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Copyright © 2004 ACNielsena VNU business


Trends and Insights From Grain Based

Categories

Bill Goergen

ACNielsen

2



A Brief Word from our Sponsor…

A VNU Company…

Active in over 100 countries around the world tracking sales in retail outlets measuring purchases in households (online) consumer surveys, interviews, focus groups

VNU Advisory Services integrate information from multiple sources transform raw data into strategic insights and

tailor-made recommendations advise on winning business decisions for complex

sales and marketing issues

3



What are we going to look at today?

Consumer Sales Trends of a variety of grain based categories

Focus on Bread, Cereal, Pasta, and Rice Regular vs Whole Grain Trends Consumer take away and purchase

dynamics Summary and Conclusions

4



Today’s Presentation

Covers Fixed Weight products, with a UPC Code Fresh Bakery Products not included Any Product that does not have a UPC

Does not cover fresh or random weight items

Generally, from the Grocery Channel (Outlets noted on each slide) Wal-Mart is not included

ACNielsen

Add a page introducing ACNielsen and youAdd a page (or modify this one) to outline what you are going to talk about -- then get into the caveats on the data

5



Fun Facts to Know and Tell

Low Carb diets first appeared in the 19th Century

Robert Atkins published his first diet book in 1972

Through the first 6 months of 2004, 994 new low carb products have been launched

Low Carb industry sales will top $25 Billion in 2004

6



A few thoughts for consideration..

Can we separate trends within “Grains” from trends impacted by “Low Carb”? Yes, but…

Many factors impact Category Trends Pricing Promotion New Product Innovations Demographic Trends Consumer & Historical trends Etc…

7



High Carb Categories have clearly had recent declines in Categories Sales

This includes Grain Based categories as well. Some categories, like Cereal, may have been impacted but have been declining for years.

Source: ACNielsen Strategic Planner – FDM (Food, Drug and Mass Combined xWal-Mart)Source: ACNielsen Strategic Planner – FDM (Food, Drug and Mass Combined xWal-Mart)

TOTAL US - FDM

52 weeks ending

04/21/01

TOTAL CEREAL (-2.4) (-1.5) (-0.9) (-5.0)TOTAL BREAD & BAKED GOODS (-0.2) 0.3 (-0.1) (-2.9)TOTAL PASTA (-1.3) 0.6 (-1.0) (-5.5)DEHYDRATED POTATOES (-2.6) 4.1 2.2 (-8.6)SW. POTATOES & YAMS - CANNED (-2.5) (-7.8) (-4.3) 1.7POTATO - FROZEN 1.5 0.5 (-1.8) (-4.1)TOTAL PIZZA/SNACKS - FROZEN 4.6 4.9 (-0.5) 2.1SALAD DRESSING - REDUCED/LOW CAL (-5.5) (-4.5) (-3.2) (-4.7)TOTAL CRACKERS 2.1 (-1.4) 0.3 (-3.0)TOTAL JUICES DRINKS - SHELF STBL (-1.5) 1.2 1.6 0.8

Unit Pct Chg vs YAG

52 weeks ending

04/20/02

52 weeks ending

04/19/03

Latest 26 weeks thru 01/24/04

TOTAL PREPARED FOODS - DRY MIXESORANGE JUICE - REFRIGERATED

1.54.6

(-0.4)(-1.7)

(-2.1)0.3

(-4.7)(-2.9)

ACNielsen

Might be more effective as a graph -- lots of numbers here for people who aren't familiar with our dataNeed to include Sweet Potates? Small category, trend different.

8



Some Trends Point Consumers Away from Grain Based Foods

Monday, August 30, 2004

9



Declines in Grain Based Categories accelerated after the death of Mr. Atkins

-0.2

-1.7

-1.1

-1.1

-3.9

-6.6

-6.7

-5.2

-3.5

-3.2

-4.9

-3.4RTE Cereal

Pasta

Rice

Fresh Bread

52 WK 4/12/03 52 WK 4/10/04 18 WK 8/7/04

Source: Strategic Planner

Pre April ‘03 Post April ‘03 Current Trend

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Fresh Bread Sales declined dramatically beginning in the Spring of 2003Total US FDM X WM

Rolling 4 wk % Chg vs YA

(8)

(7)

(6)

(5)

(4)

(3)

(2)

(1)

-

1

2

3

08/

10/0

2 0

9/07

/02

10/

05/0

2 11

/02/

02 11

/30/

02 1

2/28

/02

01/

25/0

3 0

2/22

/03

03/

22/0

3 0

4/19

/03

05/

17/0

3 0

6/14

/03

07/

12/0

3 0

8/09

/03

09/

06/0

3 1

0/04

/03

11/0

1/03

11/2

9/03

12/

27/0

3 0

1/24

/04

02/

21/0

4 0

3/20

/04

04/

17/0

4 0

5/15

/04

06/

12/0

4 0

7/10

/04

08/

07/0

4

% C

hg

EQ

Vo

l

11



On a long term basis, we do not see signs of recovery in Total Bread Sales

Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis

-5

-4

-3

-2

-1

0

1

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Column 1

Total Bread

12



Whole Wheat/Oat Bread Representsa Significant Portion of Total Bread

Sales and…

45%

27%

28%

White Whole Wheat Other

Total Bread

13



…Whole Wheat Bread continues to grow on a consistent basis

Total US Food/Drug/Mass Ex Wal Mart - Eq Vol Change - Rolling 52 Week Basis

-8

-6

-4

-2

0

2

4

6Eq Volume Chg (000)

White Whole Wheat

Total Bread

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97.3

74.891.5

72.8

10.323.2

4.7

77.6

0

20

40

60

80

100

Bread White Non-White

Wheat Oat/OatBran

Rye Pump A/O Non-White

Flavor Buyers

Household Penetration

More Households purchase non-white Bread than White Bread Wheat penetration gains were greater than White bread losses

Pt. Chg -0.2 -1.7 +0.4 +2.9 -0.7 -0.9 +0.0 -0.9

Segments

52 weeks April 24, 2004

Total Bread

ACNielsen

Need to make it clear these are annual numbers vs. the quarterly numbers on the previous page (since White Bread penetration jumps by 20 pts.)Switch the order of the charts?

15



Quarterly Penetration Total Fresh Bread is declining very slowly over time # of Households buying White and Wheat bread are nearly the

same – White declining and Wheat growing

Household Penetration

90.9 91.1 89.7 89.5 90.7 90.1 89.3

58.9 59.5 56.3 56.2 56.7 56.8 53.8

47.1 47.8 48.3 47.9 50.1 49.7 50.5

90.0

57.7

45.4

0

25

50

75

100

07/27/02 10/26/02 01/25/03 04/26/03 07/26/03 10/25/03 01/24/04 04/24/04

Total Bread

White Bread

Wheat Bread

Total Bread

ACNielsen

Note on penetration - Total Bread penetration decline is small. Probably means that number of buyers is still growing, but not as fast as population.White bread might actually be losing buyers.

16



Where did the White Bread Buyers Go? In total, White bread declines were almost equal across three

factors – but the largest percent was lost Baked good purchases However volume was also shifted to other breads and other

(non-bread) baked goods

Percent of Volume Loss

36.5

32.1

31.4

0%

20%

40%

60%

80%

100%

White Bread Loss

To OtherBreads

To OtherBaked

LostBakedVolume

Total Bread

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RTE Cereal Volume Trends have been in long term decline

Total US Food $2MM Eq Volume Change - Rolling 52 Week Basis

-6

-5

-4

-3

-2

-1

0

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Column 1

Total RTE Cereal

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The Rate of volume decline for Ready to Eat Cereal quickened in early 2003

Total US FDMRolling 4 wk % Chg vs. YA

(10)

(8)

(6)

(4)

(2)

-

2

4

08/

10/0

2 0

9/07

/02

10/

05/0

2 1

1/02

/02

11/

30/0

2 1

2/28

/02

01/

25/0

3 0

2/22

/03

03/

22/0

3 0

4/19

/03

05/

17/0

3 0

6/14

/03

07/

12/0

3 0

8/09

/03

09/

06/0

3 1

0/04

/03

11/

01/0

3 1

1/29

/03

12/

27/0

3 0

1/24

/04

02/

21/0

4 0

3/20

/04

04/

17/0

4 0

5/15

/04

06/

12/0

4 0

7/10

/04

08/

07/0

4

% C

hg

EQ

Vo

lTotal RTE

Cereal

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10-Year Penetration Trend

Like Bread, Penetration Trends on RTE Cereal have been in decline for years

% of Households Purchasing RTE Cereal

95.7 95.3 94.9 94.7 94.4 93.7 93.4 93.6 93.5 92.995.6

50

75

100

94 95 96 97 98 99 '00 '01 '02 '03 '04

Total RTE Cereal

Source: Consumer*Facts 1999 - 2003

ACNielsen

Same comments as for bread -- gaining buyers, but not as fast as population.Recent immigrants less likely to purchase RTE cereals.

20



10-Year Buying Rate Trend In addition to penetration declines, Buying Rate

Trends for RTE Cereal have been softening for years The annual decline between ’03 and ’04 is the largest

in 10 yearsPounds Purchased per Household - RTE

Cereal

30.9 31.3 30.7 31.129.1 28.3 27.6 27.3 27.8 26.5

31.4

10

15

20

25

30

35

94 95 96 97 98 99 '00 '01 '02 '03 '04

Total RTE Cereal

Source: ACNielsen Homescan Consumer Panel

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Pasta Trends are Similar to Bread and Cereal

Total US FDMRolling 4 wk % Chg vs YA

(14)

(12)

(10)

(8)

(6)

(4)

(2)

-

2

08/

10/0

2 0

9/07

/02

10/

05/0

2 11

/02/

02 11

/30/

02 1

2/28

/02

01/

25/0

3 0

2/22

/03

03/

22/0

3 0

4/19

/03

05/

17/0

3 0

6/14

/03

07/

12/0

3 0

8/09

/03

09/

06/0

3 1

0/04

/03

11/0

1/03

11/2

9/03

12/

27/0

3 0

1/24

/04

02/

21/0

4 0

3/20

/04

04/

17/0

4 0

5/15

/04

06/

12/0

4 0

7/10

/04

08/

07/0

4

% C

hg

EQ

Vo

l

Total Pasta

22



Long Term Pasta Declines pre-date the Post Atkins acceleration


-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Column 1

Total Pasta

23



Total Whole Wheat Pasta sales, while still strong, are moderating


0

10

20

30

40

50

60

70

80

90

100

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Column 1

Total Pasta

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CORE36%

RECIPE READY37%

SPECIALTY14%

NOODLES13%

+8%

Source: ACNielsen RMS Data; Total US; 52 w/e 4/19/04 vs YAGO; $2MM+ Grocery Stores

Health oriented Dry Pasta types are driving the Specialty pasta increases

Dry

Pas

ta D

oll

ar S

har

es &

C

han

ge

vs Y

AG

O

Flavored -19%Wheat +28%Organic/Soy +52%Filled +30%All Other -1%

HEALTH CONSCIOUS

-3%

-2%

-3%

Total Pasta

25



Some Types of Pasta Appeal to Different Types of Households

Spaghetti & other Long Pasta

Elbows

Lasagna

Hispanics

Empty Nesters

Families w/ Kids

Total Pasta

26



Do we see Recovery in Recent Rice trends?

Total US FDMRolling 4 wk % Chg vs YA

(12)

(10)

(8)

(6)

(4)

(2)

-

2

4

08/

10/0

2 0

9/07

/02

10/

05/0

2 11

/02/

02 11

/30/

02 1

2/28

/02

01/

25/0

3 0

2/22

/03

03/

22/0

3 0

4/19

/03

05/

17/0

3 0

6/14

/03

07/

12/0

3 0

8/09

/03

09/

06/0

3 1

0/04

/03

11/0

1/03

11/2

9/03

12/

27/0

3 0

1/24

/04

02/

21/0

4 0

3/20

/04

04/

17/0

4 0

5/15

/04

06/

12/0

4 0

7/10

/04

08/

07/0

4

% C

hg

EQ

Vo

l

Total Rice

27



Total Rice Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis

-8

-6

-4

-2

0

2

4

6

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Column 1

Total Rice

28



Total Brown/ Wild Rice Volume Trends are softening in recent months - in contrast to whole

grain segments of Bread, Cereal, and PastaTotal US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis

-2

-1

0

1

2

3

4

5

6

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Column 1

Total Rice

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Total Brown/ Wild Rice vs Other Total US Food/Drug/Mass Ex Wal Mart Eq Volume Change - Rolling 52 Week Basis

-8

-6

-4

-2

0

2

4

6

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Brown/ Wild White/ Instant

Total Rice

30



Summary and Conclusion Grain trends are clearly impacted by the

Low Carb trends General Mills believes ~ 1%

Long Term trends are impacting overall category performance Not just a low carb phenom

Whole Grain Segments are generally much stronger than white/processed Good Carbs vs Bad Carbs? “Net Carbs” the next Marketing Buzz? An opportunity for Manufacturers?

ACNielsen

Whole grains growth: positioned as "good carbs" because of fiber content. Some companies marketing "net carbs" = total carbs less fiber carbs

31




Thank You!

32




Appendix

33



Regular vs Whole Wheat Pasta Total US Food $2MM

Eq Volume Change - Rolling 52 Week Basis

-20

0

20

40

60

80

100

10/ 0

6/01

12-

29-0

1

04/ 2

0/02

07/ 1

3/02

10/ 0

5/02

12/ 2

8/02

04/ 1

9/03

07/ 1

2/03

10/ 0

4/03

12/ 2

7/03

04/ 1

7/04

07/ 1

0/04

Eq Volume Chg (000)

Regular Whole Wheat

Total Pasta

34



Penetration Over 60% of Low Carb Diet households still purchase White

They are no less likely to purchase Bread than other households, but fewer purchase White and more purchase Wheat

Wheat is increasing and White declining over all households

Percent of Households Purchasing

95.3

66.0 61.7

95.2

62.2 65.9

95.3

66.6 61.1

0

20

40

60

80

100

120

Fresh Bread White Wheat

All Households Low Carb NOT low carb

-0.1 +0.3 -0.2 -2.2 -3.4 -2.0 +3.0 +2.8 +5.6Point Change:

6 months 11/03 Vs 11/02

Total Bread

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