2. Agenda
• P/L Trends
– Evolution of P/L
– Share Growth
– Growing & Declining Categories
– Consumer Perspectives
• Retailer & Manufacturer Implications
– US market & future opportunities
• ABC Spice P/L Overview (Flavor Enhancers)
– Role of P/L in ABC's Portfolio
– Evaluating P/L size & performance in comparison to overall FE Category
– Identifying Top 50 FE Retailer’s and evaluating trends vs. Total US Food
• Evaluating Share of Shelf
• What Manufacturers are providing P/L to respective retailers
• Length of P/L Contract
• Conclusions & Recommendations
2
3. Objectives
• Provide ABC Spice with a foundation for developing a
strategy in defining a private label role.
• Assess current status of P/L in the Flavor Enhancers
category.
3
4. Executive Summary
• What is the full impact of P/L on our
categories?
• P/L has not eroded ABC Spice brands as badly as some other categories. All
Other Branded competitors have gained more $ share than P/L and ABC over
the last 2 years
• What kind of SKUs are they selling and how
many? What are units?
• With syndicated data, the UPCs of P/L are masked. Store audits are a
possible alternative source.
• How does US market compare to other
markets?
• The US P/L Market is not as developed as other markets, especially Europe.
US retailers view this as a window of opportunity to grow profitable P/L
categories
4
5. Executive Summary
• Who are other key suppliers within Spices?
• Other P/L Suppliers are: Kroger, ACH, Sauers, and Bolner Fiesta
• What info do we have already? Where are our
information gaps?
• Competitive P/L information – we’ve attempted to determine competitive
terms of contract was and P/L share of shelf with key retailers.
• Competitive information gaps - still exists with overall competitive P/L
activity. ABC Spice should understand retailer objectives relative to P/L
• Where are the big PL competitive losses?
• Over the last 2 years, some of the largest P/L losses were at:
– Winn-Dixie (-13.1%)
– Kroger (-4.0%)
– Ahold (-1.8%)
– Wakefern (-1.6%)
5
6. Introduction
6
U.S. retailers across all food channels are placing an
increasing amount of emphasis and resources into
developing private brands and using these brands as
a platform for differentiating their stores versus their
direct competitors and competing channels.
For best-in-class retailers, advances in P/L
programs are benefiting their operations in several
key ways:
• enhances gross margin performance by shifting volume
away from brands within traditionally low-margin
categories.
• provides a means to develop unique and innovative
products that resonate with consumers.
• enables the brands to serve all consumer groups through the use of multiple pricing
tiers within P/L.
• provides a new method to revitalize the center store and to differentiate through
exclusive P/L products and creative in-store merchandising.
• increases shopper loyalty and ability to profitably compete with value retailers
through expanded P/L value offerings across the store.
7. Over the past three decades, P/L has evolved from a generic-based
offering to a full multi-tiered approach used to effectively serve all
consumer types.
1970s 1980s 1990s Today
Retailer Strategy:
Value offering
for low-income
households
Improve
Margins
Improve Margins
Increase Share,
Differentiate Store, and
Build Loyalty
Positioning/Pricing:
No Name
Generics
Store Brands
Segmented and
targeted
2-4 Private Label Pricing
Tiers
Packaging: No Frills Mainstream Distinctive
Premium / Proprietary
Labels
Retailer Support: Limited On Shelf
In-Store Support,
Radio,
Newspaper
Television, Internet,
Celebrity Endorsements
Consumer
Perception:
Low Price /
Low Quality
Improved
Value
Value-Priced /
Good Quality
Depends on Product
Positioning and
Category
Typical Manufacturer
Viewpoint:
Little Threat
Temporary
Threat
Tough source of
ongoing
competition
1. Need innovation to
differentiate
2. Need strategies to coexist in
new world
3. Need marketing push to
justify price premiums
7Source: IRI Consumer Network®
8. P/L share in the U.S. across channels is flat with approximately 15% Dollar
Share, and 21% Unit Share indicating that retailers still have much room to
grow P/L.
8
20.7% 20.6% 21.2% 21.2%
19.9%
15.3%15.4% 15.4% 15.8% 15.8%
2003 2004 2005 2006 2007
Dollar Share Unit Share
Source: IRI Consumer Network® 52 weeks ending 8/12/2007; same period prior years
P/L Share of CPG Spending: All Outlets
9. While retailers are making significant P/L sales gains in many key
categories, they are seeing dramatic declines in others.
9
Data based on P/L dollar growth. Dollar amounts are in millions.
Source: IRI Consumer Network ® & Infoscan 52 weeks ending 8/12/2007 (FDM incl’d Wal-Mart)
1. Milk $ 369
2. Fresh Eggs $ 325
3. Natural Cheese $ 112
4. Internal Analgesics $ 75
5. Bottled Water $ 67
6. FZ Seafood $ 67
7. FZ Poultry $ 56
8. Rfg. Juices/Drinks $ 45
9. Misc. Snacks $ 45
10. Fresh Bread & Rolls $ 44
Top 10 P/L $ Growth CategoriesTop 10 P/L $ Growth Categories Top 10 P/L $ Declining CategoriesTop 10 P/L $ Declining Categories
1. Dog Food -$ 151
2. Socks -$ 108
3. Diapers -$ 105
4. Cat Food -$ 52
5. Carb. Beverages -$ 44
6. Charcoal -$ 37
7. Rfg. Salad/Coleslaw -$ 32
8. Candles -$ 31
9. Pies & Cakes -$ 29
10. Baby Formula/Electrolyte -$ 27
10. 10
While private label enjoys 99%+ household penetration, sales are
concentrated with 28% of Heavy P/L buyers; accounting for 54% of P/L
dollar sales. The threat that P/L poses to ABC Spice Branded
Products is not waning and should be monitored constantly
Private Label Consumer Purchase Segments
Source: IRI Consumer Network® 52 weeks ending 8/5/2007
72%
28%
54%
46%
% PL Buyers % PL Sales
Heavy
Light
Percent of Buyers by Private
Label Purchase Segments
Heavy Buyers = Top 1/3
Light Buyers = Bottom 2/3
* Buyer Share based off Raw Buyers
11. P/L Sales Growth ($ millions) – 2007 vs. 2004
Size of bubble = size of P/L dollar sales;Source:
IRI Consumer Network®.
Spice P/L has not matured like other categories
P/L Threats
-20
0
20
40
60
80
100
120
-$250 -$200 -$150 -$100 -$50 $0 $50 $100 $150 $200 $250 $300 $350
Growth ($ Millions)
Penetration(%)
Retreating
Categories
High
Potentials
Eggs
Soda
Paper Towels
Bottled Water Vitamins
Cups/Plates
Natural Cheese
Candles
Butter
Dried Fruit
Misc. Snacks
Cold Meds Liquids
Fz Plain Vegetables
Cigarettes
Snack Nuts/Seeds
Milk
Batteries
Fz Seafood
Toilet Paper
Laundry Detergent
Diapers
Growth
Giants
Growing
Slipping
Giants
Declining
Food/Trash Bags
Bottled Juices
Processed
Cheese
Spices
Breakfast Meats Fz Novelties
Dog Food
Cat Food
Margarine
Sugar
13. Summary of Key Findings
• Despite increased attention and investment from U.S. retailers, there are still a major
P/L opportunities based on U.S. performance vs. European countries as well as relatively low
P/L penetration among key household groups.
• Given that grocers are beginning to scale back center store square footage, the growing
presence of P/L will increase the likelihood that 2nd and 3rd tier national and regional brands
will lose shelf space and SKUs.
• Branded manufacturers (and consumers) believe that retailers have successfully “closed the
gap” in terms of product quality and innovation in many key categories. Manufacturers are
focusing their resources to determine how to create “space” between their brands and P/L in
the minds of consumers.
13
Retailers today have identified P/L as one of their most promising strategies
for driving sales growth, improving profit margins, and building shopper
loyalty. In fact, grocery retailers are emboldened by their recent P/L successes
and increased shopper acceptance of private brands. As a result, they are
aggressively growing P/L variety across the center store and into
perishables categories – a pattern that has critical implications for
manufacturers.
Additional summary points:
Increased focus and expertise within P/L is providing progressive retailers with a new platform to drive
profitable store sales and shopper loyalty. These changes will increase pressure on branded
manufacturers to become more effective marketers, innovators, and value-added business partners.
ImplicationsImplicationsImplicationsImplications
14. Retailer Implication - New Focus Areas in the Coming Decade
Many retailers are refocusing and rethinking their P/L growth strategies.
– Need to study best-in-class retailer programs versus their own programs to determine what is
working well and what needs to be improved.
– Need to conduct local shopper research to help identify unmet consumer needs and to
determine where the largest category opportunities are for P/L innovation and increased
marketing support.
– Need to identify broader consumer trends, i.e. organic, natural, ethnic, low sodium, etc. that
present P/L opportunities across categories.
– Need to identify opportunities to expand category and display space for P/L and determine
from which categories, segments, and brands the space will come from.
– Need to rethink P/L promotions and how to effectively message P/L products across each
shopper segment.
– Retailers believe that P/L pricing is not only a key determining factor in how well a P/L product
sells, but how it its perceived in the minds of consumers.
– Some Retailers are developing their own Category Brand Management departments
14
Retailers that proactively grow P/L will differentiate themselves from other retailers, while growing their franchise brand and bottom-line sales and
profit
ImplicationsImplicationsImplicationsImplications
15. Retailer Implication - New Focus Areas in the Coming Decade
Many retailers are refocusing and rethinking their P/L growth strategies.
– Pricing - On average, most retailers try to stay 15%-20% lower on P/L price than the national
brand and this grows to 25% in General Merchandise. Many retailers are moving to a tiered
pricing format.
– Packaging - Retailers consistently report that P/L product packaging is a key component of the
overall P/L messaging strategy. Further, packaging initiatives are closely linked to the price tiers
that each retailer manages
– Favorable P/L Conditions - Any category that has high household penetration and not a lot of
complicated dynamics make it favorable. (i.e., Meat and Seafood products)
– Unfavorable P/L Conditions:
• A category is unfavorable for P/L when the category is dominated by brands like Coke and Pepsi are just
too entrenched.
• Some categories where there’s a lot of technology and constant innovation like laundry detergent, it’s
really tough for P/L.
• When there’s a fashion element for the consumer, like in the hair care category, it’s tough for P/L to
generate much share in the category.
• It’s unfavorable if retailer’s can’t profitably offer a product with a big enough price gap (vs. branded)
that will enable our product to sell
15
16. 16
Retailers typically make “where to play” P/L decisions
based on category dynamics including speed and
complexity of innovation and the number of strong
brands within the category.
Low Brand Strength –
High Innovation
(Ex. Energy Drinks)
High Brand Strength –
High Innovation
(Ex. Beer)
High Brand Strength –
Low Innovation
(Ex. Jams & Jellies)
BrandStrength
Speed / Level of Innovation in the CategoryLow High
LowHigh
“P/L can’t succeed. Let the
brands fight it out.”
“Fast-moving category.
Wait until the right time.”
“Innovate in P/L and remove
tertiary brands”
Low Brand Strength –
Low Innovation
(Ex. Canned Fruit)
“Commodity category.
Prime P/L opportunity.”
17. Implications for Manufacturers
New Challenges and Opportunities
17
In the next decade, branded and P/L manufacturers will need to develop new methods
of adding value to retailer partnerships – including methods that will help retailers
maximize the performance of their own private brands.
Implications
With increased retailer commitment to P/L, manufacturers need to be mindful that
their retailer partners are becoming increasingly important and savvy competitors.
Manufacturers need to understand and effectively respond to emerging changes in the
retailer-manufacturer partnership:
• Retailers will use P/L to leverage their position versus both branded and P/L
manufacturers to gain pricing and other concessions.
• Increased consumer acceptance of P/L products has emboldened retailers to
increase shelf space, display space, and feature ad space allocations for P/L. (i.e.,
Publix Greenwise).
• Retailers are committed to innovating ahead of branded manufacturers in key
categories. In other categories, they’re committed to quickly developing me-too products
at the heels of branded manufacturer innovation.
• Ultimately, retailers control shelf space and pricing and are in the position of power to
control the future prospects of key categories and brands.
19. ABC Spice Brands vs. P/L Overview
19
Hypothesis
• P/L driving category growth
• P/L growing at a faster rate than national brands
• P/L pricing had an impact on branded sales
• P/L being managed properly at retail and in relation to inventory and resource allocation
• Consumer perception has changed relative to P/L quality
Observation
• In Total US Food – P/L FE is not driving growth in Units or Dollars (52 wk. ending 8/12/07)
• Price – Overall average P/L price has not kept pace with Branded price increases over past 2 years,
resulting in decrease in ABC brand unit sales.
• ABC Spice really doesn’t have a defined role that P/L plays in conjunction with Branded product. A
defined P/L role should be considered.
• Consumers surveyed feel that most P/L products are equal in quality to many brands, but at a
discounted price
Implications
• Share (% of Total Category) of P/L Flavored Enhancers in both Units & Dollars is consistent with the
national average across all categories & channels
• Close attention should be given to P/L relative to retailers expectations
• Price increases of P/L should be strategically aligned with Branded price increases
• Develop and Maintain a merchandising, promotional, and pricing strategy to control P/L – should be
included in P/L role definition
20. By not aligning P/L price increases in conjunction with ABC brands
attributed to a decline in branded unit volume over 2 years
• An effort was made to grow P/L unit volume at the expense of branded units & profit
• This strategy is dangerous and can result in further commoditization within the Spice Category
while further eroding more profitable branded business. (Total US Food)
– 2007 vs. 2005 – P/L (Units +2.3% / Dollars +3.0%)
– 2007 vs. 2005 - ABC Spice Brand (Units -0.8% / Dollars +4.8%)
– 2007 vs. 2005 – All Other brands (Units +1.8% / Dollars +11.1%)
• More focus should be given to value-added innovation with branded products to differentiate ABC
Spice from P/L and A/O branded competitors (i.e., Grinder’s)
• Price increases on P/L should be strategically aligned with branded products
20
Suggests:
21. 21(Total US Food)IRI InfoScan
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Average Price/Unit - 3 Years
ABC Spice
Total Private Label FE
All Other FE
$2.54
$2.11
$2.76
$2.22$2.19
$1.91
+8.7%
+10.5%
+1.4%
13.8% Gap
19.5% Gap
12.8% Gap
5.0% Gap
•All Other brands fall well below the traditional 15% to
20% pricing gap between P/L and branded product.
•Average Price Point of ABC brand FE has seen a 8.7%
increase over the past 3 years; compared to a 1.4%
increase in P/L.
22. Issue Tree
22
Develop a role for
P/L to meet
consumer and
retailer needs, while
assuring continued
growth for brands
Can ABC Spice get by and offer P/L
product (when needed) that is one
stage behind Branded formulas?
Understand RMA
P/L objectives and
their overall value
segment
Do Consumers see more value in
P/L vs. Branded w/o sacrificing
quality?
How to grow ABC
Brand sales while
still managing P/L
business
Learn Consumer P/L
Purchase Behaviors
Sub-issues
Sub-sub-issues
Issue
Do Retailers see more growth
opportunities in P/L vs. Branded?
Can Retailers increase category
conversion, Buyer Purchase
Frequency, improve Household
Penetration with an improved
assortment mix while increasing
P/L?
Don’t sacrifice ABC
Brand R&D for P/L
tech advancements
Can ABC Spice deploy a strategy
that would limit P/L to certain
SKU’s?
Can product formulation &
technology be more aligned with
price offered?
Will Retailers sacrifice Branded
facings at retail for P/L?
How can more innovation with
brands keep consumers focused on
this sub-segment vs. P/L?
Are US Retailers in a position to
create a graduated pricing format
with P/L?
23. Share of Units - 52 Weeks Ending 8/5/2007
2
3
19%37%
44%
All Other Private Label
ABC Branded
In Top 50 FE RMA’s, All Other brands has a larger share of
units sales vs. ABC Spice brands and P/L
(Total Category Unit Sales In Top 50 RMA’S = 467,682,188)
204,508,407
173,650,342
89,523,438
Suggests:
• P/L is more developed in ABC's core retailers being driven by Giant Eagle
and Safeway
• All Other brands is more a threat to ABC Spice brands vs. competitor
brands
ABC Spice brands = Total ABC Spice Company FE. Unit sales only (includes Dry and Liquid FE)
24. ABC Spice brands have a larger share than P/L in all items. 21% of ABC
brands have similar P/L items in the FE category. Increased innovation
with ABC Spice brands will differentiate and offset P/L share gains.
24
IRI InfoScan Latest 52 weeks ending Aug 5, 2007
Like Items
21.0% 10.4%
ABC Private Label
All Items
17.1%27.8%
ABC Private Label
(Total ABC share vs. P/L) (Like item share vs. P/L)
(Total US Food in Units)
25. All Other & P/L unit sales growth in the Top 50 FE RMA’s exceed ABC Spice
brand sales over latest 52 weeks. Rekindled focus should be given to brand
competitors.
Total FE ABC FE Private Label FE All Other
Year End 8-7-05 290,357,000 105,108,400 72,206,940 113,041,700
Year End 8-6-06 305,243,200 109,005,200 75,797,840 120,440,200
Year End 8-5-07 315,676,200 111,151,600 77,436,330 127,088,300
0
50
100
150
200
250
300
350
Millions
25
(Unit Sales – Top 50 FE RMA’s)
+3.4%
+2.0%
+2.3%
+5.5%
IRI InfoScan
2x Growth Rate
26. All Other brands’ pricing strategies have effectively resulted in 2x the rate of
ABC brands. P/L $ Share was 23.9% in 2007 vs. 17.0% in Total US Food.
Total FE ABC FE Private Label FE All Other
Year End 8-7-05 $688,481,000 $305,858,800 $171,911,300 $210,711,000
Year End 8-6-06 $734,356,600 $321,124,000 $178,741,800 $234,490,800
Year End 8-5-07 $779,295,700 $335,972,500 $186,378,700 $256,944,600
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
Millions
26
(Dollar Sales – Top 50 FE RMA’s)
Suggests:
• P/L is more developed in ABC's core retailers being driven by Safeway and Giant Eagle.
• P/L is more a threat to ABC brands in core retailer’s than A/O brands.
+4.6%
+4.3%
+6.1%
+9.6%
IRI InfoScan
2x Growth Rate
27. Within the Top 25 FE RMA’s, Kroger’s share of P/L unit sales is highly
developed.
27
*= includes Divisional RMA’sIRI InfoScan Latest 52 weeks ending Aug 5, 2007 (Unit Sales)
• Kroger is own supplier of P/L. ABC Spice opportunity lies with becoming lead P/L
supplier for other RMA’s. ABC Spice second opportunity is to offset All Other brands
nationally.
Rank RMA Supplier
Approx Contract
Expiration Date
PRIVATE LABEL FE
UNITS as % TOTAL
FE Category for RMA
ABC Branded %
of TTL Category All Other Branded
1 KR ATLANTA-RMA KROGER UNKNOWN 60.0% 2.0% 38.0%
2 DH FOOD LION CORP-RMA ACH UNKNOWN 17.9% 38.4% 43.7%
3 KR KING SPR/CTY M-RMA KROGER UNKNOWN 50.7% 4.4% 44.9%
4 KR MID-SOUTH-RMA KROGER UNKNOWN 59.8% 1.9% 38.3%
5 SFWY-NOR WOHI DIV-RMA MC ON GOING 21.6% 22.3% 56.1%
6 KR COLUMBUS-RMA KROGER UNKNOWN 68.0% 2.5% 29.5%
7 KR CINCINNATI-RMA KROGER UNKNOWN 61.0% 1.4% 37.6%
8 SFWY-VONS DIV-RMA MC ON GOING 22.6% 21.0% 56.3%
9 KR FRY'S-RMA KROGER UNKNOWN 46.4% 6.4% 47.2%
10 KR RALPHS-RMA KROGER UNKNOWN 31.2% 13.4% 55.3%
11 KR DELTA-RMA KROGER UNKNOWN 61.5% 2.0% 36.5%
12 KR CENTRAL-RMA KROGER UNKNOWN 68.5% 1.5% 30.1%
13 KR FM CORP-RMA KROGER UNKNOWN 42.4% 0.0% 57.6%
14 KR MICHIGAN-RMA KROGER UNKNOWN 61.7% 3.0% 35.3%
15 GE-CORPORATE-RMA MC ON GOING 29.9% 39.6% 30.5%
16 STOP & SHOP TOTAL-RMA MC 14.4% 34.5% 51.1%
17 KR MID-ATLANTIC-RMA KROGER UNKNOWN 61.3% 2.0% 36.8%
18 WD CORPORATE-RMA CF SAUERS UNKNOWN 13.8% 18.6% 67.7%
19 KR SMITHS CORP-RMA KROGER UNKNOWN 43.1% 9.5% 47.4%
20 KR HOUSTON-RMA KROGER UNKNOWN 35.0% 2.7% 62.3%
21 SFWY-EASTERN DIV-RMA MC ON GOING 32.1% 36.4% 31.5%
22 SFWY-SEA WOAK DIV-RMA MC ON GOING 25.7% 23.3% 51.1%
23 SPVL NORTHERN - RMA MC 2 YEARS 12.2% 21.5% 66.3%
24 HY-VEE CORPORATE-RMA ACH UNKNOWN 19.3% 10.3% 70.4%
25 WEGMANS CORPORATE-RMA MC ON GOING 24.7% 36.1% 39.1%
28. 28
ABC Spice is primary supplier of P/L in lower 25 FE RMA’s*. All Other
Brands pose more of a threat vs. P/L at these retailers.
*= includes Divisional RMA’sIRI InfoScan Latest 52 weeks ending Aug 5, 2007
• ABC Spice should first evaluate the role of P/L vs. Branded
• Develop a strategy to capture share from A/O Branded competitors
• Identify competitive P/L contract terms and request to be part of next RFQ
(Unit Sales)
Rank RMA Supplier
Approx Contract
Expiration Date
P/L FE
UNITS as % TOTAL
FE Category for RMA
ABC Branded %
of TTL Category All Other Branded
26 FIESTA-RMA BOLNER FIESTA UNKNOWN 22.8% 6.0% 71.3%
27 PUBLIX LAKELAND-RMA MC ON GOING 11.8% 22.0% 66.2%
28 KR DALLAS-RMA KROGER UNKNOWN 45.2% 1.7% 53.1%
29 DH HANNAFORD CORP-RMA MC ON GOING 20.2% 29.1% 50.8%
30 KR DILLON-RMA KROGER UNKNOWN 62.6% 8.4% 29.0%
31 SFWY-DENVER DIV-RMA MC ON GOING 27.3% 21.7% 51.0%
32 PUBLIX JCKSNVLLE-RMA MC ON GOING 12.0% 22.5% 65.5%
33 SV-ALB SHAWS DIV-RMA MC ON GOING 20.0% 30.0% 49.9%
34 KR FOOD 4 LESS S-RMA KROGER 16.4% 5.6% 78.0%
35 BROOKSHIRE CORP-RMA MC ON GOING 26.4% 20.6% 53.1%
36 WAKEFERN-CORP-RMA MC ON GOING 7.0% 22.3% 70.7%
37 SFWY-PHOENIX DIV-RMA MC ON GOING 24.0% 20.6% 55.4%
38 MINYARD CORPORATE-RMA MC ON GOING 36.2% 9.0% 54.9%
39 PUBLIX MIAMI-RMA MC ON GOING 5.6% 12.5% 81.9%
40 BI-LO TOTAL-RMA MC GEL 22.2% 36.5% 41.4%
41 PUBLIX ATL GA/SC-RMA MC ON GOING 12.9% 25.4% 61.7%
42 SFWY-DOMINICK DIV-RMA MC ON GOING 30.4% 29.5% 40.1%
43 SFWY-RAND/TOM DIV-RMA MC ON GOING 23.8% 28.6% 47.6%
44 SV-ALB JWL DIV-RMA MC ON GOING 10.5% 38.1% 51.5%
45 SPVL MIDWEST - RMA MC ON GOING 10.6% 29.1% 60.3%
46 SV-ALB SCA DIV-RMA MC ON GOING 9.9% 24.8% 65.2%
47 SFWY-PORTLAND DIV-RMA MC ON GOING 30.4% 27.8% 41.9%
48 K-VA-T FOODS-RMA ACH UNKNOWN 43.6% 29.2% 27.2%
49 GIANT LANDOVER MD-RMA MC ON GOING 11.5% 44.4% 44.0%
50 PRICE CHOPPER CRP-RMA MC ON GOING 17.7% 33.4% 48.8%
29. 29
Kroger understands importance of driving P/L unit and
dollar sales.
*= includes Divisional RMA’sIRI InfoScan Latest 52 weeks ending Aug 5, 2007 (Dollar Sales)
•ABC Spice should capitalize on increasing branded sales at the expense of all other brands
•Use Kroger as a test market for branded innovation.
RANK RMA
PRIVATE LABEL FE
DOLLARS % of TOTAL PL
ABC Branded % of
TTL Category All Other Branded
1 KR COLUMBUS-RMA 66.4% 2.5% 31.2%
2 KR CENTRAL-RMA 64.8% 1.4% 33.8%
3 KR MID-ATLANTIC-RMA 61.7% 1.9% 36.5%
4 KR ATLANTA-RMA 61.3% 2.3% 36.4%
5 KR MICHIGAN-RMA 60.6% 3.2% 36.2%
6 KR MID-SOUTH-RMA 60.2% 2.0% 37.8%
7 KR DELTA-RMA 59.5% 2.3% 38.2%
8 KR CINCINNATI-RMA 59.2% 1.5% 39.2%
9 KR DILLON-RMA 56.7% 10.8% 32.5%
10 KR FRY'S-RMA 49.2% 8.9% 41.9%
11 KR FM CORP-RMA 44.1% 0.0% 55.9%
12 KR DALLAS-RMA 43.4% 1.6% 55.0%
13 KR KING SPR/CTY M-RMA 41.2% 6.2% 52.6%
14 KR SMITHS CORP-RMA 41.0% 13.4% 45.6%
15 K-VA-T FOODS-RMA 38.5% 36.5% 25.0%
16 KR HOUSTON-RMA 33.2% 2.6% 64.1%
17 KR RALPHS-RMA 30.1% 17.9% 52.0%
18 MINYARD CORPORATE-RMA 28.6% 15.0% 56.4%
19 SFWY-DOMINICK DIV-RMA 28.1% 37.5% 34.4%
20 SFWY-PORTLANDDIV-RMA 27.4% 32.2% 40.4%
21 SFWY-DENVER DIV-RMA 27.1% 29.2% 43.7%
22 SFWY-EASTERNDIV-RMA 26.1% 39.0% 34.9%
23 SFWY-SEAWOAK DIV-RMA 25.9% 29.9% 44.2%
24 SFWY-PHOENIXDIV-RMA 25.5% 28.3% 46.2%
25 WEISCORP-RMA 23.9% 41.0% 35.1%
30. 30
*= includes Divisional RMA’sIRI InfoScan Latest 52 weeks ending Aug 5, 2007
ABC brands outpaces P/L dollar sales in 2nd tier of Top 25 FE
RMA’s*.
• ABC Spice brand leads by almost 2:1 over P/L in these RMA’s.
• A/O Branded Product is a bigger threat to ABC Brand than P/L in these second 25
retailers.
(Dollar Sales)
RANK RMA
PRIVATE LABEL FE
DOLLARS % of TOTAL PL
ABC Branded % of
TTL Category All Other Branded
26 SFWY-NOR WOHI DIV-RMA 23.3% 32.1% 44.6%
27 SFWY-RAND/TOM DIV-RMA 22.3% 33.3% 44.4%
28 SFWY-VONS DIV-RMA 22.2% 30.5% 47.3%
29 HOMELAND-RMA 21.6% 41.1% 37.3%
30 BI-LO TOTAL-RMA 21.2% 44.8% 34.1%
31 WEGMANS CORPORATE-RMA 20.8% 42.9% 36.3%
32 SV-ALB SHAWS DIV-RMA 20.7% 35.1% 44.2%
33 ABS LLC ROCKY MTN-RMA 20.3% 36.6% 43.0%
34 DH HANNAFORD CORP-RMA 20.1% 38.7% 41.2%
35 SV-ALB NW DIV-RMA 19.9% 38.5% 41.5%
36 PRICE CHOPPER CRP-RMA 19.7% 42.6% 37.6%
37 SV-ALB IM DIV-RMA 19.2% 42.7% 38.1%
38 KR QFC SEATTLE-RMA 18.8% 24.6% 56.6%
39 GE-CORPORATE-RMA 18.5% 52.8% 28.6%
40 FARMER JACK MICHI-RMA 16.9% 51.0% 32.1%
41 HY-VEE CORPORATE-RMA 16.8% 15.9% 67.3%
42 KR FOOD 4 LESS S-RMA 15.9% 9.0% 75.1%
43 STOP & SHOP TOTAL-RMA 15.8% 43.3% 40.8%
44 BROOKSHIRE CORP-RMA 15.4% 28.2% 56.4%
45 SV-ALB ACME DIV-RMA 15.2% 48.4% 36.4%
46 PUBLIX ATL GA/SC-RMA 15.0% 32.0% 52.9%
47 SUPERFRESH PHILA-RMA 14.6% 48.1% 37.3%
48 PUBLIX JCKSNVLLE-RMA 14.4% 28.9% 56.7%
49 SV CUB-RMA 14.4% 38.9% 46.7%
50 PUBLIX LAKELAND-RMA 14.3% 28.7% 56.9%
31. Top 10 Flavor Enhancer Retailer’s
31
Su• RMAs with aggressive P/L programs with 25%+ share in category
• Kroger
• Safeway
• Giant Eagle
• ABC Spice brands are losing share to competitive brands over last 2 years at:
• SuperValu
• Ahold
• Giant Eagle
Suggests: Competitive Branded Mfg’s are becoming more aggressive by adding
innovative products, increasing share of shelf and/or merchandising
IRI InfoScan Latest 52 weeks ending Aug 5, 2007
•Albertson’s
•Kroger
•Publix
UNITS - Based on Calendar Year, and
2007 is through 8/12/07
2005 Private
Label % of TTL
FE Category
2005 ABC
Branded % of
TTL FE
Category
2005 All Other
Branded % of
TTL FE
Category
2006 Private
Label % of TTL
FE Category
2006 ABC
Branded % of
TTL FE
Category
2006 All Other
Branded % of
TTL FE
Category
2007 Private
Label % of TTL
FE Category
2007 ABC
Branded % of
TTL FE
Category
2007 All Other
Branded % of
TTL FE
Category
1 TTL SUPERVALU 12.0% 28.3% 59.8% 12.0% 27.9% 60.1% 11.5% 26.0% 62.4%
2 KROGER CORPORATE 50.1% 5.1% 44.8% 48.5% 4.8% 46.7% 46.1% 4.5% 49.3%
3 SAFEWAY-CORP 23.4% 23.6% 53.0% 25.2% 23.3% 51.5% 25.7% 24.0% 50.3%
4 PUBLIX CORPORATE-RMA 9.0% 21.8% 69.3% 9.5% 20.4% 70.1% 9.6% 18.1% 72.2%
5 AHOLD - TOTAL 14.0% 40.3% 45.7% 13.8% 40.0% 46.2% 12.2% 37.6% 50.2%
6 DELHAIZE - TOTAL (EX JH HARVEY) 17.7% 37.3% 44.9% 17.0% 36.6% 46.4% 18.4% 32.9% 48.7%
7 WAKEFERN-CORP 8.5% 22.5% 69.0% 7.4% 22.4% 70.2% 6.9% 22.8% 70.3%
8 WINN DIXIE CORP 25.2% 14.5% 60.4% 18.2% 17.3% 64.5% 12.1% 18.4% 69.5%
9 ALBERTSON'S - CORP 13.0% 29.3% 57.7% 14.2% 27.4% 58.4% 12.4% 24.6% 62.9%
10 GIANT EAGLE-CORP 28.2% 43.7% 28.1% 28.5% 40.7% 30.7% 30.9% 37.9% 31.1%
32. P/L has stronger share of shelf at Kroger. ABC Brands hold more territory than P/L at other
RMA’s. A/O Brand at Publix nears ABC brand.
32
Retailer P/L ABC Spice A/O Branded
Kroger 53.1% 21.6% 25.4%
Publix 14.6% 43.1% 42.3%
Delhaize 13.7% 66.8% 19.5%
Safeway 13.4% 54.0% 32.6%
Ahold 9.8% 68.8% 21.4%
SuperValu 6.3% 78.6% 15.1%
Delhaize 13.7% 66.8% 19.5%
Albertsons 5.6% 51.5% 42.9%
Giant Eagle 4.9% 66.3% 28.8%
• Need to compare share of shelf to sales volumes to identify opportunities to
increase ABC Brand facings.
• Plan-o-gram audit suggested to assure proper assortment mix.
Source: Retailer POG’s as of 9/2007
Share of Shelf
33. Recommendations & Next Steps:
Enhanced P/L Management & Growing brands
• Define a role that P/L will play in the total portfolio of products
– Short & Long term objectives (Units & Dollars).
– Margin objectives for P/L
• Understand retail objectives relevant to P/L
• Strategically evaluate the distribution of P/L at the national & retail level
– Make business decisions at the RMA level that dovetails with national
P/L objectives
• SKU Rationalization
• Pricing/Promotional/Merchandising objectives
• Minimum annual Unit requirements that Retailers must
adhere to get P/L (i.e. 100,000 units annually per SKU –
minimum)
• ABC Spice has an extremely strong Brand, capitalize on the strength of the Brand with
expanded technology & innovation to make it harder for P/L to succeed
33
34. Take Aways
• Don’t
– Underestimate the negative impact P/L can have on
branded business
– Underestimate retailer’s desire to grow P/L at the expense
of branded product
– Provide new branded technology/formulation in P/L
• Do’s
– Understand the “Best Practices” being used by other CPG
companies regarding P/L, including profitability
compensation programs being implemented
– Be aware of 3rd party P/L brokers who add cost to the
system
34
36. Demographic Profiles
36
Source: Nielsen, 9/2007
•P/L buyers are more likely to be African American and have least some high school
education.
•ABC Spice brand buyers tend to be Caucasian and be better educated.
10326.611830.425.8College Graduate
10127.810929.927.4Some College
9826.29124.326.6High School Graduate
10512.98310.312.4Some High School
896.7665.07.5Grade School
Householder Education
915.2915.25.7Other Races
9810.0909.310.3Hispanic
12514.19811.111.3Black
9770.610374.572.5White
Race
IndexPctIndexPct%Demographic
Private LabelABCNation
10326.611830.425.8College Graduate
10127.810929.927.4Some College
9826.29124.326.6High School Graduate
10512.98310.312.4Some High School
896.7665.07.5Grade School
Householder Education
915.2915.25.7Other Races
9810.0909.310.3Hispanic
12514.19811.111.3Black
9770.610374.572.5White
Race
IndexPctIndexPct%Demographic
Private LabelNation
37. Demographic Profiles
3
7
Source: Nielsen, 9/2007
• P/L buyers are represented throughout all income levels while ABC Spice brand
buyers skew toward the higher income levels.
• Number of people in the household is not a significant factor when choosing either
ABC Spice brand or P/L.
11019.214325.017.5$100,000+
10712.712414.711.8$75,000- $99,999
10420.210921.319.5$50,000- $74,999
9810.0959.810.3$40,000- $49,999
9510.5869.511.1$30,000- $39,999
9310.5728.211.3$20,000- $29,999
939.8636.710.5$10,000- $19,999
877.1554.58.2Under $10,000
Household Income
12313.211512.410.85+ Persons
11516.211315.914.14 Persons
11018.511419.216.93 Persons
10634.411336.732.62 Persons
6717.56216.226.21 Person
Number of Persons
IndexPctIndexPct%Demographic
Private LabelABCNation
11019.214325.017.5$100,000+
10712.712414.711.8$75,000- $99,999
10420.210921.319.5$50,000- $74,999
9810.0959.810.3$40,000- $49,999
9510.5869.511.1$30,000- $39,999
9310.5728.211.3$20,000- $29,999
939.8636.710.5$10,000- $19,999
877.1554.58.2Under $10,000
Household Income
12313.211512.410.85+ Persons
11516.211315.914.14 Persons
11018.511419.216.93 Persons
10634.411336.732.62 Persons
6717.56216.226.21 Person
Number of Persons
IndexPctIndexPct%Demographic
Private LabelNation
38. Top 25 All Other Brands
All Other
Brands Unit Sales
Unit Sales %
Chg vs YA
Unit Sales
Chg vs YA Dollar Sales
Dollar Sales
% Chg vs YA
Dollar Sales
Chg vs YA
Herthyfa Fresh 9,197,702 49 3,021,876 19,469,450 51 6,609,385
Sanwgree Fresh 9,960,029 11 988,489 16,417,340 0 73,087
Miravall Bag 995,074 1,835 943,658 1,119,778 815 997,375
Goya Valadden 19,055,130 5 874,240 35,820,560 7 2,381,018
Kernseas Valadden 1,407,284 158 862,877 3,745,588 149 2,238,758
Tampico Bag 1,755,888 76 758,200 2,499,980 68 1,013,731
Nobrand Bag 1,667,871 80 741,585 1,579,446 66 628,980
Herbgar1 Fresh 3,875,221 23 730,439 9,031,640 26 1,859,942
Julispic Bag 877,347 396 700,442 1,226,941 349 953,718
Chriranc Garloni 4,099,088 18 618,684 9,577,464 20 1,596,923
Livifres Fresh 3,207,869 22 580,512 6,526,259 26 1,327,145
Mortbass Gourmet 2,724,160 27 576,722 16,202,040 30 3,749,902
W ebgricr Valadden 512,094 512,094 1,290,857 1,290,857
Newenghe Fresh 2,906,184 20 476,800 6,854,660 18 1,025,308
Infiherb Fresh 467,247 1,868 443,506 964,147 1,622 908,146
Micosten Bag 943,535 79 417,751 1,710,792 73 721,767
Herbthym Fresh 500,165 489 415,295 1,089,753 494 906,418
Jacofarm Fresh 1,385,154 41 402,297 3,301,804 45 1,022,278
Gourgard Fresh 2,397,657 20 393,921 8,684,068 19 1,399,093
Osaggard Fresh 1,066,878 58 393,479 3,014,669 63 1,162,388
Spiceit Valadden 635,450 143 374,167 630,506 139 366,895
Spicworl Garloni 15,371,310 2 353,677 35,350,640 2 835,796
Bobredmi Bag 1,990,117 22 352,642 6,453,486 26 1,350,534
Snorivra Fresh 2,238,890 18 346,279 5,315,219 23 993,445
Hergarwo Fresh 1,515,605 29 338,332 3,243,182 30 743,319
38
• Fresh & Bag is driving growth and represents 76% of the Top 25 A/O Brands
IRI InfoScan Latest 52 weeks ending Aug 5, 2007