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  • World and U.S. Confectionery Market

    June 9, 2008

  • National Confectioners Logistics Council

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • National Confectioners Logistics Council

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • About NCA: Association Profile

    675 members total Manufacturers: 400 Suppliers: 160 Brokers: 115

    Promote and protect the U.S. confectionery industry

  • NCA Goals Represent confectionery as an enjoyable food

    Significant source of candy category information

    Inhibit and reduce federal, state and international legislative and regulatory requirements

    Recognize new scientific and advancing technologies, meet the candy industry needs for training and education

    Grow the confectionery category

  • NCA Activities & Programs

    Trade RelationsPublic RelationsInternational Trade DevelopmentALL CANDY EXPO

    Government AffairsTechnical & Regulatory

  • www.candyusa.com

    Register as industry memberResource GuideNew Industry Research ResultsIRI dataManufacturer Shipment DataIndustry ReviewsSeasonal Holiday performanceExport development programs

    NCAs Daily SmartBrief

    Register today!

  • NCA 2008 PrioritiesFarm BillNutrition legislationAdvertising restrictionsResponsible cocoa growing Social ResponsibilityConsumer promotionTrade involvementALL CANDY EXPO

  • May 20-22, 2009The largest confectionery, cookie and snack show in the Americas

  • National Confectioners Logistics Council

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • 2007-2008 Global Economic TrendsEconomy slowing in Western Europe and USARetail sales growth downUSA Unemployment ends year at 5%Up from 4.6% in 2006 but low in historical termsHousing market declines affecting job growth

    Eastern Europe, Asia and Africa will grow fasterHigh oil and energy pricesFears of global inflationFear of global recessionCommodity prices higherSlower growth

  • 2007 Global Confectionery SalesManufacturers $ sales grew 3% in 2007

    Category Retail Sales Manf. Sales % Million Tons %

    Total $141 Billion $93 Billion +3.4% 13.8 +2.9%

    Chocolate $77 Billion $51 Billion +3.7% 6.9 +3.5%

    Non-Choc. $44 Billion $29 Billion +2.3% 5.9 +2.0%

    Gum $20 Billion $13 Billion +4.5% 1.0 +3.4%

    Euromonitor Estimates

  • Continuous Growth of ConfectioneryTotal value and tons of confection sold at retail has increased

    consistently over the past five years

    $ +44%Tons +15%

    Billions

    2002 2003 2004 2005 2006 2007

    13.8

    $141.2

    13.4

    $136.4

    13.0

    $128.8

    12.6

    $120.8

    12.1

    $109.4

    12.0

    $98.3

    Dollars Sold at Retail, Billions Tons Sold at Retail, Millions

    Euromonitor

  • The Second Largest Packaged Food Category

    $141.2

    $128.1

    $82.7

    $65.2

    $61.5

    $57.5

    $26.0

    $23.4

    $7.8

    $174.3

    $0 $25 $50 $75 $100 $125 $150 $175

    Beer

    Confectionery

    Carbonated Beverage

    Sweet and Savory Snacks

    Bottled Water

    Ice Cream

    Biscuits

    Wine

    Cereal

    Snack Bars

    Product Categories

    $ Billions

    +21.0%

    +43.6%

    +29.9%

    +35.8%

    +69.4%

    +39.0%

    +7.1%

    +36.6%

    +24.9%

    +55.5%

    Euromonitor

    2002 - 2007

  • Global Region Size $

    Asia Pacific

    Australasia

    Eastern Europe

    Latin America

    Middle East and Africa

    North America

    Western Europe

    $0

    $10,000

    $20,000

    $30,000

    $40,000

    $50,000

    2002 2003 2004 2005 2006 2007

    Millions of U.S. $

  • Global Region Size Tons

    Asia Pacific

    Australasia

    Eastern Europe

    Latin AmericaMiddle East and

    Africa

    North America

    Western Europe

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    2002 2003 2004 2005 2006 2007

    Tons - 000

  • Market Tonnage Growth 2002 - 2007

    World Asia Pacific Middle Eastand Africa

    EasternEurope

    LatinAmerica

    Australasia WesternEurope

    NorthAmerica

    15.5%

    27.8%26.2% 25.4%

    20.7%

    14.5%

    7.5% 7.3%

    0%

    6%

    11%

    17%

    22%

    28%

    Developing Markets are growing at almost twice the world average.

    Euromonitor

  • Tonnage Growth 2002 - 2007

    Asia Pacific EasternEurope

    WesternEurope

    Latin America North America Middle Eastand Africa

    Australasia

    571.8

    404.0

    280.0 267.4214.8

    138.2

    27.10

    100

    200

    300

    400

    500

    600

    51% of tonnage growth has come from Asia Pacific and Eastern Europe.

    Thousands of Tons

    Euromonitor

  • $12.1

    $9.7

    $8.4

    $7.3

    $6.8

    $6.3

    $6.0

    $4.9

    $4.6

    $2.8

    $2.3

    $2.3

    $2.0

    $1.7

    $1.6

    $1.5

    $1.5

    $1.5

    $29.4

    $1.6

    $0 $3 $6 $9 $12 $15 $18 $21 $24 $27 $30

    USAUnited Kingdom

    GermanyRussia

    Japan

    ChinaBrazil

    FranceItaly

    MexicoCanada

    AustraliaSpain

    PolandTurkey

    Argentina

    UkraineNetherlands

    SwedenSwitzerland

    C

    o

    u

    n

    t

    r

    i

    e

    s

    $ Billions

    Top 20 Confectionery Markets

    Euromonitor

  • 1,1841,129

    1,0651,036

    536488

    371359

    295279

    204196189187

    180179167

    144

    181

    2,990

    0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000

    USAChina

    RussiaGermany

    United KingdomBrazil

    MexicoFranceJapan

    UkraineItaly

    SpainIndonesia

    PolandAustralia

    IndiaNetherlands

    ArgentinaCanadaTurkey

    C

    o

    u

    n

    t

    r

    i

    e

    s

    Tons Billions

    Top 20 Confectionery Markets

    Euromonitor

  • Top 20 Per Capita Confectionery Markets

    16.614.5

    14.013.6

    13.512.9

    12.612.1

    11.811.2

    11.09.9

    9.19.1

    7.96.7

    6.46.0

    8.7

    17.1

    0 3 6 9 12 15 18

    United KingdomIceland

    LuxembourgIreland

    LiechtensteinSwitzerland

    GermanyDenmark

    FinlandNorwaySweden

    NetherlandsUSA

    AustraliaAustria

    BelgiumRussia

    New ZealandUkraine

    France

    CountriesKilograms

    Euromonitor

  • 8.9

    7.7

    5.5

    5.5

    4.3

    4.2

    2.9

    1.9

    1.7

    1.4

    1.0

    1.0

    1.0

    0.9

    0.5

    0.5

    0.5

    0.5

    10.1

    0.7

    0 2 4 6 8 10 12

    Cadbury Mars

    Nestl Wrigley

    HersheyKraft

    FerreroPerfetti Van Melle

    Lindt & SprngliLotte

    Storck Arcor

    Obiedinenye Leaf

    Haribo Meiji

    Cloetta FazerOrkla

    Ritter Morinaga

    Company

    Market Share %

    Top 20 Confectionery Companies

    Euromonitor

    Slightly changed since last month!!!!

  • Top 20 Confectionery CompaniesMarket Share Changes 2002 - 2007

    5.1%

    1.6%

    1.0%

    1.0%

    1.0%

    0.5%

    0.5%

    0.4%

    0.4%

    0.2%

    0.1%

    0.1%

    0.0%

    0.0%

    -0.1%

    -0.1%

    -0.1%

    -0.5%

    -0.8%

    -0.9%

    -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

    Cadbury

    Lindt & SprngliNestl

    OrklaHaribo

    RitterStorckArcor

    Cloetta Fazer

    MeijiLotte

    MorinagaMars

    Kraft Hershey

    Wrigley

    ObiedinenyeLeaf

    Perfetti Van Melle

    Ferrero

    Euromonitor

  • Top Confectionery Importing Countries

    Country 2007 $ Sales 2007 % GrowthUSA $2,006 +3.5%United Kingdom $1,734 +20.6%Germany $1,622 +13.5%France $1,471 +20.4%Netherlands $769 +10.4%Canada $723 +10.2%Belgium $558 +17.5%Russia $541 +42.2%Italy $487 +12.8%Spain $487 +13.5% Austria $460 +14.9%Sweden $438 +13.0%Denmark $351 +24.0%Ireland $365 +19.4%Australia $333 +32.2%Mexico $330 +14.4%Czech Republic $326 +35.1%Poland $321 +31.6%Hong Kong $279 +18.1%Japan $272 +0.7%

    January December 2007

    * Global Trade Atlas

  • 2007 USA ExportsJanuary - December 2007

    Country 2007 $ Sales 2007 Tons 2007 % GrowthWorld $1,004,788,079 267,734 +14.2%Canada $446,710,332 125,469 +6.7%Mexico $137,901,651 45,461 +16.7%South Korea $49,090,151 11,262 +11.5%Japan $28,724,733 6,512 +7.2%Australia $24,055,499 5,185 +32.7%Philippines $23,264,222 4,896 +16.8%United Kingdom $21,385,698 4,635 -12.2%Hong Kong $19,895,650 4,437 +32.6%Singapore $16,257,498 3,804 +44.5%Colombia $15,280,295 4,217 +57.7%Taiwan $15,078,029 3,808 +49.6%Peru $10,968,139 1,984 +38.8%China $10,692,742 2,528 -5.8%Panama $10,353,915 1,990 +51.3%UAE $10,241,649 2,674 -6.6%

    * Global Trade Atlas

  • National Confectioners Logistics Council

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • U.S. Confectionery

    The Retail Market

  • Continuous Growth of ConfectioneryTotal value and pounds of confection sold at retail has increased

    consistently over the past five years

    2001 2002 2003 2004 2005 2006 2007

    7.7

    $29.1

    7.7

    $28.2

    7.6

    $27.9

    7.3

    $27.4

    7.1

    $25.8

    6.7

    $24.4

    7.0

    $24.0

    Dollars Sold at Retail, Billions Pounds Sold at Retail, Billions

    Department of Commerce Data is released in late summer. Please return in August for actual 2007 data.

    2006- US Dept of Commerce 311 D Report

  • Total Chocolate/Non-Chocolate/Gum Dollar Share

    U.S. Department of Commerce CensusBureau 2006 MA 311D Report

    CHOCOLATE CANDY

    56% GUM11%

    NON-CHOCOLATE CANDY

    33%

  • Retail Confectionery Market Share by Trade Channel

    Mass X Wal-Mart4.7%

    Others24.9%

    Vending4.2%

    Dollar Stores*2.9%

    Supermarkets15.3%

    Convenience Stores15.0%

    Wal-Mart11.4%

    Drug Stores8.6%

    Warehouse Clubs*7.6%

    Bulk5.4%

    *estimates

    * * Others include: department stores, food service and ingredient sales, fundraising, give-aways, independent grocers, mail order/internet, military, specialty/candy stores, theaters and concessions

    NCA 2007 estimates based on IRI, U.S.Department of Commerce, MSA Vending Data, NCA Shipment Report and other industry sources.

  • 2007 Retail Channel PerformanceBased on 52 Week Sales January - December 2007

    Channel 2007 $ Sales 2007 % GrowthSupermarkets $4.6 +2.4%Wal-Mart $3.5 +7.3% Mass X Wal-Mart $1.4 +6.5%Convenience Stores $4.5 +6.2%Drug Stores $2.6 +3.9%*Warehouse Clubs $2.2 +2.0*Dollar Stores $.8 +0.2%Vending $1.2 +0.7%*Bulk $1.4 -0.5

    The confectionery retail market has grown across all trade channels but convenience stores, club stores, dollar stores and chain drug stores have outpaced the overall retail market.

    * Indicates NCA estimate Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. Sales Figures in billions

  • Are we in a recession?

    -10.0-9.0-8.0-7.0-6.0-5.0-4.0-3.0-2.0-1.00.01.02.03.04.05.06.07.08.09.0

    10.0

    37 44 51 6 13 20 27 34 41 48 4 11 18 25 32 39 46 1 8 15 22 29 36 43 50 5 12 19 26 33 40 47 2 9 16 23 30 37 44 51 5 12 19 26 33 40 48 3

    Weeks of Year

    Weekly Change4 per. Mov. Avg. (Weekly Change)

    Leading ChainsPercent Change in Weekly Sales Per Unit

    2002 2003

    Source: The NPD Groups SalesTrac service; Based on actual sales reported from 45 chains

    9/11/01

    2004 2005 2006

    Thanksgiving

    2007

  • 2007-2008 USA Retail Trends

    2007 Holiday retail sales slowed

    2.4% growth vs 2.9% in 2006

    Luxury Retailers continue to do well

    Convenience and Drug doing well

    Mass, dollar and supermarket experience slow growth

    Overall retail is growing at a slower pace

    High gas pricing negatively affecting all retailers

  • Candy and Gum Ranked 3rdAmong 2008 Food Categories

    $12.90

    $8.60

    $8.00

    $6.40

    $4.50

    $4.10

    $4.00

    $3.80

    $13.40

    $0.0 $3.0 $6.0 $9.0 $12.0 $15.0

    Carbonated Beverages

    Milk

    Candy& Gum

    Salty Snacks

    Cereal

    Ice Cream

    Soup

    Cookies

    Bottled Juice

    P

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    $ Billions

    -1.1%

    +14.9%

    +2.4%

    +2.7%

    +1.4%

    -1.2%

    -1.9%

    +1.1%

    +1.9% IRI Food, Drug & MassExcluding Wal-Mart 4/20/2008

    Unit SalesBeverage -5.5%Milk -3.4%Candy -3.0%Salty -2.5%Cereal +0.9%Ice Cream -4.2%Soup -3.3%Cookies -4.9%Juice -4.0%

  • Candy and Gum is the Largest Snack Category

    $8.0

    $4.5

    $4.0

    $2.3

    $1.0

    $0.5

    $0.3

    $8.6

    $0.0 $2.0 $4.0 $6.0 $8.0 $10.0

    Candy& Gum

    Salty Snacks

    Ice Cream

    Cookies

    Snack/Granola Bars

    Bakery Snacks

    Dry Fruit

    Misc. Snacks

    P

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    $ Billions

    -4.0%

    +18.7%

    +2.4%

    +2.7%

    +7.7%

    -0.7%

    -1.9%

    +5.1%

    IRI Food, Drug & MassExcluding Wal-Mart 4/20/2008

    Unit SalesCandy -3.0%Salty -2.5%Ice Cream -4.2%Cookies -4.9%Snack/G +6.4%Bakery -1.4%Dry Fruit -6.3%Misc +12.3%

  • 2007 Confectionery Sales

    Manufacturers Sales January - December, 2007

    $ Lbs.Confectionery +3.8% Even Chocolate Candy +2.3% -0.9%Non-Chocolate Candy +5.8% +0.5%

    NCA Monthly Shipment Reports

  • Ferrero Session

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • Confectionery

    Seasonal Merchandising

  • NCA estimates based on December 30, 2007 IRI Data, NCA Manufacturers Shipment Reports and U.S. Department of Commerce MA311D Report

    Total Confectionery Seasonal Shares

    Christmas21%

    Valentine's Day16%

    Halloween33%

    Easter30%

  • What Affects Seasonal Sales?

    Date/Day of HolidayThe EconomyConsumer ConfidenceShopping Patterns/HabitsMerchandising Strength/Visibility

  • Holiday Dates/Days

    Holiday 2007 2008 2009 2010Valentines Wednesday Thursday Saturday Sunday

    Easter 4/8 3/23 4/12 4/4

    Halloween Wednesday Friday Saturday Sunday

    Christmas Tuesday Thursday Friday Saturday

    Thanksgiving 11/22 11/27 11/26 11/25

    Shopping Days 33 28 29 30

    Indicates positive date for holiday sales Indicates neutral date for holiday sales Indicates negative date for holiday sales

  • Confectionery Seasonal Sales(** in millions of dollars)(** in millions of dollars)

    2004 2005 2006 2007 2008Valentines Day - $1,010 $970 $971 $1,036 $1,035Easter - $1,906 $1,761 $1,884 $1,987 $1,845Halloween - $2,041 $2,088 $2,146 $2,202 $2,265*Christmas - $1,342 $1,375 $1,389 $1,420 $1,430*

    Results and Projection as of January 2008Source: Sales figures are compiled by National Confectioners Association based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce

  • Seasonal Confectionery Trends

    2008 2007 2006 2005 2004 2003 2002 VALENTINES -4.0% -3.0% -7.6% +6.5%

    EASTER -7.6% +5.5% +2.2% -2.2%

    HALLOWEEN +2.3% +2.4% +0.7% -0.4%

    CHRISTMAS +2.4% -3.5% -1.4% -3.0%* IRI FD&M

    +0.1%

    +7.0%

    +1.0%

    +2.8%

    +6.7%

    +5.4%

    +2.6%

    +2.2%

    -0.2%

    +2.4%

    +2.3%

    -7.1%

  • National Confectioners Logistics Council

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • U.S. Confectionery Trends

  • We are concerned about our weight!

    Overweight or Obese

    62%

    Not Overweight

    or Obese38%

    Dist. Of Adults (18+years)

    Note: Sample is approximately 3,700 adults per year of which 90% provide food and beverage intake, height and weight information

    The alarm about our weight condition has been well documented and well reported!

    Source: The NPD Groups Health Track Service

  • Snacking is a part of our diet!

    Snacks 19%

    Lunch 27%

    Supper 26%

    Breakfast 28%

    Distribution of Annual Meals

    Source: The NPD Group's National Eating Trends and CREST Services

  • But snacking isnt becoming more important!

    0%

    5%

    10%

    15%

    20%

    25%

    96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07

    Percent of All Meals that are Snacks

    Source: The NPD Group's National Eating Trends and CREST Services

  • We snack throughout the day!

    Morning32%

    Afternoon30%

    Evening38%

    Distribution of In-Home Snack Meals

    Source: The NPD Groups National Eating Trends service

  • But there is a shift:

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07

    Percent of In-Home Snack Meals Occurring in the Morning

    Source: The NPD Groups National Eating Trends service

    Morning Snacks

  • And fewer in the evening

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07

    Percent of In Home Snack Meals Occurring in the Evening

    Source: The NPD Groups National Eating Trends service

    Evening Snacks

  • Feeling about Children and Sweets:

    52.152.449.4

    46.345.545.9

    40.636.136.7

    33.832.631.129.329.628.228.528.929.429.331.631.930.231.1

    85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07

    Children should not be allowed to eat sweetsPercent of Homemakers Agreeing

  • Top Snacks Foods Consumed By Children (under 6)

    1. Cookies

    2. Fruit

    3. Milk

    4. Juice

    5. Candy

    6. CSD

    7. Ice Cream

    8. Crackers

    9. Cake

    10. Chips

    1987

    1. Fruit

    2. Cookies

    3. Milk

    4. Crackers

    5. Juice

    6. Popcorn

    7. Candy

    8. Ice Cream

    9. Chips

    10. Fruit Rolls/Bars/Bits

    2007

    Source: National Eating Trends

  • Candy Bars

    0

    5

    10

    15

    20

    25

    30

    0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70

    Age of Eater

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    2005-20071990-1992

    Source: The NPD Groups National Eating Trends Data

    Percent of Age Group Eating Candy Bars in Two Weeks

  • Chocolate Covered Candy

    0

    5

    10

    15

    20

    25

    30

    0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70

    Age of Eater

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    2005-20071990-1992

    Source: The NPD Groups National Eating Trends Data

    Percent of Age Group Eating Chocolate Covered Candy in Two Weeks

  • Non Chocolate Candy

    0

    5

    10

    15

    20

    25

    30

    0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70

    Age of Eater

    P

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    2005-20071990-1992

    Source: The NPD Groups National Eating Trends Data

    Percent of Age Group Eating Non Chocolate Candy in Two Weeks

  • Kids are Eating more Fish!

    0

    5

    10

    15

    20

    25

    0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70

    Age of Eater

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    2005-20071990-1992

    Source: The NPD Groups National Eating Trends Data

    Percent of Age Group Eating in Two Weeks

    Goldfish

  • Trend in Consumers of Organic Products

    11.6%

    9.8%

    13.9%15.0%

    11.5% 11.5%

    13.9% 14.3% 13.4%15.1%

    18.3%

    16.5%

    20.1%21.4% 21.4%

    24.5%

    May'03

    Aug '03 Nov'03

    Feb '04 May'04

    Aug '04 Nov'04

    Feb '05 May'05

    Aug '05 Nov'05

    Feb '06 May'06

    Aug '06 Nov'06

    Feb '07

    2004 2005

    Trend in Percent of Population Consuming Organic Products

    2006 2007

    Source: The NPD Groups National Eating Trends service

    2003

  • But this still is one of the Hot Trends in the US:

  • Trends - What's for 2007/2008

    Dark chocolate sales accelerating - +50% in 2007Chocolate experiencesChocolate tastingsChocolate and wine pairings

    Exotic chocolate flavorings: citrus, spice, salt, fruitsHigh cocoa content chocolatesGourmet chocolate barsGourmet packaging for chocolatesSingle origin chocolatesUrban names for upscale chocolates

  • Trends - What's for 2007/08

    Sugar Free gum - +13.5% salesExotic fusion flavorsFortified products

    Theater Box candies Event merchandising theaters, birthday, game nightsSingle-serve seasonal itemsNew seasonal offerings

  • Whats important:1. New we like to try new things but dont

    mistake this for a trend! The top 25 new items in chocolate, non-chocolate and gum generated 10% of total sales in 2007.

    2. Taste this takes generations to change! but it is changing!

    3. Convenience we have always moved to making our lives easier!... remember, easier not easy

    4. Value Weve never let food costs rise faster than our incomes!

  • Key Customer Meeting Thirty Key Customers

    February 28, 2008

    Changes we will see in the next five years:Continued consolidationGrowth in global businessBlurring of Snacks and Confections More Customization packs for individual retailers More Secondary Merchandising Speed to Shelf coordination more important Continued loss of center storeLabeling will become more important

  • Key Customer Meeting Thirty Key Customers

    February 28, 2008

    Changes we will see in the next five years:Price Blending less differential in key sizesProduct Quality more important to consumersMore Premium section will grow

    Must have quality product and matching packaging

    Distinction between luxury and premiumHealthier optionsGrowth in organic confectionsMore functional productsMore portion control options

  • World and U.S. Confectionery Market

    June 9, 2008

  • National Confectioners Logistics Council

    About NCA Global Confectionery PerformanceUSA Confectionery PerformanceSeasonal PerformanceTrendsNew NCA Research Findings

  • New NCA Research

    Dechert-HampeExpanding the Dimensions of

    Confectionery - a $10 Billion Opportunity!and

    Phil Lempert the Supermarket GuruNew Consumer Research

  • Confectionery is Expandable Not a Zero Sum Game

    Fixed Consumption Expandable Consumption

    Source: Dechert-Hampe & Co.

    Consumption

    Purchasing

    PurchasingConsumption

    weeksweeks

    Consumption at fixed rate Soap, Detergent, Toilet Paper Promotion Loads Pantry

    Consumption Driven by Purchase Candy, Snacks, Beverages Promotion Builds Consumption

  • Confectionery Delivers High Profitability Driven By High Gross Margin

    % Gross Margin

    27%30%

    Confectionery Grocery Average

    Confectionery margins are 3-5% points higher

    Source: DHC Analysis of Retailer Data

  • Confectionery Is Among Most Frequently Purchased Categories In Stores

    15

    12

    11

    7

    31

    30

    22

    16

    Coffee

    Soup

    Cookies

    Bottled Juice

    Cereal

    Confectionery

    Milk

    Carb. Bev.

    Source: ACNielsen HomeScan

    Frequent purchases make it key to retailers

    Annual Purchases

  • Top Performing Retailers Sell Confectionery At A Higher Rate

    Confectionery Sales Index Per $MM ACV

    76

    101

    136

    LowPerformance

    ModeratePerformers

    TopPerforming

    Retailers

    Top performers have a rate 35% greater than average

    Source: DHC Analysis of Retailer Data

  • Top Performing Retailers Generate Higher Growth In Confectionery

    Some of the top retailers are growing by double digits

    Confectionery % Sales Growth

    4.1%

    1.9%

    -2.4%Low

    Performance

    ModeratePerformance

    TopPerforming

    Retailers

    Source: DHC Analysis of Retailer Data

  • Top Performing Retailers Have Greater Confectionery Section Productivity

    Confectionery Sales Per Linear Foot

    $15.57

    $6.10

    $13.91

    LowPerformance

    ModeratePerformance

    TopPerforming

    Retailers

    Source: DHC Analysis of Retailer Data

  • Potential For Improved PerformanceProjects To A $10 Billion Opportunity

    $39

    $29

    CurrentPerformance

    PotentialPerformance

    Confectionery Sales $ Billions A $10 Billion

    OpportunityA $10 Billion Opportunity

    +35%

    Potential growth based on top performing retailers

    Source: Dechert-Hampe & Co.

  • Aisle Management

  • Many Consumers Are Unhappy With Retail Merchandising Of Confectionery

    Consumer interviews reveal some of the shopper frustration at the shelf

    The candy section is confusing. Its difficult to find what you want

    The products are all clumped up. They run into each other

    They need to separate the different kinds of candy better

    Its overwhelming. Theres no organization to help you shop

    Source: Dechert-Hampe & Co.

  • Supermarket Guru Survey Customer Satisfaction

    5 22 73

    5 26 69

    8 31 61

    9 33 59

    10 46 44

    11 31 58

    11 37 52

    12 53 35

    18 59 24

    23 43 33

    24 55 21

    24 57 18

    27 54 20

    33 49 19

    0 20 40 60 80 100

    Holiday CandyChocolate

    Adult CandyGum

    Holiday GiftsHard

    MintsP Label

    GourmetNoveltyNatural

    ImportedEthnic

    Organic

    Excellent Good Fair/Poor

  • Snacks Customer Satisfaction

    11 37 52

    6 30 63

    10 32 58

    12 38 50

    15 44 41

    25 49 27

    46 40 10

    44 47 10

    0 20 40 60 80 100

    Salty Snacks

    Potato Chips

    Nuts

    Natural

    Gourmet

    Organic

    Ethnic

    P Label

    Excellent Good Fair/Poor

  • Supermarket Guru Survey Customer Satisfaction

    What Improvements?

    39

    33

    28

    24

    20

    19

    15

    13

    13

    0 10 20 30 40 50

    More Variety

    Cost Savings

    More Gourmet

    More Imported

    More Fresh

    Better Quality

    More Health Info

    Better Organized

    More Ethnic

    % of Consumers

  • New Patterns Of Consumer Shopping Behavior Change the Game

    Consumer shopping patterns changed toward more shorter trips

    Retailers competing with multiple outlets for shopping occasions

    Majority of shopping trips today are convenience oriented

    Shoppers must be drawn into the aisle

    Perimeter displays must compensate for reduced traffic

  • Where are Consumers Buying?

    Why the market share shifts?

    Is there a change in the planned vs. unplanned confectionery purchase?

    Is the consumer more apt to indulge in an impulse purchase away from the supermarket?

    Are supermarkets merchandising impulse purchase items correctly?

  • Value Channel Trips Have Increased

    Source: Nielsen Household Panel.

    1011

    1013

    1415

    1515

    2518

    17

    27

    7864

    WarehouseClubs

    Dollar Stores

    ConvenienceStores

    Drug Stores

    MassMerchandisers

    Supercenters

    Grocery

    20052000

    Household Shopping FrequencyAnnual Trips

  • Increasing Ring Is Key For Retailers

    Source: Nielsen Household Panel.

    $11$12

    $10$15

    $19$22

    $32$35

    $38$44

    $49$60

    $83$87

    Dollar Stores

    ConvenienceStores

    Drug Stores

    Grocery

    MassMerchandiser

    Supercenters

    WarehouseClubs

    2000 2005

    Average $ Basket Ring

  • Locate Confectionery Section Earlier In Shopping Trip

    Confectionery Location In Store

    37%60%

    45%

    30%

    18% 10%

    All Retailers Top Performers

    End of TripMiddle of TripBeginning of Trip

    Locate Confectionery near beginning of trip

    Source: DHC Analysis of Retailer Data

  • Confectionery Performs Best Adjacent to Snacks

    Adjacent Category

    Top Performing Retailers

    Others

    Salty Snacks 18% 12%Nuts 18 8Cookies 10 12Fruit Snacks 12 6Snack Bars 6 4

    Total Snacks 64% 42%Baking Needs 9 7Bottled Juice/Water 3 9RTE Cereal 0 6Other 23% 36%

    Source: DHC Analysis of Retailer Data

  • Drive Sales By Allocating More Space To Confectionery Gondola

    32.6

    22.229.428.0

    44.3

    35.0

    Grocery Drug Mass

    All RetailersTop Performers

    Gondola CandySection Size In Feet

    Top performing retailers devote more space & generate more Candy sales

    Source: DHC Analysis of Retailer Data

  • Increased Item Assortment Can Drive Confectionery Sales

    Non-Seasonal Gondola CandyGrocery Dollar Sales Per MM ACV Index

    82

    104

    122

    Less Than250 Items

    250-350 Items Over 350Items

    Top performing retailers stock more itemsSource: DHC Analysis of Retailer Data

  • Retailers Risk Lost Sales If They Dont Stock Candy Items Consumers Want

    12%

    9%

    16%

    11%

    27%

    25%

    Go To AnotherStore

    Buy Nothing OrDon't Know

    Buy AnotherType Of Snack

    Buy AnotherSize/Pack

    Buy AnotherBrand

    Buy AnotherFlavor/Variety

    If you were shopping & could not locate the particular product you wanted to buy, which would you do?

    Walk away

    Source: DHC Consumer Interviews

  • Retailers Must Stock Variety of Christmas CandyIf Desired Christmas Candy Were Unavailable

    22.4%

    7.8%

    5.9%

    15.7%

    25.8%

    22.4%

    Go To Another Store

    Buy Nothing Or Don't Know

    Buy Non-Seasonal Candy

    Buy Another Type of candy

    Buy Another Brand

    Buy Another Variety of Brand

    Retailers risk lost purchases if they dont carry a variety of Christmas Candy

    Source: Consumer Interviews.

    Dechert Hampe 2004

  • New Items, 9.5%

    Two Years Old, 9.2%

    More Than Two Years Old, 67.8%

    One Year Old, 13.5%

    A Third Of Candy Sales Are New Items

    New products are truly the lifeblood of Confectionery

    % Category Sales

    Source: IRI, FDMX, 2004

  • Candy Is The Most Responsive Category For Display Treatment

    88%

    68%

    61%

    49%

    169%

    105%

    95%

    95%

    Beer

    Spices/Seasoning

    Wine

    Salty Snacks

    Bottled Water

    Carb. Beverages

    Cookies

    Candy

    % Increase On Display Only

    Source: IRI, Food, 2005

  • Research Demonstrates Value Of Additional Candy Locations In Store

    Candy Store Sales IndexBy Number Of Permanent Locations

    85

    101 105

    1 or 2 3 4 or More

    Source: DHC Analysis of Retailer Data

  • Top Performing Retailers Provide More Merchandising Support

    Confectionery Gondola% Volume

    Low Performers

    Medium Performers

    Top Performers

    Feature & Display 5 8 10

    Display Only 16 20 24

    Feature Only 5 7 7

    Price Reduction 14 17 18

    Any Merchandising 40 52 59

    Source: IRI, Food, 2005

  • Keys to Maximizing Confectionery Sales

    Customer Commitment Proper Space

    Location Size Organization

    Key Assortments Increased Merchandising

    Displays and other

    Commitment to Seasons Commitment to New Items

  • World and U.S. Confectionery Market

    June 9, 2008

    National Confectioners Logistics CouncilNational Confectioners Logistics CouncilAbout NCA: Association ProfileNCA GoalsNCA Activities & Programswww.candyusa.comNCA 2008 PrioritiesMay 20-22, 2009The largest confectionery, cookie and snack show in the AmericasNational Confectioners Logistics Council2007 Global Confectionery SalesManufacturers $ sales grew 3% in 2007Continuous Growth of ConfectioneryThe Second Largest Packaged Food CategoryGlobal Region Size $Global Region Size TonsTop 20 Confectionery MarketsTop 20 Confectionery MarketsTop 20 Per Capita Confectionery MarketsTop 20 Confectionery CompaniesTop 20 Confectionery CompaniesMarket Share Changes 2002 - 2007Top Confectionery Importing Countries2007 USA ExportsNational Confectioners Logistics CouncilContinuous Growth of ConfectioneryTotal Chocolate/Non-Chocolate/Gum Dollar ShareRetail Confectionery2007 Retail Channel PerformanceCandy and Gum Ranked 3rdAmong 2008 Food CategoriesCandy and Gum is the Largest Snack Category2007 Confectionery SalesFerrero SessionHoliday Dates/DaysSeasonal Confectionery TrendsNational Confectioners Logistics CouncilWe are concerned about our weight!Snacking is a part of our diet! But snacking isnt becoming more important!We snack throughout the day!And fewer in the evening Feeling about Children and Sweets:Trend in Consumers of Organic ProductsBut this still is one of the Hot Trends in the US:Trends - What's for 2007/2008Trends - What's for 2007/08Whats important:Key Customer Meeting Thirty Key CustomersFebruary 28, 2008Key Customer Meeting Thirty Key CustomersFebruary 28, 2008National Confectioners Logistics CouncilNew NCA ResearchConfectionery is Expandable Not a Zero Sum GameConfectionery Delivers High Profitability Driven By High Gross MarginConfectionery Is Among Most Frequently Purchased Categories In StoresTop Performing Retailers Sell Confectionery At A Higher RateTop Performing Retailers Generate Higher Growth In ConfectioneryTop Performing Retailers Have Greater Confectionery Section ProductivityPotential For Improved PerformanceProjects To A $10 Billion OpportunityAisle ManagementMany Consumers Are Unhappy With Retail Merchandising Of ConfectionerySupermarket Guru Survey Customer SatisfactionSnacks Customer SatisfactionSupermarket Guru Survey Customer SatisfactionNew Patterns Of Consumer Shopping Behavior Change the GameWhere are Consumers Buying?Value Channel Trips Have IncreasedIncreasing Ring Is Key For RetailersLocate Confectionery Section Earlier In Shopping TripConfectionery Performs Best Adjacent to SnacksDrive Sales By Allocating More Space To Confectionery GondolaIncreased Item Assortment Can Drive Confectionery SalesRetailers Risk Lost Sales If They Dont Stock Candy Items Consumers WantA Third Of Candy Sales Are New ItemsCandy Is The Most Responsive Category For Display TreatmentResearch Demonstrates Value Of Additional Candy Locations In StoreTop Performing Retailers Provide More Merchandising SupportKeys to Maximizing Confectionery Sales