Presentation from the USDA Agricultural Outlook Forum 2017 United States Department of Agriculture 93rd Annual Agricultural Outlook Forum “A New Horizon: The Future of Agriculture” February 23-24, 2017 Arlington, Virginia Growing Consumer Demand for Organic Katrina Heinze February 23, 2017 Our Brands Our Legacy: 150 Years of Making Food People Love Yoplait U.S. licensing rights acquisition Betty Crocker to Yoplait are acquired created Cheeri Oats debut CPW joint venture launched Cadwallader Washburn builds first flour mill 1866 1869 1921 1924 1928 1941 1961 1977 1984 1990 2001 2011 2012 2014 2016 General Mills Häagen-Dazs goes stock trades international (Japan) Yoki acquisition Charles Pillsbury invests in first Wheaties General Mills Minneapolis mill launches as James Ford Bell completes purchase Whole Wheat Flakes Research Center of cross-town 5 varieties of Cheerios opens rival Pillsbury become gluten free General Mills Organic Portfolio 2000 2012 1936 1976 1991 Cascadian Farm and Muir Glen 2008 2014 joined General Mills, becoming Food Should Taste Good Liberté founded Mountain Muir Glen the “Small Planet Foods” LÄRABAR joined joined General Mills Annie’s joined High founded founded division General Mills General Mills 1972 1989 1993 2000 2006 2011 2013 2015 Cascadian Farm Annie’s Immaculate LÄRABAR Food Should Taste Liberté and Mountain Immaculate Baking joined EPIC joined founded founded Baking founded founded Good founded High joined General Mills General Mills General Mills #3 in Organic Food A doubling of the sourced acres More than 80% of U.S. Consumers have purchased an Organic food item within the last 3 months About 1/3 are buying Organic weekly or more often Daily 12% Weekly 22% Occasional 54% Monthly 12% 82% 18% ORGANIC USERS NON-USERS (Past 3 months) +9 pts since 2014 Hartman Group Organic & Natural 2016. Q6. How often have you used ORGANIC foods or beverages in the PAST THREE MONTHS? Base: Total Sample 2016 (n=1521); 2014 (n=1728). P3M Usage defined as those that have used at least occasionally. Leading edge consumers are deeply engaged in their food decisions but most simply are not all that engaged Many More Considerations Who made it? ● Who owns the company that made it? ● Where is it from? ● How was it Deciding The average produced? ● Did they treat their workers fairly? whether to consumer ABOUT 4 SECONDS ● Can I reuse or recycle the packaging? grab a food ● What’s the environmental impact of its spends production and transportation? item at shelf ● Does it have harmful or unnatural ingredients? ● Is it nutritious? How so? ● Will it do the job? ● Is it worth the price? ● Will my family like it? Greater Investment Passionate Voice 70% 3% say they read actually read food labels the label “often” or “always” when observed Sources: PRS IN VIVO Packaging Research; NLR Yogurt Buyer Survey and Store Intercepts, Oct 2016 Consumers are reverting to NATURE as their guide because it makes intuitive sense Products that are closer to nature are seen as being… Healthier for Me Better for the World More Trustworthy They look for shortcuts to “natural” reassurance at shelf. Hartman Natural & Organic 2016 The power of this shortcut is reflected in the growth rate of Organic food sales over the past decade $45.0 $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $13.3 $15.6 $18.2 $21.6 $22.5 $24.1 $26.4 $29.0 $32.4 $36.0 $39.8 $0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Organic Food Sales ($B) Reason consumers give for “To Avoid Pesticides & Chemicals” #1 choosing Organic food: Organic Trade Association Industry Survey 2016; Hartman Natural & Organic 2016 Trust is Foundational to Organic Growth Consumer Understanding National Organic Standards Board Consumer Trust USDA National Organic Program & Certifiers Confident Farmer Growth RESEARCH STRATEGIC SOURCING PARTNERS MARKET CONFIDENCE .