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Virtual Roundtable September 22, 2020 Industry Joint Business Planning Introductory Session with Tracie Russ

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Page 1: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Virtual Roundtable

September 22, 2020

Industry Joint Business Planning

Introductory Session with Tracie Russ

Page 2: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

ALA DISCLAIMER

"ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its officers, directors, staff, and members. Be sure to read the ALA

Antitrust Compliance Statement contained in your board books and let me know if you ever have any questions or

concerns about these issues."

Page 3: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

ALA COMMISSARY COUNCIL, ROUNDTABLE COMMITTEE CHAIR

Stephanie Supplee, Coastal Pacific Food Distributors

Virtual RoundtableIndustry Joint Business Planning

September 22, 2020

Page 4: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

Page 5: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Defense Commissary Agency

Tracie Russ

Director, Sales

Industry Joint Business PlanningSeptember 22, 2020

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STATE OF THE INDUSTRY

September 22, 2020Presented by: Nielsen

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Source: Nielsen

KEY INSIGHTS

1 2

High unemployment and low

consumer confidence will

restrict spending and limiting

GDP growth

Food costs on the rise due to

rising production costs, limited

assortment and reduced

promotions

COVID-19 further drives growth

for Ecommerce, an already

growing topic before the

pandemic took place.

AOC continues to see strong

growth for the latest 2 quarters

despite rising unit prices and

COVID-19 social impacts

(dining at home).

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ECONOMIC INDICATORS

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Source: Census.gov, Federal Bureau of Prisons, Federal Reserve

ECONOMIC IMPACTS

COVID-19 INFLATION

& PRICING

LEADING & LAGGING

INDICATORS

Enhanced unemployment benefits to end July 31st

Schools cautiously reopen in-

person and online

Restaurant spending remains

low compared to pre-covid

Rising production costs

Limited assortments & supply

chain

Reduced promotions

Historic decline in GDP

Housing construction gains

after initial pandemic slow-

down

Manufacturers invest in

machinery and equipment

CONSUMER

OUTLOOK

Low consumer confidence

reducing future spend

Presidential election causes

uncertainty

High workforce competition

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Source: Consumer Confidence Board, Federal Reserve Bank of St. Louis | Latest Update: 9/2/20

ECONOMIC STIMULUS RUNS, CONSUMER CONFIDENCE AT LOWEST LEVELS IN PAST 6 YEARS

Consumer Confidence Index:

A barometer of the health of economy

from the perspective of the consumer.

U.S. Consumer

Confidence Index

84.6▼+0.9% vs July

10.2%▼ vs July

17.8%▼ vs July

$29.39▲ vs July

Unemployment Rate

Employment continues to drop but remains

stubbornly high as businesses cautiously reopen

Personal Savings Rate

Savings are at historic highs as consumers are

limited in places to spend and supplemented

with government stimulus

Average Hourly Wage

As lower paying jobs were eliminated, the

average hourly wage spiked and remained

almost unchanged from June into July

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Source: Federal Reserve Bank of St. Louis , US Census Bureau | Latest Update: 9/2/20

PEOPLE ARE EATING MORE AT HOME

Personal Consumption

Expenditures

-3.0%vs Year Ago

+11%Food Retail

+0.4%All Other Retail

(exclu. Auto & Gas)

-19%Food Service and

Drinking Places

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Source: US Census Bureau Time Series, Food Services and Drinking Places, Nielsen Total US+Conv POS scan | Latest Update: 7/31/20

RESTAURANT SALES HAVE DECLINED BY $91.1B

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Source: U.S. Bureau of Labor Statistics - Consumer Price Index | vs LY - Latest Update: 9/2/20

RISING COST OF FOOD COULD IMPACT LOYALTY

Consumer Price Index

+1.0%vs Year Ago

-11.2%Energy

+4.1%Food

+4.6%Food At Home

+3.4%Food Away From Home

(Larger share of the two)

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Source: Indexmundi Commodity Pricing | Latest Update: 9/2/20

RECENT FOOD TRANSPORT COSTS ARE RISING

Commodity% Price Chg vs

prior month

% 12-month

Price Chg vs LY

Beverages

Cocoa Beans -5.83 % -13.22 %

Coffee, Other Mild Arabicas 3.85 % 8.36 %

Coffee, Robusta 4.93 % -8.59 %

Tea -3.78 % -17.97 %

Fuel

Crude Oil (Petroleum) 6.61 % -31.57 %

Gasoline 8.83 % -35.45 %

Diesel 10.32 % -35.42 %

Propane -1.01 % 0.82 %

Metal

Aluminum 4.80 % -8.52 %

Tin 3.75 % -2.83 %

Agricultural Raw Materials

Cotton 1.34 % -9.58 %

Rubber 5.71 % -11.38 %

Commodity% Price Chg vs

prior month

% 12-month

Price Chg vs LY

Bananas -2.31 % 12.39 %

Barley 0.0 % -46.15 %

Beef -7.84 % 1.51 %

Coconut Oil -3.45 % 35.14 %

Fishmeal 2.69 % -0.61 %

Maize (corn) 3.08 % -19.46 %

Oranges 1.54 % 22.22 %

Palm Oil 6.53 % 27.63 %

Peanut Oil 10.38 % 30.55 %

Groundnuts (peanuts) -3.16 % 57.56 %

Poultry (chicken) -3.82 % -24.12 %

Rice -7.69 % 15.38 %

Shrimp 3.22 % -3.32 %

Soybeans 3.61 % 3.11 %

Sugar 0.00 % -3.57 %

Sunflower Oil 7.75 % 10.36 %

Wheat 0.0 % 1.13 %

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OMNI-CHANNEL TRENDS

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Source: Nielsen Retail ACView, Q2/20

STORE CHANGES OF MAJOR RETAILERS

Aggressive expansion of Dollar Stores and Discounters but

contraction in Drug

Food Channel # of Stores Change vs YA

Kroger 2,742 -25

Albertsons 2,202 -12

Aldi 1,999 +107

Ahold/Delhaize 1,974 +2

Publix 1,248 +29

SEG 548 -8

Trader Joe’s 505 +17

Whole Foods 488 +14

S-A-L 421 -4

Grocery Outlet 360 +32

Lidl 65 +57

xAOC # of Stores Change vs YA

Dollar General 16,621 +928

Dollar Tree 5,515 +443

Walmart 5,200 -14

Walgreens 8,664 -384

CVS 793 -26

RiteAid 2,455 -9

Target 1,867 +24

Costco 514 +11

Variety Wholesalers 309 +38

Meijer 252 +6

BJ’s 219 +2

-307 +689

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Same-Store-Sales Growth: latest quarter 2020 versus year ago

Source: Company press releases; monthly or quarterly news releases – excluding gas; *Includes Q2 2020 reporting

COVID-19 WITH BROAD & BIG IMPACT IN 2020

Red arrows indicate worse than year ago performance

COVID-19

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Source: Nielsen Homescan Panel, 52 W/E 08/22/20

ONLINE GAINED MOST SHOPPERS AND TRIPS

Shoppers spend more in B&M. Drug and Premier Fresh lost trips

CLUB DOLLAR DRUG

ONLINE

SHOPPING WALMART TARGET

PREMIERE

FRESH

GROCERY VALUE

CONV.

GROCERY

Market Share 10.1% 5.3% 4.8% 2.8% 21.9% 4.3% 1.4% 3.8% 37.3%

Point Change 0.0 -0.1 -0.4 0.8 -1.1 0.0 0.0 0.1 1.2

% Penetration 54.0% 69.2% 69.7% 44.6% 81.5% 55.2% 22.8% 40.0% 94.8%

Point Change 0.9 -1.0 -1.2 7.2 -1.6 0.4 -0.3 0.6 -0.8

Buy Rate $1,103 $449 $408 $365 $1,581 $458 $356 $556 $2,315

Absolute Change $80.47 $35.83 $14.15 $87.15 $101.33 $33.44 $34.43 $51.75 $294.42

Frequency 15.3 31.6 18.9 8.7 34.2 13.3 13.7 18.6 63.6

Absolute Change 0.5 0.5 -1.1 2.2 0 0.3 -0.4 -0.1 2.8

Basket Size $72.14 $14.20 $21.59 $41.93 $46.25 $34.42 $25.95 $29.97 $36.40

Absolute Change $3.19 $0.94 $1.88 -$0.71 $3.01 $1.78 $3.23 $2.89 $3.19

All Shoppers

Shopper Loyalty: Share of dollars that each retailer’s shoppers spend in their stores

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Source: Nielsen + Rakuten, 52 W/E 08/25/2020, Total US xAOC, UPC & Random Weight

E-COM EXPLODES DURING THE PANDEMIC, BUT ALSO B&M SALES SEE STRONG GROWTH

Brick & Mortar

E-Commerce

Includes store level e-com

fulfillment such as click & collect

and 3rd party delivery.

2019 2020Dollar Trend (%) 27.6 46.1

Dollar Trend Amazon (%) 31..2 41.4

Amazon Market Share 26.6 51.7

2018 2019 2020Dollar Trend (%) 1.6 2.0 8.7

Unit Trend (%) -0.2 -0.2 4.7

Avg Unit Price (%) 1.3 2.4 4.2

% Unit sold on

Promo33.5 32.9 29.2

Online sales being fulfilled

outside of store level

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Source: https://www.nielsen.com/global/en/consumer-insights-for-fmcg-retail-manufacturers-coronavirus-covid-19/how-americans-are-shopping-during-covid-19/

ONLINE SHOPPING HAS ACCELERATED

+49%Online growth since Covid started

● 67% Increase in Trips

● 21% More Items in Basket

● 13% Lower Item Value

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Source: Nielsen POS Scan, Store Level Fulfillment, WE 3/14/20 - WE 09/05/20, UPC & Random Weight

SALES ARE UP DOUBLE-DIGIT SINCE MID MARCH, DRIVEN BY NON-PROMO PRICES AND COVID-19

+16.6%

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Source: Nielsen POS Scan, Store Level Fulfillment, 52 W/E 09/05/2020 UPC & Random Weight

COVID-19 EFFECT: SUPPLY CHAIN UNDER PRESSURE

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Source: Nielsen POS Scan, Store Level Fulfillment, 52 W/E 09/05/2020 UPC & Random Weight

PROMOTIONAL ACTIVITY DECLINED SINCE MARCH

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Source: Nielsen POS Scan, Store Level Fulfillment, 52 W/E 09/05/2020 UPC & Random Weight

STEEP PRICE INCREASES AS A RESULT OF LOWER PROMOTION ACTIVITY

● Retail prices jumped dramatically

since COVID - until March, only

inflationary price increases

● Avg prices are on the downswing

over the last few weeks

*) Avg. prices don’t reflect customer price perception as not

indicative of assortment mix or sizes

`

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Source: Nielsen POS Scan, Store Level Fulfillment, 52 W/E 09/05/2020 UPC & Random Weight

STORE BRANDS GROWING RAPIDLY

Categories (PL)Dollar %

Change

vs YA

Share on

Cat

xAOC xAOC

Hand Sanitizer 41.3 16.4%

Rubbing Alcohol 3.9 71.6%

Baking Powder 49.2 23.4

Dried Beans 19.3 47.4%

Baking Chips 37.1 17.7%

Flour and Meal 27.9 21.1%

Extracts 22.8 29.1%

Seasonings 26.3 9.0%

Hydrogen Peroxide -9.5 70.2%

Tomato Paste 20.9 31.0%

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Source: Nielsen Homescan Panel, 52 W/E 08/22/20

PL GAINS SHARE FOR WALMART, TARGET, PREMIERE FRESH

Point change

vs YA0.2 0.1 0.1 0.9 0.8 1.4 -0.2 0

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Source: Nielsen Homescan Panel, 52 W/E 07/27/20

ALL OUTLET SALES SPIKED, DRIVEN BY HIGHER DOLLAR PER TRIP

Dollar Sales

Avg HH Spend

+9.9%

Households (HH)

+0.7%

Purchase Size

+8.5%

Trips per HH

+1.3%

All Outlets

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Source: Nielsen POS Scan, Total DeCA CONUS ex AK & HI including xAOC, 52 W/E 08/22/2020 UPC ONLY

GROWTH ACROSS ALMOST ALL DEPARTMENTS

Performance by departments

Seafood

Produce

General

Merchandise

Meat

Alcoholic

Beverage

Grocery

Deli Bakery

Frozen

Health Beauty Tobacco

Household

Care

Pet Care

Baby Care

Dairy

Refrigerated

LEGEND

➔ Dollar change: green >0.5%, red < -0.5%

➔ Dollar change: dark green >10%

➔ Square size not reflective of size of business

xAOC

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Source: Nielsen POS Scan, Store Level Fulfillment, 52 W/E 09/05/2020 UPC & Random Weight

KITCHEN STAPLES, CLEANERS SOAR

Categories Dollar % Change vs YA

Top 150 categories based on 52 week $ volume, ranked on xAOC

growthxAOC US E-Com

FMB/CIDER 69.5 538.3

MULTI PURPOSE CLEANERS 33.7 85.8

SHRIMP 26.8 N/A

SEASONINGS 25.7 N/A

SOAP 22.2 75.9

HERBS AND SPICES 21.9 N/A

RICE 21.1 86.6

DISH SOAP 20.8 92.1

SPARKLING WATER 20.2 60

CORN 19.9 86

HIGH GROWTH CATEGORIES IN B&M

Brick & Mortar

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Source: Nielsen POS Scan, Store Level Fulfillment, 52 W/E 09/05/2020 UPC & Random Weight

QUICK MEALS, SOME PERSONAL CARE DECLINE

Categories Dollar % Change vs YA

Top 150 categories based on 52 week $ volume, ranked on xAOC growth xAOC US E-Com

GUM -13.2 35.9

BLADES AND MANUAL RAZOR -4.6 18.6

HEALTH/NUTRITION BARS -3.7 27.4

DISPOSABLE DIAPERS -2.3 22.4

CEREAL AND GRANOLA BARS -1.0 74.5

LUNCH COMBOS -0.4 n/a

INFANT FORMULA -0.1 39.4

TRADITIONAL DAIRY YOGURT 0.3 52.5

SNACK MIXES 0.5 N/A

CAT LITTER 1.2 43.4

SLOW GROWTH CATEGORIES IN B&M

Brick & Mortar

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Source: Nielsen + Rakuten, 52 W/E 06/30/20, Total US xAOC + Convenience, UPC & Random Weight

*) DeCA currently doesn’t provide e-comm sales to Nielsen

TOP GROWTH CATEGORIES IN E-COM SHOW ALSO STRONG SALES GROWTH IN B&M

E-Commerce

Online sales being fulfilled

outside of stores

Categories Dollar % Change vs YA

xAOC US E-Com

ALCOHOL > COOLERS, CIDER & BOTTLED COCKTAILS 70.2% 538.3%

HBC> BATH & SHOWER > HAND SANITIZER 187.5% 458.4%

FOOD > BAKING SUPPLIES > YEAST 59.1% 192.2%

FOOD > MEAT ALTERNATIVE 40.0% 167.8%

HBC> COSMETICS AND NAIL GROOMING > NAIL APPLIANCES 53.4% 158.8%

ALCOHOL > BEER/FMB/CIDER > BEER 6.6% 158.5%

HBC> COSMETICS AND NAIL GROOMING > NAIL ACCESSORIES 22.0% 144.3%

HBC> UPPER RESPIRATORY > SORE THROAT > SPRAY 4.5% 135.3%

FOOD > MILK PRODUCTS > CONDENSED, EVAP&POWDERED

MILK21.9% 134.2%

HBC> UPPER RESPIRATORY > COUGH, COLD & FLU 8.4% 129.7%

FOOD > SALTY SNACKS > CHEESE SNACK > PUFF 8.9% 113.6%

ALCOHOL > TOTAL WINE 9.2% 110.1%

FOOD > DRY EGGS 34.5% 107.3%

HOUSEHOLD CARE > LAUNDRY CARE > BLEACH 18.1% 106.8%

DESSERT TOPPINGS > MARSHMALLOW AND CREAM TOPPING 4.1% 103.0%

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WRAP UP

● COVID-19 wracked the economy, but brought $-gains to Food retailers as consumers cook

more at home and spend less on food away from home

● E-commerce saw large increases in shoppers and sales, especially for HHLD Care, Personal

Care, and kitchen staples

● Retailers faced supply chain issues and promoted less, leading to an increase in avg prices

● Store Brands show strong growth as consumers prepare for economic headwinds

Page 34: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

This artwork was created using Nielsen data.

Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

SHAPING A SMARTER MARKET™

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ALA COMMISSARY COUNCIL, JBP COMMITTEE CO-CHAIR

Mike Bender, Proctor & Gamble

Virtual RoundtableIndustry Joint Business Planning

September 22, 2020

Page 36: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

Why Have A JBP?

• Identifies mutual category priorities, focus areas, strategies

• Alignment to Vision and Goals

• Alignment across all levels/functions (top-down, bottom-up)

• Accelerated Value Creation

Page 37: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

How Are Sessions Designed to Flow?

• DeCA Category Managers will lead the discussion

• Approximately 20 minutes will be spent on each category

• All participants will be muted

• Industry will have the ability to offer input via the “Raising The Hand” option or type a question via “Chat”

• A scribe has been assigned to take notes for each section based on input

• Upon completion JBP’s will be distributed back to Industry as needed

Page 38: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

Outcome of JBP’s

• JBP’s are Joint Business Plans where both DeCA and Industry come together to develop key actions to move the business forward though dialog and open conversation

• We will meet on a regular cadence, based upon the category, to ensure JBP commitments are followed and updated as needed

• Both DeCA and Industry own the results

• Working together to drive success is our #1 goal

Page 39: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

JBP Session Schedule

Tuesday, September 221100 – 1200: Tracie Russ, Director, Sales – Kick-off / Overview 1400 – 1530: Barbara Merriweather, CM – RTE Cereal, Soup, Coffee, Spices

Wednesday, September 231100 – 1230: Rena Dial, CM – Paper, Laundry, Household, Pet Food 1300 – 1430: Jessica Stables, CM – Cheese, Yogurt, Refrigerated Juice, Frozen Prepared Meals 1500 – 1630: Darrell Clary, CM – Bacon, Sausage/Lunchmeat, Juice, Water

Thursday, September 241100 – 1230: Iveena Henderson, CM – CSD, Snacks, Cookies/Crackers, Candy 1300 – 1430: Bridget Bennett, CM – Specialty Produce, Cut Fruit & Veg, Salad Mix1500 – 1630: LaRue Smith, CM – Oral Care, Shaving Needs, Diapers & Training Pants, Body Wash & Soaps

Need Help Registering? Email [email protected]

Page 40: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

Page 41: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

ALA COMMISSARY COUNCIL, ROUNDTABLE COMMITTEE CHAIR

Stephanie Supplee, Coastal Pacific Food Distributors

Virtual RoundtableIndustry Joint Business Planning

September 22, 2020

Page 42: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Industry Joint Business Planning – Introductory Session

Page 43: ALA Virtual Event · "ALA operates under a policy of strict compliance with federal and state antitrust laws. Violations of those laws can pose serious consequences for ALA and its

Virtual Roundtable

September 22, 2020

Industry Joint Business Planning

Introductory Session with Tracie Russ