U.S. Consumer Goods Sector Overview, Credit Trends & Outlook March 2021 Consumer Products Industry Consumer Products | Industry Themes

Growth via innovation, M&A, and E-commerce channel – Large CPGs benefitting from consumer trial and flexible supply chains resulting in strengthening of balance sheets. – Packaged food sector will likely use balance sheet strength to reshape portfolios for faster growth through M&A. – Large CPGs should gain share in e-commerce channel because top-selling products are placed on first page of category searches. We believe they will continue to benefit from participating in this fastest growing channel.

Structural shift back to services/experiences from goods – Consumers return to most of their pre-COVID activities assuming wide availability of vaccine. – Out of home activity is supported by consumer saving during the pandemic and record level net worth at year end 2020. – Consumer staples will use innovation and advertising to retain some of the share they gained during the pandemic.

Large brands and private label will take share from small and mid-sized brands – Barriers to entry have risen for challenger brands as retailers are favoring large brands because of scale and flexible distribution. – Private label should be the biggest share gainer in the second half of 2021 because of normalized supply chains, retailers using it to boost margins and gain customer loyalty, and price polarization (erosion of mid-price points because of income disparity).

3 Longer Term COVID-19 Impact On Consumer Products Sector Consumer and business behavior changes after every significant event – this crisis is no different It is difficult to predict stickiness of consumer behavior post pandemic. But below are trends we expected to remain: − Work—blend of remote and office − Innovation remains front-and-center − Shop less in stores—lower traffic off-set − Return to repositioning portfolios by bigger basket size − Accelerate digital transformation— − Shop more in e-commerce channel and investment focus: tailored marketing, top use subscription services positions on search pages, mobile apps and websites, and omni-channel presence − Focus on health and wellness Consumer Companies − Increase interest in sustainability

COVID-19 Impact − Branded staple companies increased − Rating stability for Consumer Staples— household penetration—gained new financial policy remains key driver of customers and consumers returned to rating changes. familiar brands. Opportunities Ratings − Negative ratings bias for Consumer − Strengthened relationship with retailers-- Discretionaries should decrease quickly changed and adapted manufacturing throughout the year as consumer mobility and distribution. increases as the vaccination roll out accelerates and pandemic driven − Channel disruption will likely continue— negative outlook revisions are revised to branded companies are channel agnostic and stable. accelerating presence in e-commerce.

4 Discretionary Spending Should Improve

Spikes In New COVID-19 Cases And Slow Roll Out of Vaccine-- …Room for Savings Rates to Decline Boosts Spending Holding Consumer Spending Down…

Total PCE %YoY Savings Rate (Left Side) Household Assets/Liab (Right Side; Inverted) 8% 5.3% 5.4% 6% 4.4% 3.8% 4.0% 4.0% 4.0% 30% 0.0x 4% 1.9% 25% 2.0x 2% 20% 0% 4.0x 15% -2% 6.0x -4% -1.7% 10% -6% 5% 8.0x -8% 0% 10.0x -10% -12% -9.7% Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20

E-commerce Will Continue To Be The Fastest Growing Channel And Post Covid-19, Consumers Will Likely Return To Spending A Companies Are Well Positioned To Participated In That Growth Greater % Of Their Food Dollar In The On-Premise Channel

Ecommerce Sales %YoY (Left Side) Ecommerce as a % of Total Retail Sales (Right Side) Food at Home % Sales Food away from Home % Sales 29.7% 60% 30% 30% 25% 25% 55% 20% 16.3% 20% 14.5% 14.9% 14.4% 12.9% 50% 15% 10.9% 10.1% 10.3% 10.4% 15% 7.3% 10% 5.6% 10% 45% 5% 5% 0% 0% 40%

Sources: U.S Bureau of Economic Analysis, FRED®, Federal Reserve Bank of St. Louis, Euromonitor, U.S Department of Agriculture.

5 Tailwinds Could Outpace Headwinds In 2021

– Sustainable SG&A – Lower volumes reductions—travel, entertainment and occupancy Tailwinds – Deflationary pressures— promotions return – SKU consolidation

– Rising freight & commodities – Marketing efficiencies and (packaging, corn, flour & productivity prorgrams wheat)

– Lower COVID-19 related – Shift in wallet (Staples) costs—materially less hazard pay and supply chain disruption – Pressure from private label Headwinds – Higher margin off-premise – Weakening negotiating power sales return

6 COVID-19 Impact On Global GDP S&P GDP Growth Forecasts As of Jan. 21, 2021 2020 2021 2022 Source: S&P Global Ratings | “Global Global (3.7%) 5.0% 3.9% Economic Outlook: Limping Into A Brighter 2021”, Dec 3, 2020; “Credit Conditions Europe: Waiting For Relief”, US (3.9%) 4.2% 3.0% Dec 3, 2020; “Credit Conditions Asia- Pacific: The Rebound Has Begun”, Dec Eurozone (7.2%) 4.8% 3.9% 3, 2020; “Staying Home For The Holidays”, Dec 2, 2020; “Latin America’s Economic Recovery From the Pandemic China 2.1% 7.0% 5.0% Will Be Highly Vulnverable To Setbacks”, Dec 1, 2020. UK (11.0%) 6.0% 5.0% LATAM (7.4%) 4.1% 3.2%

A new surge in COVID-19 cases has led to re-imposition of lockdowns in parts of the U.S. and Europe, slowing pace of recovery. East Asia has been relatively unscathed. Activity remains uneven. With momentum fading, we are forecasting a weaker start to 2021 for discretionaries. The risks to our baseline are on the downside. Vaccine timing remains an upside.

The U.S. economy, which has recouped two-thirds of the economic losses from the COVID-19 recession, is now showing signs of weakness in the midst of climbing COVID-19 infection rates. Recent (and US planned) stimulus will help prop up consumer spending, which has begun to improve.

Infection rates are still high and govt’s are tightening restrictions, so the road to recovery will remain bumpy until a vaccine becomes widely available. The economic fallout of national lockdowns and EU potential corporate insolvencies remain a concern, as well as risks related to global trade, uncertainty around consumer spending, and failure of the U.K. and EU to reach a free-trade agreement.

China is set to be an early exiter from the COVID-19 downturn, however, recovery has been state-led, fueled by infrastructure and property, with household spending lagging. Selective support for weak China state-owned enterprises could mean defaults to come. While further escalation of tensions with the U.S. seems unlikely, negative bipartisan views point to a strenuous relationship ahead.

Latin American economies are expected to have the slowest recovery out of the emerging markets due to damage the virus caused to investment and inefficient government support to labor markets. LATAM These problems were exacerbated by economic weakness that preceded the pandemic. Limited ability to implement additional stimulus means economic recovery in the region will remain fragile.

7 Macro Trends

GDP Growth—Expect Stimulus Programs Bring GDP Back To Pre- Unemployment Rate Remains Elevated, But Significantly Below Crisis Levels In 2Q 2021 The Last Recession Unemployment Rate % Real GDP %YoY 5% 15% 3% 10% 1% -1% 5% -3% -5% 0%

Consumer Confidence Weak--Consumers Wary About The Future Food Inflation Is A Potential Headwind: CPI For All Urban Of The Virus & Economy Customers

University of Michigan Consumer Confidence % YoY Food at Home % YoY Food Away from Home %YoY 40% 10% 30% 20% 5% 10% 0% -10% 0% -20% -30% -40% -5%

Sources: U.S Bureau of Economic Analysis, FRED®, Federal Reserve Bank of St. Louis .

8 Discretionary | Industry Level Retail Sales 2019-2024 Food service category likely will take the longest to recover Apparel and Footwear Market Size

$600,000 17% 30% 8% 4% 3% $400,000 2% 10% Sales Level (Millions)

$200,000 -23% -10% YoY % Sales Growth

$- -30% 2019 2020 2021 2022 2023 2024 Beauty and Personal Care Market Size

$115,000 30% $110,000 -1% 1% 2% 3% 3% 10% Sales Level (Millions) $105,000 2% -10% YoY % Sales Growth $100,000 $95,000 -30% 2019 2020 2021 2022 2023 2024 Consumer Appliances Market Size

$120,000 30%

$110,000 4% 4% 5% 5% -1% 10% Sales Level (Millions) $100,000 0% -10% YoY % Sales Growth $90,000 $80,000 -30% 2019 2020 2021 2022 2023 2024 Consumer Food Service Market Size $800,000 30% $600,000 12% 8% 6% 4% 10% $400,000 1% Sales Level (Millions) -10% $200,000 -24% YoY % Sales Growth $- -30% 2019 2020 2021 2022 2023 2024 Source: Euromonitor.

9 Staples | Industry Level Retail Sales 2019-2024 Retain some share gained during the pandemic—Beverages should be the fastest growing categories ’20-’24 Packaged Food Market Size 550,000.0 30% 12% 500,000.0 2% 3% 3% 10% 2% -4% Sales Level (Millions) 450,000.0 -10% YoY % Sales Growth

400,000.0 -30% 2019 2020 2021 2022 2023 2024 Alcoholic Drink Market Size

170,000.0 30% 160,000.0 8% 4% 10% 150,000.0 4% 0% 2% 4% Sales Level (Millions) 140,000.0 -10% YoY % Sales Growth 130,000.0 120,000.0 -30% 2019 2020 2021 2022 2023 2024 Soft Drink Market Size

160,000.0 30% 150,000.0 4% 4% 4% 10% 140,000.0 4% 3% 3% Sales Level (Millions) 130,000.0 -10% YoY % Sales Growth 120,000.0 110,000.0 -30% 2019 2020 2021 2022 2023 2024 Tobacco Market Size 170,000.0 30% 160,000.0 4% 4% 4% 10% Sales Level (Millions) 150,000.0 2% -2% 3% 140,000.0 -10% YoY % Sales Growth 130,000.0 120,000.0 -30% 2019 2020 2021 2022 2023 2024 Source: Euromonitor.

10 Staples Continued| Industry Level Retail Sales 2019-2024 Hygiene and consumer health should be the fastest growing categpries ’20-’24 Home Care Market Size 60,000.0 30% 11% 3% 3% 3% 40,000.0 2% 3% 10% Sales Level (Millions) 20,000.0 -10% YoY % Sales Growth

0.0 -30% 2019 2020 2021 2022 2023 2024 Tissue and Hygiene Market Size

60,000.0 30% 8% 40,000.0 4% 3% 4% 4% 10% 2% Sales Level (Millions) 20,000.0 -10% YoY % Sales Growth 0.0 -30% 2019 2020 2021 2022 2023 2024 Consumer Health 150,000.0 30%

100,000.0 5% 3% 4% 4% 4% 10% 3% Sales Level (Millions) 50,000.0 -10% YoY % Sales Growth

0.0 -30% 2019 2020 2021 2022 2023 2024 Health and Wellness 300,000.0 30% 9% 4% 200,000.0 3% 0% 3% 3% 10% Sales Level (Millions) 100,000.0 -10% YoY % Sales Growth

0.0 -30% 2019 2020 2021 2022 2023 2024 Source: Euromonitor.

11 Beverages And Apparel Should Benefit From Consumers’ Increased Mobility Post-COVID After Taking A Big Hit During The Pandemic

Retail Selling Price Market Size

09-'19 CAGR 20-24 Est. CAGR 2020 2021 2022 2023 Slowest Growing % Private Label Category growth Growth Y-T-Y Y-T-Y Y-T-Y Y-T-Y Fastest Growing Category Category Share Top 3 Share Alcoholic Drinks (off-trade) 3.20 2.40 7.60 0.40 2.40 3.60 RTD Wine 0.2 61.2

Alcoholic Drinks (on-trade) 2.80 18.00 50.30 34.30 18.20 11.80 RTD Cider/Perry 0.2 61.2

Soft Drinks (off-trade) 2.30 3.50 3.90 3.70 3.90 3.20 RTD coffee, Sports Drinks Carbonated 21.9 45.7

Soft Drinks (on-trade) 1.40 10.90 36.00 32.80 5.90 4.10 RTD Coffee Carbonates 21.9 45.7

Hot Drinks 5.00 3.30 6.50 3.30 4.00 3.20 Coffee Pods Black tea 11.6 33.8

Packaged Food 2.00 1.20 12.40 3.70 2.00 3.00 Snacks Staples 16.4 13.3

Fresh Food 1.00 0.80 0.50 0.60 1.80 1.10 Starchy Roots Sugar and Sweeteners N/A N/A Weight Management and Consumer Health 4.30 3.90 5.00 3.70 4.10 4.10 Herbal/Traditional Products 14.5 15.4 Wellbeing Beauty and Personal Care 3.00 2.40 0.90 1.50 2.30 2.00 Skin and Sun Care Color Cosmetics 3.8 30.5

Home Care 1.10 2.90 10.70 2.90 2.60 2.90 Laundry, Dish and Air Care Polishes 6.9 52.7

Tissue and Hygiene 1.30 3.70 8.00 3.90 3.40 3.70 N/A N/A 23.5 64

Apparel and Footwear 2.50 8.00 22.90 16.00 8.20 4.20 Sportswear Accessories 4.1 10.8 Home Improvement and Homewares and Home Home and Garden 3.20 5.60 0.40 6.00 5.60 5.50 5.6 6.7 Gardening Furnishings Consumer Appliances 4.00 4.40 1.10 3.50 4.40 4.70 Dish Washers Irons 3 25.2

Consumer Electronics 0.80 0.50 4.40 1.00 0.80 0.20 Portable Consumer Electronics In-Car Entertainment 1 43

Source: Euromonitor.

12 Consumer Products | Key Takeaways

– Economic growth remains under pressure, despite good news on the vaccine front. Pre-pandemic social and economic activates are still far off because of spikes in COVID-19 cases. Macro – Weak consumer confidence, high unemployment, and lower consumer spending.

– Staples’ sales momentum continues to be good while subsectors exposed to social activity and discretionary spending sales remain negative. – Operating margins flat to up slightly in 2021 because of lower COVID-19 relate costs, return of on-premise sales in Industry second half, greater operating efficiency and cost controls.

– We see rating pressure and potential for defaults at the low-end of the rating spectrum. – Potential for prolonged-muted sales for discretionary and food service sub-sectors underpin our negative bias for the Ratings sector. – How companies manage operations, financial policies, and adjust channel mix are key factors in the direction of their ratings.

13 Subsector Risk And Recovery

2020 vs 2019 Estimates 2021 v 2019 Estimates

COVID-19, Recession Potential Neg. LT & O&G Impact* Revenue Decline EBITDA Decline Revenue Decline EBITDA Decline Industry Disruption Packaged Food Low No Decline No Decline ≥2019 ≥2019 -- Household Products Low No Decline No Decline ≥2019 ≥2019 -- Personal Care Low No Decline No Decline ≥2019 ≥2019 -- Agribusiness Low 0% to 5% No Decline ≥2019 ≥2019 -- Beverage Non-Alcoholic Low 0% to 5% 0% to 10% 0% to 5% 0% to 10% -- Tobacco Low No Decline No Decline ≥2019 ≥2019 -- Consumer Services Low 0% to 5% 10% to 15% 0% to 5% 5% to 10% Beverage Alcoholic Moderate 5% to10% 10% to 15% ≥2019 0% to 10% -- Durables High 15% to 25% 25% to 40% 10% to 15% 15% to 25% -- Beauty High 10% to 15% 15% to 25% 5% to 10% 10% to 15% -- Personal Luxury High 15% to 25% 25% to 40% 10% to 20% 10% to 20% -- Apparel High 15% to 25% 25% to 40% 10% to 20% 10% to 20% -- Food Service High 25% to 50% 25% to 40% 10% to 20% 20% to 30% Yes *The impact descriptor (high, moderate, low) is our qualitative view of the degree of impact to the sectors' operations and credit metrics Key High - Significant drop in volume and EBITDA Moderate: meaningful drop in volume and EBITDA Low - marginal or no impact on volume and EBITDA

14 Path Back To Normalcy Riskiest And Longest Recovery

Source: S&P Global.

15 Path Back To Normalcy Moderate To Low Risk With Minimal Impact To Credit Metrics

16 Deleveraging After Large M&A Transactions The majority of issuers are under our downgrade triggers

Conagra (BBB-/Stable/A-3) Campbell Soup Co. (BBB-/Positive/A-3) Post Pinnacle Foods Inc. Acquisition Post Snyder's-Lance Inc. Acquisition Leverage Downside Trigger Leverage Downside Trigger

5.3x 4.9x 4.1x 4.1x 4.0x 3.3x 3.0x 3.1x

At Close May-20 May 2021F May 2022F At Close October 2020 July 2021F July 2021F

General Mills Inc. (BBB/Stable/A-2) Kraft Heinz Food Co. (BB+/Stable/--) Post Blue Buffalo Pet Products Inc. Acquisition Post Kraft Foods Group Inc. Acquisition Leverage Downside Trigger Leverage Downside Trigger

4.5x 5.2x

3.8x 3.9x 3.2x 3.5x 2.8x 2.7x

At Close December 2020* December 2021F* December 2022F* (Trigger change due to At Close May 2020P May 2021F May 2023F rating change)

Note: As of May 2020 McCormick & Co. achieved the S&P leverage target post the Reckitt Benckiser Group's Food Division acquisition. Source: S&P Global Ratings.

17 Deleveraging After Large M&A Transactions Continued The majority of issuers are under our downgrade triggers

Bacardi (BBB-/Stable/A-3) Molson Coors Beverage Co. (BBB-/Negative/A-3) Post Patron Spirits International Acquisition Post Miller Coors Acquisition Leverage Downside Trigger Leverage Downside Trigger

5.5x 5.1x

3.8x 3.8x 3.6x 3.6x 3.2x 3.2x

At Close December 2020P March 2021F March 2022F At Close Dec-20 December 2021F December 2022F

Keurig Dr Pepper Inc. (BBB/Stable/A-2) Newell Brands Inc. (BB+/Negative/B) Post Dr Pepper Snapple Group Inc. Acquisition Post Jarden Corp. Acquisition Leverage Downside Trigger Leverage Downside Trigger

5.8x 5.0x

4.1x 3.9x 3.7x 3.6x 3.4x 3.3x

At Close December 2020 December 2021F December 2022F At Close December 2020* December 2021F* December 2022F* (Trigger change due to rating change)

Source: S&P Global Ratings.

18 Brands Took Share From Private Label During COVID… Market share vs. top 3 players

2011 2013 2015 2017 2020* Share Change (%) Tissue and Hygiene* ’20 vs. ’11 Procter & Gamble Co. 32.5 32.2 32.6 32.4 32.8 0.1 Kimberly-Clark Corp 24.7 24.5 24.3 23.8 23.2 -1.9 Georgia-Pacific Corp 10.8 9.9 9.1 8.6 8 -2.7 Private Label 20.5 21.8 22.4 22.9 23.5 3.2

Consumer Health Johnson & Johnson Inc 5.3 4.9 5 5 5.8 -1.7 Pfizer Inc 4.3 4.3 4.3 4.1 -- N/A Bayer AG 2.9 2.9 4.4 4 3.6 24.1 Private Label 17.2 17.7 16.9 16.4 14.5 -9.9

Packaged Food PepsiCo Inc 4.9 5.1 5.2 5.4 5.6 12.0 Kraft Heinz Co -- -- 5.1 4.9 4.7 N/A Nestlé SA 3.9 3.9 3.6 3.4 3.0 -25.0 Private Label 16.4 16.3 16.2 16 16.4 0

Pet Care* Nestlé SA 21.7 21.3 21.1 19.9 19.3 -2.4 Mars Inc 9.5 9.6 12.9 12.8 12.6 3.1 JM Smucker Co, The - - 6.5 5.8 6.6 N/A Private Label 12.4 12.3 12 11.8 12.5 -0.3

Health and Wellness PepsiCo Inc 9.1 8.7 8.5 8.1 8.7 -4.4 Coca-Cola Co, The 7.2 6.7 6.2 6 5.8 -19.4 General Mills Inc 4.6 4.4 4.4 3.9 3.6 -21.4 Private Label 13.2 13 12.8 12.4 12.2 -0.9

Hot Drinks Nestlé SA 3.9 3.9 4 4.7 16.2 305 JM Smucker Co, The 14.1 12 12 11.2 10.6 -25.4 Kraft Heinz Co - - 8.4 8.3 7.1 N/A Private Label 6.7 7.3 8.4 9.9 11.6 70.6 *2019 figures used where 2020 data was not yet available. Source: Euromonitor.

19 …But We Expect Private Label To Regain Share Post COVID Market share vs. top 3 players 2010 2012 2014 2016 2020* Share Change (%) Soft Drinks ’20 vs. ‘10 Coca-Cola Co, The 23 22.7 21.9 21.6 20.0 -14.2 PepsiCo Inc 20.3 19.2 18.8 17.9 18.1 -14.6 Dr Pepper Snapple Group Inc 8.5 8.2 8.1 8.5 7,4 N/A Private Label 8.8 9 8.9 9.1 9.9 12.5

Home Care Procter & Gamble Co, The 35.1 35.7 35.8 36.6 36.1 2.8 Henkel AG & Co KGaA 4.2 4 3.9 7.9 6.5 54.8 SC Johnson & Son Inc 8.9 8.6 8.4 8.6 8.0 -10.1 Private Label 6.2 6.6 6.5 6.5 7.1 14.5

Home and Garden* Ashley Furniture Industries Inc 2.4 2.5 2.7 2.7 2.6 0.4 Mohawk Industries Inc 2 2.2 2.3 2.3 2.2 0.2 Serta Simmons Bedding - - 2.1 2.1 1.6 N/A Private Label 6.9 6.8 6.6 5.8 5.6 -1.2

Apparel and Footwear Nike Inc 3.8 4.4 5.5 6.3 6 57.9 Gap Inc, The 3.5 3.6 3.3 3.4 3.7 5.7 Adidas Group 1.6 1.4 1.4 1.8 2.4 50.0 Private Label 6.9 6.8 6.6 5.8 4.7 6.8

Beauty and Personal Care* L'Oréal Groupe 11.4 12 11.9 12.7 12.4 1.2 Procter & Gamble Co, The 17.1 16 15 10.8 10.7 -7 Estée Lauder Cos Inc 6.6 6.9 7.1 7.4 7.3 0.9 Private Label 6.9 6.8 6.6 5.8 5.6 -1.2

Consumer Appliances Conair Corp 9.3 9.2 9.1 8.9 8.8 -5.4 Newell Brands Inc - - - 8.3 7.7 N/A Spectrum Brands Holdings Inc 10.3 9.5 9.3 9 8.7 -15.5 Private Label 4.1 4 3.8 3.6 3.0 -26.8 *2019 figures used where 2020 data was not yet available. Source: Euromonitor.

20 Ratings

21 Channel & Product Mix Has Resulted in Diverse Performance

Discretionary Sectors Have the Most Negative Outlooks and Watch Negative – Food, household products and personal hygiene companies are outperforming. Developing Consumption has increased because of COVID-19 stay-at-home mandates, NM nondiscretionary in nature of products, and no major disruption with their retail Watch customers. developing – Apparel, food service, Durables, and Positive and cosmetics issuers are facing significant Watch positive disruption because consumers have reduced Stable their out-of-home social activity, working from home more, and purchasing essentials. Negative and – Beverage companies' performance is also Watch negative being impacted by a significant drop in on- premise sales but have been able to make up Apparel Consumer Beverages Durables Personal Agriculture U.S a substantial amount of the loss with an services care and and packaged uptick in sales to the off-premise channels. household commodity food products foods

NM– Not Meaningful Source: S&P Global Ratings as of February 16, 2021

22 Pandemic Pressured Discretionary Subsectors

– There was a downward shift in consumer products ratings distribution especially at the low-end of the scale. – We expect negative bias to decrease as recovery in non-essentials continues and pandemic driven negative outlook revisions are restored to stable Sector Ratings Distribution Sector Outlook Distribution

As of Dec 31, 2019 (173 Issuers) As of Feb 1, 2021 (174 Issuers) Positive or Developing CWPos 1% 6% 45 40 Positive or CWPos 40 37 1% 35 3231 30 24 Stable 25 22 Inner May 2020 40% (174 Issuers) 20 Negative or 1514 14 CWNeg 15 13 12 35% Outer Feb. 2021 10 10 10 8 9 9 8 8 8 Negative or (174 Issuers) 10 CWNeg Stable 4 59% 59% 5 3 3 2 0 0 1 0 0 0 0

Source: S&P Global Ratings Source: S&P Global Ratings

23 Rating Actions – Downgrades Outpaced Upgrades 3.0x in 2020

Upgrades Downgrades 15 15 13 10 10 9 8 7 7 6 6 4 4 5 4 5 3 2 2 3 1 0 1 1

1 5 4 4 5 7 9 8 Number of entities of Number 11 11 14 13 14 14 14 13 13 13 13 16 19 18

25

31

Source: S&P Global Ratings

24 Potential Fallen Angels

Potential Fallen Angel’s Reported Debt is a Small Portion of U.S Consumer Product Companies on the Fallen Angel Cusp Consolidated Investment Grade Debt in the Sector

Current Current Previous Previous Rating Outlook Rating Outlook $ in Billions Molson Coors BBB- Negative BBB- Stable Beverage Company 450 400 PVH Corp. BBB- Negative BBB- Stable 350 Steelcase Inc. BBB- Negative BBB- Stable 300 250 200 150 100 50 0 Reported debt of all Reported debt of 'BBB-' rated investment grade companies companies with negative outlook

Ratings as of February 16, 2021 Reported Debt as of Q3 2020 Source: S&P Global Ratings. Source: S&P Global Ratings.

25 Consumer Products Sector Companies Defaults by Year

Agribusiness and Commodity Foods Premier Brands Group Holdings* Apparel

Consumer Services TMK Hawk Boardriders Parent Durables Inc.* Corporation* Personal Care and Household Product US Packaged Foods Never Slip Acosta Inc. ** Revlon Inc.* Topco Inc.

Indra Holdings CSM Bakery Renfro Corp.* Corp Solutions LLC**

Dean Foods Serta Simmons Nine West Libbey Inc.** Company Bedding LLC*

Tupperware Gibson Brands CDR HRB VIP Cinema Brands Inc. Holdings Inc. Holdings Inc. Corporation*

Pyxus Del Monte CROSSM ARK PFS Holding International Foods Inc.* Holdings Inc.* Corp.** Inc.

Performance Velocity Pooling Iconix brand CTI Foods Sports Group Tom Shoes LLC Outerstuff LLC* Vehicle LLC Group Inc.* Holding Co Ltd. *SD- Selective Default 2016 2017 2018 2019 2020 ** Lowered to SD then D Source: S&P Global Ratings.

26 Sector Outlooks

Subtitle U.S. Packaged Food Sector

– Stronger operating results due to increased at-home consumption. Retention of volume gains and new customers essential for long term industry growth. – M&A expected to continue, albeit more tuck-ins. Financial policy will drive ratings transitions.

Rating Distribution by Issuer Outlook by Issuer Negative Positive(9%) 60% 54% (6%) 50%

40%

30% 23% 20% 9% 9% 10% 6%

0% Stable AA A BBB BB B CCC CC D SD (86%)

35 Issuers as of February 16, 2021. Source: S&P Global Ratings

28 U.S. Packaged Food

Business Risk ---- Financial Risk Profile ---- Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) Highly Leveraged (6)

Excellent (1) Mars Inc. (A/Stable/--)

General Mills Inc. (BBB/Stable/A-2) Kellogg Co. (BBB/Stable/A-2) McCormick & Co. Inc. (BBB/Stable/A-2) The Hershey Co. (A/Stable/A-1) Conagra Brands Inc. (BBB-/Stable/A-3) Strong (2) Mondelez International Inc. (BBB/Stable/A-2) The J.M. Smucker Co. (BBB/Stable/A-2)

Kraft Heinz Company (The) Hormel Foods Corp. (A/Negative/NR) Flowers Foods Inc. (BBB/Stable/--) Campbell Soup Co. (BBB - /Positive/A - 3) Satisfactory (3) (BB+/Stable/--)

Hostess Brands, Inc. (B+/Stable/--) H - Food Holdings LLC (B - /Stable/ -- ) Fair (4) TreeHouse Foods Inc. (BB-/Stable/--) Post Holdings Inc. (B+/Stable/ -- )

8th Avenue Food & Provisions, Inc. (B- /Stable/--) B&G Foods Inc. (B+/Stable/--) CHG PPC Intermediate II LLC (B/Stable/--) Chobani Global Holdings, LLC (B-/Stable/--) BellRing Brands, Inc. (B/Stable/--) CSM Bakery Solutions LLC (CCC+/Negative/ --) The Simply Good Foods Company Del Monte Foods, Inc. (CCC+/Stable/--) Weak (5) (B+/Stable/--) JHW CJF Holdings Inc. (B -/Stable/--) Wells Enterprises Inc. (B+/Stable/--) KC Culinarte Holdings LP (CCC/Negative/ --) Whole Earth Brands, Inc. (B/Positive/--) KNEL Acquisition LLC (B - /Stable/ -- ) Nathan's Famous Inc. (B/Stable/--) Shearer's Foods LLC (B-/Stable/--) Sovos Brands Intermediate, Inc. (B/Stable/--) Utz Brands, Inc. (B/Stable/--) Woof Intermediate, Inc. (B-/Stable/--)

Vulnerable (6) Badger Finance, LLC (B-/Stable/--)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

29 Beverage Sector

– Alcoholic: U.S. off-premise sales should continue to largely offset lost on-premise sales until a recovery in that channel gains momentum by the second half of the year. Outside the U.S., the outlook is dimmer as on-premise consumption is a much larger share of the sales mix. – Non-alcoholic: Recent prices increase, a better mix shift to more convenience channel sales and a slow return of restaurant traffic should offset modest input cost inflation and higher marketing spend keeping margins stable in 2021. Rating Distribution by Issuer Outlook by Issuer

60% 50% 50% Negative (42%) 40%

30% 25% 25%

20% Stable (58%) 10%

0% AA A BBB BB B CCC CC D SD

12 Issuers as of February 16, 2021. Source: S&P Global Ratings

30 Beverage

---- Financial Risk Profile ---- Business Risk Highly Leveraged Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) (6)

PepsiCo Inc. (A+/Stable/A-1) Excellent (1) The Coca-Cola Co. (A+/Negative/A-1)

Constellation Brands Inc. Strong (2) Brown-Forman Corp. (A-/Stable/A-2) (BBB/Stable/A - 2) Bacardi Limited (BBB - /Stable/A -3) Keurig Dr Pepper Inc. (BBB/Stable/A-2)

Coca-Cola Consolidated, Inc. Ocean Spray Cranberries Inc. (BBB- (BBB/Stable/NR) Satisfactory (3) /Stable/NR) Molson Coors Beverage Company (BBB - /Negative/A-3)

Fair (4)

Blue Ribbon Intermediate Holdings LLC Weak (5) (CCC/Negative/--) Winebow Group LLC (CCC/Negative/--)

Arctic Glacier Group Holdings, Inc. Vulnerable (6) (CCC+/Negative/--)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

31 Agribusiness & Commodity Foods Sector

– Strong global demand for livestock and feed and a rebound in biofuel demand underpin a healthy operating outlook, but grain originators and protein processors face a difficult comp to 2020, which benefitted from low commodity input costs and strong retail food demand. – Operating margins for ingredient manufacturers and commodity processors should also benefit from fewer supply chain disruptions and one-time COVID costs rolling off by the second half of the year. Rating Distribution by Issuer Outlook by Issuer

Negative 45% 43% (19%) 40% 35% 30% 29% 25% 19% 20% 15% 10% 10% 5% 0% Stable AA A BBB BB B CCC CC D SD (81%)

21 Issuers as of February 16, 2021. Source: S&P Global Ratings

32 Agribusiness & Commodity Foods

Business Risk ---- Financial Risk Profile ---- Highly Leveraged Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) (6)

Excellent (1)

Archer Daniels Midland Co. Dairy Farmers of America Inc. (A/Stable/A-1) (BBB/Negative/A - 2) Strong (2) Cargill Inc. (A/Stable/A-1) International Flavors & Fragrances Inc. Tyson Foods Inc. (BBB+/Stable/A-2) (BBB/Negative/A - 2)

American Crystal Sugar Co. Bunge Ltd. (BBB/Stable/--) Satisfactory (3) (BBB+/Negative/A-2) Ingredion Inc. (BBB/Stable/ -- ) Darling Ingredients Inc (BB+/Stable/ -- ) Universal Corp. (BBB/Stable/NR) Land O'Lakes Inc. (BBB - /Stable/ -- )

Pilgrim's Pride Corp. (BB+/Stable/--) Fair (4) Smithfield Foods Inc. (BBB- Lamb Weston Holdings Inc. (BB+/Stable/--) /Stable/A-3)

ASG Parent, LLC (B/Stable/--) Dole Food Co. Inc. (B/Stable/NR) Milk Specialties Company (B/Stable/--) Savage Enterprises, LLC (BB- MVK Intermediate Holdings, LLC Weak (5) /Stable/--) (B/Stable/--) Sierra Enterprises LLC (B-/Negative/--) Simmons Foods Inc. (B/Stable/--)

Vulnerable (6)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

33 Personal Care & Household Products Sector

– There could be some lasting increase in demand for cleaning products because of greater health concerns from the coronavirus. – Beauty sector’s recovery will be slow and uneven – companies will focus on skin care, e-commerce channel, and costs in 2021.

Rating Distribution by Issuer Outlook by Issuer

Developing Positive 4% 35% 32% 7% 30% 25% 25% 20% 18% 14% 15% Negative Stable 10% 7% 32% 57% 5% 4% 0% AA A BBB BB B CCC CC D SD

28 Issuers as of February 16, 2021. Source: S&P Global Ratings

34 Personal Care & Household Products

Business Risk ---- Financial Risk Profile ---- Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) Highly Leveraged (6)

Colgate-Palmolive Co. (AA-/Stable/A-1+) Excellent (1) Procter & Gamble Co. (AA-/Stable/A-1+)

The Estee Lauder Cos. Inc. Clorox Co. (A-/Stable/A-2) S.C. Johnson & Son Inc. (A/Stable/NR) Strong (2) (A+/Stable/A-1) Kimberly-Clark Corp. (A/Stable/A-1)

Church & Dwight Co. Inc. Satisfactory (3) (BBB+/Stable/A-2)

Edgewell Personal Care Co. (BB/Negative/--) Energizer Holdings Inc. (BB - Reynolds Consumer Products Inc. The Scotts Miracle-Gro Co. (BB/Stable/--) /Negative/ -- ) Coty Inc. (B - /Negative/ --) Fair (4) (BB+/Stable/--) Valvoline Inc. (BB/Stable/--) Prestige Brands Inc. (B+/Positive/ -- )

Alphabet Holding Company Inc. (B- /Stable/--) Central Garden & Pet Co. (BB/Stable/--) Tupperware Brands Corp. American Greetings Corp. (B/Stable/NR) Weak (5) Herbalife Nutrition Ltd. (BB-/Stable/--) (B/Positive/NR) PDC Beauty & Wellness Co. (B/Negative/--) pH Beauty Holdings I, Inc. (B-/Negative/--)

Anastasia Holdings LLC (CCC/Negative/--) Fetch Holdco LLC (B-/Stable/--) Isagenix Worldwide, Inc (CCC/Negative/--) NSA International LLC (CCC/Developing/--) Vulnerable (6) P&L Development Holdings, LLC (B- /Stable/--) Revlon Inc. (CCC-/Negative/--) Rodan & Fields, LLC (CCC+/Negative/--)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

35 Tobacco Sector

– Following a solid 2020 we expect combustible cigarette volumes in 2021 to fall by 3%-4%. This is because of increased consumer mobility and reduced smoking opportunity. Trade down to cheaper brands is a risk factor which could curtail profit growth. – Regulatory uncertainty remains a key risk factor, though we view regulatory cliff events for combustibles as less likely in the medium-term.

Rating Distribution by Issuer Outlook by Issuer

70% 67% 60% Positive 50% 33% 40% 33% 30% 20% 10% Stable 0% 67% AA A BBB BB B CCC CC D SD

3 Issuers as of February 16, 2021. Source: S&P Global Ratings

36 Tobacco ---- Financial Risk Profile ---- Business Risk Highly Leveraged Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) (6)

Excellent (1)

Strong (2) Altria Group Inc. (BBB/Stable/A-2)

Satisfactory (3)

Fair (4)

Weak (5) Turning Point Brands, Inc. (B+/Stable/--) Vector Group Ltd. (B/Positive/--)

Vulnerable (6)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

37 Durables Sector – Performance has been mixed, depending on end-markets and channel mix. Housing, home, outdoor, and sports-related sectors have outperformed from increased consumer share of wallet. – Pull forward demand could result in weaker future operating results for companies that have benefitted. Recovery for companies hurt by pandemic will depend on pace of re-openings and vaccine dissemination.

Rating Distribution by Issuer Outlook by Issuer WatchNeg WatchPos (3%) (3%) 70% 66% Positive 60% (3%) 50% 40% 30% Stable (52%) 17% 20% Negative 10% 10% 7% (38%) 0% AA A BBB BB B CCC CC D SD

29 Issuers as of February 16, 2021. Source: S&P Global Ratings

38 Durables

Business Risk ---- Financial Risk Profile ---- Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) Highly Leveraged (6)

Excellent (1)

Strong (2)

Steelcase Inc. (BBB-/Negative/NR) Newell Brands Inc. (BB+/Negative/B) Satisfactory (3) Whirlpool Corp. (BBB/Negative/A-2)

AI Aqua Sàrl (B/Stable/--) Alliance Laundry Holdings LLC (B/Stable/--) CD&R Smokey Buyer, Inc (B/Stable/--) Tempur Sealy International Inc. ACCO Brands Corp. (BB-/Negative/--) Champ Acquisition Corporation (B/Stable/ --) Fair (4) (BB/Stable/--) Hayward Industries, Inc. (B/Stable/--) Samsonite International S.A. (B/Negative/--) Weber-Stephen Products LLC (B/Stable/--)

Brown Jordan Inc. (CCC+/Negative/--) Corelle Brands Holdings Inc. (B/Negative/--) Callaway Golf Company (B+/WatchNeg/--) KNB Holdings Corp. (CCC - /Negative/ --) Fender Musical Instruments Corp. Lifetime Brands Inc. (B/Stable/--) (B/Stable/--) Serta Simmons Bedding LLC (CCC+/Negative/--) Vista Outdoor Inc. (B+/Positive/--) Weak (5) Latham Pool Products, Inc. (B/Stable/--) SIWF Holdings Inc. (B/Stable/ --) Steinway Musical Instruments Inc. Spectrum Brands Holdings Inc. (B/Negative/--) (B/Stable/--) TGP Holdings III LLC (B/Stable/ --) The Hillman Companies Inc. (B-/WatchPos/--) Visual Comfort & Co. (B/Stable/--)

Innovative Water Care Global Corp. Vulnerable (6) (CCC+/Negative/--) LG Parent Holdco Inc. (CCC+/Stable/--)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

39 Apparel Sector – Negative ratings bias given high dependence on retail locations remaining open and consumer’s ability and willingness to spend on apparel. – Sales return to pre-Covid levels in 2022, profitability returns faster due to cost-savings initiatives. E-commerce channel will be a key driver of growth; however, we expect traffic to improve in the bricks and mortar channel as availability of vaccines become more widespread. – Rating Distribution by Issuer Outlook by Issuer

Positive 4% Stable 35% 17% 29% 29% 30% 25% 25% 20% 15% 10% 8% 4% 4% 5% 0% AA A BBB BB B CCC CC D SD Negative 79%

24 Issuers as of February 16, 2021. Source: S&P Global Ratings

40 Apparel

Business Risk ---- Financial Risk Profile ---- Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) Highly Leveraged (6)

Excellent (1)

Strong (2) NIKE Inc. (AA-/Stable/A-1+) VF Corp. (A-/Stable/A-2)

Satisfactory (3) Ralph Lauren Corp. (A-/Negative/A-2) PVH Corp. (BBB-/Negative/A-3)

Carter's, Inc. (BB+/Negative/--) Hanesbrands Inc. (BB/Negative/ -- ) Fair (4) Levi Strauss & Co. (BB+/Negative/NR) G - III Apparel Group, Ltd. (BB/Negative/ --) Wolverine World Wide Inc. Kontoor Brands, Inc. (B+/Negative/--) Under Armour Inc. (BB/Negative/--) (BB/Negative/ -- )

Authentic Brands Group LLC (B/Stable/--) Calceus Acquisition Inc. (B-/Negative/--) Elevate Textiles, Inc (CCC+/Negative/--) Fossil Group Inc. (B/Negative/--) Weak (5) New Trojan Parent, Inc. (B/Stable/--) Oak Holdings LLC (B-/Negative/--) Varsity Brands Holding Co Inc. (CCC+/Negative/--) YS Garments LLC (B-/Positive/--)

Boardriders Inc. (CCC/Negative/--) Iconix Brand Group Inc. (CCC-/Negative/--) Outerstuff LLC (CCC/Negative/--) Vulnerable (6) Premier Brands Group Holdings LLC (CCC/Negative/--) Renfro Corp. (CCC-/Negative/--) Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

41 Consumer Services Sector

– Negative ratings bias due to discretionary nature of demand, potential for high restaurant failures, and pandemic re-emergence risk. – Absent a resurgence or adverse mutation of the virus, issuers in the food away from home sector should benefit from improved conditions as governments increasingly signal a desire to relax restrictions on hard hit sectors, such as restaurants and schools.

Rating Distribution by Issuer Outlook by Issuer

Positive 6% 70% 59% 60% 50%

40% Stable 30% 47% 20% 18% Negative 12% 12% 47% 10% 0% AA A BBB BB B CCC CC D SD

17 Issuers as of February 16, 2021. Source: S&P Global Ratings

42 Consumer Services Business Risk ---- Financial Risk Profile ---- Profile Minimal (1) Modest (2) Intermediate (3) Significant (4) Aggressive (5) Highly Leveraged (6)

Excellent (1)

Strong (2) Sysco Corp. (BBB-/Stable/A-3)

Aramark (BB-/Stable/--) H&R Block Inc. (BBB/Negative/A-2) Satisfactory (3) US Foods Inc. (BB-/Stable/--)

Performance Food Group Inc. (B+/Positive/--) Fair (4) Terminix Global Holdings, Inc. (BB- /Stable/--)

Advantage Sales & Marketing Inc. (B/Stable/--) American Residential Services LLC (B/Negative/--) Edward Don & Company Holdings LLC (B- /Negative/--) Highline Aftermarket Acquisition, LLC (B/Stable/--) WW International, Inc. (B+/Negative/--) Weak (5) LS Parent Corporation (B/Stable/--) Outdoor Home Services Holdings LLC (B/Stable/--) The Chefs' Warehouse Inc. (B-/Negative/--) TMK Hawk Parent Corp. (CCC/Negative/--) Wrench Group, LLC (B/Negative/--)

Vulnerable (6) Never Slip Topco Inc. (CCC+/Negative/--)

Ratings as of February 16, 2021. Reflects business and financial risk profile descriptors only.

43 ESG In Consumer Goods

Subtitle ESG In Consumer Goods | Key Takeaways

– We consider environmental and social risks to be modest from a credit perspective, and evenly balanced in the branded non-durable consumer goods industry. Environmental and social concerns include the supply chain -- particularly regarding raw materials from agriculture and livestock, water scarcity, plastic and packaging, and waste treatment. The COVID-19 pandemic has raised awareness of the human effect on the environment. Consequently, climate change and carbon emissions are increasingly part of public debate. – Consumers’ focus on health and wellness has been an important industry driver in the past and will probably gain more importance after the COVID-19 pandemic. – Within the agribusiness industry, environmental risk factors are more important than social risks, particularly for weather-related volatility and disease outbreaks. We note that governance has featured more heavily in recent rating actions.

45 ESG In Consumer Goods | COVID-19

As consequence of COVID-19, we see new topics gaining Environmental And Social Risk For Selected Industries attention. Plastics and packaging used to be among the most debated issues in consumer goods. These issues Environmental risk Social risk remain central, but we also see supply chains, climate Oil and gas change, and carbon emissions gaining attention in the Metals and mining public domain and in companies’ communications and Chemicals Environmental agendas. Autos and auto parts Agribusiness and commodity foods Transportation COVID-19 has increased awareness of health and wellness. Consumer products This was already an industry focus resulting in a loss of Telecom market share for some product categories. Consumer Retail preferences for natural and organic features will likely Media strengthen. The tobacco sector has significantly higher Transportation infrastructure social risk than the rest of the consumer goods industry Heath care Social because of the adverse health effects of smoking that trigger increasingly stringent regulations. Capital goods Real estate operators Business and consumer services In most cases, governance does not significantly affect Supra. and dev. institutions ratings in the consumer sector. Tobacco and alcoholic 0 2 4 6 8 10 12 beverages require greater management oversight due to the need to engage with regulators and public officials. In Risk Score addition, a number of companies have significant family ownership or voting rights. We do not believe that these Source: S&P Global Ratings. Governance companies' governance unduly benefits the family trusts over other stakeholders.

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