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Attracting Shopperswith Candy - 2011

Tom PirovanoFebruary, 2011

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Topics Covered

• Recent Candy Promotions

• Print Ads Across Retailers & Suppliers

• Seasonal Candy Promotions

• Candy POS Sales

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Recent Candy Promotions

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One Week After Valentine’s Day:Front Page Ads for More Candy!!!2/20/2011 ads from Top Drug Chains: Walgreens, CVS, and Rite Aid

Reminder: Easter is on April 24th this year – nine weeks away, and three weeks later than in 2010.

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Why promote a non-competitive price?

About 70% of single candy bar ads are priced at 2/$1.Front and back page ads need to show the best deals to drive traffic.

Kmart Back Page Ad2/20/2011

CVS Back Page Ad2/20/2011

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My Favorite Valentine’s Day Ad for 2011

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Valentine’s FSIs – 2/6/2011

Where are the Valentine’s Candy FSI’s?

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Very Little FSI Support for Valentine’s Day Candy

1/31/20112/6/2011

The one true FSI for Valentine’s candy ran early: 1/23/2011

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Super Bowl TV Commercials

CPG Suppliers with 2010 Super Bowl Spots

• Anheuser-Busch• PepsiCo • Coca-Cola • Mars Candy• MillerCoors• Dr. Pepper/Snapple • Unilever • Diamond Foods

• Anheuser-Busch • PepsiCo• Coca Cola• Mars Candy

CPG Suppliers with 2011 Super Bowl Spots

Only 4 CPG Players in 2011?

Will Super Bowl TV commercials remain effective for CPG brands?

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Candy Print AdsAcross Retailers & Suppliers

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490

356

322

274

272

268

213

201

180

179

Shoppers Drug Mart …

CVS

Rite Aid

Giant Landover

Stop & Shop

Walgreens

Zellers (Canada)

Jewel-Osco

King Soopers

City Market

Top Retailers Promoting Candy

Drug chains dominate candy promotions.

Source: ECRM MarketGate, 52-Week Ad Blocks Ending 2/19/2011

Candy Ad Blocks Per Year

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Retailers Promoting Private Label Candy

Ads Including PL ShareRetailer Private Label of CandyShoppers Drug Mart (Canada) 242 14.5%CVS 96 6.4%Walgreen Company 57 4.4%Superfresh 53 14.0%A & P 51 13.5%Pathmark 43 14.5%Waldbaums 42 12.2%Tops Markets 39 9.7%Rite Aid 36 1.8%Giant Eagle 35 13.8%

Source: ECRM MarketGate, 52-Weeks Ending 2/19/2011, Brand Counts

The top U.S. drug chains support branded candy much more than private label.

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While many store brands compete on price, premium candies like Frango and Choxie drive traffic as exclusive brands.

Private Label Candy as a Destination

The Test ofPremium Private Label:

Is it “GIFTABLE”?

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Top Promoted Food Categories

4.11%

3.62%

2.49%

2.24%

1.96%

1.84%

1.67%

1.66%

1.65%

1.64%

Frozen Prepared Food

Beef

Carbonated Soft Drinks

Wine

Cheese

Pork

Candy (Excl Gum/Mints/Holiday)

Frozen Seafood

Chicken

Beer

Share of 2010 Food Ads

Source: ECRM, Share of U.S. Food Ads (Brands Counts) for Calendar 2010

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Most leading retailers ran more ad blocks in 2010 than in 2009Increased 2010 Ad Blocks Vs. 2009• Kroger• Safeway• Albertson’s (Supervalu)• Loblaw’s (Canada)• Publix • Stop & Shop• Food Lion• H.E.B.

• Walgreen Company• CVS• Rite Aid

• Walmart-US• Target Stores

Decreased 2010 Ad Blocks• A&P• Wegman’s• Meijer• Kmart• Sears• Shopko

Source: ECRM-MarketGate Ad Comparisons, Calendar 2010

Shouldn’t we expect fewer print ads as digital media grows?

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29.5%

16.3%

9.8%

8.7%

4.7%

3.9%

3.5%

2.7%

2.7%

2.3%

Hershey Foods Corporation

Mars Chocolate North …

Nestle S.A.

Wrigley Jr Company*

Russell Stover Candies

Cadbury Adams USA LLC

Private Brand Manufacturer

Farley's & Sathers Candy …

Tootsie Roll Industries

Ferrero U.S.A., Inc.

Top Promoted Candy-Makers

Hershey, Nestle, and Mars (with Wrigley) represent nearly 2/3 of all retail candy ads.

Source: ECRM MarketGate, Share of Weighted Ad Blocks, 52-Week Ending 2/19/2011

Share of Candy Ad Blocks

*Wrigley is owned by Mars.

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Seasonal CandyPromotions

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Weekly Food PromotionsWeekly Number of U.S. Print Circular Ads for Food Brands

2011Super Bowl

Pre-Easter Pre-

Mothers Day

Pre-4th of July

Pre-Labor Day

Pre-Thanksgiving

Pre-Christmas

Source: ECRM, Weekly Food Ads (Brands Counts) for U.S. Retailers

2010Super Bowl

Food ads drop for the week of Thanksgiving/Black Friday as Mass and Drug channels promote non-food categories.

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Candy Ad Support By WeekWeekly Ad Blocks in Retail Print Circulars Valentine’s

Day

Easter

Mothers Day

4th ofJuly

Halloween

Christmas

Source: ECRM, Weekly Ad Blocks Weighted by Retailer Size, 52 Weeks Ending 2/19/2011

The number of weekly candy ads vary greatly throughout the year.

20112010

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Valentine’s Season Retail Ad Support

Share of Promotions RankCandy Maker Valentine's 52-Wks Valentine's 52-WksHershey Foods 25.9% 29.5% #1 #1Mars Chocolate 19.9% 16.3% #2 #2Russell Stover 15.2% 4.7% #3 #5Nestle 9.4% 9.8% #4 #3Wrigley (Mars) 3.5% 8.7% #5 #4Ferrero U.S.A. 3.2% 2.3% #6 #10Farley's & Sathers 3.2% 2.7% #7 #8Cadbury Adams USA 3.0% 3.9% #8 #6Private Label 2.7% 3.5% #9 #7Ghirardelli Chocolate 2.1% 1.7% #10 #12

Source: ECRM MarketGate, Share of Weighted Ad Blocks52 Week Ending 2/19/2011 vs. 4 Weeks Ending 2/19/2011

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Last Minute Valentine’s Ads Running February 13, 2011

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Valentine’s Day Outside the U.S.

Comercial Mexicana (Mexico) Intermarche (France) Tesco (Poland)

Netto, UK Loblaws, Canada, Zellers, Canada

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Christmas Season Retail Ad Support

Share of Promotions RankCandy Maker Christmas 52-Wks Christmas 52-WksHershey Foods 31.7% 29.5% #1 #1Mars Chocolate 10.3% 16.3% #2 #2Russell Stover 8.3% 4.7% #3 #5Nestle 6.2% 9.8% #4 #3Ferrero U.S.A. 5.6% 2.3% #5 #10Wrigley (Mars) 4.9% 8.7% #6 #4Private Label 4.0% 3.5% #7 #7Ghirardelli Chocolate 3.9% 1.7% #8 #12Farley's & Sathers 3.7% 2.7% #9 #8Tootsie Roll Industries 3.1% 2.7% #10 #9

Source: ECRM MarketGate, Share of Weighted Ad Blocks52 Week Ending 2/19/2011 vs. 4 Weeks Ending 12/25/2010

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Metro, Austria11/11/20102 full pages for Advent

Advent Promotions?

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Halloween Season Retail Ad Support

Share of Promotions RankCandy Maker Halloween 52-Wks Halloween 52-WksHershey Foods 29.5% 29.5% #1 #1Mars Chocolate 17.6% 16.3% #2 #2Nestle 14.4% 9.8% #3 #3Wrigley (Mars) 7.0% 8.7% #4 #4Farley's & Sathers 6.8% 2.7% #5 #8Tootsie Roll Industries 5.8% 2.7% #6 #9Private Label 4.4% 3.5% #7 #7Cadbury Adams USA 2.3% 3.9% #8 #6Kraft Foods 2.2% 0.7% #9 #16Wilton Industries 1.8% 0.2% #10 #32

Source: ECRM MarketGate, Share of Weighted Ad Blocks52 Week Ending 2/19/2011 vs. 4 Weeks Ending 10/30/2010

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Share of Ad Space Makes a Difference

•Both ads ran October 24, 2010.

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Mother’s Day Season Retail Ad Support

Share of Promotions RankCandy Maker Mother’s Day 52-Wks Mother’s Day 52-WksHershey Foods 23.8% 29.5% #1 #1Mars Chocolate 14.0% 16.3% #2 #2Nestle 12.6% 9.8% #3 #3Wrigley (Mars) 6.9% 8.7% #4 #4Russell Stover 6.5% 4.7% #5 #5Ghirardelli Chocolate 5.3% 1.7% #6 #12Private Label 5.1% 3.5% #7 #7Cadbury Adams USA 4.8% 3.9% #8 #6Lindt & Sprungli 3.4% 1.9% #9 #11Godiva Chocolatier 3.0% 0.4% #10 #23

Source: ECRM MarketGate, Share of Weighted Ad Blocks52 Week Ending 2/19/2011 vs. 4 Weeks Ending 5/15/2010

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Several categories compete for front page Mother’s Day ads

May, 2010

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Easter Season Retail Ad Support

Share of Promotions RankCandy Maker Easter 52-Wks Easter 52-WksHershey Foods 28.2% 29.5% #1 #1Mars Chocolate 13.5% 16.3% #2 #2Wrigley (Mars) 9.2% 8.7% #3 #4Just Born 5.7% 1.0% #4 #14Russell Stover 4.8% 4.7% #5 #5Nestle 4.2% 9.8% #6 #3Private Label 4.0% 3.5% #7 #7Lindt & Sprungli 3.8% 1.9% #8 #11R.M. Palmer 3.4% 0.8% #9 #15Cadbury Adams USA 3.0% 3.9% #10 #6

Source: ECRM MarketGate, Share of Weighted Ad Blocks52 Week Ending 2/19/2011 vs. 4 Weeks Ending 4/3/2010

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Mass merchandisers show strong ads support for Easter.

March 28, 2010

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Easter Candy Ads in January

Giant Landover (Kroger Banners)Shoppers Drug Mart and Stop & Shop Baker’s/Dillons/Gerbes

These ads ran over three months before Easter.

January, 2011

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Candy POS Sales

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Unit 52-Week Avg UnitRank Produce Description UNIT Sales Price UPC Code#1 Snickers Bar, 2.07 oz. 112.2 MM $0.66 40000 00102#2 Reeses Peanut Butter Cup, 1.5 oz. 81.9 MM $0.66 34000 00440#3 Hershey's Milk Chocolate, 1.55 oz. 66.2 MM $0.67 34000 00240#4 M&M Peanut, 1.74 oz. 66.0 MM $0.66 40000 00032#5 Kit Kat, 1.5 oz. 65.4 MM $0.67 34000 00246#6 Hershey's Milk Choc Almond, 1.45 oz. 59.0 MM $0.65 34000 00241#7 M&M Plain 1.69 oz. 45.1 MM $0.68 40000 00031#8 Butterfinger Bar, 2.1 oz. 36.9 MM $0.64 28000 01159#9 3 Musketeers Bar, 2.13 oz. 36.5 MM $0.67 40000 00003#10 Hershey's Cookies N Creme, 1.55 oz. 33.5 MM $0.69 34000 00239

Source: Nielsen, Total U.S. Food/Drug/Mass Excluding Walmart, 52 Weeks Ending 12/25/10

Top 10 U.S. Candy Items – Unit Sales

Single bars rank highest in unit sales

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Dollar 52-Week Avg UnitRank Produce Description DOLLAR Sales Price UPC Code#1 Hershey's Milk Chocolate, 6-ct $76.6 MM $3.35 34000 29005#2 Snickers Bar, 2.07 oz. $74.1 MM $0.66 40000 00102#3 Reeses Peanut Butter Cup, 1.5 oz. $53.7 MM $0.66 34000 00440#4 Snickers Fun Size 11.18 oz. Bag $49.4 MM $2.70 40000 15140#5 Reeses Pnt Btr Cup, 10.5 oz. Bag $46.0 MM $2.61 34000 40211#6 Hershey's Milk Chocolate, 1.55 oz. $44.1 MM $0.67 34000 00240#7 Kit Kat, 1.5 oz. $44.0 MM $0.67 34000 00246#8 M&M Peanut, 12.6 oz. Bag $43.9 MM $2.97 40000 24887#9 M&M Peanut, 1.74 oz. $43.6 MM $0.66 40000 00032#10 Kit Kat, 10.78 oz. Bag $43.1 MM $2.65 34000 08752

Source: Nielsen, Total U.S. Food/Drug/Mass Excluding Walmart, 52 Weeks Ending 12/25/10

Top 10 U.S. Candy Items – Dollar Sales

The top 10 in dollar sales include 5 singles 5 multi-packs.

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Dollar Average Unit Price PriceRank Produce Description Grocery Drug Advantage Manufacturer

#1 Hershey's Milk Chocolate, 6-ct $3.38 $3.74 Supermarkets Hershey’s

#2 Snickers Bar, 2.07 oz. $0.67 $0.63 Drug Chains Mars

#3 Reeses Peanut Butter Cup, 1.5 oz. $0.64 $0.68 Supermarkets Hershey’s

#4 Snickers Fun Size 11.18 oz. Bag $2.72 $2.66 Drug Chains Mars

#5 Reeses Pnt Btr Cup, 10.5 oz. Bag $2.60 $2.72 Supermarkets Hershey’s

#6 Hershey's Milk Chocolate, 1.55 oz. $0.65 $0.70 Supermarkets Hershey’s

#7 Kit Kat, 1.5 oz. $0.66 $0.71 Supermarkets Hershey’s

#8 M&M Peanut, 12.6 oz. Bag $3.16 $2.85 Drug Chains Mars

#9 M&M Peanut, 1.74 oz. $0.67 $0.63 Drug Chains Mars

#10 Kit Kat, 10.78 oz. Bag $2.62 $2.82 Supermarkets Hershey’s

Source: Nielsen, Total U.S. Food/Drug/Mass Excluding Walmart, 52 Weeks Ending 12/25/10

Candy Pricing By Retail Channel

What’s driving

price gaps across

channels?

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Key Takeaways

• Easter is three weeks later in 2011. Be careful not to promote too early.

• Drug chains run the most candy ads, but run very few ads for private label candy.

• Despite digital alternatives, retailers are running more print ads than ever.

• The top 3 candy-makers represent nearly 2/3 of all retail candy ads.

• Holiday promotions vary widely by brand.• Mars promotes at a lower price in the drug channel

while Hershey promotes lower prices in supermarkets.

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Recent Studies/Reports: www.PromotionalReflections.com– Top 100 Promoted Brands– Super Bowl Promotions– Holiday Promotions– Promoting the Pet Aisle– Black Friday– Thanksgiving Promotions– Fresh/Perishable Promotions– Halloween Promotions

Circular Logic Blog: www.circularlogic.marketgate.com

Contacts:Scott Whalley 440-528-0417 scott@ecrm.marketgate.comTom Pirovano 440-528-0418 tpirovano@ecrm.marketgate.com

More on ECRM

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Thank YouQuestions?