Part 4 – Recessionary Lessons to Apply to Private Label Today

Special COVID-19 Series: Recession-Proof Your Business PART 4 – RECESSIONARY LESSONS TO APPLY TO PRIVATE LABEL TODAY

May 28, 2020 Read Other Recession-Focused Reports: Part 1 - How the Great Recession Reshaped the CPG Demand Curve Part 2 - Maintaining Pricing Discipline in a Recession Part 3 - How Big Brands Performed During the Great Recession Context Executive Summary Since the last recession, select retailers have invested LESSONS FROM EMERGING TRENDS heavily in Private Label THE GREAT RECESSION IN THE 2020 RECESSION programs, many with tiered offerings, product features and • Recessionary trends illustrate the • Patterns observed in the benefits, not just price. power of Private Label during a Great Recession are emerging down economy; $8B increase in the COVID-19-induced recession. The COVID-19 recession between 2008-2010. • Both edible and nonedible Private Label illustrates the bifurcation between • Where price gaps between Private outpaced National Brand growth since 2017, the hardest hit – >40M Americans Label and National Brands existed, and continues to grow in 2020. filing for unemployment – and the PL was favored; distribution also • Categories that already have strong Private gainfully employed who are had positive impact on PL sales. shifting purchases to remain Label development continue to gain the most. comfortable in their homes. • Costco, Kroger, Aldi, Walmart and • Walmart, Costco and Sam’s Club are driving Target contributed the most to PL most of the current PL growth. Private Label holds potential dollar share gains. for retailers who want to reach • Private Label risk to brands is high when • Categories that already had strong differentiation and loyalty are low, and the consumers across the economic PL development gained the most. spectrum, both as a trip-driver financial incentive for both shoppers and and loyalty builder, and is retailers is strong. an increasingly competitive threat to national brands. • The IRI COVID-19 Impacts IRI predicts 2020-21 PL growth HOW CAN Private Label programs require • The COVID-19 Dashboard of up to $20B, gaining an IRI HELP? sophisticated strategies. IRI assesses additional 0.6 ppt share. risk and opportunity, pricing and • IRI CPG Demand Index™ distribution, innovation and marketing. • IRI Inflation Tracker™

• Between 2008-2010, Food & Beverage Private Label share grew 0.8 ppt, with $2.8B in PL share gains and $4.5B incremental sales increase. Similarly, nonedible grew 2.2 ppt during the same period for net sales of $3.4B. • PL Food & Beverage grew mostly through volume, but also through price. In contrast, branded gains on pricing were offset by volume contraction. • 20 Food & Beverage categories, mostly refrigerated / frozen and snacks, drove >90% of PL sales. PL gained traction in categories where it already had strong presence. • Five retailers (Costco, Kroger, Aldi, Walmart, Target) contributed ~75% of PL gains, leveraging their strength to make their brands recognizable to shoppers. • PL helped most of the top 5 retailers gain loyalty but for others, PL gains did not necessarily increase share of wallet or buyers.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3 Private Label Food & Beverage Growth Mostly Outpaced Branded Growth During the Great Recession Food & Beverage Branded and Private Label – All Outlets / % Change vs. YAG in $ Sales Private Label Branded

12.5 THE GREAT RECESSION 11.1 10.2 9.4 9.2 8.0 7.3 6.9 6.2 5.6 5.4 5.3 5.1 5.3 5.2 4.7 4.6 4.4 3.9 3.9 3.1 2.8 2.6 2.8 2.4 2.1 1.1 0.6 0.5 0.4

-0.2 -0.2 -0.4 -0.4 -1.1 -1.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011

Source: IRI Archived POS Data 2007-2011. FDMx refers to Food-Drug-Mass (excluding Walmart). © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4 Over 2+ Years of the Great Recession, Private Label Share Grew, Accounting for Billions of Dollars in Sales Gains F&B Private Label Dollar Share of Category (%), Sales Change from 2008 to Q2 2011 – All Outlets

+0.8 $4.5B Private Label Growth Decomposed 17.8 17.8 18.5 18.6 • How – Price vs. volume? If volume, what is the role of (value) pricing compared to branded vs. distribution vs. merchandising (using two categories, cookies and salty snacks, as examples)? 2008 2009 2010 Q2 2011 • Where / Why – Which categories? Which retailers? Why? $4.5B Incremental PL Sales • Who – Which shopper segments? What is the $2.8B from PL Share Gains / $1.7B from Category Sales Increases contribution of Heavy users?

Private Label share in Nonedible also grew 2.2 ppts (from 14.4% to 16.6%) in the same time period, translating into sales of $3.9B offset by $0.5B sales losses from declines in category sales (net PL sales increase in Nonedible = $3.4B).

Source: IRI Archived POS Data, FDMx refers to Food-Drug-Mass (excluding Walmart) and Consumer Network Panel 2008-Q2 2011 (includes Walmart, Club and Dollar channels). © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5 Private Label Increased Volume and Price While Brands Lost Volume Sales as Prices Went Up % Change, Q2 2011 vs. 2008 – All Outlets Private Label Branded

1.0% 4.3%

Δ Price per Vol 7.1% 1.7%

Δ Dollar Sales 6.0% -2.4%

Δ Vol Sales

Source: IRI Archived POS Data. FDMx refers to Food-Drug-Mass (excluding Walmart) / Note: Change in price per vol = change in price per vol for each category weighted by category PL/Branded $ sales © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6 Increases in Price Gaps Between Brands and Private Label Favored Private Label but Magnitude of Gaps Varied Among Retailers

Private Label Price Gaps, Share Changes – Cookies Private Label Price Gaps, Share Changes – Salty Snacks 52 WE Q2 2011 vs. 2008 52 WE Q2 2011 vs. 2008

Food Drug Mass/Club/Dollar Conv Food Mass/Club/Dollar Conv Drug 25.0 25.0 WAWA Corr = 0.14 Corr = 0.56 20.0 20.0 Supervalu Shoppers Food Albertsons 15.0 15.0

Target Big Y Supervalu Farm Fresh 10.0 10.0 Kroger Banner 5.0 5.0 Valero Valero Freds Dollar 0.0 0.0 Kroger Banner Target -5.0 -5.0

CVS -10.0 Penn Traffic -10.0

BJ’s (ppt) share in vol PL Change Change in PL vol share share vol(ppt) PLin Change

-15.0 -15.0 Minyard

-20.0 -20.0 -80 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 -80 -70 -30 -20 -10 0 10 20 30 40 50 60 Change in price gap (ppt) Change in price gap (ppt) Low Positive Impact on PL Share High Positive Impact on PL Share

Source: IRI Archived POS Data, FDMx refers to Food-Drug-Mass (excluding Walmart; Costco not available) / NOTE: Price Gap = (National Brand price - Private Label price)/National brand price © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 7 Distribution Also had a Positive Impact on Private Label Share, Though Less Than the Impact of Price Gaps

Private Label Distribution, Share Changes – Cookies Private Label Distribution, Share Changes – Salty Snacks 52 WE Q2 2011 vs. 2008 52 WE Q2 2011 vs. 2008

Food Drug Mass/Club/Dollar Conv Food Mass/Club/Dollar Conv Drug 25.0 25.0 Corr = 0.30 Corr = 0.19 WAWA 20.0 20.0

15.0 15.0

10.0 Target 10.0

5.0 Valero 5.0 Kroger Banner Supervalu Express Kroger Banner 0.0 0.0 Target CVS -5.0 CVS -5.0

-10.0 -10.0

BJ’s

Change in PL vol share* (ppt) share* in vol PL Change Change in PL vol share* share* (ppt) vol PLin Change -15.0 -15.0

Penn Traffic Minyard -20.0 -20.0 -8 -6 -4 -2 0 2 4 8 10 12 14 -8 -6 -4 -2 0 2 4 6 8 10 12 14 Change in PL share of items in store* (ppt) Change in PL share of items in store* (ppt) Medium Positive Impact on PL Share Low Positive Impact on PL Share

Source: IRI Archived POS Data, FDMx refers to Food-Drug-Mass (excluding Walmart) / NOTE: PL share of items = PL Avg Items per Store Selling/Total Avg Items per Store Selling. © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 8 Merchandising Support Had Minimal Impact on Private Label Share Gains Throughout the Great Recession

Private Label Merchandising, Share Changes – Cookies Private Label Merchandising, Share Changes – Salty Snacks 52 WE Q2 2011 vs. 2008 52 WE Q2 2011 vs. 2008

Food Drug Mass/Club/Dollar Conv Food Mass/Club/Dollar Conv Drug 25.0 25.0 WAWA Corr = 0.10 Corr = 0.08 20.0 20.0

15.0 15.0 Supervalu Express

10.0 10.0 Kroger King Soopers Duane Reade Target Kmart 5.0 5.0 Kroger Banner

0.0 0.0 C Farms Target Kroger Banner -5.0 -5.0 Duane Reade CVS CVS

-10.0 -10.0 Kroger City Market

Change in PL vol share* (ppt) share* vol in PL Change Change in PL vol share* share* (ppt) vol PLin Change -15.0 -15.0 Minyard -20.0 -20.0 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 Change in PL share of merchandising vs. Branded *(ppt) Change in PL share of merchandising vs. Branded* (ppt) Low Impact on PL Share Low Impact on PL Share

Source: IRI Archived POS Data, FDMx refers to Food-Drug-Mass (excluding Walmart) / NOTE: PL share of merchandising = PL total points of distribution, any merch / Branded total points of distribution, any merch © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 9 20 Food & Beverage Categories Drove 93% of Sales Growth, Led by Refrigerated / Frozen Items and Snacks

Categories Driving F&B Private Label Dollar Sales Change / 52 WE Q2 2011 vs. 2008 - All Outlets MORE THAN FAIR SHARE CONTRIBUTION % of Total PL $ Share Category Contribution to Total F&B Private Label $ Sales Gain in All Outlets PL $ Sales Gain (ppt)

Meat - Rfg 12.8 1.3% 30.0% Salad/Coleslaw - Rfg 11.7 1.5% 14.3% Seafood - Fz 7.6 2.4% 3.1% Natural Cheese 7.5 6.5% 3.5% Sugar 5.5 1.7% 4.0% Butter 4.7 1.8% 3.5% Salty Snacks 4.5 1.3% 1.1% Breakfast Meats 4.3 1.3% 2.1% Pastry/Doughnuts 3.9 0.9% 6.6% Poultry - Fz/Rfg 3.6 1.4% 4.7% Canned Meat 3.5 0.5% 9.3% Cookies 3.4 1.5% 2.6% Snack Nuts/Seeds/Corn Nuts 3.0 1.9% 0.5% Meat - Fz 2.9 0.9% 4.4% Other Snacks 2.7 0.7% 5.3% Vegetables - Ss 2.6 1.6% 2.5% Baked Goods - Rfg 2.3 0.3% 13.8% Creams/Creamers 2.2 0.8% 1.4% Bottled Water 2.1 3.1% 3.1% Breakfast Food - Fz 1.7 0.4% 2.4% All Other 7.5 68.4% -0.2% Total Note: Top 20 categories based on contribution to total F&B 100.0 PL $ sales gain. All Other Sales Gains: 58%; All Other Sales Losses: -49%

Source: IRI Archived POS Data. FDMx refers to Food-Drug-Mass (excluding Walmart) and Consumer Network Panel 2008-Q2 2011 (includes Walmart, Club and Dollar channels) © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10 Categories That Contributed the Most to Private Label Dollar Sales Gains Were Mostly Where Private Label Was Already Highly Developed

Top 20 Private Label Dollar Sales Gain Contribution F&B Categories Private Label Share and Share Change, 52 WE Q2 2011 vs. 2008 – All Outlets

All Outlets Bubble Size (0.8 ppt) PL Strong 70 PL $ Sales in Category, Relative Proportion 65 Butter $600MM 60 Sugar Meat - Rfg 55 50 Other Snacks Snack Nuts/Seeds/Corn Nuts Baked Goods - Rfg 45 Seafood - Fz Natural Cheese 40 35 Vegetables - Ss 30 Creams/Creamers Poultry - Fz/Rfg Salad/Coleslaw - Rfg 25 Pastry/Doughnuts Meat - Fz All Outlets 20 Breakfast Meats Bottled Water Canned Meat (18.6%) 15 Cookies 10 Salty Snacks Breakfast Food - Fz PL Developing 52 WE 5/15/2011 PL $ Share of Category of (%) Category Share PL $ WE 5/15/201152 5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 14.0 30.5 PL Dollar Share of Category Chg 52 wks end 5/15/2011 vs. 2008 (ppt) Note: Top 20 categories based on contribution to total F&B PL Dollar sales gain.

Source: Source: IRI Archived POS Data, FDMx refers to Food-Drug-Mass (excluding Walmart) and Consumer Network Panel 2008-Q2 2011 (includes Walmart, Club and Dollar channels) © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 11 Private Label Dollar Sales Gains Were Largely Driven by a Few Retailers; ~75% of Total Gain Driven by Five Retailers

Retailers Driving Private Label F&B Dollar Sales Gain / 5.15.2011 vs. 2008 – Total F&B MORE THAN FAIR SHARE CONTRIBUTION % of Total PL $ Share Retailers Contribution to Total Private Label Dollar Sales Gain PL $ Sales Gain (ppt) Costco 18.4 5.7% 3.2% Kroger 17.8 Top 5 retailers 9.3% 0.5% Aldi 15.8 accounted for 5.7% 4.1% Walmart 13.1 ~75% of 18.9% 1.4% growth Target 10.4 2.2% 1.9% Sam’s Club 6.2 1.6% 2.2% Wegmans 4.4 1.3% 2.2% Ahold 3.8 2.8% 0.1% Dollar General 2.1 0.4% 2.7% Publix 1.5 3.6% -0.6% CVS 1.5 0.4% 0.2% Wakefern 1.3 1.2% -0.8% Harris Teeter 1.2 0.7% 0.9% Rite Aid 0.6 0.2% 1.3% Food Lion 0.6 2.1% 0.3% Family Dollar 0.2 0.1% -0.9% Safeway 0.2 3.8% 1.1% Winn Dixie 0.5 1.2% 0.3% Walgreens 1.3 0.7% -2.9% SuperValu 2.5 3.7% 1.7% All Other 5.4 34.6% -0.1% Total 100.0

Source: IRI Archived Consumer Network Panel 2008-Q2 2011 (includes Walmart, Club and Dollar channels) © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12 Retailers That Contributed the Most to Private Label Dollar Share Gains Were More Successful Than Others in Driving Store Brand Recognition

% of Private Label Recognition at Leading Retailers (% Respondents Recognizing Retailer’s Store Brand)

Costco 56

Kroger 60

Aldi 80

Walmart 90

Target 78

All Other* 47

*Consists of other retailers included in the survey (i.e., Supervalu, Delhaize, Publix, Walgreens, CVS, Dollar General, Meijer, Ahold, and Sam’s Club brands)c

Source: IRI Private Label Survey, April 2011 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 13 Successful Private Label Programs Helped Retailers Grow Share of Wallet or Buyers; Less Successful PL Programs Did Not Boost Retailer Loyalty

Retailers Private Label F&B Share and Share of Wallet Retailers Private Label F&B Share and Share of Buyers Changes – 52 WE Q2 2011 vs. 2008 Changes – 52 WE Q2 2011 vs. 2008

Club Dollar Food Mass Drug Club Dollar Food Mass Drug 1 14 Correlation = -0.12 Correlation = -0.07 12 Harris Teeter 10 8 Target Wegmans Kroger 6 Kroger Target 4 Costco Costco 2 Aldi Harris Teeter Aldi 0 0 -2 Walmart

-4 A&P (w/ Pathmark) SVU Cub -6 SVU-Albertsons -8 SVU Cub A&P (w/ Pathmark) -10

Change in retailer SOW (ppt) SOW retailer in Change -12 Walmart -14 SVU-Albertsons

Change in retailer share of buyers* share (ppt) retailer inof buyers* Change -16 -1 -18 -5 -4 -3 -2 -1 0 1 2 3 4 5 -5 -4 -3 -2 -1 0 1 2 3 4 5 Change in PL $ share (ppt) Change in PL $ share*(ppt)

Notes: Private Label $ Share = Private Label Edible / Total Edible; Share of Wallet = Retailer Share of Wallet out of All Outlets; Share of Buyers = Retailer Buyers / Buyers in CRMA (Retailer Share of Market – Product Buyers)

Source IRI Archived Consumer Network Panel 2008-Q2 2011 (includes Walmart, Club and Dollar channels) . © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 14 Shoppers Prefer Both Private Label Brands and Name Brands in Places Where They Shop % Who Agree or Strongly Agree With Statements

I Prefer to Shop at Stores I Prefer to Shop at Stores Where “Where Store Brands EXIST in Most “Availability of Store Brands DOMINATES Food & Beverage Categories ” Over Availability of Name Brands ” 16% 30% 5% 12% strongly agree agree strongly agree agree

like PL brands as an option, like PL brands as an option, but dislike when PL but dislike when PL 46% DOMINATES brand names 17% DOMINATES brand names

Source: IRI April 2011 Private Label Survey © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 15 Private Label Growth During Past Recession Was Driven by Younger and Middle- to High-Income Households

52 WE Q2 2011 vs. 2008 Private Label Dollar Sales Gain Contribution MORE THAN FAIR SHARE CONTRIBUTION

40% of Total Gains

17.1 14.5

9.0 7.8 6.2 6.1 6.4 5.3 5.1 4.9 4.7 4.5 4.5 4.1

PersonicX Jumbo Beginnings Cash & Golden Fortunes Flying Our Turn Aging Mature Flush Modest Middling Mature Other Segments Families + Taking Careers Years & Solo/Mixed Upscale Rustics Families Means Singles + Wealth * Hold Families Singles Mixed Middlers Share of Total PL $ Sales 13% 5% 4% 9% 7% 2% 5% 4% 4% 8% 6% 4% 4% 25% $60K- $60K- $25K- $60K- $25K- Income <$75K > $60K >$60K >$120K <$35K $35K-75K <$35K > $120K 120K 120K 35K 120K 75K Age 30s-40s 20s 30s 46+ 40s-50s 30s 40s-50s 45-65 46+ 40s-50s 46-65 40s 46-65 Other Children Children City Rural Children / Children City City

*Other includes Transition Time, True Blues, Active Elders, Family Focused, Leisure Buffs

Source: IRI Archived Consumer Network Panel 2008-Q2 2011 (includes Walmart, Club and Dollar channels) © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 16 African American and High-Income Households Contributed More Than Their Fair Share to Private Label Dollar Share Growth

MORE THAN FAIR SHARE CONTRIBUTION

52 Weeks Q2 2011 vs. 2008 52 Weeks Q2 2011 vs. 2008 Private Label Dollar Sales Gain Contribution Private Label Dollar Sales Gain Contribution % Contribution to PL growth % Contribution to PL growth 78.1

45.3

31.5 23.2

12.3 9.6

Caucasian African Hispanic $70K and up $35K to 69.9K $34.9K < American Share of Total Share of Total PL $ Sales 79% 10% 11% PL $ Sales 37% 33% 30%

Source: IRI Liquid Data Panel; All Outlets. © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 17 Shoppers’ Positive Perceptions of Private Label Products Increased During the Great Recession and Contributed to PL Sales Gains

% Difference Between Heavy and Light Users That Heavy Users Share of Total Agree or Strongly Agree With Statement Private Label F&B Sales

Grocery store brands are same 48% 33.8 or better than name brands 32.2 2008 Store brands are just as 38% innovative as brand name Q2 2011

Store brands are as 34% 20.3 safe as name brands 19.0

Store brands are often made 24% by brand manufacturers

Store brands are easy to 14% find on the shelf

I always know which 10% products are store brands

Name brands are worth % of PL F&B Users % Contribution to PL -41% the extra price F&B Sales

Notes: Sample size: Heavy shoppers (PL is 30% or more of total spend)= 412, Light shoppers (PL is 10% or less of total spend)= 427. Includes responses with 4 (Agree) and 5 (Strongly Agree)

Source: IRI Panel – All Outlets; IRI Private Label Survey, April 2011 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 18 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 19 2020 Trends and Implications • Post COVID-19, Private Label continues its momentum and has consistently outpaced national brand growth in both edible and nonedible categories over the past three years. • Categories that already have strong Private Label development continue to gain the most. • Private Label growth is retailer specific – Walmart, Costco and Sam’s Club have driven a vast majority of edible PL growth and Walmart and Costco have driven all the growth in nonedible. • Sales of Private Label will reach $15B-$20B dollars in sales in 2020 vs. the $5B sales gains experienced in 2019-2018; share to increase 0.6 ppts. • Private Label risk to brands is high when differentiation and loyalty are low, and the financial incentive for both shoppers and retailers is strong.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 20 Private Label Has Consistently Outpaced National Brand Growth in Both Edible and Nonedible Categories Over the Past Three Years

Quarterly Brand Dollar Performance % Chg vs YAG // Total Store // MULO Private Label Branded 2017 2018 2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Edible 6.5 7.0 5.2 5.1 4.7 4.1 3.8 3.4 3.0 3.1 2.7 2.5 2.4 2.6 2.2 1.5 1.4 1.4 1.3 0.6 1.0 0.6

0.0 -1.1 Nonedible 7.2 7.1 6.7 6.1 5.6 5.9 5.7 6.1 5.8 4.3 4.6 2.5 1.1 0.6 0.8 0.6 0.5 0.5 0.1 0.4 0.4 0.1

0.0 0.0 0.0

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 21 Both Edible and Nonedible Private Label Brands Have Taken Share Since 2017, With the Highest Point Gain Seen in Nonedible Categories (+1.6pts) Private Label Dollar Share % // CY 2019 v 2017 // MULO

Edible Nonedible +0.7 +1.6

18.7 18.9 18.5 18.1

18.0 17.3

2017 2018 2019 2017 2018 2019

PL Dollars ($B) PL Dollars ($B) $77.0 $80.5 $83.2 $38.7 $41.1 $43.5

$6.2B Incremental PL Edible Sales $4.8B Incremental PL Nonedible Sales $3.1B from PL share gains $3.6B from PL share gains $3.1B from category sales increases $1.2B from category sales increases

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 22 Since 2017, Private Label Edible Grew Volume Sales While Holding Prices Steady; Nonedible Private Label Grew Price / Volume But Also Increased Volume Drivers of Growth // CY 2019 vs 2017 // MULO

Edible Nonedible

+4.5% -0.5% +7.8% +5.2%

National Private National Private Brands Label Brands Label Δ Price per vol Δ Price per vol +3.6% +8.1% +0.8% 12.3%

Δ Dollar Sales Δ Dollar Sales (2019 vs 2017) (2019 vs 2017) -0.9% +8.6% -6.5% +6.7%

Δ Vol Sales Δ Vol Sales

Source: IRI Total Store POS / Note: Change in price per vol = change in price per vol for each category weighted by category PL/Branded $ sales © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 23 Refrigerated and Frozen Categories Led Private Label Edible Growth 2017-2019, Along with Bottled Water and Nuts / Seeds

TOP 5 SELLERS DURING THE LAST Edible Categories Driving Private Label Dollars // CY 2019 v 2017 // MULO RECESSION (YEAR-ENDED 2010)

Edible Category Contribution To Edible Growth Mix & Share Ranked by PL absolute % Chg vs % of Total PL $ Share Pt % of absolute dollar change vs 2017 dollar change 2019 vs 2017 2017 PL $ Chg vs 2017 1 MEAT - RFG 13% 27.6% 4.3 8.0 2 BOTTLED WATER 10% 18.9% 4.9 1.2 3 SEAFOOD - FZ 10% 27.9% 3.5 8.2 4 NATURAL CHEESE 10% 11.5% 7.4 3.4 5 SNACK NUTS/SEEDS 5% 25.1% 2.0 6.6 6 FRESH EGGS 4% 8.8% 4.0 1.6 7 ENTREES - RFG 4% 51.2% 0.9 4.5 8 BREAKFAST MEATS 4% 18.1% 1.7 2.1 9 WHIPPED TOPPINGS - RFG 3% 42.3% 0.7 7.3 10 COFFEE 3% 12.2% 1.9 1.6 11 SIDE DISHES - RFG 3% 25.9% 1.0 2.6 12 SPICES/SEASONINGS 2% 16.9% 1.2 2.2 13 COOKIES 2% 11.4% 1.7 0.8 14 CREAMS/CREAMERS 2% 17.3% 1.1 0.8 15 BAKING NUTS 2% 31.1% 0.7 13.8 16 PLAIN VEGETABLES - FZ 2% 11.4% 1.5 1.6 17 PROCESSED POULTRY - FZ/RFG 2% 28.8% 0.6 3.2 18 SALTY SNACKS 2% 8.8% 1.6 0.0 19 LUNCHEON MEATS 2% 10.9% 1.3 1.7 20 BUTTER/BUTTER BLENDS 2% 7.3% 1.7 0.8 ALL OTHER 13% 1.8% 56.3 -0.2 TOTAL EDIBLE PRIVATE LABEL 100% 8.1% 100% 0.6

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 24 Pet Supplies as Well as Paper Products Led Nonedible Private Label Performance Over the Past Few Years Nonedible Categories Driving Private Label Dollars // CY 2019 v 2017 // MULO

Nonedible Category Contribution To Nonedible Growth Mix & Share Ranked by PL absolute % Chg vs % of Total PL $ Share Pt % of absolute dollar change vs 2017 dollar change 2019 vs 2017 2017 PL $ Chg vs 2017 1 PET SUPPLIES 11% 43.7% 3.8 9.7 2 TOILET TISSUE 10% 24.7% 5.3 3.8 3 PAPER TOWELS 6% 17.0% 4.2 3.1 4 CUPS & PLATES 5% 11.5% 5.8 3.5 5 KITCHEN STORAGE 4% 32.7% 2.0 4.9 6 SOCKS 3% 25.5% 1.9 6.1 7 FIRST AID ACCESSORIES 3% 19.9% 1.8 4.7 8 CANDLES 3% 29.3% 1.2 5.6 9 PET TREATS 2% 40.6% 0.9 2.2 10 CLEANING TOOLS 2% 31.8% 1.0 4.1 11 GASTROINTESTINAL 2% 8.5% 3.2 2.5 12 DIAPERS 2% 11.8% 2.3 1.4 13 VITAMINS 2% 5.3% 4.8 -0.4 14 TIGHTS 2% 18.2% 1.3 3.9 15 MOIST TOWELETTES 2% 27.0% 0.9 5.3 16 FOOD & TRASH BAGS 2% 4.2% 4.6 1.1 17 HH CLEANER CLOTHS 2% 40.5% 0.6 5.2 18 AIR FRESHENERS 1% 20.8% 0.9 1.5 19 NASAL PRODUCTS 1% 20.6% 0.9 3.0 20 SLEEPING REMEDIES 1% 25.0% 0.8 -1.5 ALL OTHER 33% 7.5% 51.7 0.8 TTL NONEDIBLE PRIVATE LABEL 100% 12.3% 100% 1.6

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 25 Private Label Secured the Largest Share Gains in the Edible Categories That Already Had High Private Label Development Top-20 Edible Category Share Gain // CY 2019 v 2017 // MULO Private Label 70 Dollar Size ($MM) $1,000 65 MEAT - RFG Strong PL

60 FRESH EGGS SEAFOOD - FZ 55 WHIPPED TOPPINGS - RFG BUTTER/BUTTER BLENDS 50 BAKING NUTS

45 NATURAL CHEESE

40 PLAIN VEGETABLES - FZ SNACK NUTS/SEEDS/CORN NUTS 35

30 BOTTLED WATER SPICES/SEASONINGS

ENTREES - RFG

PL Dol Shr % % Shr (2019) Dol PL PL Developing PL 25 SIDE DISHES - RFG BREAKFAST MEATS PL Edible 20 Avg (18.7%) COOKIES PROCESSED POULTRY - FZ/RFG 15 CREAMS/CREAMERS LUNCHEON MEATS 10 GROUND COFFEE SALTY SNACKS 5 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 7.0 7.5 8.0 14.0 PL Edible Avg (+0.7) PL Dol Shr Pt Chg (2019 vs 2017)

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 26 Similar to Edible, Private Label is Taking Share in Nonedible Categories Where it is Already Established and Growing Top-20 Nonedible Category Share Gain // CY 2019 v 2017 // MULO Private Label 75 Dollar Size TIGHTS ($MM) $500

70 Strong PL

60 CUPS & PLATES 55 FOOD & TRASH BAGS SLEEPING REMEDIES 50 GASTROINTESTINAL MOIST TOWELETTES 45 PET SUPPLIES FIRST AID ACCESSORIES 40

35 PAPER TOWELS CANDLES SOCKS

PL Dol Shr % % Shr (2019) Dol PL PL Developing PL VITAMINS NASAL PRODUCTS 25 HH CLEANER CLOTHS TOILET TISSUE PL Nonedible 20 DIAPERS Avg (18.9%) KITCHEN STORAGE 15 AIR FRESHENERS CLEANING TOOLS 10 PET TREATS

5 -1.5 -1.0 -0.5 0.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 10.0 PL Nonedible Avg (+1.6) PL Dol Shr Pt Chg (2019 vs 2017)

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 27 Walmart and Club Retailers Comprised the Top-3 Growing TOP RETAILERS DRIVING PRIVATE LABEL DOLLAR SALES GAINS DURING THE LAST Private Label Growth Contributors Within Edible RECESSION (YEAR-ENDED 2010) Top Retailers Driving Edible PL Dollars // CY 2019 v 2017 // All Outlets // National Consumer Panel

Retailer Contribution to Edible Growth Mix & Share Ranked by PL absolute Change % of Total PL $ Share Pt % of absolute dollar change vs 2017 dollar change 2019 vs 2017 Index* PL $ Chg vs 2017 1 Walmart 61% 206 29.4 2.1 2 Costco 13% 131 9.6 0.7 3 Sams Club Top-5 = *90% of 10% 296 3.3 2.7 4 Kroger PL Edible Growth 4% 67 6.2 -0.2 5 Aldi 2% 19 11.2 -1.3 6 Trader Joes 2% 64 2.9 0.2 7 Dollar General 2% 217 0.9 -1.2 8 Lidl 1% 833 0.2 -4.7 9 Food Lion 1% 120 0.8 -1.0 10 Safeway 1% 59 1.6 0.6 11 Frys 1% 153 0.6 -0.1 12 Hannaford 1% 183 0.5 1.2 13 Pick N Save 1% 379 0.2 1.6 14 Ralphs 1% 152 0.5 0.9 15 Meijer 1% 48 1.4 0.0 16 King Soopers 1% 112 0.6 -0.2 17 Fred Meyer 1% 88 0.8 -0.9 18 Albertsons 1% 106 0.6 0.6 19 Weis Markets 1% 236 0.2 1.5 20 DeCA Commissary 1% 747 0.1 1.4 All Other 3% NA 28.3 -0.4 ALL OUTLETS 100% 100% 0.5

Source: IRI National Consumer Panel / *Index = contribution to sales change / contribution to total sales © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 28 In Nonedible, Significant Growth in Walmart Private Label GREATEST PL RECOGNITION AMONG SHOPPERS DURING THE LAST Was Offset by Declines in Walgreens’ and Sam’s Programs RECESSION (YEAR-ENDED 2010) Top Retailers Driving Nonedible PL Dollars // CY 2019 v 2017 // All Outlets // National Consumer Panel

Retailer Contribution to Nonedible Growth Mix & Share Ranked by PL absolute Change % of Total PL $ Share Pt % of absolute dollar change vs 2017 dollar change 2019 vs 2017 Index* PL $ Chg vs 2017

1 Walmart 130% 188 69.0 3.3

2 Costco 13% 255 5.1 1.0

3 Dollar General 2% 641 0.3 6.8

4 Target 0% -- 1.3 0.0

5 Kroger 1% -- 4.5 -1.4

6 Aldi 1% -- 3.0 3.7

7 Meijer 1% (196) 0.6 -0.8

8 Walgreens 14% (409) 3.3 -4.6

9 Sam’s Club 18% (1,142) 1.6 -1.8

All Other 11% (93) 11.4 -0.5

ALL OUTLETS 100% 100% 0.5

YTD 2020 Private Label Dollar & Unit Share// MULO Dol Share Unit Share

Edible Nonedible 22.8 22.5 25.9 22.5 22.3 22.2 22.4 24.7 25.0 24.0 24.2 24.5

19.4 20.1

18.9 18.9 18.9 18.7 18.8 19.4 19.1 19.2 19.6 19.1

CURRENT % CURRENT % CURRENT YTD 4 WE 4 WE 4 WE 4 WE 4 WE YTD 4 WE 4 WE 4 WE 4 WE 4 WE 2020 1.26.20 2.23.20 3.22.20 4.19.20 5.17.20 2020 1.26.20 2.23.20 3.22.20 4.19.20 5.17.20

0.8 2.2 0.6 0.6 0.6 1.6 1.5 0.5 1.2 0.4 0.4 1.1 0.3 0.9 0.8 0.3 0.3 0.2 0.3 0.6 0.7 0.7 0.7

0.4

CHG VS.YAG CHG VS.YAG CHG

YTD 4 WE 4 WE 4 WE 4 WE 4 WE YTD 4 WE 4 WE 4 WE 4 WE 4 WE PT PT 2020 1.26.20 2.23.20 3.22.20 4.19.20 5.17.20 2020 1.26.20 2.23.20 3.22.20 4.19.20 5.17.20

IRI Forecast Large-format Private Label sales growth will reach $15B-$20 in 2020. Due in part to increased consumption, PL will enjoy an accelerated increase in share of up to 0.6 points. Private Label for 52 WE 5.17.2020 is up ~$12B vs. comparable period YAG.

Source: IRI Total Store POS © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 30 Private Label Risk is High When Differentiation and Loyalty Are Low, and the Financial Incentive for Both Shoppers and Retailers is Strong Framework to Assess Threat of Private Label for Branded Manufacturers

FACTORS DRIVING HIGH PRIVATE LABEL RISK IN CATEGORIES

Comparability Pricing Distribution Loyalty Margin Appeal Side-by-side Price gap is large Fewer national Retailers drive trust Category is comparisons are between private label brands and & brand recognition traditionally lower simple; little and national brands, products available in their private label margin for the perceived difference providing consumers per store to meet (e.g. Whole Foods retailer, driving in attributes or claims additional incentive diverse shopper 365, Kirkland) them to push for needs stronger profits Price difference Smaller craft brands Demand is highly is evident, as private are popular, allowing Brands are highly fragmented with Private label moves label options are private label to mimic regionalized, limiting lower levels of beyond value directly comparable their cache without a widespread brand loyalty, showing pricing to higher in size and count large premium recognition and loyalty a willingness to margin Mainstream for national brands cross-shop and Premium tiers

Source: IRI Growth Consulting. © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 31 Insights and Strategic Guidance for Better Decisions IRI’s Online Resources Include Real-Time Updates and Weekly Reports Which Track the Impact of the Virus on CPG and Retail

The IRI COVID-19 lmpact Includes COVID-19 impact analyses, dashboards and the latest thought leadership on supply chain, consumer behavior, channel shifts for the U.S. AND international markets

IRI CPG Economic Indicators Including the IRI CPG Demand Index™, IRI CPG Supply Index™ and IRI CPG Inflation Tracker™ Accessible through the insights portal to track the daily impact of COVID-19. This includes top selling and out-of-stock categories across the country and consumer sentiment on social media

THE CHANGING SHAPE OF LESSONS FROM IRI COVID-19 IMPACT ASSESSMENT REPORTS THE CPG DEMAND CURVE THE GREAT RECESSION

The IRI CPG Demand Index™ provides a standard metric for tracking changes in spending on consumer packaged goods. It measures weekly changes in consumer purchases, by dollar sales, against the year- ago period across departments including fixed and random weight products, grocery aisles and retail formats. The IRI CPG Demand Index™ is available for eight U.S. regions and all U.S. states.

CLICK HERE FOR MORE!

The IRI CPG Inflation Tracker™ provides the well-known price per unit metric for tracking changes in pricing of consumer packaged goods. It provides weekly changes in consumer prices, price per unit against the year-ago period across departments including fixed and random weight products, grocery aisles and retail formats. The IRI CPG Inflation Tracker™ is available for eight U.S. regions and all U.S. states.

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The IRI CPG Supply Index™ provides a standard metric for tracking changes in product availability (i.e. in-stock rates) in stores for consumer packaged goods. It measures weekly changes in product availability against the baseline across departments and retail formats. The IRI CPG Supply Index™ is available for eight U.S. regions and all U.S. states.

CLICK HERE FOR MORE!

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