3/20/07 the program introducing: cereal toppers® retailer benefitsconsumer appealsabout cereal...

3/20/07

The Program

Introducing: Cereal Toppers®

Retailer BenefitsConsumer AppealsAbout Cereal Toppers

FMI 2005 Retailer Choice Award

3/20/07

100% NATURAL FREEZE-DRIEDFRUIT & FRUIT BLENDS

What are Cereal Toppers?

The ProgramRetailer BenefitsConsumer AppealsAbout Cereal Toppers

Strawberries Apples & Raspberries

Bananas, Blueberries & Raspberries

Bananas & Strawberries

3/20/07

on The Food Channel

There’s few tastes beating cold milk and cereal But here’s something that can top it. They’re Cereal Toppers, bite size pieces of fruit that are very convenient.

You have instant fruit that’s sliced and ready … no hassles, no preparation time. These easy eats are simply freeze dried fruit, which are not only good on the go, but good on the body.

These toppers come in six fruity flavors, such as banana blueberry raspberry and apples and raspberries, but it’s the sometimes elusive strawberry that’s the biggest seller.

It’s a process that takes a full 18 hours. And it’s all done naturally. Your standard dry fruit typically has a preservative in it, of sulfides or other type of preservatives.

# 1 show on Food Channel Network


3/20/07

on The Food Channel# 1 show on Food Channel Network


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3/20/07

About Cereal Toppers

For the Consumer:The Appeals of Cereal Toppers

The ProgramRetailer BenefitsConsumer Appeals

3/20/07

Freeze-Dried Fruit-In-Cereal Has Proven Successful With Consumers

Cereals with freeze dried fruits were the fastest growing items in the cereal aisle

…what happened next…

But that didn’t grow the cereal category. It just traded shares, spread across more SKUs.

Consumers apparently liked the idea

All the major cereal makers liked the idea, too, and spread it across a lot of line extensions

About Cereal Toppers The ProgramRetailer BenefitsConsumer Appeals

Growth appears to have peaked at about 5% market share

3/20/07

Barriers to Further Growth

• Freeze-dried fruit in cereals declined after their initial trial period…why?

• Our experience with consumers reveals dissatisfactions with:– Sugar

– Quantity & Value

– Quality

– Versatility


3/20/07

Fruit-In-The-Box Cereals Are Not for the Sugar-Conscious Consumer

Every cereal with

freeze-dried fruit

also comes with

something else:• Sugar (lots of it)• Corn Syrup

Plus other ingredients health

conscious consumers avoid:• Salt• Wheat• Coconut oil• Hydrogenated oil• Artificial color

Ingredients labels from fruit-in-cereal products

PROBLEM:


3/20/07

Because of Sugar, Fruit-In-The-Box Cereals Never Addressed Most of the Market

5%

SUGAR

They don’t bring these fruit benefits to the other 95% of the cereal market

…they don’t bring these fruit benefits to the 2/3rds of the market that prefers lower sugar products

These cereals all have added sugar and corn syrup (to keep the fruit from staining the cereal)


3/20/07

Many Consumers Just Don’t Want Sugar

The cold cereal market, segmented by sugar content, which roughly align to their target markets

SegmentSugar Weight as %

of Total Weight Target market

Low sugar 0% to 20.3% Adults

Medium sugar 21.6% to 33.9% Historically to kids

High sugar 26.4% to 55.6% Kids/teens

Cold Cereal Consumption, By Sugar Content and Age June 2002 - May 2003

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

18-24 25-34 35-44 45-54 55-64 65+

Age Segment

% o

f S

egm

ent

Usi

ng

Low sugar

Medium sugar

High sugar

Up to age 44, equal numbers of consumers say they consume high, medium and low sugar cold cereals

In recent years, schools, parents and even students are showing a backlash against sugar and high fructose corn syrup in children’s diets.

The “obesity epidemic” is a major issue with broad impacts…and is unlikely to go away soon

Above age 44, consumption skews dramatically toward the low-sugar segments.


3/20/07


The Diabetic Market Segment Is Also Getting a Lot of Attention

3/20/07

Cereal Toppers Has No Added Sugar

• Low calories• No fats• Natural fiber• Vitamin C

• Short, natural, simple, understandable ingredients list

• No added sugar or corn syrup

• No additives, no preservatives


3/20/07



• Our research with consumers suggests dissatisfactions with:– Sugar


– Quality

– Versatility


3/20/07

A Problem with Fruit-In-Cereal: Quantity and Value Perception

• “My son picks out all the fruit at the top of the box of cereal, so there’s almost none left for me”

• “Fruit in the cereal is great, but they don’t give you very much”

–consumer e-mail to Cereal Toppers

Can’t deliver fruit in every bowl, from the top to the bottom of the box

PROBLEM: Not enough fruit

13 oz. (98%) cereal

0.3 oz. (2%) fruit


3/20/07

Quantity and Value Perception

= + +

SOLUTION:

One bag of Cereal Toppers equals the fruit in three boxes of cereal freeze-dried fruit

• Add as much or as little as they like

• Every bowl is their own “right” mix

• All the way to the bottom of the cereal box, so no disappointments and no “plain” leftovers to delay the next purchase of cereal


3/20/07

Quantity and Value Perception

The retail bag delivers 2 cups (1 pint) of fruit

=

Removing waste and water leaves 10% of the fresh weight equivalent…but has all the fruit as the fresh weight equivalent…only the stems, the peels, the bruised fruit and the rotten fruit (and the water) have been removed

= = =

=11 oz. of fresh strawberries produce 1 oz.

of stemmed, sliced, freeze-dried


3/20/07





– Quality

– Versatility


3/20/07

Quality and Shelf Life

Resealable zip lock bag

5-layer foil walls

After opening (resealed): stays crisp 2 to 4 weeks

Bag not resealable

After opening: stays crisp 1 day at most…even less with humidity

PROBLEM: Goes soggy

The result?• Chewy, gummy fruit that

seems less than fresh• Cereal doesn’t get consumed

as quickly…doesn’t get repurchased as often

SOLUTION: resealable bag

(Before opening: 2 to 4 years)


3/20/07





– Quality

– Versatility


3/20/07

Only Cereal Toppers Gives Consumers a Choice

The only way consumers can get the simple, natural ingredients they insist on—with no added sugar or corn syrup—is to buy their favorite cereal and add Cereal Toppers

Arrowhead Shredded Wheat

+ =Post Grape Nuts

+ =


3/20/07

HOW DO OTHERS SEE CEREAL TOPPERS?


3/20/07

What Consumers Say About Cereal Toppers

• They are delicious! Thank you for making something that tastes great and is also good for you!

» Joanne H

• My grandsons choose to eat them with cereal as an after school snack instead of having candy or cookies

» Sherry G

• I put it on hot cereal and have to say it was great. I tried them right out of the package. Great also.

» Joe B

• My two small children LOVE them.» Christy H

• My husband also enjoys putting your fruits in his cereals which do not come with fruit.

» Kimberly S

• im a picky picky little girl. i hardly eat fruit but my mom encouraged me to try your cereal toppers and so i did and they were so good i thought i died and went to heaven.

» shawnee

• It was all I could do not to down the entire bag on my own. Fortunately, they’re healthy enough that I could do it and not feel guilty!

» Elizabeth G

• My mom and I love your strawberries. Breakfast is boring without your fruit.

» Susan P

• I LOVE fruit in my cereal, but fresh always goes bad before I can use it. I think this is a terrific product, that I plan to keep on hand from now on.

» Leah H

From e-mails to Cereal Toppers


3/20/07

What Food Editors Say About Cereal Toppers

“Give your body the nutrition it’s been

missing”--Runner’s World

“A healthy kick”--Good Housekeeping

Instant Fruit

Give your cornflakes a healthy kick: Add Cereal Toppers from Field Fresh Farms. These freeze-dried fruits plump up to almost-fresh form when splashed with milk. And dry, they’re a good crunchy snack. Choose from sliced strawberries and four kinds of mixes.


3/20/07

What Food Editors Say About Cereal Toppers

Freeze Dried Fruit

Cereal Toppers has bagged some of your child’s favorite fruits, like strawberries, raspberries, blueberries, and bananas. These freeze-dried morsels are perfect for topping cereals, yogurt, salads, and smoothies—and they’re tasty enough to eat right out of the resealable bag. They’re available as supermarkets and discount super stores in 5.5-ounce bas for about $6 or 2-ounce bags for about $4. For more information, go to cerealtoppers.com

“bagged some of your child’s favorite fruits”--Parents Magazine

MSNBC Supermarket Guru Product Hit/Miss“Hit Product”

“Like magic… returns to a natural juicy

state”


3/20/07

What Food Authorities Say About Cereal Toppers

“Right Stuff”--Center for Science in the Public Interest


3/20/07

What Retailers Say:FMI Retailer Choice Award


3/20/07

About Cereal Toppers Consumer Appeals

For the Retailer: The Benefits of Cereal Toppers

The ProgramRetailer Benefits

3/20/07

The Situation Today• Cereal category is mature and

stable– Add a SKU, subtract a SKU…it won’t

change the size of the category– Consumers will just trade brands

• SKU glut has attempted to deliver consumer choice and variety… which doesn’t help the retailer

• Retailers want strategies and products that multiply the power of shelf space, rather than just add SKUs that only trade market share

About Cereal Toppers Consumer Appeals The ProgramRetailer Benefits

Cereal Category

$ SizeTrading Shares:

adding or subtracting a few

SKUs doesn’t grow or shrink the

category

Cereal SKUCereal SKU

3/20/07

Another Approach: a “Toppings” Or “Additive” Strategy

• More variety for consumers, but fewer SKUs for the retailer

• Entirely incremental business…no share trading

• Increases shelf space available to highest volume cereals…to reduce out-of-stocks

• Potentially: increases consumption and re-purchase rates for cereals as a result of a better flavor experience, particularly for low-sugar brands


which means

3/20/07

+ =

• Don’t want sugar and corn syrup• Want more flavor in their low sugar cereals• Want fruit that’s fast, convenient and available all the time…never spoils• Don’t want to switch cereal brands to get real fruit, real fast• Want fruit in every bowl, as much or as little as they like

Cereal Toppers and cereal…a lot like ketchup and hamburger:

• Sells more ketchup • Sells more hamburger because of

a better hamburger “experience”

+ =• Sells more Cereal Toppers • Sells more cereal because of a

better cereal “experience”

Cereal Toppers can sell more cereal by meeting the desires of consumers who:


3/20/07

One Industry Expert’s Take on “Additive” Strategies

built their businesses as parasites—the good kind!

lets you customize any cereal you wish

make it your own


3/20/07

Dairy

Snacks

Consumers tell us about new uses they’re discovering:

• Topping for yogurt and ice cream

• Homemade ice cream ingredient

• Baking ingredient, especially for pancakes and waffles

• Quick, healthy snack for lunchbox, hiking and biking

• Ingredient for smoothies and protein shakes

• A surprising salad topping…crunchy real fruit instead of starchy oily croutons

Cereal Toppers builds transactions throughout the store

By creating new uses, and

usage combinations, Cereal

Toppers adds volume to other

categories, and brings new

sales to the cereal section

from outside the cereal section

Frozen

Produce

Baking

Dessert

Cereal Section

Add-in for yogurt and cottage cheese

Healthy snacksIce cream

topping

Salad topping Pudding

add-in

CupcakesPancakesWaffles

Example of Snacks: Gerber Graduates Mini Fruits freeze-dried ¼” diced fruit at DOUBLE THE PRICE PER OUNCE of Cereal Toppers


3/20/07

Cereal Category

$ SizeTrading Shares:

adding or subtracting a few

cereal SKUs doesn’t grow or shrink the

category


Cereal SKUCereal SKU

Cereal ToppersCereal Toppers

All Incremental: adding Cereal

Toppers is all net increase…doesn’t

subtract from cereal volume, and may even add to it

The “Additives” Strategy Is All Incremental…Not Trading Shares

3/20/07

Add or subtract a cereal SKU or two, and the total market size won’t grow or decline

cereal cereal cereal cereal

cereal cereal cereal



Switching one cereal brand to another adds no volume

cereal





Cereal Toppers ADDS INCREMENTAL DOLLARS

cereal

Vs.


3/20/07

Cereal Toppers leverages retail shelf space by delivering far more variety to consumers in less shelf space and fewer total SKUs

cereal cereal cereal cereal cereal cereal cereal cereal




A separate SKU for every variety Vs.


multiplied by:

= 32 varieties

Consumers can create their own varieties, including low

sugar options

“addition” “multiplication”


3/20/07

cereal cereal


cereal cereal cereal cereal cereal cereal

cereal cerealcereal cereal

As a result: more facings can be committed to high volume cereal SKUs to reduce out-of-stocks

= 60 varieties, with the “multiplier” effect

…without reducing the variety made available

to consumers

cereal cereal cereal cereal cereal cereal

cereal cereal cereal cereal cereal

cereal cereal

cereal


3/20/07

About Cereal Toppers Consumer Appeals

The Cereal Toppers Program To Deliver

Retailer Benefits The Program

3/20/07

Merchandising Power and Flexibility

Color Coded, Line Priced

Pre-punched for peg hanging

Flat gusset-bottom bag for free-standing on shelf

About Cereal Toppers Consumer Appeals Retailer Benefits The Program

3/20/07

Display Units

60-count floor-standing displays


3/20/07

4-Facing Wire Rack: Shelf Space Leverage


2 bags high, 2 bags wide

Channel for tags

Durable powder coated construction

12” of shelf space

3/20/07

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

cereal

~15”

12”

cereal

cereal

cereal

cereal

~11”

~8”


All incremental volume…in about a facing and a half of big-box cereal

3/20/07

Doing the math…cereal SKU calculator:


Reminder: this is if Cereal Toppers replaces the revenue of that cereal SKU. In reality, that cereal SKU revenue will share-swap to another cereal SKU, and the Cereal Toppers volume will be 100% incremental

Account: 20.0

Store Count: 1900 2.00

13.00 oz EDLP at 2.10$ costItem Rank: 109

Nudge Factor: % $width: 6.25 facings: 2 2.88$ 27.1% 0.78$

Ring % $ Ring Margin $Annual 3,395,006$ 23% 780,851$ 5,690,880$ 1,541,280$

67.6% 97.4%

2 16.25 1212.5 12

Annual Per Inch 271,600$ 62,468$ 474,240$ 128,440$ 74.6% 105.6%

2.98$ 2.88$ 20 boxes 36 bags

30.0 28.9 45.89$ 75.60$

410.97$ 811.20$ 8.96$ 10.73$

RingMargin

Margin

Cereal Toppers attotal bags/store/week

Wal Mart Supercenters

RTE Cereal SKU Selector

x avg supermarket

Cranberry Almond CrunchPost

Cereal Toppers Vs. Selected SKU:

facingsinches/facing

shelf price

facinginches/facinginches total


Per Running Inch of Shelf

Space: inches total

GM$/store/yearGM$/inventory$/year

shelf holding capacityaverage restocks/yearshelf inventory$/store

Account: 20.0

Store Count: 1900 2.00

13.00 oz EDLP at 2.10$ costItem Rank: 109

Nudge Factor: % $width: 6.25 facings: 2 2.88$ 27.1% 0.78$

Ring % $ Ring Margin $Annual 3,395,006$ 23% 780,851$ 5,690,880$ 1,541,280$

67.6% 97.4%

2 16.25 1212.5 12

Annual Per Inch 271,600$ 62,468$ 474,240$ 128,440$ 74.6% 105.6%

2.98$ 2.88$ 20 boxes 36 bags

30.0 28.9 45.89$ 75.60$

410.97$ 811.20$ 8.96$ 10.73$

RingMargin

Margin

Cereal Toppers attotal bags/store/week

Wal Mart Supercenters

RTE Cereal SKU Selector

x avg supermarket

Cranberry Almond CrunchPost


facingsinches/facing

shelf price

facinginches/facinginches total


Per Running Inch of Shelf

Space: inches total

GM$/store/yearGM$/inventory$/year

shelf holding capacityaverage restocks/yearshelf inventory$/store

3/20/07


Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Cran Alm Crnch Rsn Date Pecan Crnchy Pecan Ban Nut Crnch Oat Hny Rsn Oat Hny Rsn

1of2 2of22of2 1of2 2of2 1of2 2of2 1of2 2of2 1of2 2of2

Looking at one area of your top shelf

?What

makes sense

3/20/07


2of22of2Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Cran Alm Crnch Rsn Date Pecan Crnchy Pecan Ban Nut Crnch Oat Hny Rsn Oat Hny Rsn

1of22of2 1of2 2of2 1of2 1of2 2of2 1of2 2of2

Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Rsn Date Pecan Ban Nut Crnch Oat Hny Rsn Oat Hny Rsn

1of12of2 1of2 2of2 1of1 1of2 2of21of2 2of2

One possibility:

Revised set:

Gains:• Ring +$5.7 million (+91%), Margin +$1.5 million (+107%) if all incremental• Ring +$2.5 million (+41%), Margin +$0.8 million (+57%) if lose 50% from reduced facings

3/20/07


2of22of2Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Cran Alm Crnch Rsn Date Pecan Crnchy Pecan Ban Nut Crnch Oat Hny Rsn Oat Hny Rsn

1of22of2 1of2 2of2 1of2 1of2 2of2 1of2 2of2

Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Rsn Date Pecan Ban Nut Crnch Oat Hny Rsn Oat Hny Rsn

1of12of2 1of2 2of2 1of1 1of2 2of21of2 2of2

Detailing the Math:Ring Margin

Post Cranberry Almond Crunch Total 3,395,006$ 780,851$ 12.5 Inches Per Inch 271,600$ 62,468$ Post Great Grains Crunchy Pecans Total 2,892,777$ 665,339$

12.5 Inches Per Inch 231,422$ 53,227$ Total 6,287,783$ 1,446,190$

25.0 Inches Per Inch 251,511$ 57,848$

Current Set:

2 cereal SKUs, before cut-in

Ring MarginPost Cranberry Almond Crunch Total 3,395,006$ 780,851$

12.5 Inches Per Inch 271,600$ 62,468$ Post Great Grains Crunchy Pecans Total 2,892,777$ 665,339$


25.0 Inches Per Inch 251,511$ 57,848$

Current Set:


Cut In: Ring MarginCereal Toppers Rack Total 5,690,880$ 1,541,280$

12.0 Inches Per Inch 474,240$ 128,440$


12.0 Inches Per Inch 474,240$ 128,440$

Ring Margin $/Year % $/Year %High 0% lost; all incremental Total 11,978,663$ 2,987,470$ 5,690,880$ 91% 1,541,280$ 107%

24.5 Inches Per Inch 488,925$ 121,938$ 237,414$ 94% 64,090$ 111%Low 50% lost Total 8,834,771$ 2,264,375$ 2,546,989$ 41% 818,185$ 57%

24.5 Inches Per Inch 360,603$ 92,423$ 109,092$ 43% 34,576$ 60%

Change in Ring Change in MarginNew Set:

Ring Margin $/Year % $/Year %High 0% lost; all incremental Total 11,978,663$ 2,987,470$ 5,690,880$ 91% 1,541,280$ 107%


24.5 Inches Per Inch 360,603$ 92,423$ 109,092$ 43% 34,576$ 60%


3/20/07


Another possibility:

2of2Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Rsn Date Pecan Crnchy Pecan Ban Nut Crnch

1of2Oat Hny Rsn Oat Hny Rsn

1of22of2 1of2 2of2 1of2 1of2 2of2 2of2Cran Alm Crnch

2of2

Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Rsn Date Pecan Ban Nut Crnch Oat Hny Rsn

1of22of2 1of2 2of2 1of1 1of11of2 2of2Cran Alm Crnch

2of2

Revised set:

Gains:• Ring +$5.7 million (+91%), Margin +$1.5 million (+107%) if all incremental• Ring +$2.6 million (+41%), Margin +$0.8 million (+57%) if lose 50% from reduced facings

3/20/07

$/Year % $/Year %High 0% lost; all incremental Total 11,972,432$ 2,986,037$ 5,690,880$ 91% 1,541,280$ 107%


25.8 Inches Per Inch 360,476$ 92,394$ 109,214$ 43% 34,604$ 60%


$/Year % $/Year %High 0% lost; all incremental Total 11,972,432$ 2,986,037$ 5,690,880$ 91% 1,541,280$ 107%


25.8 Inches Per Inch 360,476$ 92,394$ 109,214$ 43% 34,604$ 60%



2of2Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Rsn Date Pecan Crnchy Pecan Ban Nut Crnch

1of2Oat Hny Rsn Oat Hny Rsn

1of22of2 1of2 2of2 1of2 1of2 2of2 2of2Cran Alm Crnch

2of2

Cran Alm Crnch Ban Nut CrnchRsn Date Pecan Crnchy PecanBlbrry Mrng Rsn Date Pecan Ban Nut Crnch Oat Hny Rsn

1of22of2 1of2 2of2 1of1 1of11of2 2of2Cran Alm Crnch

2of2

Detailing the Math:


12.0 Inches Per Inch 474,240$ 128,440$


12.0 Inches Per Inch 474,240$ 128,440$


12.5 Inches Per Inch 271,600$ 62,468$ Quaker 100% Natural Oat/Honey/Raisins Total 2,886,546$ 663,906$


27.5 Inches Per Inch 251,262$ 57,790$

Current Set:



12.5 Inches Per Inch 271,600$ 62,468$ Quaker 100% Natural Oat/Honey/Raisins Total 2,886,546$ 663,906$


27.5 Inches Per Inch 251,262$ 57,790$

Current Set:


3/20/07

Woman: Great run, Dad. Dad: Good distance, too.Woman: I’m ready for some cereal.

Dad: How ‘bout some fruit on that?. Woman: Try these

Woman: Always ready to eat. Cindy takes ‘em to school.

Cindy: Grampa! Those are my Cereal Toppers!

Announcer: Top off your morning with Cereal Toppers.

TV Copy

Dad: Cereal Toppers… Dad: Woah! Hundred percent natural! Woman: Cereal Toppers is real fruit

Woman: Strawberries and bananas, raspberries and blueberries.

Dad: Not my Cereal Toppers? Announcer: Real fruit, real fast. Go to cerealtoppers.com for the store nearest you.


3/20/07


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3/20/07

It all adds up to:

3/20/07 the program introducing: cereal toppers® retailer benefitsconsumer appealsabout cereal...

Documents

appeals of cereal toppers

cereal market

cereal aisle

cereal category

theyre cereal toppers

fruit benefits

cereal products problem

major cereal makers