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GROCERY UNIVERSE 2014 RESULTS OF THE 52ND INVENTORY OF RETAIL GROCERY IN BELGIUM, DRAWN UP BY NIELSEN. Any reproduction, representation or use of one or various elements of this report must show the full mention: Source: Nielsen TABLE OF CONTENTS 1. Nielsen in brief 2. Belgian Economy & Retail in 2013 3. The Nielsen Grocery Universe 3.1 Turnover and inflation 3.2 Number of stores 3.3 Market share by Shop Type 3.4 Sales surface 3.5 Discounters in Belgium 3.6 Regional characteristics 3.7 Private labels 4. Retailing in Europe 4.1 International Shop Types 4.2 Discounters in Europe 5. The Nielsen Services Nielsen Grocery Universe 2014 │ Copyright ©2014 The Nielsen Company. Confidential and proprietary. 2 1. NIELSEN IN BRIEF THE NIELSEN COMPANY For 91 years Nielsen services have been making the FMCG (Fast Moving Consumer Goods) market visible and comprehensible for manufacturers and retailers. Nielsen is the world’s leading provider of information and market analysis in the consumer and service sectors thanks to the quality of its data, the accessibility of its analyses, the expertise it has built up over more than 91 years of practical experience and the rapidity with which it communicates its findings. • Established in the United States in 1923 by Arthur C. Nielsen • Operates in over a hundred countries • Active in Belgium since 1954 ‒ Over 200 regular clients ‒ Studies more than 400 product categories This overview represents the results of the 52nd inventory of the world of retail grocery sector, drawn up every year by Nielsen. Nielsen Grocery Universe 2014 │ Copyright ©2014 The Nielsen Company. Confidential and proprietary. 4 2. THE ECONOMY & RETAIL IN 2013 Bali Package NSA scandal over Building collapse in Bangladesh ↘ Trade barriers PRISM Work conditions? Nuclear test in North Korea Crisis in Cyprus Inflation food prices Elections in Italy, Nuclear deal in Iran (bailout by UE) China Copyright ©2014 The Nielsen Company. Confidential and proprietary. and Confidential Company. NielsenThe ©2014 Copyright │ Civil war in Syria Typhoon in Philippines, Vietnam Coup d’état in Egypt, Mali, Floods in US, China, India Central Africa Impacts of climate change Nielsen Grocery Universe 2014 2014 Universe Grocery Nielsen 6 BELGIUM: THE NIELSEN BAROMETER EVOLUTION The last two years FMCG volumes remained flat in Belgium. Turnover is growing by +2.2% thanks to the price inflation. FMCG: Sales Value Sales Volume Price of Package Sold Food & Non Food % 2013 vs 2012 +2.2% +0.0% +2.2% % 2012 vs 2011 +2.2% +0.1% +2.1% % 2011 vs 2010 +3.2% +0.8% +2.4% % 2010 vs 2009 +1.1% +0.9% +0.3% % 2009 vs 2008 +2.0% -0.3% +2.2% Copyright ©2014 The Nielsen Company. Confidential and proprietary. and Confidential Company. NielsenThe ©2014 Copyright │ (*) The Nielsen Barometer shows the trend as a percentage of sales of a representative group of FMCG products in the retail sector in Belgium Nielsen Grocery Universe 2014 2014 Universe Grocery Nielsen 7 BELGIUM: FMCG TRENDS PER YEAR AND PER QUARTER In the last quarter of 2013, a positive volume trend is noted (which persists beginning of 2014). 6% 5% 4% 3.2% 3.0% 2.8% 2.6% 2.8% 2.9% 3% 0.8% 2.2% 2.2% 0.3% 1.6% 1.6% 1.0% 1.1% 2% 0.1% 4.1% 0.0% 1.5% 0.1% 2.4% 2.9% 2.6% 1% 2.1% 2.2% 1.8% 0.2% 1.9% 1.6% 1.1% 1.5% 0% 0.0% -1% -1.3% -2.7% -2% 2011 2012 2013 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Copyright ©2014 The Nielsen Company. Confidential and proprietary. and Confidential Company. NielsenThe ©2014 Copyright │ Average price change Volume change Nominal growth Source: Nielsen Growth Reporter Nielsen Grocery Universe 2014 2014 Universe Grocery Nielsen 8 3. NIELSEN GROCERY UNIVERSE 2014 DEFINITION OF THE GROCERY UNIVERSE The grocery sector includes the following: 1. Retail stores in Belgium selling at least four of the following food categories: • Edible fats • Canned goods • Bottled drinks • Drinks in the form of solid substances (e.g. coffee and tea) • Pasta • Confectionery 2. ‘Food’ sales also have to represent at least 40% of total turnover Are excluded: 1. Stores that generate more than 50% of their turnover through the sale of meat products or fish and shellfish. 2. Stores specialising in diet foods. 3. Stores that are part of petrol stations (e.g. Yelloh, Shop ‘n Go, etc…) Turnover We take into account the total turnover generated during the course of the past year. For stores that only opened during the course of the year, sales are extrapolated for a full year. For stores that closed during the course of the year, Nielsen assumes that no sales at all were made in that year. For hypermarkets, only the turnover for the food, paper products, care products and cleaning products departments is taken into account. Nielsen Grocery Universe 2014 │ Copyright ©2014 The Nielsen Company. Confidential and proprietary. 10 DEVELOPMENTS IN 2013 • Domestic consumption increased slightly (+ 0.8%) while the importance of the Grocery Universe increased by+0.2 pts. Households have spent relatively more in the Grocery Universe compared to their total expenditure. • The turnover of the grocery universe rose to EUR 24.5 billion in 2013. This is an increase of +2.7% compared with the previous year. Inflation grew in 2013 with 1.1%, less than in 2012. This means that the turnover in constant has a positive growth of 1.6%. The Nielsen Growth Reporter also showed a stabilization of the volumes in Belgium in 2013. • There were 7 289 stores in the universe in 2013. This is 96 stores less than in 2012. Between 2005 and 2013, the number of points of sale fell on average by 130 stores per year. Between 1995 and 2013, on the other hand, an average of 315 stores closed per year. • The share of F1 declined by -0.1 points to 51.5% while opening 5 extra stores in 2013 bringing their total to 597 stores. • F2 and Hard Discounters, on the other hand, gained market shares. F2 has a MS of 28% which represents an increase of +0.2 pts versus 2012. Hard Discount grew by +0.2 pts to 15.5% in Belgium. Noteworthy is that F2 (1312 stores) grew in share with 35 extra stores while Hard Discount (739 stores) increased their number of stores by 4 stores. • The market share of F3 keeps on declining. In 2013 they lost -0.3 points to 5%. The number of stores also decreased to 4 641 stores (-140 stores vs 2012). Nielsen Grocery Universe 2014 │ Copyright ©2014 The Nielsen Company. Confidential and proprietary. 11 3.1 TURNOVER AND INFLATION TURNOVER GROCERY UNIVERSE IN BILLIONS OF EURO Turnover of the Grocery Universe increased by +2.7% to 24.5 billion euro in 2013. When eliminating the effect of the inflation, evolution turnover at constant price remains positive for the first time in four year. 24.5 23.223.9 22.422.8 21.7 20.320.9 18.919.5 18.2 17.4 16.7 15.6 16 14.815.3 14 14.3 13 13.113.5 12 12.5 11.3 10.410.8 9.5 10 10.1 8.3 8.9 7.5 10.4 9.7 9.8 9.8 10 10.1 10 10.310.310.210.2 9 9.1 9 9.2 9.4 8.3 8.4 8.5 8.4 8.5 8.6 8.7 8.8 7.5 7.7 7.7 7.7 7.7 7.7 7.8 8 8.1 Copyright ©2014 The Nielsen Company. Confidential and proprietary. and Confidential Company. NielsenThe ©2014 Copyright │ '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 Current Prices Constant Prices (1981 = 100) Current Prices: Prices including inflation Constant Prices: Prices excluding inflation Nielsen Grocery Universe 2014 2014 Universe Grocery Nielsen 13 INFLATION PER YEAR Inflation rate declined again in 2013 to 1.1%. 8.2% 7.7% 6.3% 4.9% 4.5% 3.5% 3.5% 3.2% 3.1% 2.9% 2.7% 2.6% 2.8% 2.4% 2.5% 2.0% 2.1% 2.1% 2.2% 1.6% 1.5% 1.6% 1.6% 1.0% 1.1% 1.6% 1.8% 1.8% Copyright ©2014 The Nielsen Company. Confidential and proprietary. and Confidential Company. NielsenThe ©2014 Copyright 1.3% 1.2% │ 1.1% 0.0% '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 Source: Federal Public Service for the Economy, SME’s, Self-employed and Energy Nielsen Grocery Universe 2014 2014 Universe Grocery Nielsen 14 INFLATION PER TYPE OF PRODUCT/SERVICE Highest inflation rate is reported in Food in the first half of 2013. Non Food inflation, on the other hand, is decreasing and negative throughout 2013. 5.1 4.9 4.7 4.6 4.5 4.4 4 3.8 3.8 3.7 3.7 3.6 3.4 3.4 3.4 3.5 3.5 3.2 3.3 3.23.3 3.3 3.2 3.2 3.3 3.1 3.1 3.1 3.1 3 2.9 2.8 2.82.9 2.8 2.8 2.7 2.7 2.6 2.7 2.7 2.4 2.5 2.4 2.5 2.4 2.4 2.3 2.4 2.3 2.3 2.2 2.3 2.2 2.3 2.3 2.2 2 1.8 1.9 1.9 1.9 1.6 1.4 1.3 2.2 2.2 2 1.1 12 1.5 1.5 1.6 1.5 1.6 1.6 1.6 1.5 1.6 1.6 1.5 0.6 1.3 1.4 1.4 1.3 1.4 1.3 1.3 1.3 1.4 0.2 1.1 1.1 1.1 1.2 -0.3 -0.3 -0.2 -0.3 -0.2 -0.5 -0.8 -0.9 -1 -1.2 -1.1 -1.1 Copyright ©2014 The Nielsen Company.