Consumer Insights Gum Category. Empowering Manufacturers and Retailers for Category 1 Growth

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1 Consumer Insights Gum Category Empowering Manufacturers and Retailers for Category 1 Growth

2 NCA Sweet Insights Contributing Partners The NPD Group SymphonyIRI The Futures Group The Capre Group 2

3 What the Industry Offers Size, Scope Sources: Euromonitor International 2012 Symphony IRI Total Store Ranking FDMx April 2012

4 Why NCA Sweet Insights? Insights uncover category opportunities Brands offers category solutions 4

5 Objective Better understanding of the Gum & Mints consumer 5

6 Benefit? Allows us to better meet consumer needs? Helps us identify opportunities 6

7 Who is the consumer, why do we care? eating The Shopper = Buyer of product The Consumer = individual who eats product The consumer determines your success or failure 7

8 THE CONSUMER Retail Channels Where shopping? Who consumes, how often, H&W impact Consumption occasions where, how Purchase occasions where, when Key motivations 8

9 9 Consumer

Total shopping trip trends reflect channel shifting to value and convenience Grocery Supercenter Convenience Drug Mass Dollar Club Shopper Trips/Month 0.0 1.0 2.0 3.0 4.0 5.0 4.7 2.0 1.4 1.2 1.

10 Total shopping trip trends reflect channel shifting to value and convenience Grocery Supercenter Convenience Drug Mass Dollar Club Shopper Trips/Month Change -.7% -2.9% -.03% +4.9% -1.7% +5.5% +2.2% Trips/Month Convenience and value focus drive Drug, Dollar, & Club trips 10 Source: SymphonyIRI Consumer Network TM 52 Weeks ending 1/1/2012

11 Category Gum 11

12 With a High level of Daily Consumption, Gum is Consumed Often Throughout the Week On any given day, 41% of the U.S. population consumes confections Average American Gum Consumption Daily Individual Penetration: Confections None Annual Eatings per Capita: 59% 41% 157 Times per year Approximately Three times per Week In an average day, 16% of the population consumes Gum at least once. 12 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Data for 1 year ending March 2010 Source: The NPD Group, SnackTrack 2.0

13 Adults Account For 73% of Consumption Gum Consumption % of Eatings Average TOTAL Adult Gum Consumption Annual Eatings per Capita Adults % Adults % Children 2-5 3% Children % Teens % 150 Times per year Approximately Three times per Week Young Adults: Years Old Adults % 59% of Gum Consumed by Younger Adults 200+ Times per year Approximately Four times per Week 13 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Data for 1 year ending March 2010 Source: The NPD Group, SnackTrack 2.0

Teens Consume Double their Fair Share of Gum Led by Teen Girls

Teen % of Population All Other % of Population 200 150 176 86

Boys Girls Teens Represent 7% of Population yet Consume 14% of Gum.

14 Teens Consume Double their Fair Share of Gum Led by Teen Girls Total Gum 93 Teens Indexed to Overall Sample Teen % of Population All Other % of Population Total Gum Teens % Consumption All Other Consumption 0 Boys Girls Teens Represent 7% of Population yet Consume 14% of Gum. 14 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

Young Adult Women Represent 12 % of Population yet They Consume 17% of Gum

Population 160 140 120 100 Total Adults 18-44 Indexed to Overall Sample 101 144

All Other Consumption 0 Men Women Women 18-34 Consume 44% More Than Their Fair

15 Young Adult Women Represent 12 % of Population yet They Consume 17% of Gum Total Sample Women Females % of Population All Other % of Population Total Adults Indexed to Overall Sample Total Gum Consumption Women Women % Consumption All Other Consumption 0 Men Women Women Consume 44% More Than Their Fair Share of Gum 15 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

Consumption Peaks in the Teens and Declines Steadily with Age Gum Consumption: Eatings by Age Group Gum Consumption Trends Teens: Highest Frequency - Nearly Daily Annual Eatings per Capita 314 234

16 Consumption Peaks in the Teens and Declines Steadily with Age Gum Consumption: Eatings by Age Group Gum Consumption Trends Teens: Highest Frequency - Nearly Daily Annual Eatings per Capita Annual Eatings per Capita Younger Adults: Frequency - Every Other Day 2-5 Years Years Years The slight decline downward in per capita consumption is driven by three very different age groups 16 Data for years ending March Source: The NPD Group, SnackTrack 2.0

17 Gum Eatings Skew Slightly Above Fair Share Among African American and Hispanic Consumers * % Sample % of Eatings White/non-Hispanic Black/non-Hispanic Hispanic Asian Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 * Consumption Indexed to Overall Sample 100= Average

18 Switching Sugarless Gum Consumption Replacing Regular Gum Gum Consumption Trend Annual Eatings per Capita Sugarless Gum 5 Yr Pt. Change = Regular Gum 5 Yr Pt. Change = Data for years ending March Source: The NPD Group, SnackTrack 2.0

19 Households With Older Children (Teens) Represent 32% More Eatings Than Average Households Gum Consumption % of Eatings % of sample % of consumption Indexed to overall % of Sample* HH with Children <6 HH with Children 6-12 HH with Children Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 * % of Consumption/% of Sample

Chewing Gum Consumers are More Likely to Spend Time: Family, Friends, Exercising & Working Activities and events accomplished in a typical week by adult daily gum chewing consumers vs.

20 Chewing Gum Consumers are More Likely to Spend Time: Family, Friends, Exercising & Working Activities and events accomplished in a typical week by adult daily gum chewing consumers vs. those who don t chew gum: 12% - more time with family 11% - more time working 10% - more time socializing 9% - more exercising Working 45% Exercising 50% Socializing with friends Family activities 57% 55% 55% 59% 65% 67% 30% 40% 50% 60% 70% 80% Never Daily Gum Chewers Tend to be More Social, Hard-Working, and Active Source: NCA & The Futures Company, 2011 Topic: Overall perceptions of health & wellness Page: 20

Gum Chewers take Control of Their Health as Evidenced by Their Exercise Habits 70 60 50 40 30 20 10 0 Gum Chewers 60 50 Exercise is Important Non-Gum Chewers 51 41 Exercise: 3+

21 Gum Chewers take Control of Their Health as Evidenced by Their Exercise Habits Gum Chewers Exercise is Important Non-Gum Chewers Exercise: 3+ Times/Week Exercise is Important to Gum Chewers, and They Claim to Exercise More Frequently Source: NCA & The Futures Company, 2011 Topic: Overall perceptions of health & wellness Page: 21

Percent of respondents Daily Gum Chewing Adults Exhibit a High Degree of Oral Hygiene 100% 90% 80% 10% more mouthwash 70% 60% 7% more flossing 50% 40% 95% 89% 6% more brushing 30% 20% 47% 40% 56% 46%

22 Percent of respondents Daily Gum Chewing Adults Exhibit a High Degree of Oral Hygiene 100% 90% 80% 10% more mouthwash 70% 60% 7% more flossing 50% 40% 95% 89% 6% more brushing 30% 20% 47% 40% 56% 46% 10% 0% Brushing teeth Flossing Rinsing with mouthwash Daily Never Gum is Part of Their Oral Hygiene Regiment Source: NCA & The Futures Company, 2011 Topic: Drivers & barriers to better health: obesity Page: 22

Chewing for Health Sugar-free chewing gum can help prevent cavities and protect teeth 1 Emerging research suggests chewing gum may aid attention/focus 2 1 Chewing Gum - American Dental

23 Chewing for Health Sugar-free chewing gum can help prevent cavities and protect teeth 1 Emerging research suggests chewing gum may aid attention/focus 2 1 Chewing Gum - American Dental Association - ADA.org. Retrieved, from Johnston et al. "Brief Report: Gum Chewing Affects Standardized Math Scores in Adolescents." Journal of Adolescence (2001): 1-5. Print

24 Chewing gum is an important way for adults to relieve stress 29% of adults relieve stress by chewing gum daily. Adults are 214% more likely than the general population to relieve stress with daily gum chewing Gum Contributes to Helping Adults Manage their Emotional Well-Being Source: NCA & The Futures Company, 2011 Topic: Drivers & barriers to better health: stress Page: 24

25 SO WHAT The Consumer What Does All This Mean? There is an opportunity to focus efforts and unique propositions on three distinct age groups which are more greatly impacting the declining consumption. Declining consumption of regular gum and increasing consumption of sugarless gum impacts assortment decisions. There is a strong opportunity to target unique propositions to adults as the primary customer. Adult consumption in households with children is also an important volume driver. Sugarless gum has become part of an Oral Hygiene and with it s health credentials offers potential for sales and marketing focus. Targeting efforts to establish long term adult consumption habits are important to reverse the current declines that come with age. 25

26 26 Consumption occasions

27 2/3 of Gum Consumption Occurs Away from Home Consumption Location: Total Confections % of Eatings Total Gum % of Eatings Away 48% At Home 52% Away 66% At Home 34% 27 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

from home 68% In a car/plane/other trans 25% At work 21% At school 8% Away from home 58% In a car/plane/other

28 Don't Know 1% Most Away From Home Consumption Occurs Primarily In Transit or At Work Sugarless Gum Don't Know 1% Regular Gum % of Eatings % of Eatings Away from Home 68% At Home 31% Away from Home 58% At Home 41% Away from home 68% In a car/plane/other trans 25% At work 21% At school 8% Away from home 58% In a car/plane/other trans 20% At work 15% At school 6% 28 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

Consumed Mainly As a Snack in the Afternoon or Throughout the Day Type of Consumption % of Eatings As a Snack 96% Morning Snack 17.7 Afternoon Snack 30.6 Evening Snack 8.9 On and Off 39.

29 Consumed Mainly As a Snack in the Afternoon or Throughout the Day Type of Consumption % of Eatings As a Snack 96% Morning Snack 17.7 Afternoon Snack 30.6 Evening Snack 8.9 On and Off 39.0 With a Meal 2% Meal Replacement 2% Morning Snack Before Breakfast or Between Breakfast and Lunch Evening Snack After Dinner Dessert or Late Night Snack 29 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

6 Between Lunch and Dinner Between Breakfast and Lunch Total Gum 1.8 15.6 Gum 46.

30 Typically Eaten Twice a Day, Usually Between Meals Gum Consumption per Day Daily Eatings per Eater Gum Consumption by Occasion % Eatings Sugarless Gum Regular Gum Between Lunch and Dinner Between Breakfast and Lunch Total Gum Gum 46.2% eaten between meals 30 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

31 Consumed While Doing a Variety of Activities, Most Often Leisure Activities During Consumption % of Eatings Leisure Activities 33 On the Go Activities Work/School Activities Social Activities 8 Meal Related Activities 2 Other Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

32 Consumption Occasions What Does All This Mean? SO WHAT Away from home consumption is important and distinguishes gum from other confections Since consumption of gum in transit or at work are both primary occasions away from home, focusing opportunities on these occasions could be impactful Focusing on the increasing on and off consumption is an opportunity to increase eatings per day 32

33 33 Purchase occasions

Adults Purchase the Majority of Both Sugarless

Adult 91% Adult 86% 34 Data for 1 year ending

34 Adults Purchase the Majority of Both Sugarless and Regular Gum Sugarless Gum Purchased by % of Eatings Regular Gum Purchased by % of Eatings Child 6% Don't Know 3% Child 9% Don't Know 5% Adult 91% Adult 86% 34 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

Children Request Regular More Often Than

35 Children Request Regular More Often Than Sugar Free Gum Sugarless Request by Regular Requested by Child 16% Don't Know 4% Child 21% Don't Know 7% Adult 80% Adult 72% % of Eatings % of Eatings 35 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

36 An Adult is More Likely to Eat Gum They Purchased Themselves Gum Purchased by % of Eatings Sugarless Regular Adult Eater Purchased Child Eater Purchased Another Purchased Don t Know Purchased 36 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

Adults are Often Purchasing for Their Children Children Under 18 7.1 27.

37 Adults are Often Purchasing for Their Children Children Under % Eaten % Purchased Adults % of Eatings 37 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

38 Although Grocery & Walmart Represent the Majority of Purchases, Club and Convenience Perform Well Purchase Location for Gum vs. Total Confections % of Eatings Grocery Store Walmart Club Store C-Store Other Discount (ex Total Confections Walmart) Gum Dollar Store Drug Store 38 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

39 Grocery & Club and C-Store & Dollar Stores Cater to Different Gum Types Purchase Location for Sugarless vs. Regular Gum % of Eatings Grocery Store Walmart C-Store Club Store Drug Store Other Discount (ex Walmart) Sugarless Regular Dollar Store 39 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

Like Most Confections, Gum is Typically Purchased for Consumption More than a Day Later Timing of Purchase versus Consumption % of Eatings 7.7 3.5 13.2 6.3 2.9 12.

40 Like Most Confections, Gum is Typically Purchased for Consumption More than a Day Later Timing of Purchase versus Consumption % of Eatings min or less before eating it 31 min to less than 1 hour 1 to 24 hours before eating More than a day before eating Total Confections Gum 40 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

41 SO WHAT Purchase Occasions What Does All This Mean? Adults are usually purchasing for everyone in the household and need to be considered regardless of target Children s purchase requests with regular gum are a key influencer to purchase Grocery and mass capture the majority of gum purchases, but club and convenience provide opportunity to differentiate from other confections Club and dollar present opportunities to drive distinct segments of gum The frequency of purchase for future consumption provides an opportunity to prompt shoppers to stock their pantry 41

42 42 Motivations

43 Much of Gum Consumption is Motivated by Fresh Breath 27% of gum consumers choose it to freshen their breath 43 Source: The NPD Group, SnackTrack 2.1 Leading Motivations for Chewing Gum

More than a Third of Consumption Motivations are Functional Motivation for Consumption % of Eatings To freshen breath 14.0 26.9 A routine or habit 4.4 9.0 To clean or whiten teeth 1.

44 More than a Third of Consumption Motivations are Functional Motivation for Consumption % of Eatings To freshen breath A routine or habit To clean or whiten teeth Total Confections To keep from eatng something else Gum 44 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Leading Motivations for Chewing Gum

45 Top For adult 5 Occasions/Reasons daily gum chewing consumers, for Chewing Gum chewing Primarily gum is part of Driven a healthy by lifestyle. Sugarless Question: Which of the following are occasions/reasons you chew gum? Health Fresh Breath Clean My Teeth Control My Eating Emotional Well-being Help Me Feel Less Stressed Fight Boredom Mental Focus Help My Concentrations Leading Occasions/Reasons for Chewing Gum relate to Health, Wellness, and Mental Focus Source: NCA & The Futures Company, 2011 Topic: Proprietary Page: 45

Regular is Driven More by Taste and Fun Than Sugarless Sugarless and Regular Gum Motivation for Consumption % of Eatings To freshen breath 20.3 28.7 Like the taste 15.1 17.9 A routine or habit 9.3 7.

46 Regular is Driven More by Taste and Fun Than Sugarless Sugarless and Regular Gum Motivation for Consumption % of Eatings To freshen breath Like the taste A routine or habit To clean or whiten teeth Had a craving for it Fun to eat Keep from eating something Easily available Wanted a treat or reward Sugarless Gum Regular Gum 46 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Leading Motivations for Chewing Gum

47 Fun and Functional Flavors Make up the Top Ten for Regular Gum Regular Gum Top Flavors for like the taste : 1. Bubble Gum 2. Juicy Fruit 3. Spearmint 4. Hot Cinnamon 5. Wintergreen / Winterfresh 6. Cinnamint 7. Freshmint 8. Mint 9. Original / Regular / Plain 10. Peppermint Bubble Gum, Traditional and Mint Related Flavors are Among Most Preferred 47 Source: The NPD Group, SnackTrack 2.1

Spearmint Peppermint Freshmint Mint Bubble Gum Teens 13-17 Spearmint

48 And Mint Flavors Become More Appealing as Consumers Age Children 6-12 Bubble Gum Spearmint Freshmint Mint Watermelon Adults 18+ Spearmint Peppermint Freshmint Mint Bubble Gum Teens Spearmint Freshmint Bubble Gum Peppermint Mint 48 Source: The NPD Group, SnackTrack 2.1

49 SO WHAT Motivations What Does All This Mean? The breadth of functional benefits is unique to the gum category and should be leveraged Fresh breath, whitening teeth and keeping from eating something else are distinct motivations for consumption in the gum category The unique flavor preferences across age groups allow for targeted communication With a taste, functional focus 49

50 NOW WHAT Gum Consumers What Do You Do Now? Age Address consumption declines among the three very different age groups by linking to unique motivations by age children consuming for fun and adults for functional purposes fresh breath and teeth whitening Connect with the adult consumers to drive further gum consumption through in transit or at work consumption Target ages with specific flavors - mint flavors provide more functional benefits for older consumers, and bubble more fun for younger consumers Adults are purchasing the majority of gum for everyone in the household and need to be addressed in messaging Consumption Address shifting gum preferences toward sugarless gum and away from regular by ensuring proper mix of assortment and offerings Leverage the on and off consumption nature of gum to develop messages to increase consumption throughout the day Promote Gum as the Go Anywhere Treat to drive consumption across the wide range of consumption activities 50

51 NOW WHAT Gum Consumers What Do You Do Now? Path to Purchase Get on the list, trigger purchase for future consumption by reinforcing that message in store Influence shopper pre-trip through ads, social media and apps to get on the list and in-store through reminders to capture the future consumption nature of gum Ensure that assortment supports the declining consumption of regular gum and increasing consumption of sugarless gum in order to meet consumer demand Club and Convenience capture more than their fair share of gum sales and are an opportunity to drive stock-up purchase to fill the pantry Club stores can be leveraged for sugarless gum sales and dollar stores for regular gum sales Snacks and Meals Leverage snack and after-meal occasions for adults who are using gum for functional purposes Drive further association between gum consumption and in-transit occasions gum as the thing you need on your drive home from work Strengthen weak association with meal occasions through fresh breath motivations at the end of the meal 51

52 Thank You We Welcome You to Contact NCA with your questions Larry Wilson Vice President, Customer Relations Phone: ext. 111 Jenn Ellek Director of Trade Communications and Marketing Phone: ext

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