Private Labels:

Transformation
for Growth

Ananda Roy
SVP Thought Leadership Europe
CPG Growth Advisor
The battle for category growth is intense; with Private Labels competing hard

Private Label Competing Success

Landscape for Growth Code

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 2

The battle for category growth is intense; with Private Labels competing hard

Private Label Competing Success

Landscape for Growth Code

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 3

Affordability explains the wide gap between Value & Volume Sales in CPG
and the pressure Private Labels face to deliver volume sales in 2024

 Dragging Factors Value Sales continues

 Driving Factors to be Inflation Driven

Inflation  Geopolitical Instability

Driven f 8.9%  Commodity Prices Volatile
 Wage Growth c5%
 Services Inflation Lagging
+8.5%  High Interest Rates
Q1 2023 saw the June 2024  ‘Maintain Profitability’ Trap
highest price rises Forecast  Energy Prices Stable
across all markets  Transport Costs Down
-1.4% f -1%
Consumer
Demand Volume Sales soft due to
‘sticky’ dragging factors

 Affordability Constrained
 Unemployment Risk Grows
 High Interest Rates Embedded
 Personal Tax Rates Stay High
 Adjusted Consumption Behaviours
 Credit Availability Resumes

f June-24
 Consumer Confidence Growing

So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and Netherlands). Period ending FY 2023 P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 4
Intense inflationary headwinds across FMCG have given Private Labels
a volume boost despite price increases, capitalising on wide price index to Brands

Volume Price Growth Value Sales Growth Volume Sales Growth

EU6 - MAT to MAR 24 EU6 - MAT to MAR 24 EU6 - MAT to MAR 24

7.3% 7.1% -0.2%

9.9%
9.4%
2.2%
7.0%
5.7%
Private Labels Brands

Private Labels Brands -3.8%

Private Labels Brands

41 40
So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and
Private Label Volume Prices
Ne therlands). Period ending Mar 2024 Indexed to National Brands
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 5
Private Labels are now firmly established in the FMCG category; maintaining the
market share gains they have made in the last 2 years.

39.1%
Private Label Value Sales Private Label Value Share in EU6 Markets
+0.8pp vs YA MAT and L13W Growth in %
Growth surge when
inflation hit double digits €262 Bn | +9.4% MAT 10.0% 8.1% 10.0% 10.8% 12.9% 7.0%
17.3
L13W 2.7% 2.1% 3.3% 7.1% 8.9% 4.0%
64%
62% 11.6 63% 63%
10.4 61%
59% 59%
6.1 48%
43% 42%
2.0
Value 36% 37%
Share 30%
37% 40%
36% 40% 40%
39% 39%
Apr-2 2

Apr-2 3

Oct-2 3
Sep-2 3
Dec-2 2
Dec-2 1

Dec-23
May-22

May-23
Mar-22

Mar-23

Aug-23

Mar-24
Aug-21

Nov-21

Aug-22

Nov-22
Jul-22
Jul-21

Feb-22

Feb-23

Nov-23
Jul-23
Jan-22

Jan-23
Jun-21

Jun-22

Feb-24
Jan-24
Jun-23
Oct-21

Oct-22
Sep-21

Sep-22

France

Italy
Germany

Kingdom
Spain
Netherlands

United
Private Label Value Share Source: Eurostat, Circana

» Highest penetration in Spain (48%), Germany (43%) and Netherlands (42%)

» Highest absolute value in Germany (€75 Bn) and UK (€53 Bn)
» Strong overall growth in all countries in MAT’23
» Share growth across all countries, highest in Spain (+1.3 pp)

So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and Netherlands). Period ending Mar 2024
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 6
Private Labels are now firmly established in the FMCG category in Value Sales
Chilled & Fresh, Ambient and Frozen Foods, and Household Care have high penetration
Notable PL Volume Share growth in Ambient & Frozen foods, Pet Non-Food categories

30% Private Label Value Share in Categories

of FMCG Value Sales Value Share in % with Growth vs Year Ago in pp
in Categories
Vulnerable to Share
vs YA +0.8pp +1.6pp +1.6pp +1.5pp +1.2pp +1.0pp +0.6pp +0.6pp +0.6pp +0.5pp +0.3pp +0.2pp +0.2pp
Private Labels
(PL gained >+1pp)

55% 55%
50%
Value 43% 42%
Share 39% 38%
34%
23%
18% 17%
11% 15%
Pet Non Food

Frozen

Baby Food

Household
Drinks
Ambient

Chilled and Fresh

Alcohol
Baby Non Food

Personal Care
Total FMCG

Pet Food
Confectionery
So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and Netherlands). Period ending Mar 2024
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 7
Private Labels are dragging performance of Brands in Volume Sales with 68% share
Mega categories like Household & Personal Care are highly vulnerable from penetration and growth
Alcohol, Confectionery and Beverages remain resilient, but Baby Food is showing +2.3pp growth

68% Private Label Volume Share in Categories

of FMCG Volume Sales Volume Share in % with Growth vs Year Ago in pp
in Categories
Vulnerable to Share
+1.4pp +2.3pp +2.2pp +2.0pp +2.0pp +1.9pp +1.9pp +1.3pp +0.7pp +0.4pp +0.4pp +0.3pp -0.8pp
Private Labels vs YA
(PL gained >+1pp)

68% 70% 69%

62% 63% 63% 62%
Volume 57%
Share 51%
41 40
34%

Private Label Volume Prices 19% 21% 21%

Indexed to National Brands
Baby Food

Pet Non Food

Frozen
Household

Drinks
Ambient
Chilled and Fresh

Alcohol
Baby Non Food
Personal Care
Total FMCG

Pet Food

Confectionery
Yet explaining Private Label growth as Inflation-Driven is an over-simplification

So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and Netherlands). Period ending Mar 2024
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 8
Private Labels win because Retailers have transformed their role in the category

Innovative &
Strategy Obsessed Differentiated
Category Dynamics Sustainable Products
Margin & Volume Focus Innovative
Range Discipline High Quality & Taste
Delivers Claims

Demand Forecasting
Shopper Segmentation
Loyalty Data Mining
Shopper Panels
39% 46% Pricing Analytics
Promotion Effectiveness
Value Unit Range Discipline
Share Share
Consumer Focussed Data Driven

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 9

PRIVATE LABEL PENETRATION
Private Label transformation by Retailers driven by innovation, quality, sustainability &
availability squeezing out addressable volume available to Brands
4 Years Private Label Share Evolution
Private Label Penetration Trends in EU6 Markets MAT 3YA MAT 2YA MAT YA MAT
Value Share 36.4% 36.5% 38.3% 39.1%
Unit Share 44.8% 44.7% 45.4% 46.6%
90.0% Volume Share 59.8% 59.7% 60.4% 61.8%
Approaching Saturation Steady Growth → Pandemic Decline → Inflation Surge

80.0%
Frozen Vegetables
Cleaners & Wipes
Toilet Paper Household
Battleground

Volume Share
70.0% Chilled Milk Baby Non Food Pet Non Food
Frozen Cheese Personal Care
Ambient
Chilled Fresh Soup & UHT Milk Frozen Fish Cooking Oil
60.0% and Fresh Pasta Canned Beans
Frozen Desserts
Eggs Breads Ice Cream
Juices Face Yogurt Pet
Pet Food
Food Nappies & Diapers
50.0% Care Dish Detergent
Frozen Pizza
Vulnerable Butters & Margarines
Mayonnaise
40.0% Tea
Wine Toilet Cleaners
Water Soup
Cosmetics Ketchup
Drinks Coffee
Sports & Energy 30.0%
Chocolate Baby Food
Alcohol & Hand, Lip & RTD Spirits & Drinks
Spirits Body Care Conditioners
Confectionery Carbonates
20.0%
Alcohol Shampoo Baby Food Laundry
Beer Detergents &
Aids
Hair Colorants
10.0% Baby Milk

Resilient
0.0%
-2.4% -1.4% -0.4% 0.6% 1.6% 2.6% 3.6% 4.6% 5.6% 6.6%

Volume Share Growth pp

So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and Netherlands). Period ending Mar 2024 P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 10
 Private Label volume share declined from Q1 2020 (62%) to mid-2022 (59%) as consumers chose
National Brands in pandemic & post chaos; Yet as inflation intensified Private Label Volume Share
has returned to normalcy and forecast to return to c63%

Private Label Quarterly Volume Share

In EU6 between Q1 2020 – Q4 2023

Pandemic Decline to National Brands Inflation Driven Demand

0.03 f 64.0%
2.2%
Private Label Share
Private Label Share Chg vs YA 1.8%
62.6% 1.6% 1.6% 62.3% 1.7%
63.3% 63.0%
0.02 1.0% H2 2024 Slower growth rate yet
Forecast
62.0% return to pre-pandemic %
0.01 0.3% 0.4%
0.6% 62.8%
0.0% 0.1% 61.6% 61.0% Increased Promotions
-0.1% 61.0%
60.8%
0 60.2%
61.6% 60.6% 60.0% Loyalty Card Prices
0.2% 60.0%  Innovation
60.6% 59.0% Range Expansion
-0.01 59.3% 59.2%
59.0% 59.0% -0.8% 58.9% -0.8% 58.9%  Margin Pressure
58.0% Supplier Prices
-0.02 -1.8%
-2.1% 57.0%
-2.4%
-0.03 56.0%
Q1 2020

Q2 2022

Q3 2022

Q4 2022
Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Q2 2024
26.5% 20.4% 14.9% 7.8% 7.6% 6.6% 5.9% 4.8% 2.3% 1.8% 1.0% 0.3%

Private Labels will accelerate growth momentum in 2024 and beyond

So urce: Circana POS data from EU6 (France, UK, Germany, Italy, Spain and Netherlands). Period ending Mar 2024 P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 11
Competing Effectively in 2024 and Beyond

Private Label Competing Success

Landscape for Growth Code

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 12

There are 4 Strategic Options to compete effectively with Brands

Collaborate Grow Diversify Premiumise

strategically the category into adjacencies distinctively

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 13

Collaborate strategically: Brands as Own-Label Supplier or Limited Editions

Diversify Growth Opportunities Explore Synergies Protect Volume

Use line-capacity or expertise The Brand expands into a strategic in a highly competitive market
to supply make-to-stock retail channel; The Retailer lists a dominated by Private Labels
products for Food Service & trendy, artisanal brand to appeal to
younger, high-value shoppers
Retailer Customers
= Viral Earned Media

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 14

Grow the category: Branded Sports & Energy Drinks are holding off Private Labels with 18
new brands, 470 product launches, with functional & adding new shoppers

CHANGE IN CHANGE IN
TOTAL VALUE SALES TOTAL UNIT SALES Brands
16.7% 16.7% 96%
+0.5 PP Format variety for Rotating Flavors
17.4% various occasions and Limited Editions

1.7% 8.0% Value

Share

-16.9%

Brands Private Label

Functional Claims, Sugar free/Low sugar

% Promo Value by top Manufacturers ACV Avg items selling/store
Natural & Organic, Plant for Health conscious
to widen appeal to new
shoppers

MAT3YA MAT2YA MATYA MAT2 MAT3YA MAT2YA MATYA MAT2

RE D BULL
SUNT ORY HOLDINGS BRANDED PRIVATE LABEL
MONS TER ENERGY COM PANY
PRIVATE LABEL
TH E COCA COLA COMPANY

† All Data Grocery TSV; May ‘23 MAT are based on standard TSV definitions
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 15
Diversify into high growth adjacencies: Reformulating & Repositioning existing
products to target emerging premium segments & retain high-value shoppers
using the equity of the host brand

Breakfast Cereal
• Highly Competitive: Established Mega-Brands
• Price-Sensitive: Growth of Private Labels
• Children & Family Consumer Segments
• HFSS concerns
• Unclear Brand Equity

Anytime “Snacking-At-Home”
• Relatively less contested than Breakfast options
• Potentially Premium: Professional Hybrid Workers – Growth Segment
• New Moment: Grazing ‘On-The-Go’ At-Home
• New Need: A tasty, indulgent boost while busy
• Innovation possibilities: Online Personalisation, Home-Delivery‘
• ‘Have a Break, Have a Kit-Kat’ equity

One Step Further…

+ •
•
Promo via on-pack – Create your own Trail Mix
Total Nestlé cereals on-pack potential, coupon for selected Nestlé confectionary

Source: CPG Thought Leadership EMEA, ‘Growing Premium’, May 2023

Data Source: IRI POS data UK 5YRS MAT ending May’23 P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 16
Premiumisation worth paying for creates value. What volume would you rather sell?
Based on avg volume price gap (indexed) & gross margin of branded vs low-priced generic brands

=
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 17
Premiumise distinctively
Giving the offer deeper meaning: Continue Innovations, Attract New Shoppers, Target New Needs, Make Acquisitions Deliver

Average Price Per Volume – 4 Years

25.46
Value Growth % 6.2% 4.7% -0.6% +2.9% +5.4% +9% 23.84
20.66
Vol Price Growth % 11.5% 12.5% -1.1% 11.3% 13.7% 13.5% 18.40
14.76
+0.5% 12.17 12.70
Volume 10.85 11.72
Growth -4.80% -4%
10.21 9.27
-6.90% 7.62
-7.50% -7.20%
MAT 3YA MAT 2YA MAT YA MAT

Mars
Private Labels

Lindt
Confectionery

Nestle
Ferrero
To tal

TOT AL CONFECTIONERY MARS

NES TLE PRIVAT E LABE L
LINDT & S PRUN GLI FERRE RO

1 2 3 4
Continue to Launch New Products Focus on Small Gifting Packs Make Strategic Acquisitions Work ‘Quality At Heart’ Features
Volume Driver at accessible Unit Price Impulse + Everyday Gifting + ‘On-The-Go’ indulgence Fox’s Rocky Countlines positioned at affordable price points Media Push in Weekend Broadsheets & Online
200gm > 300 gm YA

MAT 2022 VOL MAT 2022 VOL

Q1 2022 Q1 2022
-30% +2% MAT 2023 MAT 2023
+111% +71% +40% +43%
Volume growth Volume growth MAT 2023 VOL MAT 2023 VOL Volume growth Volume growth
+20% +10%

† All Data Grocery TSV; May

P R‘23 MAT are
I VATE based on Istandard
LABELS TSV definitions
N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 18
SLOWDOWN OF CATEGORY INNOVATION
CPG runs the risk of becoming an ‘innovation desert’ as there have been fewer new
launches despite their ability to deliver greater organic growth than total category

17% fewer new product launches Disciplined Optimisation Aggressive Ranging

as Retailers & Brands focussed of Range & Renovation of undermines category
on Core Range Availability existing products improves dynamism & drags growth
due to supply-side disruptions top & bottom line 19% in organic demand

6% 0.50%

Oct '22 June '23 Nov '23

-17%
-22%
-25%

Range Share Growth Unit Share Growth

MAT vs Year Ago

‘More of the Same’ is not a Volume Growth Strategy

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 19

Consumers think innovative companies are better
They’re perceived to be more successful, sustainable, ethical & trustworthy

‘I think innovative companies….’

Make Better Products

Make better products 69%
Are More Successful Thanthan
Are more succesful Others
others 59%
Care about their customers 64%
Are more trustworthy than others 52%
Are highly recommended by others 65%
Care about the community 57%
Are more Sustainable 2%
Are more ethical 55%
Try to do better than other companies 77%
Constantly launch new products 67%

Source: Circana ‘European Innovation Attitudes’; April 2023: n=3500

Conducted in The UK, France (FRA), Spain (SPA), Germany (GER), Italy (ITA), The Netherlands (NL)
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 20
Future Demand: 4 Winning Innovation themes expressed across categories

Sustainability Permissible Wellbeing Resilience

Ethics & Social Conscience Indulgences & Self-Care & Performance Boost

• Simple, Natural Ingredients • Experiences • Whole Body • Enhanced Nutrition

• Low-impact Materials • New Skills • Prevention & Improvement • Hydration & Replenishment
• Ingredient Sourcing & Traceability • Crafted Details & Sensorials • Science-Based & Natural • Convenient Formats
• Better for Planet & Community • Surprising Rewards • Pro-level Benefits at Home • Fits my diet & lifestyle

Verifiable No Compromise Empowered Control

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 21

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 21
Future Shopper drivers of trial & purchase of new products have evolved

New drivers of ‘Better Value’ Physical Availability is Crucial Product Experience is Critical
Beyond New Features, Good Price, Deals, Better for Me Lost Repeat Purchase & Funnelling to Competition Shoppers are Hesitant Repeaters

Want Versatile Products Look for Products Dissatisfied trialists

72% that combine benefits or adapt 48% the next time they shop 64% would never buy it again
to various needs & occasions

67% Helps them achieve their goals Search for the product Would buy again if on deal,
that fits my lifestyle & healthy choices
>20% if not available >10% Loyalty points or referral

Are Better for Environment Look for another product Lose Trust in the Brand
68% and Better for Others
23% or brand like it
15% or Retailer

Source: ‘Innovation Pacesetters’, Circana May 2023

2
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 22
CHANGING ROLE OF CATEGORIES IN THE CONSUMER BASKET
Intense inflation has re-shaped purchase and consumption behaviour
STABLE VOLATILE
Macroeconomics Macroeconomics
Retail Landscape Challengers & Private Labels
Distribution Retail Channels - Discounters
Pricing & Promotion Distribution -
Affordability Aggressive Pricing
Affordability & Confidence

Core Essentials Discretionary

Essentials Grocery

Staples, Price Inelastic, Buy Less, Use Less Price Elastic, Occasional or
Regular Purchase Stock up less Deferred Purchase
Perishable Defer Purchase Seasonal, Non-Perishable
Switch to Alternatives

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 23

Intense inflation has re-shaped purchase and consumption behaviour

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 24

Make shopping fun again! Private Labels perform well but can make shopping
more enjoyable and add assortment, endorsement & performance

Private Labels win – and can do better in 2024 both Premium Private Label Offers must go one step
in-store & online to make shopping less functional further to create a premium shopping experience

Merchandising
& Store Navigation
signposting
Consumer Benefit
Occasion Or Need

Dispensing systems
to reduce waste

Proximity Storytelling

Digital Signage to
elevate sense of value,
Mood, story-telling
or create ambience

So urce: IRI Survey ‘Crisis At Every Step’, Aug 22; n=3000

14 markets: USA, BRA, UK, IT, FR, DE, NL, ESP, AUS, NZ, TUR, UAE, IND, CHN
Bring an authentic brand experience alive
50%
P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 25
Crafting a winning success code

Private Label Competing Success

Landscape for Growth Code

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 26

Building Volume back requires the full marketing toolbox; beyond pricing & promotion

Innovation & Renovation

8 disrupting status quo 1 Brands Matter
Invest in Equity, Media & Promotion

7 Blurring Category 2 Excellence in Distribution

Address gaps & gain TPD
boundaries &
Growing The Category
8.5%
VAL UE

-1.4%
VO LUME
6 Shopper Experience
Experiential, Engage 3 Premiumisation
Race to bottom does not guarantee uplift
& Disrupt clinical norm
Activate loyal shoppers

5 Competing with Private Labels 4 Future Consumer & Shopper Needs

Innovative, Differentiated Moments & Shopper Behaviours

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 27

Competing with Brands Effectively

Transform The Private Label Landscape

Strategy Obsessed, Innovative & Differentiated
Consumer Focussed & Data Driven

Identify the best Strategic Option

Collaborate, Grow Category, Diversify or Premiumise

Innovate: Resilient Source of Organic Growth

Sell the transformation, Not the Feature

Execute with Excellence

From Shopper Marketing, Merchandising to
Demand Forecasting, Price & Promo Analytics
Media Effectiveness

P R I VATE LABELS I N TRANSFORMATION F OR GROWTH – PLMA 27 MAY 2024 | 28

Private Labels:

Transformation
for Growth

Ananda Roy
SVP Thought Leadership Europe
CPG Growth Advisor