frozen Meals and Shelf Stable • Frozen meals are a $2 billion market • Shelf Stable meals are a $400 million market • Category is growing by • Bowl meals sales up 49% to $289.6M (as of 3/17/01, IRI) • Frozen dinner/entrée sales up 9% • Bowls are 6% of overall frozen dinner/entrée category • Dry dinner mix category up 12.4% to $470M (4/23/00) • Dry side-dish category$428M (as of 10/99)

19. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Traditional Competitive Set Sales Data • Bowl Appetit is: • ranked 7th in sales for category and 4th for shelf stable • priced high for shelf stable but lower than frozen • heavily sold on deal (48%)

20. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Main Competitors • Kraft Easy Mac • Uncle Ben’s Rice & Noodle Bowls • Healthy Choice • Chef Boyardee • Stouffer’s

21. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Kraft Easy Mac • Major provider of children quick meals • Sales volume = 18,528 units • Penetration = 7.4% of households • Strengths: • Middle income, new and maturing families • Average family size of 3 – 5 members • Caucasian, blue collar workers

22. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Uncle Ben’s Rice & Noodle Bowls • Major “bowl” competitor, of the frozen variety • Sales volume = 60,161 units • Penetration = 9% of households • Strengths: • Serving the affluent of all races • Selling mainly to young singles and established families

23. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Healthy Choice • Frozen, complete meals • Sales volume = 61,704 units • Penetration = 8% of households • Strengths: • Selling to people “Living Comfortably” and affluent • Serving middle aged childless families • Mostly Caucasians

24. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Chef Boyardee • Small hot meal provider • Sales volume = 58,558 units • Penetration = 5% of households • Strengths: • Serving poor to “Living comfortably”, 3+ member families • Selling well with all races BUT Caucasians

25. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Stouffer’s • Divided into entrees and other offerings, each with its own demographic strengths • Total sales volume = 560,954 units • Total penetration = 22% of households • Entrée strengths: • Low income, childless families • Selling well with all races BUT Caucasian • Other offerings strengths: • Affluent, childless families • Serving mainly Caucasians

26. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Market potential is large and growing • Bowl meals sales up 49% to $289.6M (as of 3/17/01, IRI) • Frozen dinner/entrée sales up 9% • Bowls are 6% of overall frozen dinner/entrée category • Dry dinner mix category up 12.4% to $470M (4/23/00) • Dry side-dish category$428M (as of 10/99) Source: Advertising Age, 12/6/99; Brandweek, 6/12/00

27. Overdeveloped New Families Family size of 3-4 Families with kids <6 Affluent Professional, White Collar Underdeveloped Families with kids 6-12 Age 55+ Family size of 1 or 2 Young singles Childless Young Couples Empty Nesters Hispanic, African-American, Other Non-Caucasian Income < $20,000 Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Competitive Analysis – Key Learnings *Overdeveloped is defined as indexing at 120+; Underdeveloped is indexing at <80.

28. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Bowl Appetit Product Performance

29. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Current product line includes 10 flavors • Cheesy Broccoli • Sour Cream & Chives • Butter & Herb Mashed Potatoes Bowl Appetit Categories Rice Pasta • Pasta Alfredo • Three Cheese Rotini • Macaroni & Cheese • Tomato Parmesan Penne • Herb Chicken & Vegetable • Cheddar Broccoli Rice • Southwestern Rice

30. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Nearly 100% of buyers and $ sales are through traditional grocery channels

31. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Low penetration rates and heavily deal-dependent purchases • Nearly ½ of all purchases made on deal and nearly 25% made with coupon

32. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Rice bowl consumers are more loyal, but not as inclined to repeat purchase

33. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Overall sales levels have declined since introduction, but have been steady since May • Pasta bowls represent nearly 60% of sales volume • Potato bowl volume ramping up after mid-year introduction • Seasonal bias shown in volume • Dip in 12/00 likely due to holidays • Decline seen in summer months and now starting to rise as winter approaches

34. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Established products have distribution and turnover well above average • Pasta and Rice Bowls have high distribution levels and above average velocity • Potato Bowl is a new entry and is still ramping up both distribution and velocity • All three bowls are on par with feature/display activity

35. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Bowl Appetit Current Situation – Key Learnings • Distributed through traditional grocery channels • Low penetration rates • Steady sales for 3rd quarter 2001 • Distribution and turnover above average

36. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Bowl Appetit Customer Research

37. Rice Bowl consumer Caucasian Full-time, White collar 5+ member households $40,000-$49,999 Young Singles 13-17 yr old children Middle Age Childless Couples East region

38. Pasta Bowl Consumer Caucasian 3-4 member household 35-44 and 45-54 Full time, white collar Childless couples $70,000+ Mature families Kids: 13-17 yr. Established families East

39. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Market Research • Product Satisfaction Survey I & II • New Product Concept Survey

40. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Product Satisfaction Survey I The survey asked respondents (n= 14) to: • Indicate your satisfaction with the following product attributes on a scale from 1 to 5: • Taste • Convenience • Size of Portion • Variety of Flavor Offerings • Appeal of Flavor Offerings • Easy to Locate in Store

41. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Product Satisfaction Survey I (Current Product)

42. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Product Satisfaction Survey I – Key Learnings • Promote product strengths: Convenience and Size of Portions • Opportunity in Flavor Variety and Taste • Not as easy to locate in store as we would like • Product quality observation • Our flavors are appealing, but don’t deliver on taste expectations

43. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Product Satisfaction Survey II Do you view the product as a meal, a side, a snack, or all three?

44. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary New Product Concept Survey • Indicate the top three offerings you are most likely to buy: • Smaller single serving • Sumptuous Sides - half starch, half veggies • Co-promote with pre-cooked meat offering • Meaty Sauce Envelope • Ethnic flavors

45. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary New Product Concept Survey Results

46. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary New Product Concept Survey – Key Learnings • Respondents find ethnic flavored meal an appealing offering. Consider re-brand. • Respondents find Sumptuous Sides an appealing meal supplement.

47. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary RecommendationsSumptuous Sides • Customer • Competitor • Concept Development • Marketing Plan • Financials

48. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Sumptuous Sides Concept Rollout June 2000 2003 2004 2002 Bowl Appetit Launched Phase I Sumptuous Sides Launch Phase II Sumptuous Sides Launch • Phase I • Half Potatoes or Rice (Betty Crocker), Half Vegetable (Green Giant). • Phase II • Maintain Phase I products • Introduce equal portions of: • Potatoes or Rice (Betty Crocker), • Vegetables (Green Giant), • Dessert, Muffin or Bread (Pillsbury).

49. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Single/empty nest/divorced or childless population is broadening and increasing • Marriage rates have fallen and divorce rates have increased • The number of marriages per thousand unmarried women aged 15+ has fallen from 77 in 1970 to 50 in 1996 • Average age at first marriage: female 25, male 27 • In 1960, 94% of women had been married at least once by age 45, but if current trends continue, fewer than 85% of today's young adults will ever marry • Couples have a 40 – 50% chance of divorce or permanent separation • People are having fewer children, if any • 34% of all households had at least one child under 18 in residence, (down from 49% in 1960) Source: American Demographics, 1999

50. Overview Current Situation Rec - SS Rec - BAK Next Steps/Summary Sumptuous Sides Target Market • Working Professional • Single, divorced, or single parent, married without children • Age 18-35 • Empty nesters • Age 50 & up