Where Commerce & Culture Collide Hispanic Insights POPAI University - On the Web January 22, 2009

Where Commerce & Culture Collide

Agenda Speaker Introduction Changing Face of America Cultural Nuances - Hispanics Hispanic Shopper Insights In-Store Opportunities Insights into Action - 7UP Case Study Questions

Speaker Introduction

Changing Face of America

Cultural Nuances - Hispanics

Hispanic Shopper Insights

In-Store Opportunities

Insights into Action - 7UP Case Study

Questions

Becky Arreaga Agency Partner & Founder Over 23 years industry experience specializing in client management, strategic planning and marketing integration Began career at nation’s largest Hispanic advertising agency, now Bromely Communications BA from Texas Tech University, MA from The University of Texas at Austin Appointed to the National Board of Directors of the College of Mass Communications at Texas Tech University

Agency Partner & Founder

Over 23 years industry experience specializing in client management, strategic planning and marketing integration

Began career at nation’s largest Hispanic advertising agency, now Bromely Communications

BA from Texas Tech University, MA from The University of Texas at Austin

Appointed to the National Board of Directors of the College of Mass Communications at Texas Tech University

Full-service Hispanic agency specialize in strategic below-the-line marketing driven by real-time consumer and marketplace insights Seasoned team of marketing junkies with 20+ years experience in segment marketing and sales activation Network of Market Ambassadors in the top 25 Hispanic markets Based in Austin, TX and are 100% minority and woman owned Mercury Mambo

Full-service Hispanic agency specialize in strategic below-the-line marketing driven by real-time consumer and marketplace insights

Seasoned team of marketing junkies with 20+ years experience in segment marketing and sales activation

Network of Market Ambassadors in the top 25 Hispanic markets

Based in Austin, TX and are 100% minority and woman owned

Mercury Mambo Motivate Hispanic consumers to take action!

Motivate Hispanic consumers to take action!

Create brand experiences designed to make a positive and meaningful impact on consumers Work with some of the most recognized brands on the planet Do amazing things with amazing clients Named to Inc. Magazine’s 500/5000 Fast Growing Companies in 2007 and 2008 Mercury Mambo

Create brand experiences designed to make a positive and meaningful impact on consumers

Work with some of the most recognized brands on the planet

Do amazing things with amazing clients

Named to Inc. Magazine’s 500/5000 Fast Growing Companies in 2007 and 2008

The changing face of America

Increasing Cultural Diversity Source: US Census Bureau (1980&1990) and Geoscape (2020) The non-ethnic market is shrinking

Percent Hispanic of the Total Population in the United States 1970 to 2050 *Projected Population as of July 1 Source: U.S. Census Bureau, 1970, 1980, 1990, and 2000 Decennial Censuses; Population Projections, July 1, 2010 to July 1, 205 0 7/1/08: Hispanic population surpassed 45 million, representing 15.1% of total pop! Census Projections

Market Opportunities Source: U.S. Census Bureau, Geoscape® American Marketscape DataStream™” 2008 Series; Latin Force Group LLC and Goldman Sachs Research Current Population Population Growth 2000 - 2008 CAGR State Hisp. Pop. (mil) Hisp. as % of Total Hispanic Total Largest Markets States with the largest Hispanic Populations California 13.5 36% 3% 1% Texas 8.8 36% 4% 2% Florida 3.8 20% 5% 2% New York 3.1 16% 1% 0% Illinois 2.0 15% 3% 1% Concentrated Markets States with the highest concentration of Hispanics New Mexico 0.9 44% 2% 1% Arizona 2.0 30% 5% 3% Nevada 0.7 25% 7% 4% Colorado 1.0 20% 4% 2% New Jersey 1.4 16% 2% 1% Growing Markets States with fastest Hispanic population growth Georgia 0.8 8% 8% 2% Tennessee 0.2 3% 8% 1% South Carolina 0.2 4% 7% 1% North Carolina 0.7 7% 7% 2% Maryland 0.3 6% 5% 1% U.S. Total 47.2 15% 4% 1%

Acculturation Source: Adapted from Yankelovich MONITOR Multi-Cultural Marketing Study 2005, Simmons NHCS/NCS Spring 2006 Full Year Study, Hispanic adults 18+ Skews Foreign Born Includes both foreign and U.S. born U.S. Born (2nd & 3rd generations) Typically married, less education, rent vs. own Skews slightly female More likely to be college-educated Avg. HHI approx. $53k Average HHI $65k Average HHI $81k Todo en español Fastest growing segment English only Desire to belong, connect to home, familiar brands Blend both languages, embrace heritage and innovation Brands = reconnect, retro-acculturation

Understanding Hispanic Cultural Insights

Macro Trends Sources: Adapted from Yankelovich MONITOR Multi-Cultural Marketing Study 2005, Simmons NHCS/NCS Spring 2006 Full Year Study, 2006 ACNielsen Pop Culture Economic Impact Values Orientation

Understanding Hispanic Cultural Values Source: adapted from Isabel Valdes Paramount Publishing, Inc., AHAA Identity Project, GFK Roper. Lionel Sosa. Felipe Korzenny. Latino American Interactions Family Interdependence Relationship Oriented Sympatía y Harmony We decide as a family Individual Achievement Task Oriented Healthy Competition I make my own decisions Success Get ahead Get more joy out of life Authority Respect Authority Challenge Authority

Understanding Hispanic Cultural Values Source: adapted from Isabel Valdes Paramount Publishing, Inc., AHAA Identity Project, GFK Roper. Lionel Sosa. Felipe Korzenny. Latino American Gender Roles Machismo - provide & protect family Marianismo - sacred duty, sacrifice Gender equality is prized. Initiative Como Dios quiera. However God wants. Tread carefully. Avoid verguenza/embarrassment. ¡Dale ganas! Give it your all! God helps those that help themselves. Blow your own horn. Take the bull by the horns. Higher Education Greatest Emphasis on High School Diploma College = Fear Greatest emphasis on College Degree

Pop culture - influencing & creating Recognize, celebrate and affirm cultural affiliations Creating their own culture Inspired by the past but facing the future Spanish & English, American & Latino: you can have it both ways Examples Plentiful Ugly Betty, American Idol, George Lopez, Nickelodeon, YouTube, MySpace LatinoLit - Barnes & Noble Spanish books grew 3X since 2000. Latino Theatre: In the Heights, Celia Cruz, Macho Men & The Women Who Love Them

Recognize, celebrate and affirm cultural affiliations

Creating their own culture

Inspired by the past but facing the future

Spanish & English, American & Latino: you can have it both ways

Examples Plentiful

Ugly Betty, American Idol, George Lopez, Nickelodeon, YouTube, MySpace

LatinoLit - Barnes & Noble Spanish books grew 3X since 2000.

Latino Theatre: In the Heights, Celia Cruz, Macho Men & The Women Who Love Them

Economic Impact Buying power of over $800 BILLION today....expected to reach $1.2 TRILLION by 2010! Source: Selig Center of Economic Growth 1990s to mid-2000s were financially strong for Latinos Disposable income and home ownership grew disproportionately among Hispanics, education rates improved Source: Global Insight, 2008 Latinos more likely to be cash consumers than total market so high proportion are debt-free Source: CFSI, 2008 Hispanics are price sensitive but willing to spend on value. 40% of unacculturated Latinos say they always look for a brand name vs 33% of Non-Hispanics Source: Simmons 2007/2008

Buying power of over $800 BILLION today....expected to reach $1.2 TRILLION by 2010! Source: Selig Center of Economic Growth

1990s to mid-2000s were financially strong for Latinos

Disposable income and home ownership grew disproportionately among Hispanics, education rates improved Source: Global Insight, 2008

Latinos more likely to be cash consumers than total market so high proportion are debt-free Source: CFSI, 2008

Hispanics are price sensitive but willing to spend on value. 40% of unacculturated Latinos say they always look for a brand name vs 33% of Non-Hispanics Source: Simmons 2007/2008

Hispanic Shopper Insights

Total CPG Spending Source: IRI Multi-Outlet Panel Data for 52 week ending 8/5/07 Note: % indicates difference between Hispanic Basket and Non Hispanic Basket Hispanics spending is 13% higher than Non-Hispanics Dif = +13% Dif = +1% Dif = -2% Dif = +37% Dif = -7% Dif = +10% Dif = +2% Dif = +21%

CPG Dollar Share by Channel Among Hispanic Consumers Source: IRI Consumer Network™; 52 weeks ending 3/9/08 vs. prior year Mass & Club stores earn an above average share of Hisp. spending, but Supercenters are gaining ground. Channel 2008 Share Share Index vs. Total Panel Point Change vs. 2007 Grocery 53.4 96 0.0 Supercenter 11.9 81 1.9 Mass 10.2 122 -0.7 Club 11.0 139 0.2 Drug 5.1 91 -0.1 Dollar 1.3 93 -0.1 Other (Specialty, Convenience) 7.0 106 -1.1

Each month, Hispanic shoppers make 26 grocery trips, 3 times greater than the General Market who makes 8.8 trips per month. Cycle through food faster, stretches the budget, proximity of small stores in urban areas. Most fill-in trips for baby products, frozen desserts/refrigerated treats, dairy, bakery, deli meats or cheeses Most quick trips (speed related) for pharmacy, health/beauty/personal, pet or car care, non-food items (books, clothes, toys) or beverages. Retail budgeting behaviors Source: Unilever, Winning the Hispanic Shopping Trip

Each month, Hispanic shoppers make 26 grocery trips, 3 times greater than the General Market who makes 8.8 trips per month.

Cycle through food faster, stretches the budget, proximity of small stores in urban areas.

Most fill-in trips for baby products, frozen desserts/refrigerated treats, dairy, bakery, deli meats or cheeses

Most quick trips (speed related) for pharmacy, health/beauty/personal, pet or car care, non-food items (books, clothes, toys) or beverages.

Shopping Trips Hispanics are somewhat more likely to shop early in the week Source: Diary Data: Q. What time did you start shopping

Shopping Trips Afternoon and especially evening trips are a good time to reach Hispanics In-Store Source: Diary Data: Q. What time did you start shopping

Product preferences change with acculturation Source: 2006 ACNielsen Fabric Softener Bodywash Soap Toothpaste RTE Cereal Beer Most Acculturated Least Acculturated Categories

In-store Opportunities

Importance of Advertising Hispanics are much more likely than General Market to be aware of specials before going to the store Source: Diary Data: Q. If yes, where did you notice these advertised specials

Source: Unilever, Winning the Hispanic Shopping Trip Hispanics are more likely than non-Hispanics to always refer to offers at the shelf, in-store samples, and announcements in-store. Hispanics are more attuned to value messages Things that people always refer to when shopping in-store Hispanic Non-Hispanics Unacculturated MESSAGE/OFFERS AT THE SHELF 7.4% 5.7% 8.7% IN-STORE SAMPLES 5.7% 6.5% 6.5% ANNOUNCEMENTS IN STORE 12% 3% 14%

Source: Unilever, Winning the Hispanic Shopping Trip

Merchandising Mandates Know your audience Level of acculturation How they use your product Brand lifecycle Use appropriate language Avoid slang, geek-speak Walter Cronkite Spanish Translate the message not the words Understand retailer requirements Language guidelines Acceptable formats Pricing requirements Space availability/display standards

Know your audience

Level of acculturation

How they use your product

Brand lifecycle

Use appropriate language

Avoid slang, geek-speak

Walter Cronkite Spanish

Translate the message not the words

Understand retailer requirements

Language guidelines

Acceptable formats

Pricing requirements

Space availability/display standards

Insights into Action - 7UP Case Study

7UP Celebrity Chef Mobile Tour & Recipe Contest Challenge Drive frequency of 7UP 100% Natural Flavors new product innovation and stay ahead of competitive pressure. Insight Unacculturated Hispanic women are heavy Lemon-Lime CSD users, but were not aware that 7UP had undergone a innovation of 100% Natural Flavors in 2007. The natural message is highly compelling to Unacculturated Hispanic moms who want to feel they have made a better choice for themselves and their families without sacrificing taste. The use of fresh, natural ingredients is inherent to their culture.

Challenge

Drive frequency of 7UP 100% Natural Flavors new product innovation and stay ahead of competitive pressure.

Insight

Unacculturated Hispanic women are heavy Lemon-Lime CSD users, but were not aware that 7UP had undergone a innovation of 100% Natural Flavors in 2007.

The natural message is highly compelling to Unacculturated Hispanic moms who want to feel they have made a better choice for themselves and their families without sacrificing taste.

The use of fresh, natural ingredients is inherent to their culture.

7UP Celebrity Chef Tour - 360º Focus Market Integration

7UP Celebrity Chef Mobile Tour & Recipe Contest Merchandising Kits Standee Pole Sign w/info tearpads Rack Cards Door Posters Neckringer recipe booklets Danglers Results 100% Natural Flavors awareness doubled between a pre and post wave study (DPSG Qualitative Study, Sept. 2008.) Campaign markets experienced a +8% sales lift.

Merchandising Kits

Standee

Pole Sign w/info tearpads

Rack Cards

Door Posters

Neckringer recipe booklets

Danglers

Results

100% Natural Flavors awareness doubled between a pre and post wave study (DPSG Qualitative Study, Sept. 2008.)

Campaign markets experienced a +8% sales lift.

Questions?

Questions?

For more information, please feel free to contact: Becky Arreaga [email_address] 512.447.4440 xt 111

For more information, please feel free to contact:

Becky Arreaga

[email_address]

512.447.4440 xt 111