The document summarizes trends in the US food retail industry and premium food segments. It discusses growing consumer interest in natural, organic and locally-sourced foods. Private label brands are expanding their premium and gourmet offerings. "Foodies" are an important consumer segment that spends more on specialty foods and influences broader trends in the industry.

1. U.S. Food Sales Trends, Customer Trends, and the Role of Private Label Brands Prepared by Mike Spriggs, Principal PREMIUM FOODS RETAILING MOVE FORWARD.

2. Welcome! Gourmet, Specialty, and Premium Foods & Beverages Consumer Trends US Food Retail Sales Trends and Market Overview Trends in Premium Food Segments The “Foodie” Consumer The Changing Role of Private Label (Store Brands) Retail Store Profiles AGENDA

3. Bienvenidos a Dallas! Dallas/Plano/Irving metro area 4.1 million people + 19% since 2000 census #1 population growth market in the US Home to 6 major sports teams: WELCOME ! COWBOYS MAVERICKS RANGERS STARS FC DALLAS FOOTBALL BASKETBALL BASEBALL HOCKEY SOCCER

4. Source: www.Dallas-EcoDev.org Source: Pew Research Center The rapid growth of the Hispanic population in Dallas reflects the Total US projected trend Shifting consumer demographics have increased the opportunity for more specialty food offerings Dallas Ethnic Composition and Trend

5. US Grocery Retail has sustained solid growth during the last 3 years However, the economic downturn will have a huge effect on this trend going forward into 2009 Source: US Census Bureau * US Grocery Sales – Supermarkets & Other Grocery (except convenience); Not Seasonally Adjusted US Grocery Retail Industry Sales

6. 122,743 new items were sold through US Grocery Retailers New Item Sales represent 4.2% of Total 2008 Sales New Items Helped to Sustain Growth Rates for 2008 Not All Departments are Performing Well Source: Nielsen Strategic Planner 2008 New Products Generated $21Billion in Sales for 2008

7. Source: Nielsen Strategic Planner – 52, 13, 4 weeks ending 2/21/2009 vs Previous Year Sales Growth is Slowing Down Several departments show growth rate declines in early months of 2009

8. Economic Slowdown Is Changing How People Shop Shopping and Eating Patterns Have Become More Frugal Value is Most Important Factor in Grocery Store Choice Consumers Cooking In More , Dining Out Less “ Eat-on-the-Go” Consumers Want More Convenience More Americans Are Seeking to Eat Healthier Cultural Diversity Increases the Opportunities for Retailers Ethnic Food Enthusiasts Growing in Numbers US Trends in Grocery Retail Are Changing

9. Consumers have a broader range of food venues Items Once Exclusive to Grocery Stores Now Widely Distributed Food Retailers Aggressively Moving Toward Foodservice Variety of Retailer-Prepared Foods Rapidly Increasing Faster Food-To-Go, Single-Serve Portions More Distinctive, Targeted Shopping Experience Carefully Planned Store Layouts and New Store Formats Retailer Differentiation is Most Important Creating a Store Identity Consumers Connect With Exclusive Sourcing for Highest Quality Products Re-positioning of Private Labels to Premium, Gourmet New Consumer Habits Bring Change at Retail

10. Renewed focus on Fresh and Natural/Organic Seeking Out Fresh, Locally Grown and Natural/Organic Foods Coordinated with Broadening Health Awareness Close Attention Paid to Food Safety, Nutrition Ratings New Channels, New Trends Interactive Shopping Farmers’ Markets are Expanding in Number More Stores Offering Cooking Classes by Expert Chefs Blogs, Newsfeeds, Community Center Resources New Consumer Habits Bring Change at Retail

11. Total Retail Sales at $53 Billion in 2007 10.9% Increase from 2006 11.1% Compound Annual Growth Rate 2003-2007 Natural/Organic Foods and Beverages are a Major Factor: 20.9% Increase from 2006 to Reach $20 Billion in 2007 Consumer Penetration Over 59% Fastest Growing Items on Restaurant Menus Other Factors Driving Growth: Broader Availability Across More Retailers Expanding Diverse Consumer Base Retailers Focusing on Upscale and Fresh Formats Source: Information Resources, Inc. InfoScan, Organic Trade Association Annual Report 2008 Gourmet and Premium Foods and Beverages

12. 7 Primary Segments of Premium Foods/Beverages Non-Alcoholic Beverages Baked Goods, Pastas, and Grains Condiments and Sauces Fresh Foods (Including Produce, Meat, Seafood, Sushi) Ready-To-Eat Meals (Food to Go, Frozen, Refrigerated, etc) Cheese and Dairy Products Ice Cream and Frozen Desserts Source: Information Resources, Inc. InfoScan Gourmet and Premium Foods and Beverages

13. Premium Non-Alcoholic Beverages Total Retail Sales of $22 Billion in 2007 Most Activity in Following Sub-Segments: Bottled Water Value-Added Waters with Proteins, Vitamins, San Pellegrino Teas (Ready-To-Drink, and Bagged/Loose Tea) Significant Increase in Yerba Mate Coffees (Ready-To-Drink, Whole Bean, Ground) Refrigerated Specialty Juices (Fresh, Pasteurized) Source: Information Resources, Inc. InfoScan Gourmet and Premium Foods and Beverages

14. Premium Baked Goods, Pastas, and Grains Total Retail Sales of $8 Billion in 2007 Significant Sales Increases in: In Store Baked Artisan Breads Specialty Filled Fresh Pastas Premium Condiments and Sauces Total Retail Sales of $5.7 Billion in 2007 Driving Factors: Innovative Flavors – Especially in Olive Oils Mediterranean Influences – Synergy with Premium Breads and Pastas Trend Toward Outdoor Cooking Styles – Marinades and BBQ Sauces Gourmet Consumers Skew to Ethnic Source: Information Resources, Inc. InfoScan Gourmet and Premium Foods and Beverages

15. Fresh Foods Total Retail Sales of $7.4 Billion in 2007 Fresh Produce is the Top Selling Organic Sub-Segment Organic Vegetables up 8.9%, Organic Fruits up 5.4% vs. 2007 Total Produce up only 1.6% during same timeframe Significant Growth from New Items and Expanded Penetration Fresh-Cut Salads Refrigerated Seafood and Sushi Exotic Produce and Pre-Cut Fruit Free-Range, Organic Poultry Specialty Meats, Fresh Sausage Source: Information Resources, Inc. InfoScan Gourmet and Premium Foods and Beverages

16. Ready-To-Eat Meals Total Retail Sales of $5.3 Billion in 2007 Items Span All Departments and Are the Most Varied The Fasting Growing Sub-Segments Are: SuperPremium Refrigerated and Frozen Entrees, Pizzas, Meals, Appetizers Deli Prepared Salads, Soups, Sandwiches Pasta Dishes The Highest Percentage of Retailer-Prepared Foods, Usually Positioned as Gourmet or Premium Ready-To-Eat Retailers Use Ready-To-Eat Meals to Strengthen Customer Loyalty Source: Information Resources, Inc. InfoScan Gourmet and Premium Foods and Beverages

17. Cheese and Dairy Products Total Retail Sales of $3.8 Billion in 2007 Growth is Driven By: Specialty, Exotic Cheese – Both Import and Domestic Manufacture Hispanic, Goat, and Terroir Cheeses are Especially Strong Value-Added Yogurts (with Pro-Biotic Cultures, Acidophilus) Healthier-For-You Butters Organic Milk Sales Continue to Increase – 23% Annual Increase Sources: Information Resources, Inc. InfoScan, Dairy Market News Gourmet and Premium Foods and Beverages

18. Ice Cream and Frozen Desserts Total Retail Sales of $1.3 Billion in 2007 Significant Trends: Increased Differentiation of Flavors to Compete Against Expanding IceCream Shop Formats Special Locally Harvested Ingredients for Exclusivity Increase in Gelatos and Sorbets Healthier Options Least Amount of Retailer Private Label Presence Sources: Information Resources, Inc. InfoScan, Dairy Market News Gourmet and Premium Foods and Beverages

19. Other Popular Trends Also Include: Emphasis on Purity, Less Ingredients, and Simplicity Clean Labels and Packages Made from Recycled Materials Antioxidant Ingredients Hormone / Antibiotic Free Fat Free High Fructose Corn Syrup (HFCS)-Free Calcium Resealable, Renewable Packaging Additional Trends In Premium Foods

20. Foodie’s make over 5 more shopping trips each year on average than other US Households - Grocery spend is 11% higher overall - Spend 105% more on Wine - Spend 46% more on Spices - Spend 31% more on Fresh Produce - Spend 14% more on Dairy/Cheese STILL, CONSUMERS ARE SENSITIVE TO PRICE. “ Foodie” – a person who has a strong interest in unusual, rare, or premium foods and gourmet cooking or dining. The “Foodie” Revolution

21. Profile of the Foodie Customer 31.2 Million US Adults are Foodies Span All Ethnic Demographics Educated, But Not Necessarily Wealthy High Media and Advertising Awareness – Web, Blogs Will Impulse Spend on Food Items Likes to Recreate the Restaurant Experience at Home Highly Receptive to Food Marketing Informed Healthy Consumers Very Eco-Conscious Prefer to Shop in “Fresh” Formats Sources: Simmons Market Research Bureau The “Foodie” Revolution

22. - Store Brands are up over 10% to $84.4Billion annually for 2008 - Retailers are working hard so that customers won’t switch back to National Brands after economy improves. Much of the Private Label expansion has been in Gourmet and Premium Foods Private Label offers savings of 5%-35% compared to Nation Brand prices National Brands Will Need to Innovate to Win Back Sales Lost to Private Label Store Brands Retailer Brands Have Expanded Gourmet and Premium Options for Consumers / Foodie’s

23. 31 Stores Across California, Arizona, Colordo, and Texas 14 Stores planned over next 2 years. Company founded in 2002 in Phoenix, AZ Annual Sales $350 Million Strong focus on Natural, Organic, and Premium Foods Extensive Private Label Offering, with all-natural ingredients. No additives or preservatives Fresh Foods are usually locally-sourced, with exception of Fresh Seafood, which is flown in daily Vitamin selection is extensive, with most HABA products being 100% natural Retailer Tour on Tuesday April 28 th

24. A Division of Safeway, Inc. Parent Company Ranked #5 in US Annual Sales $44 Billion 2008 62 Stores, ranked #3 in Dallas Mkt “ LifeStyle” Store Concept created to improve customer experience Very Strong Private Label Branding and Premium Positioning Organics, and Signature Brands target Foodie Shoppers Retailer Tour on Tuesday April 28 th

25. Division of HEB Grocery Company (ranked #12 grocery company in US) 8 stores; 4 stores DFW market HEB corporate Revenues $15 Billion annual 2008 310 stores, including 31stores in Mexico that account for 10% of corporate sales Hands-on Buying –In-house procurement team works directly with farms, wineries, dairies, fishermen, ranchers and kitchens to ensure unique and high quality products. Direct Importing – Have buyers in Europe who seek out the newest food finds. Import straight from the source (over 150 countries). Team attends Culinary Institute of America and other institutions, visiting vineyards, fishing vessels to source the best foods — firsthand. Retailer Tour on Tuesday April 28 th

26. World’s leading Natural and Organic Foods. Ranked #21 in US Fiscal 2008 Revenues of $7.9Billion 278 Stores across 37 states, Canada, and UK. Founded in Austin, TX in 1980 Over 2,000 store-branded products Named one of the “Best Companies to Work For” 12 consecutive years by Fortune magazine Promotes locally grown products Has very strict Quality Standards: Meats: No Antibiotics, No Hormones, Free Range Foods: Prohibits over 60 common ingredients HABA: Bans over 400 common ingredients PRIVATE LABEL: Retailer Tour on Tuesday April 28 th

27. Regional Grocery chain with 49 locations 35 in Houston, 14 in Dallas Market Ranked # 8 in the Dallas Market Fiscal 2008 Revenues of $1.2 Billion Very strong Hispanic merchandising and marketing Broadest selection of Authentic Mexican Food Ingredients Heavy emphasis on Fresh Foods, Aguas, and Variety Meats Customer Base is +80% Hispanic Over 40% are non-English Speaking Retailer Tour on Tuesday April 28 th

28. The UrbanMarket & Dealey Plaza - Downtown Dallas, TX Retailer Tour on Tuesday April 28 th

29. About StratAdvant Consulting Mike Spriggs is an Independent Consultant and owner of StratAdvant Consulting. Mike has over 14 years of experience in consumer packaged goods and retail marketing. After starting his career with Lever Brothers Company as a sales representative, Mr. Spriggs moved on to several analytical and managerial positions with two of the United States’ premier retailers. Most recently, Mike served as a Regional Director with the Nielsen Company, and handled the executive relationships with many top US retailers in the food, wholesale, and convenience channels. Starting in December 2008, Mike launched a private consulting practice called StratAdvant Consulting, which specializes in helping both small and large businesses understand consumer and sales information, with strategic methods for applying insights to their business decisions. Additionally, StratAdvant offers professional speaking services, custom research, data management, strategic planning, executive presentations, diversity training, and other custom business solutions.

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