Today’s Consumers and Generation Next Myths and Realities

Confidential & Proprietary • Copyright © 2010 The Nielsen Company

Today’s Consumers and Generation Next Myths and Realities

Nick LakeThe Nielsen CompanyNABI Board MeetingJuly 29, 2010

Confidential & ProprietaryCopyright © 2010 The Nielsen Company

Page 2

The Economy Is a Bit Like This –Can’t Make Up its Mind


Page 3

The News Is Inconsistent – Not All Good and Not All Bad

Foreclosures (May)New: -3% vs Apr

Total: +11% vs 6 mos ago

Building Permits +10% vs YAG

DOW Rollercoaster

>11K (Apr);

<10K (May),

>10K (Jun)

Retail Sales (May)

-1.2% vs Apr

+6.9% vs YAG

Jobs lost since recession began

-7.8 m9.7%Unemployment

16.6%Underutilized


Page 4

-347K

-504K

-344K

-211K-225K-224K

64K

-109K

-26K

35K

208K

290K

431K

-582K

-753K

-144K -160K-137K-161K-128K

-175K

-321K-380K

-597K

-681K

-779K

41,000

-726K-800,000

-700,000

-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

Dec-07

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Monthly Job Gains/Losses

The Labor Picture Is Improving,But Recovery Will Take Years

Source: Seasonally Adjusted U.S. Total Non-Farm Employment, U.S. Government

411,000 temporary workers for Census 2010


Page 5

Momentous Events – Unpredictable or Uncontrollable – Are Impacting the Consumer


Page 6

20

30

40

50

60

70

80

90

100

110

120

Source: The Conference Board - Nine census regions, 5,000 US households; 1985 = 100

2001 2002 2003 2004 2005 2006

Confidence Is Better, But Still Weak by Historical Levels

2007 2008 2009 2010


Page 7

Consumers Still Saving, But Moving Toward Some Discretionary Spending

0%

5%

10%

15%

20%

25%

30%

35%

40%

Savings PayingDebts

No sparecash

HomeImprov

Out ofHome Ent.

Vacations Apparel RetirementFunds

Tech Prods Investing

U.S. Avg - 1Q09U.S. Avg - 4Q09U.S. Avg - 1Q10

Once you have covered your essential living expenses, what do you do with your spare cash? I spend it on…

Source: Nielsen Global Online Consumer Confidence and Opinion Survey, 1Q10


Page 8

Overall Dining Is Close to Flat Now, But Well Down vs. Two Years Ago

Dining Operators Same Store Sales Comps

0.8%

-5.0%-1.5%

-14.4%

-8.2% -8.7% -7.3%

-17.1%

0.4% 0.1%

2007 2008 Q2/3, 2009 Q4, 2009 Q1, 2010

Total Dining Fine Dining

Source: Company Reports – Nation’s Restaurant News


Page 9

It Could Take at Least 4–5+ Years Before Restaurant Sales Return to 2007 Levels

Illustration of Same Store RevenuesAssuming 2010 is +1%, and Following Years are +5%

$0$200,000$400,000$600,000$800,000

$1,000,000

2007 2008 2009 2010 2011 2012 2013 2014

Total Dining Fine Dining

Source: Nielsen projections


Page 10

Consumers Are Rephrasing Value

“I’ll trade down even if it means

sacrificing what I really want.”

“I want what I want, but at the

best price.”


Page 11

Bev Al Mid Year Report Card – What’s Hot and Not


Page 12

‘Value vs. Volume’ Gaps Have ShrunkFrom 2007 Levels

Value % Change vs Year Ago Volume % Change vs Year Ago

Annual 2007

Lat 52 weeks

Lat 26* weeks

Lat 13* weeks

Annual 2007

Lat 52 weeks

Lat 26* weeks

Lat 13* weeks

Beer +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/FMB’s only


Page 13

Now We See a “Trading Up” Comeback – Or Do We?

15%

-1%

14%

7%4%

-2%

10%

-1%

5%1%

22%

1%3%

13%

9% 8%

-6%-4%

5%

12%

-1%

<$6 >$20 Value UltraPremium

BelowPremium

Imports Crafts

Annual 2007 52 weeks to 10/17/2009 26 weeks to 5/29/2010

Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus/Dollars


Page 14Page 14

Spirits: Ultra Premiums

(6)

(4)

(2)

0

2

4

6

8

10

12

Q3

'08

Q1

'09

Q2

'09

Q3

'09

Q4

'09

Q1

'10

Q2

'10

($1.00)

($0.80)

($0.60)

($0.40)

($0.20)

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

Source: Nielsen, Total US Food, 13 weeks rolling ending 5/29/10

Pricing Is a Factor in the Current Wine and Spirits Trading Up

-15

-10

-5

0

5

10

15

20

Q3

'08

Q4

'08

Q1

'09

Q2

'09

Q3

'09

Q4

'09

Q1

'10

Q2

'10

($1.50)

($1.00)

($0.50)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$ Volume % Chg vs YA Avg Eq 750ml Price Chg vs YA

Wines >$20


Page 15

Avg. Price Across 100 Key Items Per Category

100

101

102

103

104

105

106

107

108

1/12/

08

3/8/0

8

05/03

/08

06/28

/08

08/23

/08

10/18

/08

12/13

/08

02/07

/09

04/04

/09

05/30

/09

07/25

/09

09/19

/09

11/14

/09

01/09

/10

03/06

/10

05/01

/10

Table Wine Spirits Beer

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 Segments


Page 16

Beer – 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 $ Share

Major Sub-Category

Value % Chg Volume % Chg Price TrendLat 52 Lat 12

Lat 52 Lat 12

100% Ttl Beer +0.9% +1.0% -1.0% -0.9%

84.3 Domestic +1.5 +1.1 -0.9 -1.249.1 --Premium -0.8 -0.1 -2.7 -1.6

20.9 --Below Premium +5.0 +1.4 +1.3 -1.9

12.0 --Above Premium +5.6 +5.8 +2.9 +4.2

6.1 --Craft/Microbrew +14.0 +14.5 +11.4 +12.7

15.7 Imported -2.0 +1.0 -1.8 +2.0

53.9 Light +1.5 +1.1 -0.4 -0.6


Page 17

Beer – 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 $ Share

Country of Origin

Value % Chg Volume % Chg Price TrendLat 52 Lat 12 Lat 52 Lat 12

15.7% Ttl Imported -2.0% +1.0% -1.8% +2.0%

7.6 Mexican -0.2 +3.1 +1.1 +4.63.5 Holland -7.5 -4.3 -7.5 -3.21.1 Canadian +2.1 +3.6 +0.2 +1.60.8 Germany -5.2 -3.4 -6.8 -3.8

0.6 Belgium +10.9 +14.6 +8.2 +14.7

0.5 Ireland -1.8 -5.7 -3.4 -6.1

0.4 England +5.0 +6.5 +6.3 +6.8



Page 18

Beer – 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 $ Share Package Size


100% Ttl Beer +0.9% +1.0% -1.0% -0.9%30.9 12 Pack -2.8 -2.2 -5.4 -4.320.3 6 Pack -0.2 +1.3 -1.7 -0.413.1 18 Pack +3.6 +2.9 +1.6 +1.311.5 Singles +2.8 +3.0 +0.1 +0.29.7 24 Pack +0.8 -1.1 -1.4 -3.19.5 30 Pack +7.5 +5.4 +4.4 +2.22.1 20 Pack -8.5 -12.3 -9.8 -12.11.4 4 Pack +11.1 +11.3 +10.5 +10.10.4 36 Pack +1.6 +1.0 -1.9 -2.30.4 Kegs -1.1 +17.2 -4.8 +4.9



Page 19

Table 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 $ Share Price Segment


100% Ttl Table Wine +2.6% +2.8% +1.4% +1.9%

8.6 0-$2.99 +0.8 -1.6 -3.6 -3.7

24.4 $3-$5.99 +4.9 +3.3 +3.2 +3.024.1 $6-$8.99 -2.3 -2.6 -0.7 +0.1

19.3 $9-$11.99 +6.2 +6.4 +8.5 +9.3

11.5 $12-$14.99 +3.9 +6.0 +6.2 +9.6

6.8 $15-$19.99 +1.2 +5.0 +2.7 +6.4

5.2 >$20 +4.2 +12.4 +3.7 +12.5

Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent


Page 20

Table 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 $ Share

Package Size/ Type Segment


100% Ttl Table Wine +2.6% +2.8% +1.4% +1.9%

67.5 750 ml +3.2 +3.9 +5.0 +5.2

21.3 1.5 l +0.4 +0.3 -0.1 +1.34.4 5 l +3.5 +1.0 -1.1 -0.4

1.7 3 l Prem Box +18.9 +16.1 +12.6 +12.6

1.4 4 l -6.3 -11.5 -12.9 -16.2

1.4 187 ml +4.5 +6.7 +3.4 +7.1

1.4 3 l Glass -3.8 -4.9 -8.3 -7.7

0.3 Tetra +19.9 +21.4 +22.8 +23.6



Page 21

Table Wine – Country of Origin Domestic growth is running well ahead of Imports, with all major wine-growing states contributing.

Lat 52 $ Share Origin


100% Ttl Table Wine +2.6% +2.8% +1.4% +1.9%

71.8 Domestic +4.0 +4.5 +2.0 +2.8

65.4 --California +4.0 +4.3 +1.9 +2.64.1 --Washington +3.5 +3.6 +4.7 +5.5

0.8 --Oregon +6.0 +19.1 +13.3 +26.0

0.3 --Texas +0.9 +5.2 -1.1 +5.5

24.6 Imported -1.0 -1.3 -0.6 -0.9



Page 22

Table 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 $ Share

Country of Origin


24.6% 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



Page 23

Table 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 $ Share Varietal


100% Ttl Table Wine +2.6% +2.8% +1.4% +1.9%21.5 Chardonnay +1.8 +1.7 +2.8 +2.715.0 Cab Sauv +4.7 +4.6 +5.6 +5.510.1 Merlot -3.6 -4.6 -1.5 -2.77.8 P. Grigio/Gris +1.9 +2.7 +3.2 +4.35.8 P. Noir +7.6 +9.3 +10.9 +12.74.4 Sauv Blanc +7.4 +7.7 +7.2 +7.24.2 White Zin -2.2 -3.5 -3.0 -2.73.1 Syrah/Shiraz -8.6 -9.5 -7.3 -7.82.5 Riesling +8.5 +9.3 +10.9 +12.82.4 Zinfandel +4.3 +7.2 +5.7 +8.1



Page 24

Spirits - 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 $ Share Sub-category


100% Ttl Spirits +0.8% +2.5% +1.1% +2.7%29.1 Vodka +3.1 +4.1 +4.3 +4.925.8 Whiskey -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 -1.5 0.3 -2.8 -1.11.8 ---Blended +4.7 +0.3 +6.0 +1.61.1 ---Irish +12.6 +9.9 +13.2 +10.5

12.4 Rum +1.0 +3.2 +1.4 +3.411.5 Cordials/Schnapps -2.4 -1.8 -2.3 -0.96.9 Tequila +0.5 +2.9 +3.4 +5.86.6 Unflav Brandy/Cog. +2.3 +8.6 -0.0 +4.14.4 Gin -2.7 -2.7 -3.0 -3.22.7 Prep/RTD Cocktails -1.6 +8.5 +1.2 +10.8



Page 25

Spirits – Import vs. DomesticWhile domestic trends overall are flat, Imported trends have picked up in the last 13 weeks, with help from Imported Vodka growth

Lat 52 $ Share

Imp vs. Dom by Sub-category


100% Ttl Selected* Spirits +0.4% +2.1% +0.8% +1.9%62.5 Imported +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 -8.8

37.5 Domestic +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


*NOTE: Ttl Selected Spirits = Vodka, Whiskey, Cordials, Gin, Brandy and Schnapps segments


Page 26

Spirits - Price Tiers Trading down NOT the descriptive word any longer; premium and especially ultra-premium leading the way but with reduced pricing.

Lat 52 $ Share Price Tier


100% Ttl Spirits +0.8% +2.5% +1.1% +2.7%

21.6 Value +0.1 +0.4 -0.3 +1.0

32.5 Mid Price +0.5 +1.6 +1.7 +3.0

33.8 Premium +0.7 +2.1 +2.0 +3.8

12.1 Ultra Premium +3.1 +10.4 +3.7 +11.5

Spirit Price Tiers Legend (equiv 750 ml)



Page 27

Ultra Premiums Generally Leading the Way, with the Exception of Vodkas and Tequilas

TTL US Sales Volume % Chg – Lat 26 weeks vs Year AgoValue Mid Premium Ultra

VodkaScotchBourbonCanadian WhiskyRumCordials/SchnappsUnflavored Brandy/CognacTequilaGin

Top box growthBottom box growth



Page 28

Summary

• Economic uncertainty still prevails; recovery likely modest– Impact depends upon your products’ geographic development and

consumer demographics

•Consumers have re-phrased “value”–Frantic 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 pricing• Imports in general are mixed and those performing well

have adjusted pricing to be more competitive within the category

Documents

Today’s Consumers and Generation Next Myths and Realities