Retail Candy Promotions

Tom Pirovano December 5th, 2011 Some Candy Trivia Before We Get Started

Which popular candy was named after horse?

Snickers was named after a horse owned by the Mars Family.

2 More Candy Trivia

The town of Derry Church, PA was re-named to honor which candy entrepreneur?

Derry Church is now Hershey, PA, named for Milton Hershey.

3 More Candy Trivia

How many pounds of candy are consumed each year by the average American?

• 5 Pounds • 10 Pounds • 15 Pounds • 25 Pounds Source: U.S. Census Bureau

4 More Candy Trivia

Which candy, introduced in 1896, was named after the daughter of Leo Hirshfield of New York?

Tootsie Rolls were named after Hirshfield’s daughter.

5 More Candy Trivia

What does NECCO (in Necco wafers) stand for?

NECCO is an acronym for New England Confectionery Company

6 More Candy Trivia

In which year were Hershey Kisses introduced? • 1907 • 1927 • 1947 • 1967

7 More Candy Trivia

Which candy was created to address the seasonal decline in summer chocolate sales?

M&M’s were named after their inventors Forrest Mars & Bruce Murray

8 More Candy Trivia

Which three flavors were included in the original 3 Musketeers bars?

The 3 Musketeers bar was named for its flavors of chocolate, vanilla, & strawberry nougat.

9 More Candy Trivia In which year did this candy ad run?

Ad for: Peoples Drug Store Free Lance-Star Fredericksburg, VA

• 1911 • 1931 • 1951 • 1971 10 Topics Covered

• 2-Page Candy Promotions This Week • Print Ads Across Retailers & Suppliers • Web Promotions & FSIs • Halloween Highlights • Promoted Candy Pricing • Ad Exclusivity

11 Front-Page Candy Ads Running This Week of 12/4/2011

12 Walgreens Candy Ads 12/4/2011, Pages 4-5

13 CVS Candy Ads 12/4/2011, Pages 2-3

14 Rite Aid Candy Ads 12/4/2011, Pages 10-11

15 Target Candy Ads 12/4/2011, Pages 14-15

16 Walmart Candy Ads Mixed with Baking Supplies 12/4/2011, Pages 22-23

17 Two Candy FSIs Running This Week of 12/4/2011 Storck teams up with other manufacturers in Werther’s Half-Page FSI for FSI including recipe ideas Assorted Mars Candy Brands

18 Weekly Trends in Retail Candy Ad Support

Valentine’s Easter Christmas Day (later in 2011) Halloween

Mother’s Day 4th of July

Current Year Ago

3/19/11 4/2/11 4/16/11 7/2/11 7/16/11 7/30/11 10/15/11 10/29/11 11/12/11 1/1/11 1/8/11 1/15/11 1/22/11 1/29/11 2/5/11 2/12/11 2/19/11 2/26/11 3/5/11 3/12/11 3/26/11 4/9/11 4/23/11 4/30/11 5/7/11 5/14/11 5/21/11 5/28/11 6/4/11 6/11/11 6/18/11 6/25/11 7/9/11 7/23/11 8/6/11 8/13/11 8/20/11 8/27/11 9/3/11 9/10/11 9/17/11 9/24/11 10/1/11 10/8/11 10/22/11 11/5/11 11/19/11 11/26/11 12/3/11 12/10/11 12/17/11 12/24/11

Week Ending Dates Source: ECRM, Circular Ad Block Counts Weighted by Retailer Size. 19 Retailers Running the Most Candy Circular Ads

Number of Candy Ads – Brand Counts Rite Aid 2,707 Shoppers Drug Mart 1,761 CVS 1,629 Walgreens 1,515 Kinney Drugs 986 ShopRite 753 Bartell Drug 747 The top 5 retailers with Kmart 672 the most candy ads are Jewel-Osco 634 all drug chains. Giant Food Landover 630 Stop & Shop 627

Copps 614 Source: ECRM, 52 Weeks Ending 11/26/2011 20 Retailers Growing Number of Products Promoted 52-Week Change % Chg Retailer Brand Counts Vs Ygo Vs Ygo Rite Aid 2,707 +632 +30% Bartell Drug 747 +309 +71% Walgreens 1,515 +266 +21% Kroger Stores 490 +205 +72% Copps 614 +203 +49% Giant Food Carlisle 537 +194 +57% Shoppers Drug Mart 1,761 +179 +11% Hy-Vee Food Stores 244 +167 +217% CVS 1,629 +131 +9% Kinney Drugs 986 +125 +15% Ralph's 260 +119 +84% Jewel-Osco 634The big 3 drug+118 chains are+23% King Soopers 563 +117 +26% Smith's Food & Drug 550all promoting+116 more candy.+27%

Source: ECRM, 52 Weeks Ending 11/26/2011 21 Retailers Promoting Fewer Candy Products

52-Week Change % Chg Retailer Brand Counts Vs Ygo Vs Ygo Stop & Shop 627 -410 -40% Giant Food Landover 630 -408 -39% Albertson's (SV) 267 -211 -44% Hilander 317 -159 -33% Weis Markets 133 -154 -54% Zellers 461 -150 -25% Cub Foods 165 -138 -46% Acme Markets 440 -131 -23% Dillons 389 -128 -25% Baker's Supermarkets 388 -126 -25% Gerbes Many grocers are 388 promoting - 125 -24% Jay C Storesfewer candy products. 218 -124 -36%

Source: ECRM, 52 Weeks Ending 11/26/2011 22 Retailers Promoting Private Brand Candy

Private Brand Share of Candy Ad Blocks Aldi* 83.3% Fresh & Easy 53.9% Macy's 44.8% Heinen's* 40.0% The Food Emporium 22.2% Shoppers Drug Mart 18.3% Loblaws 18.1% Wegmans 17.6% Unlike many “national brand A & P 15.0% equivalents”, private brand Superfresh 14.7% candy is often promoted at Waldbaums 14.6% premium price points. Food Basics 14.1% Source: ECRM, 52 Weeks Ending 11/26/2011 Giant Eagle 14.0% * Aldi & Heinen’s ran <10 candy ads 23 Top Promoted Candy-Makers Share of Weighted Retail Ad Blocks The Hershey Company 29.4% Mars Chocolate 18.0% Nestle S.A. 9.1% Wrigley (Mars) 8.1% Russell Stover Candies 6.4% Private Brand Manufacturer 3.7% Cadbury (Kraft) 3.2% Farley's & Sathers 2.6% The top 5 manufacturers Ferrero U.S.A., Inc. 2.6% represent 71% of retail Lindt & Sprungli Usa Inc 2.0% ad support. Tootsie Roll Industries 1.9% Ghirardelli Chocolate Co. 1.6%

Just Born Inc 1.5% Source: ECRM, 52 Weeks Ending 11/26/2011 24 Ad Support Vs. Year Ago for Top Players Share of Candy Ad Blocks Vs. Year Ago Manufacturer Current Year Ago Change The Hershey Company 29.4% 28.0% +1.4 pts Mars Chocolate 18.0% 16.2% +1.8 pts Nestle S.A. 9.1% 9.2% -0.1 pts Wrigley (Mars) 8.1% 8.6% -0.5 pts Russell Stover Candies 6.4% 5.1% +1.2 pts Private Brand Manufacturer 3.7% 3.9% -0.2 pts Cadbury (Kraft) 3.2% 3.8% -0.6 pts Farley's & Sathers 2.6% 2.5% +0.1 pts Ferrero U.S.A., Inc. 2.6% 2.4% +0.1 pts Lindt & SprungliHershey Usa Inc& Mars grew2.0% 2.1% -0.1 pts Tootsie Roll Industriesfrom 44.2% to 47.4%1.9% of 2.6% -0.7 pts Ghirardelli Chocolatetotal circular Co. ad support.1.6% 1.9% -0.3 pts Just Born Inc 1.5% 1.0% +0.5 pts Source: ECRM, 52 Weeks Ending 11/26/2011 25 Retail Ad Support for Gum & Mints

Share of Candy Total Ad Support

Circular Ad Support Vs. Year Ago Chocolate Total Candy -1.2% & Assorted Gum & Mints -12.1% Candy Choc/Asst Candy +0.1% 90.7%

Mints & Gum 9.3%

26 Candy-Makers with the Most Web Promos Share of 13-Week Candy Ads on Retailer Web Sites Wrigley (Mars) 21.0% Nestle S.A. 19.1% HARIBO 18.1% Mars Chocolate 7.7% The Hershey Company 4.8% Ghirardelli Chocolate Co. 4.7% Wrigley, Nestle, HARIBO, Cadbury (Kraft) 2.7% and others are leading the category in retailer Ferrero U.S.A., Inc. 2.2% web promotions. Tootsie Roll Industries 1.2% Godiva Chocolatier, Inc. 1.1% Private Brand 0.9% Russell Stover Candies 0.9%

Perfetti Van Melle USA, Inc. 0.8% Source: ECRM, 13 Weeks Ending 11/26/2011 27 Retailers Running the Most Candy Web Promos Number of 13-Week Candy Ads Within 2 Clicks of Main Page Walgreens 148 Target Stores 130 Loblaws 37 Homeland 32 Family Dollar 29 Hannaford Brothers 26 Hy-Vee Food Stores 24 F.W. Albrecht Grocery 22 Walgreens & Target Fred Meyer Stores 20 differentiate themselves Shoppers Food & Pharm 20 with candy web promotions. Adams Super Food Stores 20 Copps 19 Sun Fresh 19 28 Source: ECRM, 13 Weeks Ending 11/26/2011 Candy FSI Support FSI FSI Chg in Weeks Manufacturer Ads Weeks Vs Year Ago The Hershey Company 34 20 -1 Perfetti Van Melle 21 8 +4 Cadbury/Kraft 10 9 -1 Nestle S.A. 13 7 +5 Farley's & Sathers 4 4 +4 Mars Chocolate 5 4 +4 Wrigley Jr Company 1 1 +1 DeMet's Candy Company 1 1 -1 Some candy-makers Ferrero U.S.A., Inc. 1 show a renewed1 +1 Storck USA, L.P. 1 focus on1 FSI support -1 Lindt & Sprungli Usa Inc 1 1 -1 29 Source: ECRM, 52 Weeks Ending 11/26/2011, Top 10 Markets Examples of November Candy FSIs

11/13/2011 11/20/2011

11/13/2011

11/6/2011 10/30/2011

30 Only Four Halloween FSIs

9/25/2011 Other candy FSIs ran in October, but (half page) only 4 with Halloween themes.

10/16/2011 9/25/2011

10/16/2011

31 October Share of Total Candy Feature Ads Share Point Manufacturers Oct – 2010 Oct – 2011 Change 1 The Hershey Company 24.8% 26.9% +2.1 pts 2 Mars Chocolate 16.0% 18.4% +2.4 pts 3 Nestle S.A. 14.1% 12.0% -2.1 pts 4 Wrigley (Mars) 5.2% 5.7% +0.5 pts 5 Tootsie Roll Industries 6.6% 5.1% +1.4 pts 6 All Other Candy 33.2% 32.0% -1.2 pts The top 2 manufacturers represent 45% of ad support up from 41% in October 2010. Source: ECRM, October 2011 October Share of Retail Web Promotions

Share of Total Web Promotion Ad Blocks

Nestle S.A. 41.1%

Wrigley (Mars) 13.8% Nestle made web promos HARIBO 13.1% a priority for Halloween.

Mars Chocolate 6.9% Walgreens Web Promo 10/10/2011 The Hershey Company 5.3%

Private Brand 2.2%

Ghirardelli Chocolate Co. 2.2%

Source: ECRM, October, 2011 October Candy Ads By Retailer Total Candy Ad Blocks Shoppers Drug Mart 73.7 59.4 Rite Aid 56.1 40.3 CVS 51.6 37.3 Walgreens 42.3 38.4 Oct-2011 Jewel-Osco 35.8 31.4 Oct-2010 Kinney Drugs 35.8 40.2 Copps 32.4 21.6 Bartell Drug 32.1 34.9 Farm Fresh 26.6 26.1 Owen's Market 25.9 19.2 Source: ECRM, October 2011 Early Halloween/Autumn Candy Promotions

Walgreens Rite Aid - Fresh Market - Salt Lake City 7/17/2011 - pg 3 08/14/2011 - pg 4 08/17/2011 - pg 3

Tops Markets - Albertsons LLC - 08/21/2011 - pg 7 08/24/2011 - pg 7 Share of Ad Space Makes a Difference

Both ads ran the week

before Halloween, 2011. 36

The Dangers of Predictability 2009: Walmart: $2.50, Target: $2.49 2010: Walmart: $2.50, Target: $2.49

 

2011: Walmart: $2.48, Target: $2.49

 Walgreens & CVS Deliver Lower Halloween Candy Prices than Walmart & Target for 2011

10/23/2011 – Walgreens 10/23/2011 – CVS $1.99 with coupon 4-for-$7 with Reward Bucks 38 The Same Thanksgiving Ad Déjà Vu at Target Three Years in a Row

2011 2010 2009

What can we learn from

other seasonal promotions? 39 Share of YTD Candy Ads Candy Ads By Price Point

Price 17.1% Points 26.9% 29.9% 39.7% 34.2% $3.00+ 22.6% 8.7% 10.4% 11.0% 19.0% 42.3% $2-$2.99 26.0%

29.0% $1-$1.99 50.0% 50.4% 26.9% 30.1% 17.7% <$1.00 3.8% 4.1% Walmart Target Walgreens CVS Rite Aid Walgreens and CVS are focused on Source: ECRM, YTD Through 9/3/2011 smaller pack sizes at lower price points. 40 Candy Promotions By Pricing Type

% of Retailer Candy Ads Candy Price Buy N, Other Promo Type Point N for $X Get X Save X% Save $X Promo Walgreens 47.7% 51.2% 0.6% 0.3% 0.3% CVS 27.2% 63.0% 9.6% 0.2% Rite Aid 57.9% 36.8% 3.9% 0.6% 0.4% 0.4%

Walmart-US 100.0% Target Stores 51.4% 47.2% 1.4% Kmart 35.4% 61.7% 1.5% 0.5% 1.0%

Multi-unit Kroger Stores 27.5% 71.0% 1.5% candy pricing is Safeway Stores 22.1% 69.1% 7.4% 1.5% common across

retail channels. Dollar General 80.9% 19.1% Source: ECRM, YTD Through 9/3/2011 41 Example: CVS Circular Retail Circulars Vary By Geography 12/4/2011

New York City, Different Brands Most Markets, Some Markets, Price: 2/$5 Price: $2.22

42 Top-Selling U.S. Candy Items Through 8/6/2011

Dollar 52-Week Avg Unit Rank Produce Description DOLLAR Sales Price UPC Code #1 Hershey's Milk Chocolate, 6-ct $78.3 MM $3.36 34000 29005 #2 Snickers Bar, 2.07 oz. $75.2 MM $0.68 40000 00102 #3 Reeses Peanut Butter Cup, 1.5 oz. $52.1 MM $0.67 34000 00440 #4 Snickers Fun Size 11.18 oz. Bag $50.8 MM $2.71 40000 15140 #5 Reeses Pnt Btr Cup, 10.5 oz. Bag $46.3 MM The$2.61 top 10 34000 in dollar 40211 #6 M&M Peanut, 1.74 oz. $44.4 MM sales$0.68 include 40000 5 singles00032 #7 Kit Kat, 1.5 oz. $43.7 MM $0.69 34000 00246 and 5 multi-packs. #8 Kit Kat, 10.78 oz. Bag $43.2 MM $2.66 34000 08752 #9 Hershey's Milk Chocolate, 1.55 oz. $43.2 MM $0.69 34000 00240 #10 M&M Peanut, 12.6 oz. Bag $41.6 MM $2.99 40000 24887

Source: Nielsen, Total U.S. Food/Drug/Mass Excluding Walmart, 52 Weeks Ending 8/6/2011 For more on Nielsen data, contact Marc Santos ([email protected] or 847-605-5473) 43

Candy Pricing By Retail Channel

Avg Unit Price Price Product Description Groc Drug Advantage Manufacturer #1 Hershey's Milk Chocolate, 6-ct $3.41 $3.72 Supermarkets Hershey #2 Snickers Bar, 2.07 oz. $0.69 $0.65 Drug Chains Mars #3 Reeses Peanut Butter Cup, 1.5 oz. $0.66 $0.68 Supermarkets Hershey #4 Snickers Fun Size 11.18 oz. Bag $2.74 $2.69 Drug Chains Mars #5 Reeses Pnt Btr Cup, 10.5 oz. Bag $2.60 $2.72 Supermarkets Hershey #6 M&M Peanut, 1.74 oz. $0.69 $0.66 Drug Chains Mars #7 Kit Kat, 1.5 oz. $0.68 $0.71 Supermarkets Hershey #8 Kit Kat, 10.78 oz. Bag $2.63 $2.83 Supermarkets Hershey #9 Hershey's Milk Chocolate, 1.55 oz. $0.67 $0.72 Supermarkets Hershey #10 M&M Peanut, 12.6 oz. Bag $3.15 $2.76 Drug Chains Mars

Source: Nielsen , 52 Weeks Ending 8/6/2011 44 Candy Ad Density is Growing

+10.4%

Retailers are promoting more candy products with slightly fewer candy ads.

-1.2% Weighted Ad Block Counts Weighted Brand Counts

45 Multiple Manufacturers Sharing Candy Ads Running This Week of 12/4/2011

“Non-Exclusive” ads may drive volume, but not market share.

46 Ad Exclusivity Varies Across Candy Makers

47% Percent of Ads Shared with 45% 42% 43% 40% Other Manufacturers 38% 39% 36% 36% 37% 34% 34% 34% 32% 33% 29% 30% 25% 25% 26% More Shared Ads, 19% Less Exclusivity Fewer Shared Ads,

More Exclusivity

Ferrero U.S.A., Inc. Russell Candies Stover Cadbury(Kraft) Wrigley(Mars) TootsieRoll Industries DeMet'sCandy Born Just Inc PerfettiMelle Van FerraraPan Candy Belly Jelly Candy AmericanLicorice TheHershey Company Farley'sSathers & GodivaChocolatier Mars Chocolate StorckL.P. USA, ElmerCandy ToppsCompany Inc & Sprungli Lindt Palmer R.M. GhirardelliChocolate

47 Source: ECRM, 52 Weeks Ending 9/3/2011, Select Manufacturers Top Manufacturers Track Ad Exclusivity By Retailer

Percent of Ads Shared with Other Manufacturers Wrigley Russell Cadbury Lindt & Tootsie Hershey Mars (Mars) Stover (Kraft) Ferrero Sprungli Roll Walgreens 58% 59% 74% 54% 56% 97% 93% 97% CVS 33% 49% 37% 55% 39% 86% 96% 86% Rite Aid 79% 83% 92% 73% 73% 85% 96% 93%

Walmart-US 16% 50% 25% 100% 0% 0% 50% N/A Target Stores 79% 70% 60% 100% 68% 100% 85% 75% Kmart 53% 73% 78% 32% 25% 100% 100% 17% Meijer 49% 60% 100% 78% 83% 50% 100% 80%

Dollar General 43% 46% 0% 100% 50% N/A N/A 88% Dollar Tree 29% 50% 50% N/A 17% N/A N/A 0% Family Dollar 60% 57% 36% N/A 60% 50% N/A 50%

Kroger Stores 30% 56% 42% 67% 50% 0% N/A N/A Safeway Stores 31% 50% 20% 0% 40% 0% 60% 0% Albertson's (SV) 8% 14% 19% 0% 11% 0% 25% 25% 48 Source: ECRM, 52 Weeks Ending 9/3/2011, Select Manufacturers Promotional Reflections Report Library

Dozens of industry studies are available for ECRM event attendees at: www.PromotionalReflections.com

49 Key Takeaways

• Top 5 retailers promoting candy are all drug chains • Walgreens/CVS/Rite Aid – increasing candy ads • The top 5 manufacturers – 71% of candy ad support • Total candy ad block counts - flat vs. year ago • Gum & mints ads – down 12.1% vs. year ago • Higher ad density – more brands sharing ads • Retailers leading web promos – Walgreens & Target • Mfr’s leading web promos – Wrigley, Nestle, HARIBO • Renewed focus on FSI’s in 2011

More 50 More Key Takeaways • Hershey & Mars – increased Halloween ads • Predictability is risky – Target Halloween example • Top drug chains beat Walmart & Target on Halloween pricing • Walgreen & CVS – 50% of candy ads <$1.00 • Multi-unit pricing (N-for-$X) – huge for candy • Multiple circulars versions – vary by geography • Pricing by channel – Mars vs. Hershey example • Ad exclusivity – worth tracking & optimizing 51 Thank You

Questions?

Tom Pirovano [email protected]