E very category has an anchor - that one product type that defines

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1 CATEGORY CAPTAIN N E S T L E Anchor Pet Food your Pet sales. E very category has an anchor - that one product type that defines and grounds the category and that the other products can build upon. In the Pet category, which features both dry and wet dog and cat food, as well as treats and litter, the dry foods are the anchor! It may be difficult to believe, but more US households have dogs than have children under 8, with 43% owning dogs and only 37% having children. Specifically, dry dog food is the largest pet food segment and it s growing! With $0 billion in retail sales, this segment drives more annual dollars and a bigger basket ring than any other pet food segment. Similarly, dry cat food is the largest portion of the cat category in that 86% of all cat food and snack buyers buy dry. Overall, the Pet category has a broad household penetration rate of 70+% and pet parents don t hesitate to spend their hard-earned dollars to keep their pets happy and healthy. In addition, the dog population is at an all-time high and is increasing steadily, while the cat population has stabilized and is showing slight growth. Each of these data points create an opportunity for growth in your Pet category. So let s focus on learning more about how to anchor these segments and drive customers to the convenience channel. Dog Food and Treats It may be difficult to believe, but more US households have dogs than have children under 8, with 43% owning dogs and only 37% having children. This fact simply illustrates what an important opportunity dog food can create for your c-store. As we mentioned earlier, dry dog food is the anchor in this segment and is the largest player in the Pet category in convenience. Dry dog food brings additional dollars to the category since cross-purchase is highly likely 43% of dry dog buyers also buy wet dog and 77% also buy dog snacks. Within the dry dog offering, each tier has a role, but Super Premium and Ultra Natural drive the most spending across Pet. Premium also has a sizeable buyer 68 CATEGORY INSIGHTS

2 base and accounts for one half of the dry dog sub-category. And if dry dog food is the anchor, then wet dog food is the heart of this subcategory. Owners who feed wet dog food tend to have a stronger emotional connection to their dog and make 2.7% more trips to the store than non-wet dog food buyers. Therefore, maintaining a good selection of the top wet brands is important to these shoppers. Nestle Purina is the clear leader in dry dog food at 55% share, and Mars Petcare is the leader in wet dog food at 50% share, but Nestle Purina also makes a great showing here at 36%. As is true in other categories, pet parents prefer brands they know and trust, and these manufacturers and their items are key to your Pet set. With regard to Nestle Purina is the clear leader in dry dog food at 55% share, and Mars Petcare is the leader in wet dog food at 50% share, but Nestle Purina also makes a great showing here at 36%. 2nd Quarter

3 Cats Dogs Pet Segment Volume in Convenience # of Dogs/Cats (millions) Projected Source: Nielsen HomeScan Panel Surveys; Nielsen Forecast Model (Jan 4) Dog Dollar/Trips Per Buyer Annual Snacks $ Per Buyer Annual Snacks Trips Per Year Wet Dog Buyers $ Dry Dog Buyers $ Source: Nielsen Custom Crosstab, 52 Weeks ending 7/9/4 Cats Dogs brand, Purina Beneful and Purina Dog Chow are the leaders in dry dog, while Alpo and Pedigree are the key brands in wet. In dog treats, Big Heart Pet Brands is the clear leader at 40% share. Within this segment, growth is being driven by product innovation. For example, some treats now offer dental care while others boast natural meat ingredients. It s important to note that wet dog food buyers spend 22% more on treats than dry dog buyers and purchase the treat category more often. Whether it s dog food or dog treats, simply remember that pet parents count on c-stores to carry staple products for fill-in and emergency purchases so be sure that your set includes these musthave items. Cat Food and Litter As we mentioned earlier, after some years of decline, the cat population has stabilized and is even showing slow growth that s expected to continue. And with this positive turn comes opportunity for growth in your c-store sales of cat food and other related items. As was the case with dog food and treats, cat parents also look to purchase brands they know, and in the case of cat food, Nestle Purina and their brands are the leaders in both dry and wet cat food. The leading dry cat food brands are Purina Cat Chow and Meow Mix, while Friskies and Fancy Feast are the key brands in wet cat food. In addition, it s important to note that cats tend to crave variety in their diet and therefore, there is quite a bit of cross-purchasing that goes on for cat food shoppers. For example, 55% of all cat food shoppers shop for both dry and wet food. On a related note, customers who buy small bags of dry cat food spend 40% more on wet cat food and...it s important to note that cats tend to crave variety in their diet and therefore, there is quite a bit of cross-purchasing that goes on for cat food shoppers. 70 CATEGORY INSIGHTS

4 47% more on cat snacks than large bag buyers. Again, here s that crosspurchasing angle that s prevalent in cat food. Cat litter is another sub-category that s important to your set, but it should be limited in SKU count. The leading brand is Tidy Cats. Also, cross-promote litter with cat food to significantly enhance basket ring. Buying HH s (M s) Frequency Total $ Spend-Wet Cat (B s) Total $ Spend-Cat Snacks (M s) Cross Purchasing in Cat Food Small lb 20.8M 5. $.7B $370M Medium lb 5.0M 3.4 $.2B $256M Large lb 9.M 4.3 $.2B $25M Source: Nielsen HomeScan Panel Surveys; Nielsen Forecast Model (Jan 4) Extra Large 20lb+ 5.2M 3.4M $380M $79M Merchandise for Success As we have established, we know that dry food for both dogs and cats is your anchor product type within your Pet offering. With this in mind, be sure your product assortment meets the needs of your pet parent by offering branded items they know and trust. Remember that your pet shopper brings opportunity for impulse buys and a higher basket ring so be sure you can meet their needs. There are also other techniques you can use to drive success in the Pet category. First, awareness of the Pet category in your c-store is one of the largest barriers to your success. Research has shown that effective marketing and merchandising can help you knock down this barrier. Therefore, merchandising and proper product assortment is absolutely critical to capitalizing upon the opportunities provided in the Pet category. Remember to merchandise treats on clip strips and in secondary locations around your store. These displays are inexpensive, highly profitable and are a great way to drive awareness. Promote the treat yourself, treat your pet mentality that reminds pet parents that their pets love a treat as much as they do! Also, consider implementing multiple pricing in order to increase wet cat purchases. Historically, consumers purchase 0 cans per trip so tailor your offering to align with that trend. In addition, consider smaller sized versions of the top-selling brands or flavors this will allow for better on-shelf price points while maintaining margins. Eby-Brown has created planogram recommendations to help you with this task. However, if you need additional assistance in creating a powerful, profitable Pet category in your c-store, contact your Eby-Brown representative. Sources: Nielsen HomeScan Panel Surveys; Nielsen Forecast Model (Jan 4); Nielsen Custom Crosstab, 52 Weeks ending 7/9/4; Nielsen Custom Channel Facts, Mid-Year 204; Decision Insight Shopper Decision Tree Research, 202. Remember to merchandise treats on clip strips and in secondary locations around your store. These displays are inexpensive, highly profitable and are a great way to drive awareness. 2nd Quarter 206 7

5 Implement the Eby Brown recommended 3ft Pet planogram to maximize your category dollars. 3ft Pet Planogram ITEM # DESCRIPTION ITEM # DESCRIPTION TOP SHELF SECOND SHELF FAN FST SEAFOOD 3 OZ FAN FST OCN WHFISH 3 OZ FAN FST SAR SALMON 3 OZ FAN FST FLK FSH/SHR 3 OZ FAN FST TURKEY/GIB 3 OZ FRISK CHKN&GRAVY 6 OZ FRISK BUF LVR&CHIX 6 OZ FRISK MIXED GRILL 6 OZ FRISK WHT FSH/TUNA 6 OZ FRISK SLCDBF&GRAV 6 OZ FRISK TRKY/CHEESE 6 OZ FRISKIES TSTY TRS CAT FOOD CKN/B ALPO PRIME CUTS BEEF ALPO FILET MIGN 3.2 OZ ALPO SLICED BEEF 3 OZ ALPO BEEF 3 OZ ALPO PRIME CHICKN 3 OZ MIGHTY DOG BEEF 6 OZ CESAR K9 W/BEEF 3.5 OZ CESAR K9 FLTMGN 3.5 OZ FRISK SALMON 6OZ THIRD SHELF FOURTH SHELF BOTTOM SHELF FRISKIES PRIME FILET TURKEY DINN FRISK PRME FLTCHKN 6 OZ FRISK PRTY MIX TRT 2 OZ FRISK SEAFOOD SENS 6 OZ PURINA KITTEN CHW PCH TIDY CAT LITTER 0 LB TIDY CAT LITTER 4 LB KIT N KABOODLE 8 OZ PURINA CAT CHOW 3.5 LB CAT CHOW NATURALS DRY MEOW MIX CAT FD 3.5 LB PURINA BEG STRPS 6 OZ ALPO PRIME CUTS PURINA DOG CHOW PURINA BENEFL DG 3.5 LB ALPO SNAPS VARIETY 6 OZ MILKBONE MEDIUM 24 OZ 72 CATEGORY INSIGHTS

6 PET 3ft Pet Planogram 2nd Quarter

7 Implement the Eby Brown recommended 4ft Pet planogram to maximize your category dollars. 4ft Pet Planogram ITEM # DESCRIPTION ITEM # DESCRIPTION TOP SHELF SECOND SHELF ALPO FILET MIGN 3.2 OZ ALPO PRIME CUTS BEEF ALPO PC BF STEW 3.2 OZ ALPO PRIME CHICKN 3 OZ CESAR K9 W/BEEF 3.5 OZ CESAR K9 FLTMGN 3.5 OZ MIGHTY DOG BEEF 6 OZ FAN FST SEAFOOD 3 OZ FAN FST OCN WHFISH 3 OZ FAN FST SAR SALMON 3 OZ FAN FST FLK FSH/SHR 3 OZ FAN FST GRMT CHKN 3 OZ FAN FST LIVER/CHKN 3 OZ FAN FST TURKEY/GIB 3 OZ ALPO BEEF 3 OZ ALPO SLICED BEEF 3 OZ FRISK SALMON 6 OZ FRISKIES PRIME FILET TURKEY DINN FRISK PRME FLTCHKN 6 OZ FRISKIES TSTY TRS CAT FOOD CKN/B FRISK TRKY/CHEESE 6OZ FRISK CHKN&GRAVY 6 OZ FRISK BUF LVR&CHIX 6 OZ FRISK MIXED GRILL 6 OZ THIRD SHELF FOURTH SHELF BOTTOM SHELF FRISK WHT FSH/TUNA 6 OZ FRISK SLCDBF&GRAV 6 OZ MILKBONE MEDIUM 24 OZ ALPO SNAPS VARIETY6 OZ PURINA BEG STRPS 6 OZ KIT N KABOODLE 8 OZ FRISK SEAFOOD SENS 6 OZ CAT CHOW NATURALS DRY FRISK PRTY MIX TRT 2 OZ PURINA BENEFL DG 3.5 LB GRAVY TRAIN 3.5 LB PURINA CAT CHOW 3.5 LB MEOW MIX CAT FD 3.5 LB CAT CHOW INDOOR 8 OZ PURINA KITTEN CHW PCH ALPO PRIME CUTS PURINA DOG CHOW PURINA PUPPY CHOW 4 LB TIDY CAT LITTER 0 LB TIDY CAT LITTER 4 LB 74 CATEGORY INSIGHTS

8 4ft Pet Planogram 2nd Quarter

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10 Nestle PROMOTION OBJECTIVE Drive volume through promotion. CATEGORY CAPTAIN N E S T L E Pet Food BENEFITS Featuring multiples (2/$$ or 3/$$) will drive volume. ITEM # UPC DESCRIPTION PK SZ OI Allowance SRP Frisk Chkn & Gravy Frisk Mixed Grill Frisk Trky/Cheese Frisk Salmon Frisk Prme Flt Chkn Frisk Wht Fsh/Tuna Frisk Supreme Supper Frisk Buf Lvr & Chix Frisk Slcd Bf & Grav Frisk Rsty Trsr Chicken Bacon Frisk Prime Filets Turkey Dnr $.09 $.09 $.09 $.09 $.09 $.09 $.09 $.09 $.09 $.09 $.09 REQUIREMENTS Distribution only DATES - OPEN BUY WINDOW Order dates: 3/28/6-4/22/6 Dates for in-store promotion: 3/28/6-4/22/6 2nd Quarter

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12 Big Heart Pet Brands PROMOTION OBJECTIVE Drive customer awareness of the top selling items offered in the pet food category. BENEFITS Focus on the top selling Big Heart brand pet items to increase sales and volume in the pet food category. ITEM # UPC DESCRIPTION PK SZ OI Allowance SRP Meow Mix Cat Fd 3.5 L Canine Carry Out Bf 5 oz 3.5 oz 5.00 oz $0.20 $6.79 $.49 REQUIREMENTS Distribution only DATES - OPEN BUY WINDOW Order dates: 3/28/6-4/22/6 Dates for in-store promotion: 3/28/6-4/22/6 2nd Quarter