THE SWEETENER STORY: IT S NOT WHICH TYPE, BUT HOW MUCH

THE SWEETENER STORY: IT S NOT WHICH TYPE, BUT HOW MUCH

THE SWEETENER STORY MINTEL RESEARCH SURVEYED CONSUMER ATTITUDES/BEHAVIORS ACROSS 12 TOP PRODUCT CATEGORIES AND FOUND CONSUMERS ARE MORE CONCERNED ABOUT TOTAL ADDED SUGARS THAN ANY SPECIFIC SWEETENER. For anyone who s turned on a television or browsed the Internet in the last few months, it s been hard to miss news stories about sweeteners. No doubt, all the coverage and headlines had an effect on consumer attitudes toward sweeteners and the food and beverage products that use them. With sweeteners in the news, along with increased awareness of calories and nutrition, independent research shows that consumers are avoiding sugar and added sugar more than any ingredient. However, these studies indicate that it s not about what type of sweetener is used it s about how much. LISTENING TO THE VOICE OF CONSUMERS Independent research firm Mintel Research Consultancy conducted a survey in May 2012 that looked at consumer behaviors and attitudes about sweeteners and high fructose corn syrup (HFCS) compared to the previous year. The study explored consumer purchase behavior across 12 high-volume food and beverage categories such as bread, yogurt and cold cereals. Commissioned by the Corn Refiners Association, the study asked more than 2,000 consumers a series of 30 unaided questions to determine what product concerns were top of mind. In light of the spike in media coverage around sweeteners, Mintel sought to determine: Do consumers read labels? If so, what are they looking for? What are important considerations for consumers when buying a food or beverage product? How much awareness do consumers have around HFCS? Are there some food and/or beverage categories more likely to be impacted by HFCS concerns? If so, which ones? For any food and beverage manufacturer trying to discern true consumer sentiment from the recent media buzz surrounding sweeteners, Mintel s 2012 survey findings provide an insightful starting point. 2 THE SWEETENER STORY

INGREDIENT AWARENESS IS ON THE RISE As for what consumers look for on labels, the same hot-button ingredients topped the list in 2011 and 2012. However, there s been an upset in the number one spot. In 2011, consumers looked for fats and oils more than any other ingredient. In 2012, calories took the top spot, with 41 percent of consumers saying they check labels for calorie counts. The amount of sugar or added sugar remained the third most-looked-for information on nutrition labels. However, the percentage of consumers saying they look for sugar jumped 6 points to 31 percent. The amount of consumers focused on HFCS remains very small. In 2012, only 4 percent said they read nutrition labels for HFCS, compared to 3 percent in 2011. All of these trends point to consumers becoming more aware that it s calories that count. WHEN READING PACKAGE LABELS, CONSUMERS ARE MOST FOCUSED ON CALORIES, FATS & OILS Information looked for on nutritional labels (Unaided) Calories Fats & Oils Sugar, Added Sugar Salt or Sodium Carbohydrates Protein Fiber Vitamins High Fructose Corn Syrup Ingredients 8% 5% 6% 4% 5% 3% 14% 12% 25% 26% 28% 31% 41% 37% 37% 38% 3% 4% 3% 2012 2011 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Q2. When you read labels, what information are you looking for? (Multiple responses accepted) *Include HFCS and corn syrup Those who read labels (Q1=1, 2 or 3) (2011 Base n=1,760) (2012 Base n=1,816) THE SWEETENER STORY 3

DOES SWEETENER AWARENESS TRANSLATE INTO CONCERN? When asked in the May 2012 survey, more than six in 10 consumers said they recall hearing something about sweeteners, compared to fewer than half in the 2011 survey. Consumer recollection of hearing about specific sweeteners also grew in 2012 compared to 2011, with Stevia awareness up 6 points, HFCS up 2 points, sugar up 3 points and corn syrup up 5 points. Yet, consumers growing awareness of sweeteners in general didn t translate into a higher concern of HFCS in particular. To measure the impact of media on consumer behavior, Mintel referenced Google Trends, which quantifies not just opinions but also actions. This data determines if sugar concerns, for example, resulted in searches for information on a particular topic. In spite of higher awareness and reported avoidance of HFCS, searches for HFCS have declined since 2009. In the 52 weeks ending June 24, 2012, searches for HFCS which includes corn syrup and high fructose corn syrup declined 14 percent from 2009. In addition, searches for sugar were 45 times higher than HFCS in the last year, and rising. This finding illustrates the sheer magnitude of interest around sugar compared to HFCS. GOOGLE TRENDS SHOW THAT SEARCHES FOR HIGH FRUCTOSE CORN SYRUP HAVE FALLEN TO THE LOWEST LEVEL SINCE 2009, WHILE SEARCHES FOR SUGAR, SODA AND STEVIA ARE AT AN ALL-TIME HIGH. Google Trends, Search Volume Index 52-week periods ending June 26, 2009 June 24, 2012 Search Volume Index 52 Weeks Ending High Fructose Corn Syrup Stevia Soda Sugar July 26, 2009 1.4 11.8 42.2 June 27, 2010 12.6 42.9 June 26, 2011 13.5 47.1 June 24, 2012 1.2 1.5 15.4 53.6 * High Fructose Corn Syrup search combines commonly used terms, High Fructose Corn Syrup and Corn Syrup Source: Google Trends; scale is based on the average traffic in the US only. 4 THE SWEETENER STORY

HFCS IN 12 LEADING CATEGORIES: DOES AWARENESS TURN INTO AVOIDANCE? The 2012 Mintel numbers show consumers are becoming increasingly aware of nutrition information. They re watching their calories more than ever, and they re on the lookout for sweeteners. However, does this rise in sweetener awareness translate into new purchasing behaviors for HFCS, and do these behaviors vary by product category? For example, are shoppers more likely to avoid HFCS when buying a loaf of bread than when purchasing their favorite soda? Mintel studied consumer concern about HFCS in each of the 12 highest-volume food and beverage categories: Fresh/packaged bread Carbonated beverages/pop/ soda Ketchup Cakes/cookies/pastries Cold cereals Fruit juice Chocolate milk Jams and jellies Sports drinks Spaghetti sauce Yogurt and yogurt drinks Salad dressing Fewer than 3 percent of shoppers specifically avoid HFCS in 12 high-volume food and beverage categories (unaided). Shoppers are far more concerned about added sugars overall than about HFCS specifically, as indicated in the chart below. Fresh/packaged bread topped the list with 2.7 percent of consumers concerned about HFCS, with salad dressing the category of least concern at 0.7 percent. The percentage of consumers concerned about HFCS in all of the 12 categories fell between that 2.7 and 0.7 percent range. This finding is consistent with other independent research by 36% Packaged Bread 60% 21% 43% 56% 54% 29% 45% 42% 52% 24% 35% 2.7% 2.2% 2.1% 2.0% 1.9% 1.9% 1.7% 1.5% 1.5% % % 0.7% Carbonated Beverages Ketchup Cakes/Cookies/Pastries Fruit Juice Cold Cereal Mintel and NPD Group that shows low consumer interest and no special preference for the type of sweetener used in food and beverage products. Given the low consumer awareness of HFCS, there appears to be little or no incentive for manufacturers to remove HFCS. IN ANY GIVEN CATEGORY, NO MORE THAN 3 PERCENT OF RESPONDENTS REPORTED THAT HFCS WAS SOMETHING THEY SPECIFICALLY AVOID. Flavored Milk Jams & Jellies Sports Drinks Yogurt & Yogurt Drinks Category shoppers who consider sugar/sweeteners when buying products Category shoppers specifying HFCS as a concern when buying products Spaghetti Sauce Salad Dressings Q11. You said that you consider sugar and other sweeteners when buying... Please tell us why (open-ended response: Avoid/dislike HFCS ). Source: Mintel Research Consultancy; N =2,008. THE SWEETENER STORY 5

NIELSEN DATA SHOWS THAT HFCS-FREE FORMULATIONS DON T IMPACT SALES GROWTH. The data from Mintel s 2011 and 2012 surveys indicates that HFCS is not the issue that consumers have with sweeteners, and that s also reflected in what s happening in the marketplace. In a Nielsen scan of 3,200 product SKUs, brands that switched to HFCS-free formulations have continually seen flat or falling sales. In fact, some brands that switched to HFCS-free formulations have since switched back. HUNT S SHARE $ VOLUME HFCS-free products continue to be a low priority among manufacturers. In a review of Mintel s Global New Products Database (GNPD), No HFCS accounted for only 2 percent of all new product package claims in 2011 or about 400 products out of 20,000 new product introductions. For example, in the ketchup category, Hunt s experienced no increase in volume-share growth during or after the brand switched from HFCS to sugar. Hunt s focus on a specific type of sweetener as a point of difference did not motivate shoppers to buy the product. In fact, market share decreased slightly from 15 to 14 percent during the period of the switch in product sweeteners. In June 2012, Hunt s publicly announced its return to HFCS: Overall, consumer demand for the HFCS-free ketchup was not as strong as expected, thus prompting the change, said ConAgra spokesman Jeff Mochal. This 2012 consumer study showed results consistent with prior research by Mintel in 2011 that indicated low consumer interest and no specific preference for the type of sweetener used in food and beverage products. It s clear from this data that consumers care about how much sweetener is used in food and beverage products, not the specific type. Source: The Nielsen Company, February 2012. 6 THE SWEETENER STORY

DOES THE CHOICE OF A SWEETENER INFLUENCE PRODUCT SALES? While some companies learned that eliminating HFCS from their formulations was not the answer, other food and beverage manufacturers found success by fine-tuning their sweetener strategies to meet trending consumer needs. In July 2010, Capri Sun fruit drink for children introduced a reducedsugar, flavored-water sub-brand, Roarin Waters. Sales of this lower-added-sugar line extension increased dramatically in two years and it s sweetened with HFCS. During the same period that Capri Sun s flagship brand changed sweeteners twice (from HFCS to sugar and then back to HFCS), sales of Roarin Waters grew by 23 percent annually in a category with typical growth rates in single digits. Likewise, in early 2010 Heinz launched a sugar-sweetened version of its ketchup. Simply Heinz was introduced as a line extension of its ketchup brand; it didn t replace the flagship line of Heinz ketchup, which is sweetened with HFCS. Today, sugar-sweetened Simply Heinz continues as an extension of the Heinz ketchup brand. The success of Capri Sun and the continued viability of Simply Heinz show that successful sweetener strategies depend on not taking an all-or-nothing approach. Instead, food and beverage manufacturers would be wise to listen to what the consumer data is saying. With awareness of calories and nutrition on the rise, consumers are avoiding sugar and added sugar more than any other ingredient. In fact, consumers avoid sugar and added sugar three times more than HFCS. Meanwhile, HFCS-free formulations have failed to gain market share. For consumers, attitudes and actions show it s not a matter of what type of sweetener is used but how much. As for food and beverage manufacturers, they are discovering when it comes to implementing a successful sweetener strategy less is more. ROARIN WATERS SALES GROWTH: AUGUST 2009 MAY 2012 Source: The Nielsen Company, May 2012. THE SWEETENER STORY 7

Methodology The telephone survey conducted May 15 25, 2012, consisted of 30 questions and averaged 17 minutes in duration. Topics included awareness of and attitudes toward sweetening ingredients, HFCS message recall and sweetener avoidance by category. The sample: 2,008 primary household grocery shoppers were interviewed via phone (random-digit dialing) Quotas were set at 500 in each region (Southeast, East, Midwest, West) The sample was weighted by age and education prior to analysis The 75 percent of primary shoppers being women is within range of other studies¹ For the latest independent research on HFCS and other caloric sweeteners, go to CornNaturally.com. This white paper was developed in consultation with Sara Martens, Vice President, The MSR Group. SOURCES 1. ESPN 70% Primary Shopper Female/30% Male 2011. IDDBA (International Dairy-Deli-Bakery Association s What s In Store 2011 Reports Market Trends) found that over 30% of men today are the primary grocery shopper. ABOUT SARA MARTENS As vice president at The MSR Group, Sara Martens serves as a consultant to major consumer products and services companies. Over the course of her nearly 20-year career in marketing and advertising, Sara has worked extensively in branding and strategy development. Since 2008, she has been studying consumer attitudes toward HFCS. In 2009, Sara joined The MSR Group, an independent full-service market research firm based in Omaha, Neb. ABOUT MINTEL RESEARCH CONSULTANCY Mintel Research Consultancy is an independent, award-winning provider of world-leading marketing intelligence, delivering robust information, analysis and critical recommendations. Its trusted portfolio of proprietary industry solutions and products has been supporting high-profile clients in key sectors such as FMCG, financial services, media, retail, leisure and education for over 38 years. ABOUT THE CORN REFINERS ASSOCIATION (CRA) The Corn Refiners Association is the national trade association representing the corn refining (wet milling) industry of the United States. CRA and its predecessors have served this important segment of American agribusiness since 1913. To learn more, visit CornNaturally.com.