Private Label: Market Overview

1. Private Label: Market Overview Innova Market Insights May 2010

2. Different Response to Economic Downturn • Focus on core products/brands with extra marketing spend behind them • Pulling poorer performing brands off the shelf • Rising interest in cheaper and own brand alternatives • Growing presence of discount retailers • Overall, number of product launches recorded globally over 2009 has risen by 34.6%, but share of private label products has fallen in terms of product launches. Market shares for private label has actually increased. • Number of product marked as indulgent/premium has also fallen, however, number of products marketed on an economy platform has risen sharply. Picture of overall activity and innovation is mixed

3. Increase in Global product Launches

4. Increase in Private Label Products

5. Retailers Look to Expand Market Share Less emphasis is being placed by retailers on new private label product innovation. Retailers are now looking to expand their market shares. For instance, AHOLD private label are now knocking off the most popular products like Bastogne cookies and Fruit2Day to grab sales.

6. Adapting To Economic Times The current economic times leads to heavy discounting by branded products -tighter competition for private label.

7. Carrefour Goes For Clean Look Clean- looking packaging with simple, yet effective graphics. color on packaging makes it look “less cheap” and more enticing. Carrefour’s discount range reinforces their brand, which is in contrast to Tesco, who have chosen multiple new discount brand names and packaging styles. www.carrefourdiscount.com is a dedicated website to promote its new range of low cost own brand products.

8. The facts

9. Looking To Health For Survival Products with a health positioning are on the rise. +31% +30%

10. Company Launches Dominated by Health Claims

11. Private Label: Positioning Standouts

12. Health Messages are Everywhere

13. Where are the opportunities?

14. Where are the opportunities? In-line with Health & Wellness Trends Innovating in Niche Areas Matching Competitors Pushing Premium Boundaries Knock-offs and Price Comparisons

15. In-Line with Health & Wellness Trends

16. Global Growth: Organic-> Natural-> Traditional-> Sustainable • There is growing trend in the food industry for all things “natural” • Consumers demanding natural-> healthy • Organic lends itself to the natural trend • Traditional farming methods: • without pesticides • more natural food • sometimes more labour intensive - demands premium pricing • Sustainability & Environment: • traditional methods more environmentally friendly

17. Increase in PL Launches with Ethical Claims

18. Offering Sustainable Choices Sustainable farming practices followed for private label products.

19. The Importance Of Cleaner Labels With the natural trend, there are more and more products with claims stating, for example “no artificial colors, flavors or preservatives”. This type of claim is being used as a selling point to consumers and is boldly displayed on the front of the packaging. +1.8% +0.6% -1.4%

20. Total Transparency For Natural Appeal Only natural ingredients Netherlands: AH Albert Heijn Alleen met Natuurlijke Ingredienten Hollandse Gehaktbal met Spercieboontjes: Dutch Meat Ball with French Beans and Potatoes, in Gravy Sauce

21. Sense of Simplicity: Back to Basics • Complex and stressful times are calling for simpler products, which is why Sense of Simplicity tops our trend list for 2010 • The downturn is making people nostalgic for simpler times, and simpler foods. The interest in “back to basics” has driven interest in natural and clean-label foods • More natural ingredients are on the rise, including natural sweeteners extracted from source such as: • apple • agave • maple syrup 21

22. Sense of Simplicity: Homemade Using the word “homemade ” or “homestyle” in the promotion of new products is on the rise 22

23. Real Authencity: The Face Of Europe Is Changing • It is no longer enough to simply create a product with a regional positioning: the product should be based on ingredients from that region and ideally even be produced there • With the growing number of immigrants and a rising interest in authenticity, regionally-produced foods will undoubtedly be on the rise • Ethnic and exotic products have become more specific. Mainstream Indian style products shifted from being merely Indian, to indicating the region of India where the product 23

24. Inherent Nutrition: Keeping It Simple With Ingredients France: Casino Ondilege Mousse Aux Fruits Peche-Mangue: Yogurt with Peach & Mango Mousse Flavor. Contains 50% fruits. These dairy specialties contain sugars which are naturally present in milk and fruit. 0% fat. 0% sugar. Netherlands: AH Albert Heijn Water & Fruit Rood: Fruit Juice with Red Fruit & Water. With 9 sorts of fruit.  

25. Healthy Soil, Healthier Vegetables UK: Marks & Spencer Young Super Spinach. Young super spinach grown in selenium enhanced soil.  Fresh and prepared. Rich in vitamin A. Natural source of calcium. Grown in selenium rich soil. Selenium is an essential mineral which is important for a healthy immune system. Washed, prepared, and ready-to-cook.   Selenium enhanced soil could hold great potential for better health.

26. Healthy Innovation Brazil: Carrefour Viver Light Quiche Integral Legumes: Light Wholegrain Quiche with Vegetables. "Viver" is a health line product from Carrefour brand. 26% less calories. This is a microwavable product. 63% less saturated fat. Source of fiber.   USA: Trader Joe’s Shortbread Blueberry Bites with Almonds and Omega-3’s UK: Aldi Optifit Liquid Breakfast Probiotic Yogurt Drink with Apple and Mango Flavors with Added Vitamin C Private label offers consumers many healthy, innovative choices.

27. Fresh Daily Offerings Combining freshness, health and convenience on a daily basis.

28. Innovating in Niche Areas

29. Innovating By Addressing Allergies France: Auchan Mieux Vivre Spaghetti A La Farine de Mais: Spaghetti Made From Corn Flour. Gluten free. UK: Sainsbury's Freefrom 5 Muesli Bars. Five gluten, wheat and dairy free muesli bars with mixed dried fruits, flaked almonds and hazelnut nibs. Private Label has led the way with their “free from” ranges. Recognised a gap in the market. Gluten free product launches in particular, have shown significant growth in recent years.

30. Catering For Individual Needs Cooking For One Carb-Conscious Dieters Netherlands: Albert Heijn 1 person Japanese Sukiyaki Wok Dish USA: Kroger Carb Master Strawberry and Banana Flavored Yogurt. Vitamins A and D and calcium added. Net carbs 3 grams.  Identifying demand and supplying the solution.

31. In-Store Bakery Innovation Booms Hungary: Fitberry Vorosszolos Kenyer: Bread Loaf with Red Grape Concentrate and sunflower and caraway seed. The red grape extract contains flavonoids which has a significant antioxidant effect. Germany: VollkornBrot. Wholemeal bread with sunflower seeds. Netherlands: C1000 Melkbroodjes. Milk Bread for Children USA: Safeway Premium Wheat Hot Dog Buns UK: Marks & Spencer Green Olive Ciabatta Rolls

32. Wowing With Flavours Greece: AB Tangerine Sanguine Carrot Juice France: Auchan Dark chocolate with violet. USA: Trader Joe's Rice & Bean Chips with Adzuki Beans USA: Safeway Select Mandarin Orange Naturally Low Fat Sherbet Unique flavours represent an opportunity to stand out from the rest on the shelf.

33. New Texture & Flavour Experiences France: Casino Ondilege Mousse Aux Fruits Peche-Mangue: Yogurt with Peach & Mango Mousse Flavor Belgium: Delicieux Aardbeien sorbet Sorbet Fraises: Strawberries Sorbet. Strawberries sorbet, a refreshing sorbet for one intense strawberry experience. UK: Snackrite Be Light Satin Crunch Thai Sweet Chilli Flavour. Six packs of Thai sweet chilli flavored crisps. 70% less fat. Less than 2% fat per pack. Only 80 calories per 20g pack. No artificial color, flavors or preservatives. Suitable for vegetarians. 

34. New Product Ideas USA: Market Pantry Mozzarella Double Twist String Cheese. Twelve individually wrapped mozzarella double twist (yellow and white) string cheese. Great for snacking. South Africa: Woolworths Breakfast Fruit Booster. Ready-to-eat dried bananas, apricots, and raisins in a plastic bag. UK: Tesco Apple & Blackcurrant Juicy Water. 75% fruit juice + 25% water = 100% natural. Australia: Coles Hot Smoked Salmon Portion 

35. Packaging Advantages Which Stand Out UK: Sun Quench Fruity Shots Orange. Six bottles of orange flavored drink with squirty sports cap. With added vitamins. No artificial colors or flavorings. Suitable for vegetarians. 10% fruit from concentrate. Netherlands: Plus Tuinerwten Extra Fijn Vriesvers: Frozen Extra Fine Fresh Garden Peas in a cardboard box with see-through aperture.

36. Speedy Step-by-Step With ingredients ready prepared and simple step-by-step instructions, the consumer can have a freshly cooked meal from the wok in not much more time than a microwave ready meal. Netherlands: AH Albert Heijn 1 Persoons Wok Schotel Japanse Sukiyaki: Stir & Fry Meal Japanese Yukiyaki. Ready to stir and fry Japanese sukiyaki meal with chicken breast, white rice, Chinese cabbage and sauce, separately held in a PET dish. Accommodating single person households with cooking for 1 dishes.

37. Big Idea: Small Serves AH Albert Heijn SmallMeal SmallSalad SmallSoup Beef Japanse Teriyaki - Japanese Teriyaki Meal “Small meal small salad small soup” is a range from AH which includes ready salads, ready meals and soups, all in small servings (280g). Can be consumed for snacks or main meals.

38. So Easy With Steaming Microwave 750W 5 ½ minutes or 1000W 4 ½ minutes with innovative steam valve. Steaming is associated with healthy cooking. Netherlands: AH Albert Heijn Stoommaaltijd Tilapiafilet Kormasaus - Steam Dish Tilapia Fillet with Korma Sauce. Contained in a special plastic microwave dish, with a unique steam valve. Ready to heat in microwave.

39. Clever Use Of Secondary Packaging The steam valve which is unique to the product is highlighted with a clever aperture in the secondary package, drawing the consumer’s attention to it. France: Auchan dos de Hoki-Hoki with Potatoes

40. Secondary Packaging Colour UK: Waitrose Crab & Chilli Linguine. Prime Scottish crab dressed in a sunblush tomato and chilli oil, served on a bed of egg pasta in a plastic bowl held in a cardboard sleeve. UK: Sainsbury's Espana Paella. Spiced rice seasoned with smoked paprika, garlic and white wine, mixed with red peppers, chorizo, chicken and prawns. Using secondary packaging to convey the meal theme.

41. Seasonal/Limited Edition South Africa: Woolworths Limited Edition Moroccan Lamb & Lentil Soup Netherlands: AH Albert Heijn Seizoens Vla Appel-Kaneel: Apple Cinnamon Custard USA: Publix Premium Limited Edition Monkey Business Banana Ice Cream Offering the consumer a unique flavour and experience for a limited time.

42. Private Label Seasonal Launches

43. Private Label Profiting From Upcoming Events South Africa: Woolworths Soccer Champion Shapes Pasta South Africa: Woolworths England and Argentina Money Box World Cup Soccer Selection Jellies

44. Matching Competitors

45. Tesco Competes With Discounters Tesco or Aldi? At the end of 2008 UK retailer Tesco launched a new range of 350 products under new discount brands in 10 categories to compete with Aldi. Similar packaging and price scales to Aldi products. Tesco also cut prices on existing Tesco and branded products.

46. Carrefour Fights Back in France Carrefour has launched a new range of 400 low cost food and non-food items and is promoting them via a dedicated Carrefour Discount website. The launch of 'Carrefour Discount' is the company's latest initiative to defend itself against falling spending from the increasing cost-sensitive consumer. As well as providing product information on each of the 400 items in the Carrefour Discount range, the website provides low cost recipe ideas and explains in detail its quality promise.

47. Getting Back to Basics Offering more value and basics lines can win over consumers on a budget but still wanting a choice. Discounters do not offer much choice.

48. PL Copy Cats UK: Asda Loaded Cookies & Cream Ice Cream UK: Asda 2 Chapattis: 2 Flatbreads. Two unleavened Indian style flatbreads. UK: Tesco Crunch Duo Mix Banana Choc Crunch. Deliciously thick and creamy vanilla flavored yogurt with a separate portion of crunchy milk chocolate coated cornflakes. Australia: Coles Chocolate Mint Supremes

49. Pushing Premium Boundaries

50. Differentiating Through Premium Premium is an area where private label in recent times has excelled -providing the consumer with excellent quality Excellent, select, choice etc are all examples of premium ranges.