the best thinking since sliced bread

Ravi Parmeswar

Vice President ▪ Business Insights and Strategy

Sara Lee bread: from crumbs to number one

1.1

$ share

6.5

$ share

#1

2001 2006

Jimmy Dean: from sow’s ear to silk purse

24.8

$ share

46.9

$ share

#1

1994 2006

but wait, why is sliced bread so great?

the ultimate depiction of innovative achievement

meets multiple consumer needs and desires

makes life easy

fresh, delicious meals

saves time

our challenge:

develop the next ultimate innovation in bread

ingredients for successful growth

communication

innovation

insights

ingredients for successful growth

communication

innovation

insights

how we shop for, prepare and consume food & beverages

macro consumer and marketplace trends

food loving households

a deep understanding of our core consumers

to

to

food loving households

top 3 benefits sought

our core consumers’ demands

great taste wholesome

goodness

quick but loving

preparation

Food Loving Households Account for lot of Sara Lee

Volume

Percent of Total Households

Share of Sara Lee Volume1

Share ofSara Lee Bulk

Deli Meat Volume

Share ofSara Lee

Dessert Volume

Share ofSara Lee

Bread Volume2

Food Loving Households Share of Sara Lee Volume

Food Loving Households

Volume Index:

289 271 317 274

Sara Lee Can Provide Our Target the Support They Need and Still

Allow Them to Have the Role They Desire

Finished the Right Way for My Family,in My Kitchen

“I’d love a head start, as long as I know no shortcuts were taken”

Started By Sara Lee,in Her Kitchen√

Key Opportunity with the Food Loving HH

The Right Ingredients

The Right Cooking/Prep

The Right Finishes

“We”(My Family and

I enjoy them)

“You”(You provide me the basics)

“Me”(I prepare them)

The Desired

Meal and Experience

“The Right Way” to Provide Food For My Family

white bread lifecycle

Oblivious Pick Your

Battles

Unapologetic

Users

Reluctant Adjusting Fully

Reformed

Reformed

Users

mining category insights

moms and kids are splitwhen it comes to bread …

mining category insights

kids want white – moms want wheat

taste & texture nutrition

vs.

mining category insights

using insights to drive innovation

communication

innovation

insights

we thought long and hard

innovation needs incubation

we had some crazy ideas

innovation needs imagination

innovation needs stimulation

we scoured the world for great ingredients

and we ate a lot of sandwiches

innovation is a delicious process at Sara Lee

we developed the next great thing in bread

Sara Lee Soft & Smooth

we developed the next great thing in bread

taste & texture nutrition

+

kid friendly whole grains

=

we knew it was a big idea

• Nutritional trends

• Consumer research

• Competitor research

• Sara Lee strategy

the next “sliced bread”

the toast of the industry

overwhelming consumer response

the nation’s #1 branded bread SKU

Dollar Sales ($ Million)

Source: IRI Grocery, Total U.S. Grocery, 12 weeks ending 12/25/2005.

$17.0

$12.5

Nature's Own®

Honey Wheat

20 oz

Sara Lee® Soft

& Smooth™

Whole Grain

White 20 oz#1

this bread makes serious dough

Sara Lee drove a $10M improvement in category sales

the whole category is rising

5 year Category

CAGR

0.8%

FRESH BREAD & ROLLS - CATGEORY VS. SARA LEE BRANDED

7,400,000,000

7,600,000,000

7,800,000,000

8,000,000,000

8,200,000,000

8,400,000,000

8,600,000,000

8,800,000,000

9,000,000,000

CY 2001 ending Dec 30, 2001 CY 2002 ending Dec 29, 2002 CY 2003 ending Dec 28, 2003 CY 2004 ending Dec 26, 2004 CY 2005 ending Dec 25, 2005 CY 2006 ending Dec 24, 2006

TIME PERIOD

$ S

AL

ES

CTG - FRESH BREAD & ROLLS SARA LEE BRANDED FRESH BREAD & ROLLS

5 year Sara Lee

CAGR

44.5%

Source: IRI Grocery, Sara Lee U.S. Fresh Bakery Distribution Area

65.4%

9.8%

24.8%

Soft and Smooth % Total Volume

Incremental

Volume (75.2%)

Cannibalized

Volume (24.8%)

Category Expansion

All Other Brand

Switching

Source: IRI Total US All Outlets Data -18 Weeks Ending 11/06/05 vs. 18 Weeks Ending 7/03/05

the whole category is rising

almost 10% category expansion

but we’re not just about bread

Sara Lee is about brands

communication

innovation

insights

the opportunity:

it’s time to enjoy eating again

on TV, in print, online

the joys of multimedia communications

Consumer touch points

how we build brands

communication

innovation

insights

Sara Lee is the #1 fresh bakery brand in the U.S.

1.1%

$ share

6.5%

$ share

#1

2001 2006

our next challenge:

what’s the next sliced bread of breakfast?

how we rebuild brands

communication

innovation

insights

how we rebuild brands

communication

innovation

insights

key findings

mining insights

category

sliding

cannibalization

rampant

consumer time

more crunched

breakfast lovers

a deep understanding of core consumers

“real” breakfast

Is hot with meat

I have less time

than ever

how we rebuild brands

communication

innovation

insights

innovation refocused the brand to meet consumer needs

hot breakfast fast

how we rebuild brands

communication

innovation

insights

spots spur volume spikes

Skillets Media Effectiveness

Base LB Turns per Point of ACV

0

200

400

600

800

1000

1200

Apr 3

, 200

5

Apr 1

7, 2

005

May

1, 2

005

May

15,

2005

May

29,

2005

Jun

12, 2

005

Jun

26, 2

005

Jul 1

0, 2

005

Jul 2

4, 2

005

Aug

7, 2

005

Aug 2

1, 2

005

Sep

4, 2

005

Sep 1

8, 2

005

Oct 2

, 200

5

Oct 1

6, 2

005

Oct 3

0, 2

005

Nov

13,

200

5

Nov

27,

200

5

Dec

11,

200

5

Dec

25,

200

5

Jan

8, 2

006

Jan

22, 2

006

Feb

5, 2

006

Feb 1

9, 2

006

Mar

5, 2

006

Mar

19,

200

6

Apr 2

, 200

6

Apr 1

6, 2

006

Apr 3

0, 2

006

May

14,

2006

May

28,

2006

Jun

11, 2

006

Jun

25, 2

006

Base L

b T

urn

s /

AC

V

1/2 Weight Media Base Lbs./ACV

FSI Drop

1.3 Jimmy Dean Advertising Driving Skillets’ Success

Full Weight Media

Jimmy Dean advertising drives Skillets success

integrated marketing

makes for a happy breakfast

Happy Breakfast Tour – Event Sampling

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

St.

Loui

s - F

ores

t Par

k

Des

Moine

s - H

ot A

ir Ballo

on

KC- C

ity M

arke

t

Chica

go -

Nav

y Pie

r

Cincy

- Ta

ll Sta

cks/

New

port

DC - W

ash

Red

skins

Gam

e

Richm

ond

- M

all

Roa

noke

- M

all

Cha

rlotte

- Fes

tival

/Sho

w

Raleigh

- Far

mer

s' M

kt

Kno

xville

- Sam

's C

lub

Nas

hville

- W

al*M

art

Mem

phis -

Bas

ketb

all G

ame

# S

am

ple

s

Event Samples

• Went to 13 markets and 20 event days!

• Total Tour Attendees: 26,093

• Delivered over 53,400 JD Sandwiches!

NOTE: For events through 11/12/06

ROP Support

• Distributed in local “Events/Weekend” section of the paper

• Nearly 5.6MM circulation to-date

PR Buzz

• Local on air cooking segments!

PR Buzz

• Local newspaper segments!

September 29, 2006 Circulation: N/A

Jimmy Dean's "Happy Breakfast"

Tour will stop at Navy Pier from 9

a.m. to noon Saturday and Sunday

to find the most inspiring

Chicagoan. Video booths will be set

up where people can nominate

someone that has improved their

life. Winning nominators and

nominees will win goodies.

Online

• Launched www.HappyBreakfast.com, Sept

2006

• Interactive, with lots of information

• Online coupon

• Research survey

– Which event did they attend?

– Opinion of the tour?

– What did they like most about the tour?

– Did they purchase JD products?

– Before/After attending tour, what was

their opinion of the brand?

Over 700 consumers completed the survey, to-date!

Online

• View amazing stories on

www.happybreakfast.com

• 734 video nominations

created!

42 Facings

13 Varieties

Happy Breakfast Retail Results - Meijer

-14%

-5%

Jimmy Dean is the fastest growing handheld breakfast

Dollar Sales

Current 12 w/e Nov 12, 2006 - Total US - Grocery

33,980,100

10,616,260

JD HH

HT PKTS HH

Source: IRI, Total US Food, 12 WE 11/12/06

hot results fast

Brand Position

…but more importantly driving category results

Source: IRI, Total U.S. – F/D/MM x WM Last 52 Weeks Ending 12/17/06

(1) IRI, Total U.S. – F/D/MM x WM, CY 2004, CY 2005, CY 2006

#1 #1 #1 #1 #2 #1 #1

0% 0%

44% 35%

17%

5% 5%

-5%

0%

5%

10%

15%

20%

Fresh Buns

& Rolls

Fresh

Bread

Bacon Cocktail

Links

Main.

Lunch Meat

Protein

Breakfast

Smoked

Sausage

Sara Lee Growth

Category Growth

N/AN/A

$700MM in

annual sales

from new

products

launches1

43%

…but more importantly driving category results

English Muffins

Soft & Smooth Whole

Grain White Bread

Soft & Smooth Whole

Grain White Buns

Breakfast Sandwich

Breakfast Bread

Skillets

…Through New Consumer Consumption

35%

12%

11%

10%

10%Brand Switching1 Churn

% of Product Volume from New

Consumers or Increases in Existing

Consumers’ Consumption

Jimmy Dean is also driving category growth

hot results fast

Jimmy

Dean SKUs

a good day starts with a good breakfast

Jimmy Dean is just getting started

$1.3 billion market for frozen breakfast food

key takeaways

communication

innovation

insights

whether it’s bread, sausage, coffee…

great thinking…

any way you slice it

thank you

I hope you enjoyed it.