2

3

Total Tea Sales Were Relatively StableConsumer Sales of Total Tea

Total Grocery-Mass-Drug (Millions)

129 131 130

0

20

40

60

80

100

120

140

1998 1999 2000

$1,538$1,639

$1,715

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

1998 1999 2000

% Chg 2% -1% 7% 5%

Pounds Dollars

% Chg

Total U.S. -*52 Weeks Ending 7/22/00

4

The Pounds Sale Decline Was Driven By Less Tea Purchasing Per Shopping Trip

Household Purchase Dynamics of Total TeaAll Outlets

Penetration (Millions Households Purchasing)+2.2

%

Buying Rate (Annual Spending per Household)-

1.3%

Average Purchasing Trips per Year+1.6

%

Average Total Shopping Basket when Tea Is Purchased+0.7

%

5

Grocery Remains The Dominant Tea Channel

Consumer Sales Of Total Tea(Millions)

Mass12%

Drug2%

Grocery86%

Mass9%

Drug4%

Grocery87%

Pounds Dollars

Note: Mass Merch includes SuperCentersTotal U.S. -*52 Weeks Ending 7/22/00

6

Grocery Dollar Sales Are Gaining Due To Higher Prices And The Increasing

Importance Of R-T-DConsumer Sales Of Total Tea Dollars Grocery $2MM+ (Millions)

Total U.S. - *52 Weeks Ending 7/24/99 or 7/22/00

7

However, Grocery Tea Dollars AreContinuing Recent Declines

Consumer Sales Of Total Tea Pounds Grocery $2MM+ (Millions)

Total U.S. - *52 Weeks Ending 7/24/99 and 7/22/00

8

The Growth Of Mass And DrugHave Offset Grocery

Consumer Sales Of Total TeaTotal Grocery-Mass-Drug (Millions)

-0.7%

-4.1%

28.8%

12.5%

4.6%2.3%

31.7%

6.6%

Pounds Dollars

Total – All Outlets Grocery Mass Drug

130 $1,715 112 $1,486 15 $157 3 $72

Total U.S. -*52 Weeks Ending 7/22/00

9

All Kinds Of Tea

10

Ready-To-Drink Contributes Significantly To Dollars, But Is A Great Deal Less Important To

Pound SalesShare Of Tea Sales By Type

Dollars Versus Pounds – Total Grocery-Mass-Drug

Herbal5% Instant

6%

Iced TeaMix22%

GreenTea3%

Pounds Dollars

Herbal10%

Instant2% Iced Tea

Mix16%

GreenTea5%

Total U.S. -*52 Weeks Ending 7/22/00** Three Outlets = Grocery $2MM+, Drug, Mass Merch

11

Tea Bags/Green Tea Has Stabilized, While RTD Continues To Impact Iced

And InstantShare Of Tea Pound Sales By Type — Grocery $2MM+

60.9 60.4 60.8 59.2 58.1 57.5 57.2 57.1 56.1 55.6 56.0

20.4 21.7 22.3 23.5 23.8 24.2 24.3 24 24.7 24.3 23.4

0.7 1.0 1.3 2.9 4.6 5.0 5.7 6.6 7.5 8.6 9.3

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999* 2000*

Loose Tea Tea Bags (includes Green Tea) Herbal Instant Iced Tea R-T-D

Note: Tea Bags include Green Tea (4.9 share in 2000*)Total U.S. - *52 Weeks Ending 7/24/99 or 7/22/00

R-T-D

Iced Tea

Instant

Herbal

Tea Bags(includes

Green Tea)

Loose Tea

12

Volume Expansion Was Fueled By Green Tea Gains, While Dollar Growth Was Powered By

Ready-To-DrinkTea Sales Growth 1999-2000 By Type

Total Grocery-Mass-Drug (‘000)

(45)

1,210

(82)

635

(441)

(1,557)

(634)

(958)Total Tea

Regular Tea Bags

Iced Tea Mix

Instant Tea

Ready-To-Drink Tea

Herbal Tea

Green Tea

Loose Tea ($337)

$27,689

$5,402

$49,478

($1,929)

($13,013)

$10,008

$76,062

Pounds Dollars

Total U.S. -*52 Weeks Ending 7/22/00

13

Both Buying Households And Increased Tea Purchasing Drove Green And R-T-D

Gains% Change in Penetration — All Outlets

-6.5%

-1.9%

44.6%

3.9%

-3.7%

11.4%

2.9%

-0.5%

Penetration

Buying Rate

Iced Tea Mix Herbal Tea Green Tea RTD Tea

Total U.S. -*52 Weeks Ending June 2000

14

Dollar Sales Growth Was Fueled By Increased Pricing Across All Tea Types …

Tea Price Per Pound ChangesTotal Grocery-Mass-Drug

1%

4%

5%

6%

5%

1% 1%

3%

5%

Price Per Pound % Chg vs Year Ago

Total TeaRegular

Tea BagsDecaf

Tea BagsIced

Tea MixInstant

TeaRTD Tea

Herbal Tea

Loose Tea Green Tea

Total U.S. -*52 Weeks Ending 7/22/00

15

Green & Herbal Achieve Significantly Higher Premium Pricing To Mainstream

TeaTea Dollar Sales by Price Point

Total Grocery-Mass-Drug

$5.08

$7.74

$8.31

$9.47

$11.24 $21.15

$25.96

$0

$50

$100

$150

$200

$250

$300

$350

$400

Opportunity?

$

Price per Pound

Do

lla

rs (

Mil

lio

ns

)

Instant Tea

RegularTea Bags

IcedTea

Decaf Tea Bags

LooseTea

Green

Herbal

Total U.S. -*52 Weeks Ending 7/22/00

16

Ready-To-Drink Is Especially Important In Drug, However Tea Bags Dominate Across All Outlets

Division of Tea Pound Sales within Channels By Type – Grocery $2MM+

Herbal4%

R-T-D7%

Regular Tea Bags

65%

Instant Tea8%

Iced Tea Mix13% Green

Tea2%

Herbal5%

R-T-D9%

Regular Tea Bags

54%

Instant Tea6%

Iced Tea Mix22%

Green Tea3%

R-T-D27%

Herbal8%

Regular Tea Bags

56%

Iced Tea Mix6%

Green Tea3%

Mass Merchant

Grocery$2MM+

Drug Stores

Total U.S. -*52 Weeks Ending 7/22/00

17

Grocery Is Still The Key OutletFor Regular Tea Bag Sales

Consumer Sales Of Regular Tea Bags

Mass14%

Drug2%

Grocery84%

Mass11%

Drug2%

Grocery87%

Pounds Dollars

Total U.S. -*52 Weeks Ending 7/22/00

18

Regular Tea Bag Volumes Declined Slightly, But Dollars Sales Gained

Consumer Sales Of Regular Tea Bags(Millions)

-0.9%-4.7%

23.9%

55.3%

2.1%

-1.0%

28.7%24.0%

Pounds

Dollars

Total – All Outlets Grocery Mass Drug

71 $497 62 $431 10 $57 2 $9

Total U.S. -*52 Weeks Ending 7/22/00

19

RTD Tea Continues Strong Dollar Growth, Capturing 37% Of Tea Grocery

DollarsReady-To-Drink Tea — Grocery $2MM+

$58.

9

$84.

8

$237

.3

$370

.0

$383

.0

$400

.0

$417

.0

$460

.0 $514

.0

$549

.0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

*

20

00

*

6.0% 8.

1%

20.1

%

28.4

%

29.0

%

30.3

%

31.5

%

33.0

%

35.4

%

37.0

%

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

*

20

00

*

Dollar Sales (Millions) Dollar Share of Tea

Total U.S. -*52 Weeks Ending 7/24/99 or 7/22/00

20

Ready-To-Drink Provided The Sole Tea Gains Within The Supermarket ($2MM+)

ChannelVolume Gains 1999-2000 — Tea Pounds (000s)

429960

(76)(2,172)

(597)(295)

(2,931)

185200

31669

158247

1,969

2180

(54)(2)

(34)328

0

(4000) (3000) (2000) (1000) 0 1000 2000 3000

Regular Tea Bags

Herbal Tea

Instant Tea

Iced Tea Mix

Loose Tea

Green Tea

Ready-To-Drink Tea

Regular Tea Bags

Herbal Tea

Instant Tea

Iced Tea Mix

Loose Tea

Green Tea

Ready-To-Drink Tea

Regular Tea Bags

Herbal Tea

Instant Tea

Iced Tea Mix

Loose Tea

Green Tea

Ready-To-Drink Tea

Drug Stores

Mass Merchandisers

Grocery $2MM+

21

Finally, There Are Distinct Differences In The Demographics For The Growth

SegmentsDemographic Insights

•Tea Bags• Large Families, Older Children, South, Rural, Less Affluent

•Green Tea• Small Households, No Kids, 55+, East/West, Urban

•Ready-To-Drink• Large Families, Middle-Aged (35-54), East, Urban• Kids 6-17 Ethnic Households, Affluent

Demographic profiles are largely unchanged since 1996

Total U.S. -*52 Weeks Ending June 2000

22

A Closer Look At Decaffeinated Tea

23

Decaf Tea Growth Is Outpacing Regular, Accounting About 13% Of Sales

Total Grocery-Mass-Drug

Pounds (000)

$ (000,000)

113

17

1,504

211+4%

-1%

+9%

+4%

Decaf

Regular

Total U.S. -*52 Weeks Ending 7/22/00

24

In Fact, Decaf Tea Bag Sales Helped Offset Regular (Caffeinated) Tea Bag

LossesTea Bags Gains By Caffeination

Total Grocery-Mass-Drug (‘000s)

Regular Decaf Regular Decaf

-2.0% +4.4% -0.8% +9.4%

Dollars

(1,190)

800

($2,695)

$12,703

Pounds

Total U.S. -*52 Weeks Ending 7/22/00

25

Decaf’s Presence Is Strongest In Tea Bags

Volume Share Of Decaf Tea By TypeTotal Grocery-Mass-Drug

Instant Tea11%

RegularTea Bags

77%

Iced Tea Mix8%

R-T-D4%

Note: Dollar Mix is similar to Volume MixTotal U.S. -*52 Weeks Ending 7/24/99 and 7/22/00** Three Outlets = Grocery $2MM+, Drug, Mass Merch

26

Decaffeinated Growth Was Sourced Almost Entirely From Tea Bags And

Ready-To-Drink Decaffeinated Tea Sales Growth 1999-2000 By Type

Total Grocery-Mass-Drug (‘000s)

103

11

(69)

556

0

Regular Tea Bags

Iced Tea Mix

Instant Tea

Ready-To-Drink Tea

Herbal Tea

Green Tea

Loose Tea ($2)

$5,600

($23)

($635)

$12,703

Pounds Dollars

Total U.S. -*52 Weeks Ending 7/22/00

27

Don’t Miss The Opportunity

28

Bottled Water Market Has Grown10 Fold Since 1976U.S. Bottled Water Market

1976-1997, Gallonage

0

500

1000

1500

2000

2500

3000

3500

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

Th

ou

sa

nd

s o

f G

all

on

s

YearSource: Beverage Marketing Corporation, New York

29

Water Is A $2.6 Billion Dollar Market, Growing Over 20%

U.S. Bottled Water Market — 1976-1997, Gallonage$2.60

$2.20

$1.90$1.70

$1.50

1995 1996 1997 1998 1999

% Chg 13% 12% 17% 21%

* Food, Drug, Mass, Convenience, Petro

30

We Must Continue To Find New Ways To Leverage The Benefits Of Tea

•Tea Based Beverages• i.e. Minute Maid and Snapple Iced Tea, Lemonade/Lemonade Iced Tea

•Tea Based Frozen Specialties• i.e. Tea Flavored Ice Pops (recruit young consumers early)

•Dietary Supplements• i.e. Anti-Oxidant Tea Pills

•Tea Based __________________