Todays Consumers and Generation Next Myths and Realities

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Todays Consumers and Generation Next Myths and Realities. Nick Lake The Nielsen Company NABI Board Meeting July 29, 2010. The Economy Is a Bit Like This Cant Make Up its Mind. Unemployment. -7.8 m. 9.7%. Jobs lost since recession began. Underutilized. 16.6%. Retail Sales (May). - PowerPoint PPT Presentation

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360 Conference

Todays Consumers and Generation Next Myths and Realities

Nick LakeThe Nielsen CompanyNABI Board MeetingJuly 29, 2010

Confidential & Proprietary Copyright 2010 The Nielsen CompanyPage 2The Economy Is a Bit Like This Cant Make Up its Mind

Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 3The News Is Inconsistent Not All Good and Not All Bad

Foreclosures (May)New: -3% vs AprTotal: +11% vs 6 mos ago

Building Permits +10% vs YAG DOW Rollercoaster>11K (Apr); 10K (Jun)Retail Sales (May)-1.2% vs Apr+6.9% vs YAGJobs lost since recession began-7.8 m9.7%Unemployment16.6%UnderutilizedConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 4

Monthly Job Gains/LossesThe Labor Picture Is Improving,But Recovery Will Take YearsSource: Seasonally Adjusted U.S. Total Non-Farm Employment, U.S. Government411,000 temporary workers for Census 2010Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 5

Momentous Events Unpredictable or Uncontrollable Are Impacting the Consumer

Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 6

Source: The Conference Board - Nine census regions, 5,000 US households; 1985 = 100200120022003200420052006Confidence Is Better, But Still Weak by Historical Levels2007200820092010Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 7Consumers Still Saving, But Moving Toward Some Discretionary Spending

Once you have covered your essential living expenses, what do you do with your spare cash? I spend it onSource: Nielsen Global Online Consumer Confidence and Opinion Survey, 1Q10Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 8Overall Dining Is Close to Flat Now, But Well Down vs. Two Years Ago

Source: Company Reports Nations Restaurant NewsConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 9It Could Take at Least 45+ Years Before Restaurant Sales Return to 2007 Levels

Source: Nielsen projectionsConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 10Consumers Are Rephrasing Value

Ill trade down even if it means sacrificing what I really want.I want what I want, but at the best price.Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 11Bev Al Mid Year Report Card Whats Hot and Not

Confidential & ProprietaryCopyright 2010 The Nielsen Company11Page 12Value vs. Volume Gaps Have ShrunkFrom 2007 LevelsValue % Change vs Year AgoVolume % Change vs Year AgoAnnual 2007Lat 52 weeksLat 26* weeksLat 13* weeksAnnual 2007Lat 52 weeksLat 26* weeksLat 13* weeksBeer+3.2%+0.9%+1.1%+1.0%+0.5%-1.0%-0.8%-0.9%Wine+6.1%+2.7%+4.4%+3.2%+2.9%+1.4%+2.8%+1.9%Spirits+4.4%+0.8%+2.5%+2.5%+2.2%+1.1%+2.4%+2.7%Source: Nielsen Tl U.S. Food/Drug/Conv/Liquor Plus - through 06/26/2010 Lat 24 and Lat 12 for Beer/FMBs only

Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 13Now We See a Trading Up Comeback Or Do We?

Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus/Dollars Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 14Page 14

Source: Nielsen, Total US Food, 13 weeks rolling ending 5/29/10Pricing Is a Factor in the Current Wine and Spirits Trading Up

$ Volume % Chg vs YA Avg Eq 750ml Price Chg vs YAWines >$20Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 15

Source: Nielsen Total U.S. Food, Drug, Liquor (+ Conv for Beer)Taking Price in Wine and Spirits Is Difficult; Beer Is in a Better Place, for some SegmentsConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 16Beer Price Tiers/Origin Crafts continue to lead the way, while mainstream Premiums decline. Imports are now back to flat, and the only segment down on price. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 06-26-2010

Lat 52 $ ShareMajor Sub-CategoryValue % ChgVolume % Chg Price TrendLat 52Lat 12Lat 52Lat 12100%Ttl Beer+0.9%+1.0%-1.0%-0.9%84.3Domestic+1.5+1.1-0.9-1.249.1--Premium -0.8-0.1-2.7-1.620.9--Below Premium+5.0+1.4+1.3-1.912.0--Above Premium+5.6+5.8+2.9+4.26.1--Craft/Microbrew+14.0+14.5+11.4+12.715.7Imported-2.0+1.0-1.8+2.053.9Light+1.5+1.1-0.4-0.6Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 17Beer Country of Origin The Import comeback is led by Mexican beer, and reduced Hollandlosses albeit with reduced prices, coupled with Canada/Belgium gains. Lat 52 $ ShareCountry of OriginValue % ChgVolume % Chg Price TrendLat 52Lat 12Lat 52Lat 1215.7%Ttl Imported -2.0%+1.0%-1.8%+2.0%7.6Mexican-0.2+3.1+1.1+4.63.5Holland -7.5-4.3-7.5-3.21.1Canadian+2.1+3.6+0.2+1.60.8Germany-5.2-3.4-6.8-3.80.6Belgium+10.9+14.6+8.2+14.70.5Ireland-1.8-5.7-3.4-6.10.4England+5.0+6.5+6.3+6.8Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 06-26-2010

Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 18Beer Package Size 4 packs, as well as large 30 packs lead growth, with Kegs now bouncing back. Prices are uniformly higher than year ago. Lat 52 $ SharePackage SizeValue % ChgVolume % Chg Price TrendLat 52Lat 12Lat 52Lat 12100%Ttl Beer +0.9%+1.0%-1.0%-0.9%30.912 Pack-2.8-2.2-5.4-4.320.36 Pack-0.2+1.3-1.7-0.413.118 Pack+3.6+2.9+1.6+1.311.5Singles+2.8+3.0+0.1+0.29.724 Pack+0.8-1.1-1.4-3.19.530 Pack+7.5+5.4+4.4+2.22.120 Pack-8.5-12.3-9.8-12.11.44 Pack+11.1+11.3+10.5+10.10.436 Pack+1.6+1.0-1.9-2.30.4Kegs-1.1+17.2-4.8+4.9Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 06-26-2010Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 19Table Wine Price Tiers Trading down was a 2008/09 event. Now, price points $9-$15 and >$20 are in the best growth position, but have been accompanied by price decreases. Lat 52 $ SharePrice SegmentValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Table Wine+2.6%+2.8%+1.4%+1.9%8.60-$2.99+0.8-1.6-3.6-3.724.4$3-$5.99+4.9+3.3+3.2+3.024.1$6-$8.99-2.3-2.6-0.7+0.119.3$9-$11.99+6.2+6.4+8.5+9.311.5$12-$14.99+3.9+6.0+6.2+9.66.8$15-$19.99+1.2+5.0+2.7+6.45.2>$20+4.2+12.4+3.7+12.5Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

Confidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 20Table Wine Package Growth is led by 750 ml (but with average price attrition), alternative packaging such as 3 l Box and Tetra, and the 187 ml size. Lat 52 $ SharePackage Size/ Type SegmentValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Table Wine+2.6%+2.8%+1.4%+1.9%67.5750 ml+3.2+3.9+5.0+5.221.31.5 l+0.4+0.3-0.1+1.34.45 l+3.5+1.0-1.1-0.41.73 l Prem Box+18.9+16.1+12.6+12.61.44 l-6.3-11.5-12.9-16.21.4187 ml+4.5+6.7+3.4+7.11.43 l Glass-3.8-4.9-8.3-7.70.3Tetra+19.9+21.4+22.8+23.6Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 21Table Wine Country of Origin Domestic growth is running well ahead of Imports, with all major wine-growing states contributing.Lat 52 $ ShareOriginValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Table Wine+2.6%+2.8%+1.4%+1.9%71.8Domestic+4.0+4.5+2.0+2.865.4--California+4.0+4.3+1.9+2.64.1--Washington+3.5+3.6+4.7+5.50.8--Oregon+6.0+19.1+13.3+26.00.3--Texas+0.9+5.2-1.1+5.524.6Imported-1.0-1.3-0.6-0.9

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 22Table Wine Imports Softness still from AU and FR, while clear growth leaders remain AR and NZ, now ranked #5 and #6, but with opposite pricing trends.Lat 52 $ ShareCountry of OriginValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 1324.6%Ttl Imported-1.0%-1.3%-0.6%-0.9%7.7- Italy-2.4-0.4-2.2+0.37.0- Australia-7.3-8.4-5.1-6.32.3- France-6.6-8.1-7.0-10.22.0- Chile+3.1+0.3+4.3+3.01.8- Argentina+30.9+19.3+23.8+11.11.2- New Zealand+16.7+19.4+22.9+27.91.1- Spain+1.1-2.7+2.5-0.71.0- Germany+3.1+4.9+2.5+5.60.3- S. Africa-7.1-9.2-5.3-5.50.2- Portugal+2.0+3.6+3.1+3.2

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 23Table Wine Top 10 Varietals Pinot Noir and Riesling lead the way, followed closely by Sauv Blanc, Zinfandel and Cab Sauv. Syrah/Shiraz continues to struggle. Lat 52 $ ShareVarietalValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Table Wine+2.6%+2.8%+1.4%+1.9%21.5Chardonnay+1.8+1.7+2.8+2.715.0Cab Sauv+4.7+4.6+5.6+5.510.1Merlot-3.6-4.6-1.5-2.77.8P. Grigio/Gris+1.9+2.7+3.2+4.35.8P. Noir+7.6+9.3+10.9+12.74.4Sauv Blanc+7.4+7.7+7.2+7.24.2White Zin-2.2-3.5-3.0-2.73.1Syrah/Shiraz-8.6-9.5-7.3-7.82.5Riesling+8.5+9.3+10.9+12.82.4Zinfandel+4.3+7.2+5.7+8.1

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 24Spirits - Sub-category Vodka continues to grow, along with improved Tequila, Cognac and Prep Cktl growth. Average price for some rising (Cognac, Prep Cltl), and others falling (Vodka, Tequila)Lat 52 $ ShareSub-categoryValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Spirits +0.8%+2.5%+1.1%+2.7%29.1Vodka+3.1+4.1+4.3+4.925.8Whiskey-0.0+1.0-1.8-1.18.5---Scotch-2.6-0.2-5.7-5.48.4---Bourbon+0.9+1.5-1.9+0.55.8---Canadian-1.50.3-2.8-1.11.8---Blended+4.7+0.3+6.0+1.61.1---Irish+12.6+9.9+13.2+10.512.4Rum+1.0+3.2+1.4+3.411.5Cordials/Schnapps-2.4-1.8-2.3-0.96.9Tequila+0.5+2.9+3.4+5.86.6Unflav Brandy/Cog.+2.3+8.6-0.0+4.14.4Gin-2.7-2.7-3.0-3.22.7Prep/RTD Cocktails-1.6+8.5+1.2+10.8

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 25Spirits Import vs. DomesticWhile domestic trends overall are flat, Imported trends have picked up in the last 13 weeks, with help from Imported Vodka growthLat 52 $ ShareImp vs. Dom by Sub-categoryValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Selected* Spirits +0.4%+2.1%+0.8%+1.9%62.5Imported+0.0+2.9+0.6+2.632.0 Vodka+2.9+5.6+7.4+8.332.0 Whiskey-2.3+0.4-4.2-2.320.2 Cordials-1.6-1.1-1.4-0.55.3 Gin-3.1-1.1-2.1+0.21.1 Brandy-8.5-9.4-9.3-8.837.5Domestic+1.1+0.8+1.0+1.363.4 Vodka+3.2+2.9+3.1+3.612.5 Brandy-1.1-0.9-2.2-1.38.6 Gin-2.3-4.3-3.5-4.97.6 Cordials-5.1-3.4-3.7-1.03.9 Whiskey-1.4-6.0-4.4-8.5

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent*NOTE: Ttl Selected Spirits = Vodka, Whiskey, Cordials, Gin, Brandy and Schnapps segmentsConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 26Spirits - Price Tiers Trading down NOT the descriptive word any longer; premium and especially ultra-premium leading the way but with reduced pricing.Lat 52 $ SharePrice TierValue % ChgVolume % Chg Price TrendLat 52Lat 13Lat 52Lat 13100%Ttl Spirits +0.8%+2.5%+1.1%+2.7%21.6Value+0.1+0.4-0.3+1.032.5Mid Price+0.5+1.6+1.7+3.033.8Premium+0.7+2.1+2.0+3.812.1Ultra Premium+3.1+10.4+3.7+11.5Spirit Price Tiers Legend (equiv 750 ml)

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 27Ultra Premiums Generally Leading the Way, with the Exception of Vodkas and TequilasTTL US Sales Volume % Chg Lat 26 weeks vs Year AgoValueMidPremiumUltra VodkaScotchBourbonCanadian WhiskyRumCordials/SchnappsUnflavored Brandy/CognacTequilaGinTop box growthBottom box growthSource: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml EquivalentConfidential & ProprietaryCopyright 2010 The Nielsen CompanyPage 28SummaryEconomic uncertainty still prevails; recovery likely modestImpact depends upon your products geographic development and consumer demographics

Consumers have re-phrased valueFrantic trading down replaced by I want what I want, on my terms

Trading up activity in Wine and Spirits at least partially tied to decrease in pricingImports in general are mixed and those performing well have adjusted pricing to be more competitive within the categoryConfidential & ProprietaryCopyright 2010 The Nielsen Company