The Power of Private Label 2005

A Review of Growth Trends Around the World

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

TABLE OF CONTENTS
Executive Summary Geographic Insights Category Insights Pricing Trends Private Label Consumers Methodology 2 9 13 17 22 28

The information contained in this report has been collected from ACNielsen in 38 countries around the world. For questions or to obtain more detailed information by country please contact your local ACNielsen Global Services representative or contact either of the authors, Clare Nishikawa at clare.nishikawa@acnielsen.ca or Jane Perrin at jane.perrin@acnielsen.com. The information contained in this report is not to be used with sources outside of your company without the express written permission of ACNielsen Global Services.
Copyright © 2005 ACNielsen. All rights reserved. ACNielsen and ACNielsen with globe design are trademarks or registered trademarks of AC Nielsen (US), Inc. Other brand and product names are trademarks or registered trademarks of their respective companies.

Executive News Report from ACNielsen Global Services September 2005 1

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

EXECUTIVE SUMMARY
How big is the Private Label market globally? Why is Switzerland the largest market? Could the Private Label business become as big in the United States as it is in Switzerland? What’s happening in the developing markets? Looking across categories, where is Private Label most prevalent? Is Private Label expanding into new categories? The Power of Private Label starts to answer these questions by looking at the latest Private Label information from across the globe. Alongside a review of current trends in 38 countries and 80 categories, this study looks at the market dynamics that have created a haven for Private Label development across countries. Such factors as retailer concentration and the presence of discounters have played a significant role in the development of these products. The growing level of sophistication among retailers in marketing and product development, along with the added resources they are putting into cultivating their own brands are other contributing factors. In this study we have also included a look at the history and development of a couple of very successful Private Label brands. In addition to looking at sales in retail stores, we have included consumer panel data from 14 countries. The Power of Private Label closely examines the people that buy Private Label: Who are they? How often do they purchase Private Label? How much do they spend on Private Label? Do they purchase the same way across countries?

THIRTY-EIGHT COUNTRIES AND 80 CATEGORIES
The Power of Private Label reviews the level of development and growth of Private Label products in 38 countries around the world. From a channel coverage perspective, sales within supermarkets, hypermarkets and mass merchandisers are generally included (although coverage varies dependent on the market). In a number of countries, convenience stores and drug stores are included as well. For the most part, department stores and cash and carry outlets, as well as wholesalers and food service outlets are generally excluded. To illustrate the overall impact of Private Label activity, we have examined sales across 80 distinct categories and 14 different product areas. In addition, we have taken a look at a couple of smaller, more dynamic categories (identified in ACNielsen’s 2004 series of What’s Hot reports as the fastest growing categories globally) to see if Private Label has made any significant in-roads into these growth areas. It is important to note that coverage of categories within markets depends on data availability within each country. (Details of the number of countries included for each category can be found in the methodology section at the end of the report.) Due to differences in volumetric measures across countries, value sales were used in the analysis and then converted to US dollars for comparison purposes.

Executive News Report from ACNielsen Global Services September 2005 2

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

TOP FIVE PRIVATE LABEL COUNTRIES LOCATED IN EUROPE
Across the 38 countries and 80 categories included in this study Private Label sales accounted for 17% of the value sales over the 12 months ending the first quarter of 2005. In comparison to year ago, Private Label sales grew by 5%. Europe maintained its position as the most developed Private Label region with an aggregated Private Label share in value sales of 23% for the 17 European countries included in the study. As with our 2003 study, the European countries of Switzerland, Germany, Great Britain, Spain and Belgium were the five countries with the highest Private Label shares. North America, which ranked second in regional Private Label shares, saw a significant growth of Private Label sales, up 7%. The share of Private Label in this region is currently at 16%. Although starting from a smaller base, Private Label in the Emerging Markets saw the fastest growth over the last year, up 11%. Private Label now holds a 6% share of sales in the Emerging Markets. This growth was primarily driven by the increasing strength of the modern trade (where Private Label goods are more prevalent), as well as the entry of Private Label products into new categories.

SHARE AND GROWTH RATES OF PRIVATE LABEL BY REGION (BASED ON VALUE SALES)
PL SHARE
Global
17%

PL GROWTH
Global
5%

Europe

23%

Europe

4%

North America

16%

North America

7%

Emerging Markets

6%

Emerging Markets

11%

Asia Pacific

4%

Asia Pacific

5%

Latin America

2%

Latin America

5%

0%

5%

10%

15%

20%

25%

0%

2%

4%

6%

8%

10%

12%

Executive News Report from ACNielsen Global Services September 2005 3

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

EUROPEAN PRIVATE LABEL SALES EXPERIENCED GREATEST MARKET SHARE GAIN
In comparison to year ago, global Private Label sales grew by 5%, outpacing manufacturer brands (growing by only 2%). The result was a global gain of 0.4 share points for Private Label versus the previous year. In fact, growth in Private Label sales outpaced manufacturer brands in every region except for Latin America. (In general, Latin America continues to be a far less developed Private Label market than the rest of the world.) The result was that Private Label in Latin America lost 0.1 points versus manufacturer brands. Interestingly, the region with the most developed Private Label market saw the greatest gain in share points. Private Label sales grew in Europe by 4%, while aggregated sales of manufacturer brands remained flat. The result was a gain of 0.7 share points for Private Label. This growth is illustrative of the fact that sales of Private Label have not peaked…even within the largest Private Label markets.

REFRIGERATED FOOD HAD THE HIGHEST SHARE OF PRIVATE LABEL
Across product areas, Paper Products, Plastic Bags & Wraps has traditionally been the strongest product area for Private Label sales (as seen in our 1998 and 2003 studies). Although Private Label shares in this product area are still strong, now at 31%, and continue to experience growth, Private Label Refrigerated Food now tops the list, with an aggregated share of value sales of 32%. The most significant share of Private Label sales within this area was seen within the Refrigerated Complete Ready Meals category (Private Label had a value share of 47%). Retailer development of Private Label brands to meet the needs of their shoppers for convenient meal alternatives has resulted in the growth of this category. As seen in our previous studies, Private Label shares within the areas of Personal Care, Cosmetics and Baby Food were the smallest at less than 5%.

PRIVATE LABEL SHARES AND GROWTH RATES BY PRODUCT AREA (BASED ON VALUE SALES)
PRODUCT AREA 1 2 3 4 5 6 7 Refrigerated Food Paper, Plastic & Wraps (PPW) Frozen Food Pet Food Shelf-Stable Food Diapers & Feminine Hygiene Health Care PL SHARE 32% 31% 25% 21% 19% 14% 14% PL GROWTH 9% 2% 3% 11% 5% -1% 3% 8 9 10 11 12 13 14 PRODUCT AREA Non-Alcoholic Beverages Home Care Snacks & Confectionery Alcoholic Beverages Personal Care Cosmetics Baby Food PL SHARE 12% 10% 9% 6% 5% 2% 2% PL GROWTH 3% 2% 8% 3% 3% 23% 13%

Executive News Report from ACNielsen Global Services September 2005 4

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL BRANDS PRICED A THIRD LOWER THAN MANUFACTURER BRANDS
On a global basis, across all of the 38 countries and 80 categories studied, Private Label products were priced, on average, 31% lower than their manufacturer counterparts. The variance across regions ranged from 40% lower in the Emerging Markets to 25% lower in Latin America and Asia Pacific. It is interesting to note that the two least developed regions (from a Private Label perspective), also had the smallest price differential versus manufacturer brands. On a category basis, the average price differential ranged from Private Label being priced 46% lower in Personal Care products to just 16% lower for Refrigerated Food. At the individual country/category level, however, there were a number of examples where Private Label products had an average price that was actually higher than the manufacturer brands. One reason for this was the presence of ‘premium’ Private Label products. In addition, several countries cited intense promotional price “wars” among manufacturers as a contributing factor to lower manufacturer price points. It is interesting to note that there is not a direct correlation between lower price and largest share. Of the five product areas with the smallest price differential in comparison to manufacturer brands, three had the largest share of Private Label and two had the smallest.

PRIVATE LABEL PRICE DIFFERENTIAL VERSUS MANUFACTURER BRANDS
Refrigerated Food
-16% -20% -20% -26% -26% -24% -24%

Diapers & Feminine Hygiene

Shelf-Stable Food

Paper, Plastic & Wraps

Non-Alcoholic Beverages

Snacks & Confectionery

Personal Care

0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50%
-46% -42% -37% -36% -34% -32% -27%

Executive News Report from ACNielsen Global Services September 2005 5

Frozen Food

Health Care

Home Care

Baby Food

Cosmetics

Alcoholic Beverages

Pet Food

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

RETAILER CONCENTRATION A KEY FACTOR IN PRIVATE LABEL DEVELOPMENT
In order to study the impact of retailer concentration on the development of Private Label, we looked at the share of total country value sales held by the leading five retailers within each country. Interestingly, there is significant variation in this measure around the world. For example, in the European countries of Sweden and Finland the top five retailers account for nearly 100% of total country sales, whereas in the Asian countries of South Korea and Japan, the leading retailers hold only 12% of total sales. Not surprisingly, the level of retailer concentration was closely aligned with the level of Private Label development. Of the top ten countries (ranked by share of Private Label), nine countries had retailer concentration of over 60%. The only exception in this group was the United States whose retail environment was far more fragmented. Ranking 10th in share of Private Label sales, the United States ranked 30th in retailer concentration. The top five retailers in the United States accounted for only 36% of total country sales. The majority of other countries with such a fragmented retailer landscape had a far less developed Private Label market.

DISCOUNTERS CONTINUED TO PLAY A SIGNIFICANT ROLE
A contributing factor to Private Label growth, particularly in Europe, was the growing presence of Hard Discounters. Hard Discounters sell a very limited selection of products (primarily shelf stable food) at a very low price. More importantly (for this study), hard discounters mostly sell Private Label products. For example, within Aldi, Private Label products account for approximately 95% of sales. Hard Discounters such as Aldi and Lidl are present in every European country and are expanding this presence. As hard discounters continue to grow and gain share, with more stores and wider consumer acceptance, so does Private Label.

RETAILERS CREATE POWERFUL BRANDS THAT MEET CONSUMER NEEDS
The approach of retailers to Private Label, particularly in the more developed markets, has advanced far beyond simply meeting the consumer’s need for lower priced products (the more traditionally perceived role of the Private Label brand). Retailers such as Tesco in Great Britain and Loblaws in Canada, for example, have both added new private label offerings to their mix. In addition to continuing to offer a ‘value’ or ‘no frills’ option, they also now offer healthy Private Label lines for both adults and kids.

Executive News Report from ACNielsen Global Services September 2005 6

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

CONSUMERS – WHO REALLY BUYS PRIVATE LABEL?
NEARLY EVERYONE…Looking at consumer panel data from 14 countries, it was found that the penetration of Private Label was significant. In fact, in nine of the 14 countries, 100% of households had purchased Private Label products over the past year. Penetration was the smallest in Singapore, but even there, 77% of households purchased at least some Private Label products within the last year.

EIGHTY-TWO PERCENT OF BRITISH SHOPPING TRIPS INCLUDED PRIVATE LABEL PRODUCTS
Frequency of purchase was found to be a key driver of Private Label share. Looking across countries, consumers purchased Private Label products at varying degrees. Those countries with the highest Private Label share were found to purchase Private Label goods most often. Consumers in Great Britain (with a Private Label share of 28%), were found to have Private Label products in their basket on 82% of their shopping trips. Private Label consumers in less developed markets generally purchased Private Label products on only 16% of their shopping trips.

PRIVATE LABEL CONSUMERS RANGE FROM THE YOUNG TO THE OLD, THE RICH TO THE POOR AND FROM SINGLES TO LARGE FAMILIES
Looking across consumers and households, Private Label purchasing varied based on demographic composition. Income: The share of spend allocated to Private Label products was generally higher in those households with a lower household income. Household Size: Households with more family members allocated a higher share of their total spend to Private Label products. Age: On trying to identify the ‘typical’ age of the Private Label consumer, there was no clear trend that held true across regions.

HOW BIG WILL PRIVATE LABEL GROW?
The limits of Private Label are currently undetermined but it seems almost certain that they have not been reached. In a number of countries, category penetration of Private Label is still significantly underdeveloped. As Private Label offerings are expanding into new markets and categories, global share will of course grow. For example, in Switzerland, where 97% of all the categories tracked in this study had Private Label entries, the total Private Label share was high at 45%. In the Philippines, however, where only 26% of the categories tracked had a Private Label presence, the share for Private Label was less than a percentage point.

Executive News Report from ACNielsen Global Services September 2005 7

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

How big will it grow? Today, Private Label has a 17% share of market globally and it is still growing. Even in the most developed market of Switzerland, Private Label continues to extend its reach. (In the last year, Private Label in Switzerland gained yet another share point). The differential between the 17% global share and Switzerland’s high of 45% is a good place to begin our predictions for the future. Somewhere in between these two percentages is the answer but it is important to note that as the share in Switzerland grows so does the upper boundary of this range. As retailers with strong Private Label offerings expand their reach across categories and countries, Private Label will continue to challenge the position of branded products in the minds of the consumers. How high they will grow is yet to be determined.

Executive News Report from ACNielsen Global Services September 2005 8

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

DETAILED FINDINGS GEOGRAPHIC INSIGHTS
The Power of Private Label looked at retail sales across 38 countries (encompassing Europe, North America, Asia Pacific, the Emerging Markets and Latin America) and 80 categories. Private Label value sales and share across these markets and categories grew, with 17 dollars out of every 100 being spent on Private Label products. In 2003, Private Label share was found to be only 15%. As seen in the table below, the strength of Private Label varied widely across the countries included in the study, from Switzerland (with a Private Label share of 45%), to the Philippines (where Private Label sales hold an insignificant share of total country sales).

VALUE SHARES OF PRIVATE LABEL BY COUNTRY
COUNTRY 1 2 3 4 5 6 7 8 9 Switzerland Germany Great Britain Spain Belgium France Netherlands Canada Denmark REGION Europe Europe Europe Europe Europe Europe Europe North America Europe North America Europe Europe Asia Pacific Europe Europe Emerging Markets Emerging Markets Europe Asia Pacific PL SHARE 45% 30% 28% 26% 25% 24% 22% 19% 17% 16% 14% 14% 12% 11% 11% 10% 10% 10% 9% COUNTRY 20 Norway 21 Ireland 22 Czech Republic 23 Hong Kong 24 Brazil 25 Greece 26 South Africa 27 Puerto Rico 28 Japan 29 Israel 30 Singapore 31 Chile 32 Argentina 33 Colombia 34 Croatia 35 Thailand 36 Mexico 37 South Korea 38 Philippines REGION Europe Europe Emerging Markets Asia Pacific Latin America Europe Emerging Markets Latin America Asia Pacific Europe Asia Pacific Latin America Latin America Latin America Emerging Markets Asia Pacific Latin America Asia Pacific Asia Pacific PL SHARE 8% 7% 7% 4% 4% 4% 4% 4% 4% 3% 3% 3% 3% 2% 2% 1% 1% 1% <0.5%

10 United States 11 Sweden 12 Austria 13 New Zealand 14 Italy 15 Portugal 16 Hungary 17 Slovakia 18 Finland 19 Australia

Executive News Report from ACNielsen Global Services September 2005 9

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World As in our 2003 study, the Emerging Markets, Asia Pacific and Latin America were again found to have less developed Private Label markets than Europe and North America. In the Emerging Markets, the strongest Private Label development was seen in Hungary and Slovakia where Private Label sales accounted for 10% of total country sales. When looking across Asia Pacific, the Pacific countries of New Zealand and Australia had far more developed Private Label markets than the Asian countries. New Zealand’s Private Label share was 12% and Australia’s was 9%. The Asian countries all had much smaller Private Label markets, accounting for 4% or less of total country sales. The highest ranking country in Latin America was Brazil, where only 4% of sales were for Private Label products. Europe maintained its position as the most developed Private Label region. In fact, when the 38 countries were ranked, based on Private Label share, eight of the top 10 highest-ranking countries were in Europe. The other two were in North America. Both the United States and Canada were amongst the most developed countries in terms of Private Label share.

EUROPE’S HIGH LEVEL OF RETAILER CONCENTRATION CORRELATES WITH STRONG PRIVATE LABEL DEVELOPMENT
Retailer concentration was measured as the share of sales held by the top five retailers within each country. Of the ten most developed Private Label countries, nine had retailer concentrations over 60%. The United States was the only exception among this group - despite a more fragmented marketplace (with a retailer concentration of only 36%), its share of Private Label was still among the top ten countries. Generally, across the countries, when retailer concentration was low, the share of Private Label was also low.

RETAILER CONCENTRATION OF THE MOST DEVELOPED PRIVATE LABEL MARKETS
COUNTRY 1 2 3 4 5 6 7 8 9 Switzerland Germany Great Britain Spain Belgium France Netherlands Canada Denmark REGION Europe Europe Europe Europe Europe Europe Europe North America Europe North America PRIVATE LABEL SHARE RETAILER CONCENTRATION

45% 30% 28% 26% 25% 24% 22% 19% 17% 16%

86% 65% 65% 60% 80% 81% 64% 62% 89% 36%

10 United States

Executive News Report from ACNielsen Global Services September 2005 10

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL GROWTH SEEN ACROSS ALL REGIONS
At the global level, aggregated Private Label sales for the last 12 months grew at 5%. At the regional level, the Emerging Markets saw the fastest growth of Private Label – up 11% since last year (albeit from a small base). This growth was attributed to the increasing strength of the modern trade (where Private Label products are far more prevalent), as well as the presence of Private Label products in an increasing number of categories. At an individual country level, the ten countries experiencing the fastest growth of private label were drawn from a number of regions including the Emerging Markets, Europe, Asia Pacific and Latin America. The most surprising presence in the list below is that of Spain. Being a large developed country in terms of total packaged goods sales and already having a Private Label share of 26%, Spain still ranked among the top ten in Private Label growth. This strong growth was attributable to a number of factors including: the expanded availability of Private Label products (as stores with a focus on Private Label opened more outlets), as well as further development and innovation of Private Label offerings (such as anti-wrinkling products within face care).

TOP TEN FASTEST GROWING PRIVATE LABEL MARKETS
COUNTRY 1 2 3 4 5 6 7 8 9 Croatia Greece Thailand Argentina South Korea Finland Spain Singapore Colombia REGION Emerging Markets Europe Asia Pacific Latin America Asia Pacific Europe Europe Asia Pacific Latin America Emerging Markets PL GROWTH 77% 24% 18% 18% 17% 16% 16% 16% 15% 15% MANUFACTURER GROWTH 0% 2% 8% 22% 1% -3% 6% 1% 6% 5% PL SHARE 2% 4% 1% 3% 1% 10% 26% 3% 2% 10%

10 Hungary

Executive News Report from ACNielsen Global Services September 2005 11

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL CONTINUED TO GAIN SHARE…MOST SIGNIFICANTLY IN EUROPE
The growth of Private Label brands over the last 12 months again outpaced that of manufacturer brands. As mentioned previously, aggregated Private Label sales for the last 12 months grew globally at 5%, with manufacturer brands growing by only 2%. The result was a gain in Private Label share across the 38 countries of 0.4 share points. In two-thirds of the countries studied (26 out of 38), Private Label brands were growing at a faster rate than their manufacturer counterparts. The most significant share gains for Private Label were in the developed Private Label region of Europe. Private Label sales grew in Europe by 4%, while aggregated sales of manufacturer brands remained flat. The result was a gain of 0.7 share points for Private Label. The share gains within Europe were driven by a number of countries. Looking globally at the ten countries with the largest Private Label share gains, seven were in Europe. For five of those seven countries, the growth rate of manufacturer brands was actually negative. In Spain, value sales for both manufacturer brands and Private Label brands were growing but Private Label growth was at twice the pace…the result was a gain of 1.8 share points for Private Label.

TOP TEN PRIVATE LABEL MARKETS BASED ON SHARE POINT GAIN
PL GROWTH RATE MANU GROWTH RATE PL SHARE POINT GAIN

COUNTRY 1 2 3 4 5 6 7 8 9

REGION Europe Emerging Markets Europe Europe Europe Europe Europe Emerging Markets Emerging Markets Europe

Spain Slovakia Netherlands Finland Sweden France Germany Croatia Hungary

16% 14% 8% 16% 10% 3% 3% 77% 15% 14%

6% -6% -2% -3% -2% -2% -2% 0% 5% 1%

1.8 1.6 1.6 1.5 1.4 1.0 1.0 0.8 0.8 0.8

10 Norway

A contributing factor to Private Label growth, particularly in Europe, was the growing presence of Hard Discounters. Hard Discounters sell a very limited selection of products (primarily shelf stable food) at a very low price. More importantly (for this study), hard discounters mostly sell Private Label products. For example, within Aldi, Private Label products account for approximately 95% of sales. Hard Discounters such as Aldi and Lidl are present in every European country and are expanding this presence. As hard discounters continue to grow and gain share, with more stores and wider consumer acceptance, so does Private Label.

Executive News Report from ACNielsen Global Services September 2005 12

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

CATEGORY INSIGHTS
In order to provide a fair representation of the role of Private Label across a wide range of product areas, we chose a selection of 80 different categories within 14 different product areas. For example, within the larger product area of Refrigerated Food, six categories were chosen to provide a perspective on this area: • • • • • • Milk Yogurt Butter/Margarine Cheese Complete Ready Meals Meat/Poultry/Game

REFRIGERATED FOOD TAKES THE LEAD AS THE MOST DEVELOPED PRIVATE LABEL PRODUCT AREA
Refrigerated Food, represented by the six categories cited above, had the highest overall share of Private Label in the study, with an aggregated value share of 32% (see chart included in the Executive Summary). Within this area, the Complete Ready Meals category had the highest Private Label share, with nearly half of the category sales (47%) made up of Private Label products. The most significant Private Label shares for this category were found in Europe. In Great Britain, for example, 97% of sales in the Refrigerated Complete Ready Meals category were for Private Label brands. Another significant Private Label category in Refrigerated Food was Milk, with 43% of sales accounted for by Private Label brands. In addition to Refrigerated Food, Frozen Food and Shelf-Stable Food also had a number of entries in the top Private Label categories when ranked on share. In aggregated sales, each of these product areas had over 20% of sales accounted for by Private Label brands. As identified in the 2003 study, the Private Label stronghold in Paper Products, Plastic Bags & Wraps (PPW) was still evident. This product area ranked second in Private Label share at 31%. Furthermore, looking globally across all of the 80 categories studied, the category of Aluminum Foil (a part of PPW) had the highest Private Label share at 49%. Penetration of Private Label in this area across all of the countries was a significant contributor to share, with five of the six categories in this product area having Private Label products present in every country.

Executive News Report from ACNielsen Global Services September 2005 13

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

VALUE SHARES OF PRIVATE LABEL BY CATEGORY
CATEGORY
1 Aluminum Foil 2 Complete Ready Meals 3 Milk 4 Garbage/Refuse Bags 5 Meat/Poultry/Game 6 Fish/ Shellfish/ Seafood 7 Vegetables 8 Vegetables 9 Kitchen Paper/Towel 10 Cheese 11 Potato Fries 12 Plastic Wrap/Rolls 13 Cooking Oil 14 Toilet Tissue 15 Jam/Jelly/Marmalade 16 Meat/Poultry/Game 17 Rice 18 Facial Tissue 19 Dry Pasta 20 Dog Food 21 Butter/Margarine 22 Cat Food 23 Vodka 24 Auto Dish Detergent 25 Juices/Juice-Based Drinks 26 Ice Cream/Frozen Yogurt 27 Pizza 28 Disposable Baby Diapers 29 Toilet Care 30 Complete Ready Meals 31 Ketchup - Tomato Based 32 Sweet Biscuits (Cookies) 33 Flavored Milk Drinks 34 Self-Adhesive Dressings 35 Yogurt 36 Water 37 Cold Remedies 38 Tea 39 Coffee 40 Hand Dish Detergent

PRODUCT AREA
PPW Refrigerated Refrigerated PPW Frozen Frozen Frozen Shelf-Stable PPW Refrigerated Frozen PPW Shelf-Stable PPW Shelf-Stable Refrigerated Shelf-Stable PPW Shelf-Stable Pet Food Refrigerated Pet Food Alcoholic Bev Home Care Non-Alco Bev Frozen Frozen Diapers/Fem Hyg Home Care Frozen Shelf-Stable Snacks/Conf Non-Alco Bev Health Care Refrigerated Non-Alco Bev Health Care Non-Alco Bev Non-Alco Bev Home Care

PL SHARE
49% 47% 43% 40% 39% 39% 38% 36% 33% 33% 32% 31% 30% 30% 28% 28% 26% 24% 23% 22% 21% 20% 19% 19% 19% 18% 17% 17% 17% 16% 16% 16% 16% 16% 15% 14% 14% 14% 13% 13%

CATEGORY
41 Fabric Softeners 42 Mouthwash 43 Pain Relief 44 Wine 45 Mayonnaise 46 Wet Soup 47 Breakfast Cereals - RTE 48 Whisky 49 Cleansing - Bath/Shower 50 Household Cleaners 51 Feminine Personal Hygiene 52 Savory/Neutral Crackers 53 Cereal/Fruit/Muesli Bars 54 Drinking Yogurt 55 Toothbrushes 56 Skin Tanning (Protection) 58 Laundry Detergent 57 Chips/Crisps 59 Carbonated Beverages 60 Dry Soup 61 Chocolate 62 Facial Cleansing 63 Body Moisturizers 64 Disposable Razors 65 Fresheners/Deodorizers 66 Sports Energy Drinks 67 Hair Styling 68 Toilet Soap 69 Eye Shadow 70 After Shave Preps 71 Face Moisturizers 72 Shampoo 73 Insect Control 74 Beer/Lager/Ales 75 Deodorants 76 Toothpaste 77 Baby Formula 78 Lip Stick/Gloss 79 Baby Food 80 Chewing Gum

PRODUCT AREA
Home Care Personal Care Health Care Alcoholic Bev Shelf-Stable Shelf-Stable Shelf-Stable Alcoholic Bev Personal Care Home Care Diapers/Fem Hyg Shelf-Stable Snacks/Conf Non-Alco Bev Personal Care Personal Care Home Care Snacks/Conf Non-Alco Bev Shelf-Stable Snacks/Conf Personal Care Personal Care Personal Care Home Care Non-Alco Bev Personal Care Personal Care Cosmetics Personal Care Personal Care Personal Care Home Care Alcoholic Bev Personal Care Personal Care Baby Food Cosmetics Baby Food Snacks/Conf

PL SHARE
13% 13% 13% 12% 12% 12% 11% 11% 10% 10% 10% 9% 9% 9% 9% 9% 8% 8% 8% 7% 7% 6% 6% 6% 6% 5% 5% 4% 4% 3% 3% 3% 3% 3% 3% 3% 2% 2% 1% 1%

Executive News Report from ACNielsen Global Services September 2005 14

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World As with the Power of Private Label study released in 2003, the lowest level of Private Label development was seen primarily in three product areas: Personal Care, Cosmetics and Baby Food. Interestingly, Personal Care Private Label products were available in most countries, but the Private Label share was still only at 5% of value sales. For example, Shampoo Private Label products were available in 37 of the 38 countries measured, but Private Label market share in this category was limited to 3%. For Cosmetics, however, availability of Private Label products did limit the value share. Lip Stick/Gloss and Eye Shadow Private Label brands were only available in half of the countries measured. Similarly in the product area of Baby Food, only 15 of the 33 countries measured had Private Label Baby Food sales and only six of 32 had Private Label Baby Formula.

FASTEST GROWING CATEGORIES NOT ALWAYS THE SMALLEST CATEGORIES
It is not surprising that a number of the categories that experienced the fastest growth in Private Label sales over the last year were the smaller, less developed Private Label categories. For example, Eye Shadow, ranked 69th in Private Label share, but was the fastest growing category, growing by 34%. Similarly, Chewing Gum, the category with the smallest Private Label share, saw a 23% growth in Private Label sales. Interestingly, however, the Private Label category with the second largest share, Complete Ready Meals, was also one the fastest growing categories. Complete Ready Meals grew by 14% in the last year. Similarly, other larger Private Label categories, including Chocolate, Water and Dog Food, also experienced strong growth

TOP TEN FASTEST GROWING PRIVATE LABEL CATEGORIES
CATEGORY 1 Eye Shadow 2 Drinking Yogurt 3 Chewing Gum 4 Baby Food 5 Lip Stick/Gloss 6 Complete Ready Meals 7 Chocolate 8 Face Moisturizers 9 Water 10 Dog Food PRODUCT AREA Cosmetics Non-Alco Bev Snacks/Conf Baby Food Cosmetics Refrigerated Snacks/Conf Personal Care Non-Alco Bev Pet Food PL GROWTH 34% 28% 23% 20% 16% 14% 13% 13% 13% 12% MANU GROWTH 3% 18% 4% 3% -3% 7% 2% 7% 1% 5% PL SHARE 4% 9% 1% 1% 2% 47% 7% 3% 14% 22%

Executive News Report from ACNielsen Global Services September 2005 15

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL GAINED SHARE ACROSS A NUMBER OF CATEGORIES
In 60 of the 80 categories measured, Private Label brands outpaced the growth of manufacturer brands resulting in share gains. In the categories of Refrigerated Complete Ready Meals and Frozen Fish/Shellfish/Seafood, the share gain for Private Label was more than one and a half share points. (A number of other categories actually experienced higher Private Label growth but because of the small Private Label sales value in the category, the share gains were minimal and not included in the top ten.) In the category of Toilet Care, the gain in share for Private Label was not so much due to the large growth in Private Label but rather a decline in manufacturer sales over year ago.

TOP TEN PRIVATE LABEL CATEGORIES IN SHARE GAIN
CATEGORY 1 2 3 4 5 6 7 8 9 10 Complete Ready Meals Fish/Shellfish/Seafood Cooking Oil Water Butter/Margarine Dog Food Toilet Care Plastic Wrap/Rolls Milk Meat/Poultry/Game PRODUCT AREA Refrigerated Frozen Shelf Stable Non-Alco Bev Refrigerated Pet Food PPW PPW Refrigerated Refrigerated PL GROWTH MANU GROWTH PL SHARE POINT GAIN

14% 7% 12% 13% 10% 12% 7% -2% 8% 9%

7% 1% 4% 1% 1% 5% -1% -6% 4% 4%

1.6 1.5 1.4 1.3 1.3 1.2 1.1 1.0 0.9 0.9

PRIVATE LABEL ACTIVE IN THE ‘HOTTEST’ OF CATEGORIES
In addition to the 80 categories studied, we looked at the top categories from our What’s Hot in Food & Beverages and Personal Care studies published in 2004. In the What’s Hot in Food & Beverages study, ACNielsen had identified Soy Based Flavored Drinks as the fastest growing category, growing by 30%. In this study we looked at a more comprehensive category definition, the aggregate of Soy Based Drinks and Milks (both flavored and unflavored products). The value sales for this category grew by 26% over the last 12 months, with Private Label products having a small but expanded presence. In 2005, Private Label brands captured a 5% share of aggregated value sales within the category, with value sales growth of 45% over year ago. Similarly, the 2004 What’s Hot in Personal Care study identified Tooth Stain Removers and Whiteners as the fastest growing category. Unlike 2004, the total category did not show growth in 2005 (declining in sales by 25% over last year), however, Private Label brands held a 5% share of the value sales and experienced 66% growth.
Executive News Report from ACNielsen Global Services September 2005 16

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRICING TRENDS
The average price per category was calculated for each country by dividing the total dollar sales by the total volume sold. Given the variances in units of measurement across the 38 countries and 80 categories, it was not possible to compare the actual price per unit. Within each country, however, the unit of measurement for a category was consistent, making it possible to compare the average price difference between manufacturer brands and Private Label products on a category-by-category basis.

PRICE DIFFERENTIAL BETWEEN PRIVATE LABEL AND MANUFACTURER BRANDS BY COUNTRY
COUNTRY 1 Greece 2 Australia 3 Germany 4 Belgium 5 Czech Rep 6 Spain 7 Hungary 8 Ireland 9 Portugal 10 France 11 Austria 12 Slovakia 13 Sweden 14 Croatia 15 Finland 16 UK 17 Argentina 18 Norway 19 New Zealand REGION
Europe Asia Pacific Europe Europe Emerging Markets Europe Emerging Markets Europe Europe Europe Europe Emerging Markets Europe Emerging Markets Europe Europe Latin America Europe Asia Pacific

PL PRICE DIFFERENTIAL
-48% -47% -46% -45% -44% -44% -43% -42% -42% -40% -40% -38% -38% -37% -36% -36% -35% -34% -33%

COUNTRY 20 Philippines 21 South Korea 22 Mexico 23 South Africa 24 US 25 Switzerland 26 Canada 27 Denmark 28 Italy 29 Chile 30 Netherlands 31 Japan 32 Israel 33 Brazil 34 Puerto Rico 35 Colombia 36 Singapore 37 Hong Kong 38 Thailand

REGION
Asia Pacific Asia Pacific Latin America Emerging Markets North America Europe North America Europe Europe Latin America Europe Asia Pacific Europe Latin America Latin America Latin America Asia Pacific Asia Pacific Asia Pacific

PL PRICE DIFFERENTIAL
-32% -31% -28% -28% -28% -27% -27% -27% -26% -26% -26% -25% -23% -20% -19% -19% -13% -10% -10%

Executive News Report from ACNielsen Global Services September 2005 17

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL PRODUCT PRICED A THIRD LOWER THAN MANUFACTURER BRANDS
On a global basis, looking at the cumulated figures for all 80 categories, Private Label products were found to offer consumers, on average, savings of 31% over manufacturer brands. These are similar to the price differences seen in both the 1998 and 2003 studies. Regionally, the Emerging Markets had the greatest discount on Private Label products, 40% lower than the manufacturer brands. European countries also experienced some of the largest price differentials, with the average differential for Europe at 37%. Looking at the previous chart, the countries with the highest price differential were primarily in one of these two regions, with the exception of Australia (ranking number two with a price difference of 47%). Greece had the largest differential, with Private Label products sold at half the price of their manufacturer counterparts. This did differ, however, across categories. For example, Private Label Hair Styling and Auto Dish products in Greece were actually priced two-thirds lower than manufacturer brands. At the other end of the spectrum, Thailand and Hong Kong both experienced only a 10% price reduction for Private Label brands. This limited price difference was closely related to the pricing approach of the retail formats that offered Private Label (i.e., Modern Trade as compared to the more traditional shops). Similarly, the Modern Trade also introduced more “premium” Private Label products into the market, thus lowering the price differential with manufacturer brands.

PERSONAL CARE PRIVATE LABEL PRODUCTS PRICED WITH THE LARGEST DISCOUNT
Looking at the pricing trends across the product areas included in the study, Personal Care products had the widest differential between Private Label and the corresponding manufacturer brands. Private Label products in this product area were, on average, priced 45% lower than manufacturer brands. The following chart shows the Personal Care categories that demonstrated this trend. Private Label products within the categories of After-Shave Preps, Mouthwash and Shampoo were all priced at less than half the price of the manufacturer brands on a global basis (a differential of over 50%). One reason for this large difference is that the type of private label products available in the Personal Care area are of the more basic variety with few added features or benefits. Two Health Care categories, Pain Relief and Cold Remedies, and the Non-Alcoholic Beverage category of Sports Energy Drinks, saw a similar difference in price (Private Label products priced at half that of manufacturer brands). Interestingly, Private Label products in the Chewing Gum category were priced at a premium when compared to manufacturer brands. This trend was seen in seven of the 18 countries where Private Label brands were available. The reasons for this trend differed across countries, but a number of countries related the higher price to the fact that these products offered added benefits (e.g., coated gum) and were, therefore, priced at a premium.

Executive News Report from ACNielsen Global Services September 2005 18

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRICE DIFFERENTIAL OF PRIVATE LABEL BY CATEGORY
CATEGORY
1 After Shave Preps 2 Sports Energy Drinks 3 Mouthwash 4 Shampoo 5 Pain Relief 6 Cold Remedies 7 Disposable Razors 8 Fresheners/Deodorizers 9 Carbonated Beverages 10 Body Moisturizers 11 Toothbrushes 12 Cleansing - Bath/Shower 13 Dog Food 14 Skin Tanning (Protection) 15 Face Moisturizers 17 Hair Styling 18 Deodorants 19 Fabric Softeners 20 Breakfast Cereals - RTE 21 Household Cleaners 22 Cat Food 23 Wine 24 Tea 25 Auto Dish Detergent 26 Self-Adhesive Dressings 27 Hand Dish Detergent 28 Water 29 Laundry Detergent 30 Jam/Jelly/Marmalade 31 Toilet Soap 32 Mayonnaise 33 Chips/Crisps 34 Facial Cleansing 35 Cereal/Fruit/Muesli Bars 36 Toilet Care 37 Ice Cream/Frozen Yogurt 38 Cooking Oil 39 Sweet Biscuits (Cookies) 40 Facial Tissue

PRODUCT AREA
Personal Care Non-Alco Bev Personal Care Personal Care Health Care Health Care Personal Care Home Care Non-Alco Bev Personal Care Personal Care Personal Care Pet Food Personal Care Personal Care Personal Care Personal Care Home Care Shelf-Stable Home Care Pet Food Alcoholic Bev Non-Alco Bev Home Care Health Care Home Care Non-Alco Bev Home Care Shelf-Stable Personal Care Shelf-Stable Snacks/Conf Personal Care Snacks/Conf Home Care Frozen Shelf-Stable Snacks/Conf PPW

PL PRICE DIFFERENTIAL
-55% -52% -51% -51% -50% -50% -49% -44% -43% -43% -43% -43% -43% -42% -42% -42% -41% -41% -41% -40% -39% -39% -38% -37% -37% -36% -35% -34% -34% -34% -33% -33% -33% -33% -33% -32% -32% -31% -31% -31% 42 Vodka

CATEGORY
41 Toothpaste 43 Drinking Yogurt 44 Ketchup - Tomato Based 45 Flavored Milk Drinks 46 Beer/Lager/Ales 47 Rice 48 Whisky 49 Savory/Neutral Crackers 50 Juices/Juice-Based Drinks 51 Potato Fries 52 Dry Pasta 53 Coffee 54 Plastic Wrap/Rolls 55 Kitchen Paper/Towel 56 Disposable Baby Diapers 58 Baby Food 57 Lip Stick/Gloss 59 Eye Shadow 60 Aluminum Foil 61 Vegetables 62 Chocolate 63 Vegetables 64 Garbage/Refuse Bags 65 Butter/Margarine 66 Milk 67 Yogurt 68 Meat/Poultry/Game 69 Cheese 70 Toilet Tissue 71 Dry Soup 72 Complete Ready Meals 73 Pizza 74 Fish/Shellfish/Seafood 75 Insect Control 76 Baby Formula 77 Complete Ready Meals 78 Meat/Poultry/Game 79 Wet Soup 80 Chewing Gum

PRODUCT AREA
Personal Care Alcoholic Bev Non-Alco Bev Shelf-Stable Non-Alco Bev Alcoholic Bev Shelf-Stable Alcoholic Bev Shelf-Stable Non-Alco Bev Frozen Shelf-Stable Non-Alco Bev PPW PPW Diapers/Fem Hyg Baby Food Cosmetics Cosmetics PPW Shelf-Stable Snacks/Conf Frozen PPW Refrigerated Refrigerated Refrigerated Refrigerated Refrigerated PPW Shelf-Stable Refrigerated Frozen Frozen Home Care Baby Food Frozen Frozen Shelf-Stable Snacks/Conf

PL PRICE DIFFERENTIAL
-31% -31% -30% -30% -29% -28% -28% -28% -28% -28% -27% -27% -27% -26% -25% -25% -24% -24% -24% -24% -23% -22% -22% -22% -21% -17% -17% -16% -16% -13% -12% -11% -11% -11% -9% -6% -5% -2% 0% 7%

16 Feminine Personal Hygiene Diapers/Fem Hyg

Executive News Report from ACNielsen Global Services September 2005 19

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL BRANDS MEET CONSUMER NEEDS BEYOND A LOW PRICE
As we saw in the case of the added value products in Chewing Gum, Private Label products are not always competing with manufacturer brands simply on price. In a number of the more developed markets, retailers are developing their own lines to respond to growing consumer needs. Alongside a general improvement in the quality of products, Private Label offerings now also include products specifically focused on providing healthy alternatives. In addition, retailers have used the strength of their Private Label brand to develop other services such as mobile phones and financial services.

A CLOSER LOOK AT TWO KEY BRANDS TESCO
The Tesco brand, launched in Great Britain in 1924, was one of the earliest Private Label brands sold. Today, alongside the Tesco Value brand (usually depicted by blue and white stripes), Tesco have a premium quality brand, Tesco Finest, which also spans most product areas in the store. Overall, Tesco has been responsive to consumers and cultivated their store brands to respond to a variety of consumer needs and beliefs. • • • • • • Tesco Organics was launched over a decade ago to provide consumers with a variety of organic foods from cookies to sausages. In response to the growing share of the population with allergies or intolerances, Tesco Free From includes over 150 products which are gluten, wheat or milk free. The Tesco Healthy Living range includes over 500 products which have reduced fat, sugar and sodium for consumers who prefer a healthier alternative. Similarly, Tesco Carb Control was specifically developed to make it easier and more convenient for consumers to follow a low carb eating program. On a more ethical note, Tesco Fair Trade products are fair trade certified which means producers and small suppliers in the developing world are guaranteed to receive a fair price for their produce contained in these products. Finally, Tesco Kids includes products from toothbrushes to fun size apples designed to cater specifically to the next generation.

Furthermore, Tesco has also used its brand equity to expand into personal finance, insurance and the telecommunication industry.

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRESIDENT’S CHOICE
With the launch of the first President’s Choice (PC) products in Loblaws in 1984, the aim was to offer better value to Canadian consumers. Today, the brand has expanded beyond a price-point focus to offer quality, health-focused alternatives to consumers in Canada as well as the United States, the Caribbean, Hong Kong and Israel. • • • PC Blue Menu is aimed at the growing demands of health-conscious consumers. Focusing on nutrition, PC Blue Menu provides healthier options including low fat, low calorie and high fiber products. Similarly, as a result of consumer demand for organic foods, PC Organics offers a range of organic foods including organic juices, cereals, produce and baby food. PC Mini Chefs extends the range of President’s Choice products to provide parents with a healthy option for their children as well.

President’s Choice has now expanded its product offerings from food products to non-food items including household and beauty products, pet food, lawn and garden and general merchandise and more recently financial services and telecommunications.

AND THE TREND CONTINUES…
On a similar, more news-breaking note, 7-Eleven has just responded to a growing consumer need for healthy foods by introducing a line of Private Label functional foods and beverages under its Formula 7 name.

Executive News Report from ACNielsen Global Services September 2005 21

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL CONSUMERS
To supplement the retail measurement data, ACNielsen collected consumer panel data from 14 of the 38 countries, encompassing four of the five regions: • • • • Australia, Hong Kong and Singapore in Asia Pacific Finland, France, Germany, Great Britain, Italy, Spain and Switzerland in Europe Chile and Colombia in Latin America Canada and United States in North America

Consumer panel data allowed us to look at the shopping behaviors and demographics of Private Label consumers around the world.

PRIVATE LABEL PRODUCTS WERE PURCHASED BY NEARLY ALL CONSUMERS WITHIN THESE COUNTRIES
In nine of the 14 countries studied, 100% of households had purchased Private Label products over the past year. Penetration was most limited in Singapore, but even in Singapore 77% of households purchased at least some Private Label products over the last 12 months. The other countries where Private Label was not purchased by every household included Italy (98% penetration), Hong Kong (96%), Chile (94%) and Colombia (80%).

PRIVATE LABEL PENETRATION BY COUNTRY
Switzerland Germany Great Britain Spain France Canada US Finland Australia Italy Hong Kong Chile Colombia Singapore 50% 70% 90%

Executive News Report from ACNielsen Global Services September 2005 22

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

EIGHTY-TWO PERCENT OF BRITISH SHOPPING TRIPS INCLUDED PRIVATE LABEL PRODUCTS
Frequency of purchase was found to be a key driver of Private Label share. Across countries, consumers purchased Private Label products at varying degrees. Those countries with the highest Private Label share were found to purchase Private Label goods most often. Consumers in Great Britain (with a Private Label share of 28%), were found to have Private Label products in their basket on 82% of their shopping trips. Private Label consumers in less developed markets generally purchased Private Label products on only 16% of their shopping trips.

SHARE OF SHOPPING TRIPS INCLUDING PRIVATE LABEL
Share Level high
Switzerland Germany Great Britain Spain France Canada
44% 45% 26% 34% 59% 12% 11% 23% 18% 54% 73% 55% 82% 70%

Average 67%

med

US Italy Finland Australia Hong Kong

Average 42%

low

Singapore Chile Colombia 0%

Average 16%

20%

40%

60%

80%

100%

Executive News Report from ACNielsen Global Services September 2005 23

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PRIVATE LABEL CONSUMERS RANGE FROM THE YOUNG TO THE OLD, THE RICH TO THE POOR AND FROM SINGLES TO LARGE FAMILIES
Looking across consumers and households, Private Label purchasing varied based on demographic composition.

Income
The share of spend allocated to Private Label products was generally higher in those households with a lower household income.

PRIVATE LABEL SHARE OF SPEND SEGMENTED BY INCOME LEVEL
Share of Spend

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Low Medium High Low Medium High Low Medium High Low Medium High

Europe

North America

Asia Pacific

Latin America

Income Level

Interestingly, a handful of countries, namely, Singapore, Great Britain, Italy and Colombia, experienced the reverse trend. Within these four countries, it was the high income households that allocated the greatest share of their total spend to Private Label products. Reasons for this were related to two very different situations. In some countries the premium products offered by retailers attracted a significant number of households with higher incomes, thus raising the share of spend on Private Label. In Colombia, however, the reason was quite different. Lower income families, relying on public transportation, had limited access to Private Label brands due to the fact that stores selling Private Label were further away from their homes (particularly when compared to their corner stores).

Executive News Report from ACNielsen Global Services September 2005 24

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

Household Size
Overall, households with larger families allocated a higher share of their total spend to Private Label products than households with smaller families.

PRIVATE LABEL SHARE OF SPEND SEGMENTED BY HOUSEHOLD SIZE
Share of Spend

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Small Medium Large Small Medium Large Small Medium Large Small Medium Large

Europe

North America

Asia Pacific

Latin America

Household Size

It is worth noting that, although Great Britain followed the general trend, whereby the larger households allocated the greatest share of spend to Private Label products (42%), small families in Britain also allocated a considerable share of total sales to Private Label brands (41%). The only country where this trend was reversed was Italy. Surprisingly, in Italy, households with only one or two family members, allocated a greater share of their total spend to Private Label than did larger households.

Executive News Report from ACNielsen Global Services September 2005 25

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

Age
The ‘typical’ age of the Private Label consumer varied across regions as well as by local country within the regions.

PRIVATE LABEL SHARE OF SPEND SEGMENTED BY AGE OF HOUSEHOLD

Share of Spend

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Young Middle Old Aged Young Middle Old Aged Young Middle Old Aged Young Middle Old Aged

Europe

North America

Asia Pacific

Latin America

Age of Household

Within both Latin America and North America, it was generally found that the younger households allocated a greater share of their total spend to Private Label brands. Within Asia Pacific, it was the older consumers that allocated a greater share of spend to Private Label. Within Europe, overall, the middle aged consumers were the ones that gave the greatest share of total spend to Private Label; however, the trend in Spain and Great Britain differed from this. In Spain the greatest share to Private Label was allocated by the younger consumers and in Great Britain by the middle aged consumers.

Executive News Report from ACNielsen Global Services September 2005 26

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

IN SUMMARY….
Private Label continues to grow. In over two-thirds of the markets studied, Private Label grew faster than its manufacturer counterparts. Europe continues to be the region with the highest share of Private Label. Switzerland maintained its position as the number one Private Label country, growing to a 45% value share of market. With the growth of the modern trade, the Emerging Markets experienced the largest growth rate for Private Label, albeit from a small base. Refrigerated Food was found to be the product area with the largest Private Label share (replacing Paper, Plastic & Wraps – formerly number one). This is primarily due to the increased development of Private Label in the Complete Ready Meals category. Globally, the price of Private Label brands was, on average, a third lower than manufacturer brands. This price differential differed by country and category. Retailer concentration continues to be a contributing factor in the development of Private Label. The more concentrated the market…the greater the share of Private Label. As Hard Discounters expand their stores and enter new markets, the share of Private Label will grow. Around the world, almost all consumers, to some degree, use Private Label. The share of Private Label was highest among larger families and those with lower incomes. Frequency of purchase was found to be a key driving factor. The growth of Private Label will continue. Private Label products today are being introduced into both new markets and categories. The introduction of more premium Private Label lines has changed both the shape and perception of what a “store brand” can be. How far Private Label will grow is yet to be determined.

Executive News Report from ACNielsen Global Services September 2005 27

THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

METHODOLOGY
UNDERSTANDING THE STUDY PARAMETERS EIGHTY CATEGORIES REVIEWED ACROSS 38 COUNTRIES
In preparing this report, retail measurement data was collected by ACNielsen from 38 countries, covering five regions – Europe, North America, the Emerging Market Asia Pacific and Latin America. In total, these 38 countries represent over 60% of the world’s Gross Domestic Product (GDP). The 38 countries studied were chosen as areas where there was an established Private Label presence.

COUNTRIES INCLUDED IN THE STUDY
EUROPE Austria Belgium Denmark Finland France Germany Great Britain Greece Ireland Israel Italy Netherlands Norway Portugal Spain Sweden Switzerland NORTH AMERICA Canada United States ASIA PACIFIC Australia Hong Kong Japan New Zealand Philippines Singapore South Korea Thailand EMERGING MARKETS Croatia Czech Republic Hungary Slovakia South Africa LATIN AMERICA Argentina Brazil Chile Colombia Mexico Puerto Rico

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

PERIODS INCLUDED
Information was collected for the years ending April 2004 and 2005.

CATEGORY COVERAGE REPRESENTED A WIDE CROSS-SECTION OF PRODUCT AREAS
To provide a wide perspective on Private Label trends, the retail measurement data includes views of 80 different categories within 14 larger product areas - Alcoholic Beverages; NonAlcoholic Beverages; Snacks & Confectionery; Baby Food; Shelf-Stable Food; Refrigerated Food; Frozen Food; Home Care; Paper Products, Plastic Bags & Wraps (PPW); Diapers & Feminine Hygiene; Personal Care; Cosmetics; Health Care; and Pet Food. The actual categories chosen were not necessarily those with the highest Private Label share, but rather represented a varied cross-section of consumer products. Due to the fact that category coverage can differ across countries, we have cited in our findings the actual number of countries included in this study for each category. Where products were segmented into different categories across markets, we have reconstructed the categories in order to have the most consistent view available. Channel coverage varied from country to country but generally included supermarkets, hypermarkets and mass merchandisers. The data from some countries also includes convenience stores and drug stores. Department stores, cash and carry stores, wholesalers and food service outlets are generally excluded. On looking specifically at the coverage of Private Label activity, certain exclusions should be noted that may have affected the country specific trends observed. For example, data from the hard discounters Lidl and Aldi was not included for the following countries: Lidl: Czech Republic, Slovakia, Austria, Finland, France, Greece, Ireland, Netherlands, Norway, Portugal and Sweden. Aldi: Australia (liquor), Denmark, Ireland, France, Netherlands (Private Label products), United States. Additionally, the following stores are also excluded from this study: Austria Croatia Denmark France Great Britain Greece Hofer Kaufland Coop Hard Discounters Marks and Spencer Sklavenitis (some categories) Philippines Mexico South Africa South Korea Sweden Thailand SM Supermarket Wal-Mart; Soriana; HEB; Gigante; Commercial Mexicana; Woolworths E-Mart Netto Leader Price

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

CATEGORY COVERAGE
ALCOHOLIC BEVERAGES
Beer/Lager/Ales (35) Wine (23) Vodka (26) Whisky (27)

(Number of Countries Included)
BABY FOOD
Baby Food (33) Baby Formula (32)

SNACKS & CONFECTIONERY
Chocolate (37) Chewing Gum (34) Chips/Crisps (38) Cereal/Fruit/Muesli Bars (30) Sweet Biscuits (Cookies) (36)

NON-ALCOHOLIC BEVERAGES
Coffee (38) Tea (31) Carbonated Beverages (37) Juices/Juice-Based Drinks – Ready To Drink (37) Sports Energy Drinks (33) Flavored Milk Drinks (31) Drinking Yogurt (28) Water (38)

SHELF-STABLE FOOD
Breakfast Cereals – Ready To Eat (38) Dry Pasta (31) Rice (30) Savory/Neutral Crackers (33) Dry Soup (35) Wet Soup (24) Containered Vegetables (25) Cooking Oil (32) Mayonnaise (37) Ketchup - Tomato Based (36) Jam/Jelly/Marmalade (25)

PERSONAL CARE
Cleansing - Bath/Shower (36) Deodorants (37) Shampoo (38) Hair Styling (34) Mouthwash (30) Toothpaste (38) Toothbrushes (Manual) (38) Toilet Soap (37) Skin Tanning (Protection) (28) Disposable Razors (36) Facial Cleansing (35) Face Moisturizers (34) Body Moisturizers (33) After Shave Preps (25)

FROZEN FOOD
Ice Cream/Frozen Yogurt (34) Potato Fries (28) Vegetables (27) Meat/Poultry/Game (23) Fish/ Shellfish/ Seafood (25) Pizza (30) Complete Ready Meals (26)

HOME CARE
Hand Dish Detergent (37) Auto Dish Detergent (29) Fresheners/Deodorizers (37) Household Cleaners (37) Toilet Care (36) Insect Control (31) Laundry Detergent (38) Fabric Softeners (36)

REFRIGERATED FOOD
Milk (31) Yogurt (35) Butter/Margarine (33) Cheese (35) Complete Ready Meals (16) Meat/Poultry/Game (14)

PAPER PRODUCTS, PLASTIC BAGS & WRAPS (PPW)
Aluminum Foil (21) Plastic Wrap/Rolls (23) Garbage/Refuse Bags (22) Kitchen Paper/Towel (33) Toilet Tissue (34) Facial Tissue (36)

DIAPERS & FEMININE HYGIENE
Disposable Baby Diapers (38) Feminine Personal Hygiene (38)

COSMETICS
Eye Shadow (15) Lip Stick/Gloss (19)

HEALTH CARE
Pain Relief (22) Self-Adhesive Dressings (21) Cold Remedies (17)

PET FOOD
Cat Food (33) Dog Food (34)

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

REPORT FOCUSED ON SALES VALUE AND PRICE PER VOLUME
In analyzing the share and growth trends, our focus was on value sales as opposed to volume sales since the volume measurement units were significantly different across categories and countries. However, it should be recognized, that since Private Label products are often priced lower than their manufacturer counterparts, the value shares for Private Label are probably understated (in comparison to their volume share). In order to create accurate value comparisons, all local currency data was converted to US dollars using a constant exchange rate across the two-year period. When analyzing the pricing of Private Label compared to its branded counterparts, the average price per volume measure was compared for each category and country. Average percentage differences (compared to manufacturer branded products) were calculated to account for the variation between kilograms, liters or pieces and hence allow comparisons to be made across categories and countries.

CONSUMER PANEL DATA REVIEWED ACROSS 14 COUNTRIES
In preparing this report, consumer panel data was collected by ACNielsen from 14 countries covering four regions – Europe, North America, Asia Pacific and Latin America. Consumer data was collected from a sample of household panels in each country to reflect the total population of that country. EUROPE Finland France Germany Great Britain Italy Spain Switzerland NORTH AMERICA Canada United States ASIA PACIFIC Australia Hong Kong Singapore LATIN AMERICA Chile Colombia

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

CONSUMER PANEL DATA ESTABLISHED TO REFLECT RETAIL MEASUREMENT
In order to align the data sources, consumer panel data from each country generally covered the same 80 categories included in the retail measurement data. For some countries not all categories were available; for others a wider selection of categories was included in the measurement of consumer behavior.

DEMOGRAPHIC GROUPINGS ALIGNED ACROSS COUNTRIES
To enable the comparison of consumer panel data across countries, the local segmentations within each demographic - Household Income, Household Size and Household Age - were consolidated to form three basic groups – low/medium/high, small/medium/large, young/middle aged/old. The actual income, age and size boundaries for these groups varied slightly across countries.

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THE POWER OF PRIVATE LABEL 2005
A Review of Growth Trends Around the World

EXCHANGE RATES USED
To obtain a global perspective local currency was converted to US dollars using a constant exchange rate across the two-year period. COUNTRY EUROPE
Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain Denmark Great Britain Israel Norway Sweden Switzerland

CURRENCY

EXCHANGE RATE (PER US$)

Euro

0.80 5.96 0.55 4.51 6.59 7.28 1.21 5.90 25.50 218.52 32.77 6.83 1.42 7.39 105.26 1143.84 1.63 57.39 1.62 38.93 1.31 2.94 3.03 615.38 2867.38 11.69 1.00

Danish Krone British Pound Israeli Shekel Norwegian Krone Swedish Krona Swiss Franc Croatian Kuna Czech Koruna Hungarian Forint Slovakia Koruna South African Rand Australian Dollar Hong Kong Dollar Japanese Yen South Korean Won New Zealand Dollar Philippines Peso Singapore Dollar Thai Baht Canadian Dollar Argentine Peso Brazil Real Chilean Peso Colombian Peso Mexican Peso US Dollar

EMERGING MARKETS
Croatia Czech Republic Hungary Slovakia South Africa

ASIA PACIFIC
Australia Hong Kong Japan South Korea New Zealand Philippines Singapore Thailand

NORTH AMERICA
Canada

LATIN AMERICA
Argentina Brazil Chile Colombia Mexico Puerto Rico

Executive News Report from ACNielsen Global Services September 2005 33