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1 Hispanic Allocation on Revenue Growth, 3/7/2012 Revised April 5, 2012 (Nestle & Appendix)

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1 Hispanic Allocation on Revenue Growth, 3/7/2012

Revised April 5, 2012 (Nestle & Appendix)

2 Hispanic Allocation on Revenue Growth, 3/7/2012

Background

Hispanic Allocation on Revenue Growth

Since 1998, AHAA has been helping its members serve its corporate clients through breakthrough independent studies that

• increase understanding of what it takes to win the market,

• share new concepts

• and identify best practices of marketing to Latinos.

Most recently, in October 2011, Part 1 of AHAA’s study series on drivers to growth found a strong positive correlation between allocation of ad resources and topline growth.

• Hispanic marketing ‘Best-In-Class’ companies have a sustainable competitive

growth advantage over the ‘Laggards’.

3 Hispanic Allocation on Revenue Growth, 3/7/2012

Hispanic Market Highlights

Hispanic Allocation on Revenue Growth

MARKET SIZE

– 2010 Population 50.7M1

– 2011 Hispanic Share of US 17%2, 1 in 6

GROWTH

– Hispanic Population 2000-2010 CAGR v Non-Hispanic 3.6% v. 0.5%3

– Share of Total US 2000-2010 Growth 56%4

– Share of Labor Force Growth 2010-2020 74%7

ECONOMIC

– 2012 Estimated Buying Power $1.2 Trillion5

– Hispanic Buying Power 2000-2010 CAGR v. Non-Hispanic 7.8% v. 3.4%6

4 Hispanic Allocation on Revenue Growth, 3/7/2012

Challenge

• Companies challenged by anemic growth more than ever

– Consumers have changed; more fickle today

– Economic downturn will make consumers more frugal and value-oriented over the long run

– Technology and new media create both opportunities to reach audiences and complexity as well

– Possible “Reset” of economy could structurally impact certain sectors and jobs

– Changing demographics (age) and multicultural trends create new potential sources for growth

Hispanic Allocation on Revenue Growth

5 Hispanic Allocation on Revenue Growth, 3/7/2012

Challenge

All companies have growing challenge of balancing competing needs

1. Holding on to ‘General Market’

2. Finding new growth

3. Capturing fair share of growth markets

Hispanic Allocation on Revenue Growth

6 Hispanic Allocation on Revenue Growth, 3/7/2012

About the Author & Sources

Hispanic Allocation on Revenue Growth

• The study was commissioned by AHAA’s Research Committee and developed and executed by Santiago Solutions Group (SSG), a growth strategy consultancy.

• Independent methodological review performed by Dr. Cristina Garcia, professor of mathematics & statistics at USC.

• Financial revenue growth data extracted from companies 10Ks.

• Parent company ad spend data for 2006-2010 Hispanic media and non-Hispanic media collected from The Nielsen Company.

• Consumer habits, attitudes and values by GfK Roper & GfK MRI syndicated studies with sample of 53K (sampling details in Appendix E)

7 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Study Objectives Presented by Carlos Santiago, President & Chief Strategist, Santiago Solutions Group

[email protected] (818) 736 5661

8 Hispanic Allocation on Revenue Growth, 3/7/2012

Is there a significant difference in the revenue growth rate attained by

CPG companies which designate higher focus and resources to the

Hispanic market and those that focus less?

What do they do differently?

What factors distinguish companies that capture Hispanic growth

successfully from those that underperform with this segment?

Study Objectives

Hispanic Allocation on Revenue Growth

9 Hispanic Allocation on Revenue Growth, 3/7/2012

Study Variables

Hispanic Allocation on Revenue Growth

Aggregate Hispanic Allocation 2006-2010: Independent variable

1. The input being changed possibly impacting Revenue CAGR.

2. The % of total advertisement dollars spent in TV, Radio, and Print (per Nielsen tracking) assigned to Hispanic-centric media channels throughout 2006 to 2010.

2006-2010 Revenue CAGR: Dependent variable

1. Revenue CAGR is our dependent variable which was tested against different levels of Hispanic Allocation.

2. Revenue as reflected from topline, organic US-only consumer demand per 10Ks.

− may have been adjusted to exclude extraordinary transactions and normalize revenue from acquisitions, if enough clear data has been stated in corporate financials.

10 Hispanic Allocation on Revenue Growth, 3/7/2012

Methodology

Hispanic Allocation on Revenue Growth

A main CPG regression with 39 companies was validated by three other test regression models with larger sample sizes.

Four total regression tests • All confirmed the same findings at

statistical significance

• Details of statistical analysis will follow after Q&A section.

Aggregate 06-10 Hispanic Allocation

N=211

Aggregate Hispanic 06-10 Allocation AND Year by Year

Revenue Growth

N=211

Aggregate Hispanic 06-10 Allocation, Year by Year Revenue Growth, AND Super Categories

N=211

CPGs

N=39

11 Hispanic Allocation on Revenue Growth, 3/7/2012

CPGs & Retailers in Study

12 Hispanic Allocation on Revenue Growth, 3/7/2012

Study Significance

Hispanic Allocation on Revenue Growth

All findings discussed in the presentation are statistically significant at a

95% confidence level or better.

13 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Study Findings

14 Hispanic Allocation on Revenue Growth, 3/7/2012

Are CPGs Growth Rates Related to Hispanic Focus?

Hispanic Allocation on Revenue Growth

There is a direct & positive relationship between CPG’s Hispanic ad allocation and their topline revenue growth.

Please see Appendix D (Graph 1) for Detailed Graph and Graphical Analysis.

15 Hispanic Allocation on Revenue Growth, 3/7/2012

Key Findings

Hispanic Allocation on Revenue Growth

• Hispanic Allocation alone explains about 35% of CPGs change in topline revenue growth – The other 65% may include other critical

factors such as brand awareness/equity, new product development, management focus, measurement tools, distribution, sales force, past performance, community position, organization structure, talent, overall segmentation expertise, etc.

– Further analysis is needed to determine what exactly the other drivers of revenue growth are.

Hispanic Marketing

35%

Other Drivers of

Growth 65%

CPGs & Retailers Revenue Growth Drivers

For Consumer Packaged Goods and their retailers

16 Hispanic Allocation on Revenue Growth, 3/7/2012

Key Findings

Hispanic Allocation on Revenue Growth

Organic revenue growth rates decline sharply as Hispanic share of budgets decrease and vice versa.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Top Allocation (≥70th

Percentile)

MiddleAllocation (40th -70th Percentile)

Low Allocation(<40th

Percentile)

7.7%

4.7%

0.9%

6.8%

2.2%

0.6%

Allocation Tiers

Average 06-10 Hispanic Allocation Average 06-10 Revenue CAGR

17 Hispanic Allocation on Revenue Growth, 3/7/2012

Top 30 Percentile Hispanic Marketers By Allocation And Overall Revenue Growth

Hispanic Allocation on Revenue Growth

Top 30 Percentile

Please see Appendix D (Graph 1) for Detailed Graphical Analysis.

18 Hispanic Allocation on Revenue Growth, 3/7/2012

Key Findings

All tests validated the same findings.

Hispanic Allocation has a direct & significant impact on companies overall revenue growth.

Aggregate 06-10 Hispanic Allocation

N=211

Aggregate Hispanic 06-10 Allocation AND Year by Year

Revenue Growth

N=211

Aggregate Hispanic 06-10 Allocation, Year by Year Revenue Growth, AND Super Categories

N=211

CPGs

N=39

19 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Why Hispanic Consumers Are So Important Today?

20 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Much faster household formation has exponential impact on continued growth

opportunity

Non-Hispanic Hispanic

2.5%/yr. 0.4%/yr. Households CAGR

6x NH CAGR

21 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Much larger Households means heavier usage

Non-Hispanic Hispanic

Persons Per HH1 3.8 2.5

52% larger HH

22 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Hispanic households food at home expenditures will grow at 5.7% annually, more than twice the rate for Non-Hispanic households of 2.5%.

Which Consumer Is Worth More?

$-

$20

$40

$60

$80

$100

1995 2000 2005 2010 2015 2020

$27 $33

$42

$59

$78

$94

$ B

illio

n

Hispanics Food at HH Expenditures

HistoricCAGR: 5.4%

ForecastCAGR: 5.7%

23 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

The younger age and larger Hispanic household size contributes to Hispanic households having the highest consumer spending potential for necessary spending on Food at Home and Personal Care.

Which Consumer Is Worth More?

Hispanic Personal Care cumulative lifetime

spending is about 33% higher than that of Non-

Hispanic White.

Hispanic Food at Home cumulative lifetime

spending is over 50% higher than that of Non-

Hispanic White.

24 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

More influenced by strong brands

Hispanics are CPG valuable customers

Source: 2011 Doublebase GfK MRI - Base: All (n= 6.6K Hispanics & 46.5K Non-Hispanics)

Top Box: Agree Completely or Agree Mostly or Very Important Hispanic Index

I am more influenced by what seems hot and what’s not 139

Brand name is the best indication of quality 152

I only buy food items that are name brands, not generic brands 150

25 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Less price sensitive

Hispanics are CPG valuable customers

Top Box: Agree Completely or Agree Mostly or Very Important Hispanic Index

I’d pay extra for products that are consistent with the image I want to convey

125

I tend to make impulse purchases 117

I know the price I pay for most of the foods & packaged goods I buy

83

26 Hispanic Allocation on Revenue Growth, 3/7/2012

Status & Image Conscious

Hispanics are CPG valuable customers

Top Box: Agree Completely or Agree Mostly or Very Important Hispanic Index

I like to live a lifestyle that impresses others 149

I prefer to buy things that my friends/neighbors would approve of

167

Seeking the utmost attractive appearance 122

27 Hispanic Allocation on Revenue Growth, 3/7/2012

See Shopping as Fun

Hispanics are CPG valuable customers

Top Box: Agree Completely or Agree Mostly or Very Important Hispanic Index

I enjoy wandering the store looking for new products 131

I’m always first of friends to try new products/services 145

Shopping is a great way to relax 147

28 Hispanic Allocation on Revenue Growth, 3/7/2012

Key Category Influentials

Hispanics are CPG valuable customers

My family/friends often ask for and trust my advice on this topic

Hispanic Index

Babies/Children 130

Beer 121

Alcoholic Beverages 135

Beauty 138

Cleaning Products 112

New Food Items 126

Food 112

Snacks 123

Dieting 115

Healthy Lifestyle 112

29 Hispanic Allocation on Revenue Growth, 3/7/2012

Conclusions & Implications

30 Hispanic Allocation on Revenue Growth, 3/7/2012

Key Takeaways For Consumer Packaged Goods

Statistical evidence demonstrates that:

• Consistent/significant Hispanic marketers drive superior revenue growth.

• Hispanic as a priority drive sustainable growth into future.

31 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Implications for Companies

• Real bottom-line benefits come from consistent approaches.

• Marketing is only the beginning, corporate-wide integration and investment is key

– Responding to the most appropriate cultural insights

– Broad use of all elements of marketing

– Developing strategies from communications to customer experience

32 Hispanic Allocation on Revenue Growth, 3/7/2012

The U.S. Hispanic Consumer Opportunity Robert Moskow, Research Analyst

Marcela Giraldo, Research Associate

[email protected]

(212) 538 3095 [email protected] (212) 325 6764

DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON TRADE ALERTS,

ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with

companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this

report. Investors should consider this report as only a single factor in making their investment decision.

The materials may not be used or relied upon in any way.

33 Hispanic Allocation on Revenue Growth, 3/7/2012

Top Five Observations

• Wall Street should be paying more attention to the companies that “get this right”

• Good Hispanic marketing companies attract and retain “best-in-class” managers

• Commitment from the top and accountability at the bottom are key

• Kraft has engineered a turnaround

• Goya is the premier asset in Hispanic CPG

CREDIT SUISSE (USA), INC.

34 Hispanic Allocation on Revenue Growth, 3/7/2012

Why Does Wall Street Tend To Overlook Hispanic Marketing Expertise?

Source: Company information. CS estimates

Tier

Approx. % of

Sales To

Hispanics

Growth Rate

With

Hispanics

Growth Rate

With Non-

Hispanic

U.S.

Division

Growth

Rate Companies

Leaders 18% 7.0% 2.5% 3.3% KO, GIS, NESN.VX, MKC

Followers 13% 5.5% 2.5% 2.9% KFT, K, UN

Laggards 8% 4.0% 2.5% 2.6% HNZ, CPB, HSY, PEP, CAG

High/Low Difference 0.7%

+ Most of these companies have 60% of their sales in North America

+ Therefore, an incremental 0.7% to North America growth rate translates to only 0.4% for total company sales

+ In terms of valuation, 0.4% of incremental growth translates to a valuation differential of only 8%

Difficult to isolate the impact of Hispanic marketing on growth rates

Even when you do isolate it, it doesn’t look that meaningful to valuation

Investors attention has shifted to emerging markets

35 Hispanic Allocation on Revenue Growth, 3/7/2012

In reality, “Leaders” have outpaced “Laggards” in North America by 3.1% on

average

Source: Company information. CS estimates

4.4% 4.6%

3.3%

1.4%

0.7%1.0%

2.3%

2.9%

1.3%

0.5%

1.4%

-0.1%

-3.7%-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Nes

tle

McC

orm

ick

Gen

eral

Mill

s

Col

gate

P&

G

Cok

e

Kel

logg

Kra

ft

Uni

leve

r

Hei

nz

Con

Agr

a

Cam

bpel

l

Pep

si

(bev

erag

es)

His

tori

c o

rgan

ic r

even

ue

gro

wth

NA

(3

yrs)

Leaders:

Average 2.6% Followers:

Average 2.2% Laggards:

Average -0.5%

- Translates into a much more meaningful 20%+ valuation differential!

36 Hispanic Allocation on Revenue Growth, 3/7/2012

Good Hispanic Marketing Organizations Attract Best-In-Class Managers

• Good managers want to be on the cutting edge of marketing

• They create shareholder value

Examples

• Coke shifting their mindset to the Latin American point-of-sale merchandising approach

• General Mills’ leveraging the “Que Rica Vida” platform and partnering with Univision

CREDIT SUISSE (USA), INC.

37 Hispanic Allocation on Revenue Growth, 3/7/2012

The trend is to push more of the responsibility into the brand teams

Stage 1

• Low level of top

management

commitment

• Young brand

managers get

assigned to

monitor the

Hispanic efforts

Stage 2

• Creation of a high

profile

management role

to oversee the

Hispanic efforts

• Creation of a

Center of

Excellence

dedicated to

sharing best

practices

• Support function

with no P&L

responsibility

Stage 3

• Accountability at

the brand level for

Hispanic sales.

• Hispanic

advertising budget

is integrated within

the brands.

• ROI goals for

Hispanic marketing

investment within

the brand teams

- Coke, Wal-Mart, P&G, Unilever are all doing this

- The risk is that upper management lose will some of their control and

visibility

- Maintaining accountability will be the key to success CREDIT SUISSE (USA), INC.

38 Hispanic Allocation on Revenue Growth, 3/7/2012

2.1% 2.4%

4.4%

13.1%

0%

2%

4%

6%

8%

10%

12%

14%

2008 2009 2010 2011 (E)

Kraft Foods Inc Average group

3X increase in

2011

Kraft has engineered a turnaround • Strong support from top

management

• The strategy is to increase Hispanic spending on top 10 brands including Oreo, Kool-Aid and Kraft Singles.

• Re-established their Latino Center of Excellence in 2008

Risks

• It’s hard to regain momentum after several years away

• Spin off of companies may dilute Hispanic efforts and impact scale advantage

Kool-Aid, in a first for any Kraft brand, has allocated the majority

of its 2011 marketing budget to reach Hispanics

Source: NY Times

Source: Kantar media. KFT’s management comments

Hispanic Advertising Investment as % of Total

CREDIT SUISSE (USA), INC.

39 Hispanic Allocation on Revenue Growth, 3/7/2012

Mexican

65.7%

Other

5.1%Central

American

8.3%

Cuban

3.4%

Puerto Rican

9.0%

Dominican

2.8%

South American

5.8%

Goya is the premier asset in the Hispanic food space

• 75-year-old family-owned and family-managed company

• Approximately $1B in annual revenues

• Best at understanding food preferences by country of origin

• Tailor product portfolio by region in the US

• Relationships with bodegas are important asset

US Hispanic Population by Country of Origin

Source: www.goya.com

Source: U.S. Census 2008

Caribbean

Mexican

Central And South

American

CREDIT SUISSE (USA), INC.

40 Hispanic Allocation on Revenue Growth, 3/7/2012

Companies Mentioned (Price as of 06 Mar 12)

Campbell Soup Company (CPB, $33.04, NEUTRAL, TP $33.00) Clorox Co. (CLX, $67.92, NEUTRAL, TP $72.00) Colgate-Palmolive (CL, $93.35, NEUTRAL, TP $90.00) ConAgra Foods, Inc. (CAG, $26.36, NEUTRAL, TP $27.00) Danone (DANO.PA, Eu50.58, UNDERPERFORM, TP Eu44.00) General Mills (GIS, $38.60, NEUTRAL, TP $41.00) H.J. Heinz Company (HNZ, $53.09, NEUTRAL, TP $54.00) Hormel Foods (HRL, $28.50, NEUTRAL, TP $32.00) Kellogg Company (K, $52.09, NEUTRAL, TP $56.00) Kimberly-Clark Corporation (KMB, $72.66) Kraft Foods, Inc. (KFT, $38.35, OUTPERFORM, TP $45.00) McCormick & Company (MKC, $50.82, NEUTRAL, TP $50.00) Nestle (NESN.VX, SFr55.30, NEUTRAL, TP SFr58.00) PepsiCo, Inc. (PEP, $62.79) Procter & Gamble Co. (PG, $66.95, OUTPERFORM, TP $70.00) Ralcorp (RAH, $74.41, NEUTRAL, TP $75.00) Reckitt Benckiser (RB.L, 3469 p, OUTPERFORM, TP 3,800.00 p) Sara Lee Corporation (SLE, $21.24, NEUTRAL, TP $20.00) The Coca-Cola Company (KO, $69.23) The Hershey Company (HSY, $60.93, OUTPERFORM, TP $68.00)

Disclosure Appendix Important Global Disclosures

I, Robert Moskow, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

See the Companies Mentioned section for full company names.

3-Year Price, Target Price and Rating Change History Chart for NESN.VX

NESN.VX Closing

Price

Target

Price

Initiation/

Date (SFr) (SFr) Rating Assumption

16-Nov-09 47.88 55

11-Feb-10 49.69 60

30-Nov-10 54.55 N

9-Jun-11 53.15 55

11-Jul-11 52.6 R

16-Dec-11 51.2 58 N

55

60

55

58

NR

N

35

40

45

50

55

60

7-M

ar-0

9

7-May-

09

7-Jul-0

9

7-Sep-

09

7-Nov

-09

7-Ja

n-10

7-M

ar-1

0

7-May-

10

7-Jul-1

0

7-Sep

-10

7-Nov

-10

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n-11

7-M

ar-1

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7-May-

11

7-Jul-1

1

7-Sep

-11

7-Nov

-11

7-Ja

n-12

Closing Price Target Price Initiation/Assumption Rating

SFr

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

3-Year Price, Target Price and Rating Change History Chart for HSY

HSY Closing

Price

Target

Price

Initiation/

Date (US$) (US$) Rating Assumption

3/24/09 35.41 30 U

7/8/09 37.01 33

7/24/09 40.97 43 N

12/31/09 35.79 R

2/1/10 36.81 40 N

4/22/10 48.08 50

7/23/10 47.21 52

2/2/11 48.61 55 O

2/28/11 52.32 56

3/18/11 53.87 58

4/26/11 57.27 64

10/21/11 60.26 70

10/27/11 57.46 68

30

33

43

40

5052

55 5658

64

7068

O

NR

N

U

30

35

40

45

50

55

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65

70

3/7/

09

5/7/

09

7/7/

09

9/7/0

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/09

1/7/

10

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10

5/7/

10

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0

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/10

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11

5/7/1

1

7/7/1

1

9/7/1

1

11/7/1

1

1/7/

12

Closing Price Target Price Initiation/Assumption Rating

US$

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities.

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*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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See the Companies Mentioned section for full company names. Price Target: (12 months) for (NESN.VX) Method: Our price target is based on our APV (adjusted present value), a hybrid DCF that splits the operating cash flows (discounted at the cost of equity), and the tax shield (discounted at the cost of debt). A terminal growth rate of 2.5% is assumed Risks: Significant movements in raw material costs or currency can impact the business, as can irrational behaviour by either competitors or retailers. Food scares, shortages, or contamination can also impact the business. Price Target: (12 months) for (HSY) Method: Our 12-month target price of $68/share implies a 19x P/E multiple against our 2013 estimate. This assumes that stock maintains the 19-20x P/E multiple which is the range where it is trading today Risks: The risks that HSY and our $68 target price could face include: 1) execution risk in the growing premium/dark chocolate category; 2) volatile cocoa, nuts and dairy commodity input costs; and 3) the risk of competitive incursion in chocolate from Mars.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

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41 Hispanic Allocation on Revenue Growth, 3/7/2012

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42 Hispanic Allocation on Revenue Growth, 3/7/2012

Q & A Discussion

43 Hispanic Allocation on Revenue Growth, 3/7/2012

Statistical Detail & Model Validation Presented by Dr. Cristina Garcia Math & Statistics Professor at USC SSG Methodology Advisor

44 Hispanic Allocation on Revenue Growth, 3/7/2012

Methodology Highlights • Started by looking at the Top 500

overall Advertisers (TV, Radio, Print) by year and in aggregate between.

• Matched each parent company to available published financial revenue data, and calculated 2006-2010 compounded annual growth rates.

• Companies which did not have consistent published financials such as companies which grew on M&As that weren’t adjustable rather than organic consumer driven growth were eliminated from the final regression set.

Top 500 U.S. Overall Advertisers 2006-2010

(500)

Public

(418)

Consistent Advertisers

(220)

Publicly Traded

w/ clear Organic US Revenue

(211)

CPGs

(39)

Unadjustable M&As

Inconsistent Data

(-9)

Inconsistent Advertisers

(-198)

Private

(-82)

45 Hispanic Allocation on Revenue Growth, 3/7/2012

Test Validations

All models validated the same findings.

Hispanic Allocation has a direct & significant impact on companies overall revenue growth.

Aggregate 06-10 Hispanic Allocation

N=211

Aggregate Hispanic 06-10 Allocation AND Year by Year

Revenue Growth

N=211

Aggregate Hispanic 06-10 Allocation, Year by Year Revenue Growth, AND Super Categories

N=211

CPGs

N=39

46 Hispanic Allocation on Revenue Growth, 3/7/2012

Consumer Packaged Goods Regression Model

• Hispanic Allocation alone explains

about 35% of changes in revenue

growth over a 5 year period for Consumer Packaged Goods (R2=0.35)

– An R squared of .35, tells us that roughly 35% of a company’s revenue growth is driven by changes in Hispanic Allocation.

– The expected range for a 1 percent increase in Hispanic allocation is an increase of .48% to 1.28% in overall corporate revenue growth rate.

Revenue Growth over 5

year period (CAGR 06-10)

Aggregate Hispanic

Allocation 2006-2010

CPG (N=39)

47 Hispanic Allocation on Revenue Growth, 3/7/2012

CPG Model Findings

– For every additional percentage point increase in Hispanic allocation, we would expect revenue growth of 0.883% over the 5 years for Consumer Packaged Goods

– In other words, on average, a 10% allocation of a CPG company’s ad spend to Hispanic media over 5 years would generate revenue growth of 8.83% over the 5 year period.

Hispanic Marketing

35%

All Other Drivers of

Growth 65%

Revenue Growth Drivers for CPGs & Retailers

48 Hispanic Allocation on Revenue Growth, 3/7/2012

Test 1: Is Aggregate Hispanic Allocation Important? YES! Hispanic Allocation directly impacts topline revenue

growth for Top 500 Advertisers

• On average, for every additional percentage point increase in Hispanic allocation, we would expect revenue growth of .40% over the 5 years.

• In other words, allocating 10% of the company’s ad spend to Hispanic media over 5 years would generate revenue growth of 4.00% over the 5 year period

Aggregate Growth

CAGR 06-10

Aggregate Hispanic

Allocation

06-10

TOP ADVERTISERS (N=211)

49 Hispanic Allocation on Revenue Growth, 3/7/2012

TEST 2: Individual Years Growth and Aggregate Hispanic Allocation Revalidated! Both directly impact topline revenue growth

Revenue Growth over 5 year period

Aggregate Hispanic Allocation

06-10

CAGR

06-07, 07-08, 08-09, 09-10

• Of course, each year’s CAGR most significantly affects the company’s revenue growth over 5 years

• R-square 0.608 In other words, 60.8% of the variation in growth over the 5 years (CAGR 06-10) is explained by the ad spend in Hispanic media over the 5 years and each year’s annual growth.

• On average, for every additional percentage point increase in Hispanic allocation, we would expect revenue growth of .34% over the 5 years.

• In other words, allocating 10% of the company’s ad spend to Hispanic media over 5 years would generate revenue growth of 3.44% over the 5

year period. TOP ADVERTISERS (N=211)

50 Hispanic Allocation on Revenue Growth, 3/7/2012

Test 3: Hispanic Allocation, Super Categories and Revenue CAGR Revalidated Again! Hispanic Allocation Is Relevant to Revenue Growth!

Revenue Growth over 5 year period

Categories: Auto, Tech & Entertainme

nt, Retail, CPG,

Finance/Insurance

CAGR:

06-07, 07-08, 08-09, 09-10

Hispanic Allocation:

06-10

• R-square .64, in other words, 64% of the variation in growth over the 5 years (CAGR 06-10) is explained by the ad spend in Hispanic media over the 5 years and each annual year’s growth.

• On average, for every additional percentage point increase in Hispanic allocation, we would expect revenue growth of 0.29% over the 5 years.

• In other words, allocating 10% of the company’s ad spend to Hispanic media over 5 years would generate revenue growth of 2.89% over the 5 year period

TOP ADVERTISERS (N=211)

51 Hispanic Allocation on Revenue Growth, 3/7/2012

1 Hispanic Allocation on Revenue Growth

Conclusions of Tests

• In all tests, Hispanic Allocation consistently comes up as a statistically significant variable positively affecting revenue growth rates.

– Along with showing the importance of investing in the Hispanic market, our model also shows that performance during the turn into the recession 2007 to 2008 and recovery from the recession 2009 to 2010 time periods serve as good indicators for relative long term performance (06-10).

52 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix

53 Hispanic Allocation on Revenue Growth, 3/7/2012

Sectors/Super Categories Breakdown

Top 500 Advertisers

Super-Categories

Included

Auto

Packaged Goods

Omitted Advertisers

(Reasons)

Private

Gov’t

Non-Profits

54 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix A Ranking By Hispanic Allocation

Company 2006-2010 Hispanic

Allocation Percentage Rank Percentile

2006-2010 Revenue Growth Rate

WALGREEN CO 10.05% 1 100.00% 9.20%

WAL-MART STORES INC 9.70% 2 97.30% 5.12%

COCA-COLA CO 8.79% 3 94.70% 12.39%

CLOROX CO 8.09% 4 92.10% 3.30%

RALCORP HOLDINGS 8.08% 5 89.40% 11.82%

GROUPE DANONE 7.81% 6 86.80% 11.82%

KIMBERLY-CLARK CORP 7.09% 7 84.20% 2.74%

UNILEVER 6.92% 8 81.50% 1.39%

TARGET CORP 6.68% 9 78.90% 3.25%

GENERAL MILLS INC 6.27% 10 76.30% 6.50%

NESTLE SA 6.25% 11 73.60% 7.45%

LOREAL SA 6.20% 12 71.00% 3.86%

PROCTER & GAMBLE CO 6.13% 13 68.40% 2.30%

HERSHEY CO 5.72% 14 65.70% 2.22%

TYSON FOODS INC 5.71% 15 63.10% 3.70%

BROWN-FORMAN CORP 5.09% 16 60.50% 1.62%

CVS/CAREMARK CORP 5.01% 17 57.80% 5.03%

JM SMUCKER CO 4.90% 18 55.20% 3.44%

BEIERSDORF AG 4.11% 19 52.60% -1.34%

55 Hispanic Allocation on Revenue Growth, 3/7/2012

Ranking By Hispanic Allocation Cont.

Company 2006-2010 Hispanic

Allocation Percentage Rank Percentile

2006-2010 Revenue Growth Rate

PEPSICO INC 3.80% 20 50.00% -0.21%

KRAFT FOODS INC 3.77% 21 47.30% 0.90%

DIAGEO PLC 3.53% 22 44.70% 2.73%

KELLOGG CO 3.42% 23 42.10% 3.40%

ESTEE LAUDER COS 2.80% 24 39.40% -0.03%

BIG LOTS INC 2.33% 25 36.80% 1.08%

CONAGRA FOODS INC 2.24% 26 34.20% 1.06%

HORMEL FOODS CORP 1.97% 27 31.50% 5.60%

PERNOD RICARD SA 1.57% 28 28.90% 3.06%

LVMH MOET HENNESSY LOUIS VUITTON SA 0.64% 29 26.30% 3.91%

MCCORMICK & CO INC 0.55% 30 23.60% 5.01%

SARA LEE CORP 0.53% 31 21.00% -9.25%

FORTUNE BRANDS INC 0.53% 32 18.40% -4.32%

HENKEL KGAA 0.48% 33 15.70% -0.78%

CHURCH & DWIGHT CO 0.26% 34 13.10% 7.40%

DEAN FOODS CO 0.20% 35 10.50% 4.67%

CAMPBELL SOUP CO 0.15% 36 7.80% 2.98%

KAO CORP 0.13% 37 5.20% -4.50%

NEWELL RUBBERMAID 0.04% 38 2.60% -3.76%

NUTRI/SYSTEM INC 0.01% 39 0.00% -2.59%

56 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix B Ranking By Growth Rate

Company 2006-2010 Revenue

Growth Rate Rank Percentile

2006-2010 Hispanic Allocation

COCA-COLA CO 12.39% 1 100.00% 8.79%

RALCORP HOLDINGS 11.82% 2 97.30% 8.08%

GROUPE DANONE 11.82% 3 94.70% 7.81%

WALGREEN CO 9.20% 4 92.10% 10.05%

NESTLE SA 7.45% 5 89.40% 6.25%

CHURCH & DWIGHT CO INC 7.40% 6 86.80% 0.26%

GENERAL MILLS INC 6.50% 7 84.20% 6.27%

HORMEL FOODS CORP 5.60% 8 81.50% 1.97%

WAL-MART STORES INC 5.12% 9 78.90% 9.70%

CVS/CAREMARK CORP 5.03% 10 76.30% 5.01%

MCCORMICK & CO INC 5.01% 11 73.60% 0.55%

DEAN FOODS CO 4.67% 12 71.00% 0.20%

LVMH MOET HENNESSY LOUIS VUITTON SA 3.91% 13 68.40% 0.64%

LOREAL SA 3.86% 14 65.70% 6.20%

TYSON FOODS INC 3.70% 15 63.10% 5.71%

JM SMUCKER CO 3.44% 16 60.50% 4.90%

KELLOGG CO 3.40% 17 57.80% 3.42%

CLOROX CO 3.30% 18 55.20% 8.09%

TARGET CORP 3.25% 19 52.60% 6.68%

57 Hispanic Allocation on Revenue Growth, 3/7/2012 Hispanic Allocation on Revenue Growth

Ranking By Growth Rate Cont.

Company 2006-2010 Revenue

Growth Rate Rank Percentile

2006-2010 Hispanic Allocation

PERNOD RICARD SA 3.06% 20 50.00% 1.57%

CAMPBELL SOUP CO 2.98% 21 47.30% 0.15%

KIMBERLY-CLARK CORP 2.74% 22 44.70% 7.09%

DIAGEO PLC 2.73% 23 42.10% 3.53%

PROCTER & GAMBLE CO 2.30% 24 39.40% 6.13%

HERSHEY CO 2.22% 25 36.80% 5.72%

BROWN-FORMAN CORP 1.62% 26 34.20% 5.09%

UNILEVER 1.39% 27 31.50% 6.92%

BIG LOTS INC 1.08% 28 28.90% 2.33%

CONAGRA FOODS INC 1.06% 29 26.30% 2.24%

KRAFT FOODS INC 0.90% 30 23.60% 3.77%

ESTEE LAUDER COS INC -0.03% 31 21.00% 2.80%

PEPSICO INC -0.21% 32 18.40% 3.80%

HENKEL KGAA -0.78% 33 15.70% 0.48%

BEIERSDORF AG -1.34% 34 13.10% 4.11%

NUTRI/SYSTEM INC -2.59% 35 10.50% 0.01%

NEWELL RUBBERMAID INC -3.76% 36 7.80% 0.04%

FORTUNE BRANDS INC -4.32% 37 5.20% 0.53%

KAO CORP -4.50% 38 2.60% 0.13%

SARA LEE CORP -9.25% 39 0.00% 0.53%

58 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix C Regression Analysis Results

Test 1 Test 2 Test 3 CPG Model

Variable in Model Unstandarized Beta Standardized Beta (Significance)

Unstandarized Beta Standardized Beta (Significance)

Unstandarized Beta Standardized Beta (Significance)

Unstandarized Beta Standardized Beta (Significance)

CAGR 06-07 NA .038 .189 (.000)

.039

.195 (.000)

NA

CAGR 07-08 NA .291 .511 (.000)

.269

.472 (.000)

NA

CAGR 08-09 NA .019 .202 (.000)

.016

.176 (.000)

NA

CAGR 09-10 NA .435 .581 (.000)

.448

.598 (.000)

NA

Hispanic Allocation 06-10

.396

.143 (.037)

.344

.125 (.005)

.288

.104 (.018)

.883

.592 (.000)

Auto NA NA -5.458 -.128 (.007)

NA

Insurance/Finance NA NA 2.229 .042 (.385)

NA

Technology NA NA 4.095 .112 (.026)

NA

Retail NA NA 1.226 .037 (.459)

NA

CPG NA NA 2.399 .068 (.168)

NA

R-Square .021 .608 .644 .350

N = 211 211 211 39

Dependent Variable CAGR 06-10

59 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix D Graphical Analysis

Graph 1

60 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix D Graphical Analysis

Chart 1

61 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix D Graphical Analysis

Chart 2

62 Hispanic Allocation on Revenue Growth, 3/7/2012

Appendix E

GfK MRI Hispanic Data Notes • GfK MRI has measured Hispanics within its National Study (Survey of the American

Consumer).

• Since 2003, GfK MRI began translating all survey materials into Spanish and hiring bilingual interviewers to capture the Spanish dominant Hispanic.

• Other enhancements to data sampling since then include: – Hispanic language capability sample balanced against Nielsen Language estimates

– Additional Hispanic specific demographics (language capability outside the home, language

capability inside the home, country of origin, foreign born, length of time in the U.S., additional Hispanic adults in the home, how well do you speak English)

– Hispanic specific media (3 Magazines, 135+ Television Programs, 2 Cable stations, 3 Radio formats, 3 websites)

– Hispanic specific segmentations (Geoscape Hispanicity, Hispanic Cohorts, Hispanic PersonicX)

– Hispanic Networks/Programs available in NPM Fusion database