Tracking Trends That Matter Todd Hale Retail Insights

Tracking Trends That Matter Todd Hale Retail Insights Thought Leader Principal, Todd Hale, LLC March 11, 2019 © NATIONAL PASTA ASSOCIATION

RETAIL LANDSCAPE & PERFORMANCE 2

U. S. CURRENT STATE Economic indicators improving, but headwinds remain Total store sales soft; growth in perimeter continues Private Brands winning; retail format no guarantee of success Bifurcation of wants: health & wellness versus indulgence 3

INFLATION DRIVES TOTAL STORE SALES All Departments Billions Copyright © 2018 The Nielsen Company. Confidential and proprietary. $956 $933 $924 Dollar Sales Unit Volume 301 52 weeks ending 1/2/16 302 52 weeks ending 12/31/16 300 52 weeks ending 12/30/17 300 52 weeks ending 12/29/18 Dollar Trend +1. 0 +0. 3 +2. 1 Unit Trend +0. 5 -0. 8 -0. 0 Avg U Price Trend +0. 5 +1. 2 +2. 1 % U sold on Promo 32. 4 31. 7 31. 1 Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 $ sales up 2. 1% as unit sales flat w/prices up 2. 1% 4

RETAIL FORMAT NO GUARANTEE OF SUCCESS 8% 7% 6% 5% 4% 3% 2% 1% 0% Albertsons Kroger Ahold Delhaize Sprouts Publix Dollar Tree Dollar General Walmart Source: Company press releases; monthly or quarterly news releases – excluding gas Target Lowe's Home Depot Rite Aid Walgreens CVS Sam's Club Costco Copyright © 2018 The Nielsen Company. Confidential and proprietary. Same-Store-Sales Growth: average latest 52 -weeks 5

CPG STORE COUNT HITS A WALL & STORE SIZE CONTINUES TO SHRINK U. S. Store Count & Store Size Trends* Store Count 275, 000 Square Footage Per Store* 10, 600 10. 6% increase since 2007 but 0. 8% decrease since 2017 270, 000 4. 4% decrease since peak in 2009 10, 500 265, 000 10, 400 Copyright © 2018 The Nielsen Company. Confidential and proprietary. 260, 000 10, 300 255, 000 250, 000 10, 200 245, 000 10, 100 240, 000 10, 000 235, 000 9, 900 230, 000 225, 000 9, 800 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 18 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 *Store size adjusted for Supercenters to reflect total store Source: Nielsen TDLinx, U. S. counts are for open stores during month of December; includes supermarkets $2 MM+, conventional mass-merchandisers, supercenters, drugstores, dollar stores, warehouse clubs, and convenience stores 6

WHAT’S SELLING? 7

MOST FRESH PERIMETER DEPARTMENTS LEADING DOLLAR GROWTH All Outlets Combined (plus Convenience) – Dollar Trend Deli Seafood Floral Meat Bakery Pet Care Frozen Grocery Baby Care Produce Household Care Health & Beauty Care Alcohol Dairy Tobacco & Alternatives General Merchandise Total All Departments 14% 6% 5% 3% 3% 3% 2% 2% 2% 1% 1% 1% Note: the 14% growth is under review at Nielsen for overstatement. It is still the fastest growing department, but growth could be closer to 8%. Todd Hale -3% 2% Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 8

GROCERY DOMINATES SALES; GROCERY & DELI WITH 65% OF GROWTH Edible Departments (excluding Alcoholic Beverages) Dollar Change Year Ago (millions) Dollar Sales (billions) Total Edibles $596 Grocery $277 $16, 481 Total Edibles Deli $5, 491 $5, 168 Dairy $71 Grocery Meat $68 Meat Produce $61 Frozen $1, 106 Frozen $54 Produce $1, 033 Deli $45 Dairy Bakery Seafood $14 $5 Grocery + Deli = 65% of growth $2, 118 $860 Bakery $402 Seafood $304 Comparing share of growth to share of sales, the deli department overdelivered by a factor greater than 4 times Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 9

PRODUCTS CLOSER TO THE POINT OF CONSUMPTION WINNING Deli Department Prepared Foods Super-Category Dollar Sales Trend Salad 55% Handheld Entrees 49% Meal Kit 48% Main Course 18% Sides 18% Soup 16% Pot Pie 12% Appetizer 12% Complete Meal 11% Pasta Shoppers choose meals & meal components over ingredients as demand for immediacy grows 10% Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 where category dollar sales >= $50 million 10

DRY PASTA & NOODLES @ $2. 1 BILLION & OFF LONG-TERM Dry Pasta & Noodles (Grocery Department) Dollar Sales (millions) $2, 170 $2, 158 % Change Year Ago 52 w/e 1/2/16 $2, 097 $2, 098 -0. 6% -2. 8% +0. 1% 52 w/e 12/31/16 52 w/e 12/30/17 52 w/e 12/29/18 Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 11

FLAT MARKET FOR DRY PASTA IN LATEST YEAR; MODEST GAIN FOR NOODLES Dry Pasta & Noodles (Grocery Department) Dollar Sales (millions) 3 -YR $ CAGR Latest Year $2, 500 $2, 000 $ 1, 917 $ 1, 894 $ 1, 843 $ 1, 841 $ 253 $ 263 $ 254 $ 257 1/2/2016 12/31/2016 12/30/2017 12/29/2018 (1. 3%) (0. 1%) +0. 4% +1. 2% $1, 500 $1, 000 $500 $0 52 Weeks Ending Dry Pasta - Grocery Noodles - Grocery Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 12

TOTAL PASTA & NOODLES @ $6. 5 BILLION & DELIVERING MODEST GROWTH Total Pasta & Noodles (All Departments) Dollar Sales (millions) % Change Year Ago $6, 462 $6, 456 3 + times greater $6, 345 52 w/e 1/2/16 $6, 512 +1. 8% -0. 1% +0. 9% 52 w/e 12/31/16 52 w/e 12/30/17 52 w/e 12/29/18 Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 13

GROCERY DEPARTMENT DOMINATES PASTA & NOODLE SALES Billions Major Pasta & Noodle Categories Dollar Sales (billions) $1. 8 Grocery Frozen Dairy Deli $1. 7 $0. 5 $0. 4 Dry Pasta Mac & Lasagna Prepared Pasta Cheese Pasta $0. 3 Mac & Noodles Cheese $0. 2 Pasta $0. 2 $0. 1 $0. 0 Mac & Prepared Lasagna Noodles Cheese Pasta Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 14

MODEST TO SOLID GROWTH IN SMALLER CATEGORIES Billions Major Pasta & Noodle Categories Dollar Sales (billions) -0% Grocery Frozen Dairy Deli +2% Only three categories not growing Products closer to the point of consumption winning -6% +4% +1% Dry Pasta Mac & Lasagna Prepared Pasta Cheese Pasta +4% +1% Mac & Noodles Cheese -4% Pasta +6% +9% +10% +12% +3% +10% Mac & Prepared Lasagna Noodles Cheese Pasta Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 15

PRIVATE BRANDS* *AKA: PRIVATE LABEL, STORE BRANDS, OWN BRANDS 16

PRIVATE BRANDS RESURGENCE Private Brands $ Share – All Departments 17. 5% 17. 1% 16. 7% 2015 16. 6% 2016 2017 2018 Dollar Sales Percent Change vs. Year Ago Private Brand -0. 0% +3. 4% +4. 3% Branded +0. 8% -0. 6% +1. 5% Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) 17

BRANDS DOMINATE SALES IN TOP SELLING PASTA & NOODLE CATEGORIES Top Selling Pasta & Noodles: Private Brand Dollar Share 30. 3 29. 9 26. 4 25. 2 14. 4 13. 4 10. 9 12. 3 9. 8 10. 0 4. 2 3. 7 1. 9 Dry Pasta - Grocery Noodles - Grocery Pasta - Dairy Mac & Cheese - Grocery 52 w/e 1/2/2016 Lasagna - Frozen 52 w/e 12/29/2018 Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) Prepared Pasta Grocery 2. 0 Mac & Cheese - Frozen Private Brand share growth 18

BRANDS DOMINATE SALES IN SMALLER SELLING PASTA & NOODLE CATEGORIES Smaller Selling Pasta & Noodles: Private Brand Dollar Share 39. 1 36. 0 24. 8 17. 4 13. 9 15. 4 14. 1 13. 6 11. 7 8. 7 5. 0 4. 1 Pasta - Frozen Mac & Cheese - Deli Mac & Cheeese Dairy Prepared Pasta Frozen 52 w/e 1/2/2016 Lasagna - Deli 2. 5 Prepared Pasta - Deli Noodles - Frozen 52 w/e 12/29/2018 Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) 3. 6 1. 1 0. 0 Noodles - Dairy 1. 1 Private Brand share growth 19

PRIVATE BRANDS ON BOARD WITH HEALTH & WELLNESS TREND • • • • Spartan. Nash FULL CIRCLE Albertsons Open Nature Aldi’s Simply. Nature CVS’s Gold Emblem Abound Food Lion’s Nature’s Place Giant Food’s Nature’s Promise Free from H-E-B’s Select Ingredients Kroger’s Simple Truth Meijer’s True Goodness Supervalu’s Wild Harvest Target’s Simply Balanced Shop. Rite’s Wholesome Pantry Stop & Shop’s Nature’s Promise Free from Sources: cspinet. org and company websites 20

ALBERTSONS EXPANDED ITS ULTRAPREMIUM OWN BRAND Albertsons continues to add new products to its top-shelf label, Signature RESERVE which launched in May 2018. In November 2018, the company added Signature RESERVE products to the pasta and pasta sauce, single origin whole bean coffee, lose leaf team, confectionery, and pie filling categories. The company says it plans to continue adding to the Signature RESERVE line into 2019. Signature RESERVE is part of the company’s lineup of iconic Signature brands, which generates more than $6 billion in annual sales. Signature RESERVE™ Purely delicious choices, certified to the highest organic standards. The Signature brands are part of Albertsons Companies’ portfolio of exclusive and trusted Own Brands, which also includes O Organics®, Lucerne®, and Open Nature™. Source: Albertsons 21

OTHER FACTORS BEHIND SOFTNESS IN DRY PASTA & NOODLES? Competition heats up! 22

GROWTH IN COMPETITIVE CATEGORIES FAR SURPASSES DRY PASTA LOSS Dollar Sales (millions) $246 million increase from 2015 for these three categories versus a $46 million decline in dry pasta sales $2, 500 $2, 000 $1, 500 $1, 917 $1, 894 $1, 843 $1, 841 $1, 285 $1, 275 $1, 257 $1, 318 $ 544 $ 558 $ 561 $ 598 $ 46 $ 56 $ 150 $ 205 1/2/2016 12/31/2016 12/30/2017 12/29/2018 $1, 000 $500 3 -YR $ CAGR Latest Year (1. 3%) (0. 1%) +0. 8% +4. 9% +3. 2% +6. 6% +64% +36% $0 52 Weeks Ending Dry Pasta - Grocery Rice - Grocery Ramen - Grocery Cauliflower - Frozen Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 23

FOOD FIGHT 24

FOOD EXPENDITURES RANK THIRD BEHIND HOUSING & TRANSPORTATION Share of Wallet: Average Annual Expenditures 1% Housing 2% 3% 3% 3% Transportation Food 5% 8% 33% Healthcare 2017 Entertainment All Other Expenditures Cash Contributions 11% Apparel & Services 13% Food At Home Food Away From Home Personal Insurance & Pensions 16% Education Personal Care Products & Services 56% 44% Source: Consumer Expenditure Survey, U. S. Bureau of Labor Statistics, September, 2018 25

EXPENDITURES UP 7% FROM 2015 WITH > INCREASE IN AWAY-FROM-HOME FOOD Average Annual Expenditures & Share of Wallet 2015 Expenditure Categories 2016 2017 vs. 2015 $ Growth/Loss 2017 Healthcare $4, 342 8% $4, 612 8% $4, 928 8% 13% Education $1, 315 2% $1, 329 2% $1, 491 2% 13% Entertainment $2, 842 5% $2, 913 5% $3, 203 5% 13% $683 1% $707 1% $762 1% 12% $7, 023 13% $7, 203 13% $7, 729 13% 10% Food away from home $3, 008 43% $3, 154 44% $3, 365 44% 12% Food at home $4, 015 57% $4, 049 56% $4, 363 56% 9% All Other Expenditures $1, 849 3% $1, 898 3% $2, 010 3% 9% $18, 409 33% $18, 886 33% $19, 884 33% 8% Personal insurance & pensions $6, 349 11% $6, 831 12% $6, 771 11% 7% Cash contributions $1, 819 3% $2, 081 4% $1, 873 3% 3% Transportation $9, 503 17% $9, 049 16% $9, 576 16% 1% Apparel and services $1, 846 3% $1, 803 3% $1, 833 3% -1% Average annual expenditures $55, 978 100% $57, 311 100% $60, 060 100% 7% Personal care products & services Food Housing Note: The average dollar expenditures shown are in nominal amounts (not adjusted for inflation) Source: Consumer Expenditure Survey, U. S. Bureau of Labor Statistics 26

WHAT MATTERS MOST IS GOOD TASTING & CONVENIENT FOOD @ A GOOD PRICE % Comp-Same-Store Sales Growth: latest 52 -weeks Domino's 7% Chipotle 4% Taco Bell International 4% Starbucks Americas 3% Mc. Donald's 3% Pizza Hut 2% Burger King 1% Wendy's N. A. KFC Dunkin' Donuts 1% 1% 1% At least 50% or more of sales from the top 3 pizza chains are from digital orders Source: Company Press Releases – U. S. Results; dominos. com; fools. com 27

Lt b Fl To a en h ck m g e % Comp-Same-Store Sales Growth: latest 52 -weeks St in h C e g' or 4. 0% aa s n E 3. 3% pi Pk St d C ta Y 2. 6% B h ri Bel di ar 2. 6% aa o m o e ra G d h u 0. 8% e k n V' b ril H a se St 0. 7% h ef sl b o Sm eo 0. 5% is u ea' a a u h 0. 2% se a. Bks se G 0. 1% s. It hr ril -0. 1% oal el o nia e u n s Source: Company Press Releases – U. S. Results; The Capital Grille (photo) ze se CHAINS CATERING TO MORE UPSCALE DINERS DELIVERING MIXED GROWTH 28

APPLEBEE’S RIGHTS THE SHIP; OLIVE GARDEN STEADY AS SHE GOES % Change in Same-Store-Sales: last six reported quarters 10% 8% 6% 4% 2% 0% -2% “Applebee's announced that it anticipated -4% the closure of 60 to 80 locations in 2018. Applebee's closed 99 locations in 2017 and 46 locations in 2016. ” Business Insider (2/20/2018) -6% -8% -10% 1 st 2 nd 3 rd Olive Garden Source: Business Insider 4 th 5 th 6 th (current) Applebee's 29

SERVING UP PASTAS IN THE NEIGHBORHOOD “Treat your taste buds to one of our new Neighborhood Pastas like Chef Bulgarelli’s Stuffed Rigatoni with Tomato Meat Sauce or Creamy Penne Pasta with Sliced Prime Rib. All our new pasta dishes come with a Signature Breadstick, brushed with garlic and parsley butter, which is just one more reason your taste buds will thank you. ” Source: applebees. com 30

PASTA POWER: WOLFGANG PUCK SERVING PASTA AT THE 2019 OSCARS “Ever wondered how many people, plates and pounds of food it takes to pull off a celebrity-filled after-party considered to be the hottest event in Hollywood? It's even more than you could imagine. We're talking 200 culinary staff to support legendary chef Wolfgang Puck, 5, 000 pieces of handmade filled agnolotti pasta, 250 pounds of Parmesan Reggiano cheese and 4, 800 small plates, just to name a few figures. ” (ABC News 2/22/2019) Source: ABC News 31

CONNECTING WITH SHOPPERS THAT MATTER 32

HIGH REACH BUT OPPORTUNITIES TO BUILD FREQUENCY & PER TRIP SPEND Pasta: Dry, Frozen & Refrigerated: Annual Buying Behaviors 85 How much are pasta buyers spending on pasta sauce, meat, seafood, vegetables, or other ingredients to make pasta dishes? 6. 7 % Household Penetration Trips per Buying Hhld $3. 09 $ per Trip UPC-coded items Source: Nielsen Homescan, Total U. S. – All Outlets Combined, 52 weeks ending 12/30/2017 33

DRY PASTA DRIVES SHOPPERS & TRIPS; REFRIG. & FROZEN DRIVES TRIP SPEND Pasta: Annual Buying Behaviors 83 18 17 6. 1 % Household Penetration 2. 1 2. 3 Trips per Buyer Dry Refrigerated $2. 59 $5. 17 $6. 62 $ per Trip Frozen UPC-coded items Source: Nielsen Homescan, Total U. S. – All Outlets Combined, 52 weeks ending 12/30/2017 34

TOOLS TO ATTRACT SHOPPERS & IMPACT HOW OFTEN & HOW MUCH THEY BUY Sales Components Tools for Change Penetration Advertising, product offering, couponing, trial packs, product sampling, displays Purchase Frequency Smaller packages, couponing, displays, in-pack/on-pack promotions, sweepstakes/contests, recipes/recipes Purchase Size 2 -for-deals, larger or bonus packs, trade deals, displays w/larger packages 35

BY 2025, 62% OF U. S. POPULATION WILL BE MILLENNIALS OR YOUNGER U. S. Population Projections – 2025: All Races/Ethnicities Age Males (170 MM) Greatest Generation 6 MM Boomer 31 MM Gen X 24 MM Millennial 41 MM Post. Millennial 68 MM 2, 500, 000 Females (174 MM) 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 0 9 MM 35 MM 24 MM 40 MM 65 MM 0 In 2025, 130 million older consumers with spending power! In 2025, 62% of the U. S. population will be Millennials or younger, up from 54% in 2017 2, 500, 000 Population Source: U. S. Census Bureau (2017 National Population Projections); MM = million 36

BOOMERS STARTED TURNING 70 IN 2016 Edibles: $ Sales Per 1, 000 Households *Over the next decade, 70 - to 79 -year-olds will increase by more than 50%. $1, 200 $1, 000 Sales of edibles will likely be challenged! $800 Double-digit declines in sales rates will be likely $600 $400 $200 $0 Grocery Dairy Frozen Foods Boomers Alcohol Produce Greatest Generation Source: Nielsen Homescan, Total U. S. 52 weeks ended 12/30/2017; *usatoday. com (01/26/2016) Meat Bakery Deli UPC-coded items 37

PASTA CONNECTS WITH YOUNGER HOUSEHOLDS, BUT AGING WILL BE A DRAG $ Sales Per 1, 000 Households Index Pasta Millennials Gen X Boomers Greatest Generation Dry 114 116 90 69 Frozen 109 130 88 59 Refrigerated 127* 119 85 50 *Read as: Refrigerated Pasta sales among households with a Millennial head of household, are 27% greater than sales among total U. S. households. Are you actively working to deal with this situation? UPC-coded items Source: Nielsen Homescan, Total U. S. 52 weeks ending 12/30/2017; >=110 is above average and <=90 is below average 38

SMALLER PORTION SIZES, BUT WHAT ELSE? Source: Multi. Ad Kwikee 39

SMALLER PORTION SIZES, BUT WHAT ELSE? • Have you explored smaller packages sizes or packages with portion-filled packs within a standard package? • How about larger font-size on package labels? • Vitamin/Mineral fortified foods targeted against the older population? Or how about callouts for calorie or fiber content? • How about targeted coupon drops & trial packs in senior communities? Source: photo from Kroger. com 40

WE HAVE NEVER BEEN MORE DIVERSE: MAKING MASS-MARKETING LESS VIABLE U. S. Population (millions) Millions 2016 Percentage of U. S. Population 2060 2016 2060 61% 198 179 44% 111 57 28% 43 18% 60 37 13% 15% 6% 18 White Non-Hispanic Black Asian White Non-Hispanic Black 9% Asian Change in respective demographic groups: -9% +93% +41% +101% Source: U. S. Census Bureau, 2017 National Projections (released in March 2018); Hispanic origin is considered an ethnicity, not a race. Hispanics may be of any race. 41

MULTICULTURAL CHALLENGES & OPPORTUNITIES $ Sales Per 1, 000 Households Index Pasta White Black Asian Hispanic Dry 103 78 105 110* Frozen 113 34 100 87 Refrigerated 106 53 126* 119 (any race) *Read as: Refrigerated Pasta sales among Asian households are 26% greater than sales among total U. S. households. What are your plans to better connect with multicultural populations? UPC-coded items Source: Nielsen Homescan, Total U. S. 52 weeks ending 12/30/2017; >=110 is above average and <=90 is below average 42

WEBSITES, ADS AND RECIPES NEED TO BE MORE DIVERSE Sources: company websites 43

HEALTH & WELLNESS 44

FAST GROWERS NOT BIG SELLERS, NOT ALL BIG SELLERS GROWING, BUT Top Sellers ($ billions) Kosher +1. 7% Natural Presence +2. 6% Gluten Free +5. 5% Soy +2. 3% Natural $ 199 $ 90 $ 84 $ 63 +6. 7% $ 51 Fast Growing ($ billions) % Change YAG $4. 4 B increase from 2017 Cruelty Free +32% Grain Free +29% Grass Fed +25% Corn Free +21% Oil Free $ 0. 04 $ 1. 25 $ 1. 12 $ 1. 04 $ 1. 81 +19% Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018, CAGR = compound annual growth rate; Note: Wellness claims are not additive 45

CARB CONSCIOUS CLAIMS AT $3. 4 BILLION & GROWTH ACCELERATING Wellness Claims: Dollar Sales (millions) 3 -YR $ CAGR Latest Year $90, 000 $80, 000 $70, 142 $75, 632 $79, 992 $84, 359 +6. 3% +5. 5% +5. 4% +12. 0% $60, 000 $50, 000 $40, 000 $30, 000 $20, 000 $10, 000 $2, 899 $2, 947 $3, 032 $3, 397 1/2/2016 12/31/2016 12/30/2017 12/29/2018 $0 52 Weeks Ending Gluten Free Carb Conscious Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018, CAGR = compound annual growth rate; Note: Wellness claims are not additive 46

GLUTEN FREE DELIVERING NICE GROWTH, BUT CAPTURING SMALL SHARE OF SALES Gluten Free Claims: Dollar Sales (millions) 3 -YR $ CAGR Latest Year 130 $140 $120 108 112 117 +6. 3% +11. 2% 7% $100 % of Sales $80 $60 7% $40 $20 10 13 14 17 1/2/2016 12/31/2016 12/30/2017 12/29/2018 +18. 1% +18. 4% $0 52 Weeks Ending Dry Pasta - Grocery Noodles - Grocery Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018, CAGR = compound annual growth rate; Note: Wellness claims are not additive 47

GLUTEN FREE W/SMALL SHARES IN MOST OTHER PASTA & NOODLE CATEGORIES Gluten Free Claims Category 2018 Sales (millions) % of Total Sales Year-Over-Year Growth Mac & Cheese - Frozen Prepared Pasta - Frozen $29. 8 $28. 9 9. 1% 21. 3% +10. 9% +9. 9% Mac & Cheese - Grocery Lasagna – Frozen Noodles - Dairy Prepared Pasta - Grocery Pasta - Dairy Pasta - Frozen $27. 4 $10. 8 $7. 4 $4. 4 $3. 8 $2. 4 1. 6% 56. 3% 1. 0% 0. 9% 1. 2% +1. 9% (1. 3%) +25. 5% +60. 7% +0. 5% +2. 0% Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018, CAGR = compound annual growth rate; Note: Wellness claims are not additive 48

CLEAN LABEL CLAIMS DELIVERING THE BEST GROWTH Dollar Percent Change versus Year Ago Claims delivering both double-digit short- & long-term growth 50% 40% Cruelty Free Fruit & Vegetable 30% [SERIES NAME] Free Range Nut Free 20% Oil Free Grass Fed Corn Free Soy Free Stevia Size of circle based on Dollar Sales Antibiotic Free 10% Spelt GMO Free 0% 0% 10% 20% 30% Dollar CAGR across three-years 40% 50% Clean Label claims are bolded Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018; CAGR = compound annual growth rate; Note: Wellness claims are not additive 49

MAKING CLEAN LABEL THE NORM? Source: mcdonalds. com 50

KETO DIET: ACCORDING TO GOOGLE, THE MOST SEARCHED DIET IN 2018 1. Keto Diet In 2017, this diet was No. 6 on the list, and in 2018, it rose to the No. 1 spot. This only shows us, much to my chagrin, that the keto diet's popularity continues to grow. Here's the deal: The keto diet is very high in fat, supplies adequate protein and is very low in carbohydrates. There is a lot of research being conducted on the keto diet, and even though there are success stories being shared in the scientific community, it is still controversial. A diet very high in saturated fat remains associated with an increased risk of heart disease. And putting your body into a ketogenic state, which is caused by cutting way back on carbs, is not something you should take lightly. Side effects including increased urination, bad breath, fatigue, vomiting and confusion are common. Source: U. S. News, January 15, 2019, Google 51

“ 23 Studies on Low-Carb and Low-Fat Diets – Time to Retire The Fad “Many health professionals now believe that a low-carb diet (higher in fat and protein) is a much better option to treat obesity and other chronic Western diseases. ” “The low-carb group lost an average of 5. 8 kg (12. 8 lbs) while the low-fat group lost only 1. 9 kg (4. 2 lbs). The difference was statistically significant. ” Source: healthline. com “Overall, the low-carb diet had significantly more beneficial effects on weight and key biomarkers in this group of severely obese individuals. ” 52

KETO PASTA ALTERNATIVES “ “ primaledgehealth. com 53

KETO PASTA RECIPES Zucchini Noodles with Creamy Avocado Pesto Sauce primaledgehealth. com Cilantro Lime Shrimp Scampi with Zucchini Noodles Keto Garlic Gnocchi 54

SOLID LONG-TERM GROWTH FOR VEGGIE NOODLES, BUT SLOWS IN NEAR-TERM Dollar Sales (millions) $300 $ 253 $ 263 3 -YR $ CAGR Latest Year $ 254 $ 257 $ 28 12/30/2017 12/29/2018 $250 +0. 4% +1. 2% +996% +3. 3% $200 $150 $100 $50 $0 $ 5 1/2/2016 12/31/2016 52 Weeks Ending Noodles - Grocery Vegetable Noodles - Produce Source: Nielsen Retail Measurement Services, Total U. S. x. AOC (UPC-coded + random-weight/Non-UPC) plus Convenience (UPC-coded), 52 weeks ended 12/29/2018 55

DIGITAL SHOPPING & DIGITAL RETAILING 56

NET SALES GROWTH REMAINS SOLID, NET INCOME MORE THAN TRIPLES % Change in Net Sales Net Income (millions) 31% 27% 31% 10, 073 27% 20% 3, 033 2, 371 596 274 Source: Company reports 2018 2017 2016 2015 2014 -241 2013 2012 2018 2017 2016 2015 2014 2013 -39 2012 Copyright © 2018 The Nielsen Company. Confidential and proprietary. 22% 57

BUT QUARTERLY SALES TREND POINTS TO > E-COMMERCE COMPETITION % Change in Net Sales Net Income (millions) 43% 2, 883 39% 38% 3, 027 2, 534 34% 29% 23% 1, 856 25% 1, 629 20% Source: Company reports Q 4'18 Q 3'18 Q 2'18 Q 3'17 Q 1'18 256 Q 4'17 197 Q 2'17 Q 1'17 Q 4'18 Q 3'18 Q 2'18 Q 1'18 Q 4'17 Q 3'17 Q 2'17 Q 1'17 724 58

Copyright © 2018 The Nielsen Company. Confidential and proprietary. UNMANNED DELIVERY WARS Sources: Walmart; Stop & Shop; Kroger 59

KROGER PARTNERS WITH OCADO TO AUTOMATE WAREHOUSES Copyright © 2018 The Nielsen Company. Confidential and proprietary. Customer orders can be picked & packed in five minutes “Kroger will use Ocado's "Smart Platform" technology to develop three new automated warehouses across the United States this year that will use robots to fulfil orders. The pair is targeting 20 new warehouses across the US over the next 3 years. ” Sources: Ocado and Business Insider; Photos: Ocado Technology/You. Tube screen capture 60

Copyright © 2018 The Nielsen Company. Confidential and proprietary. UNIQUE CONTAINERS FOR E-COMMERCE OREO of the Month Gift (3 to 6 Month Subscription) Sources: P&G Tide & Dawn, Purina Tidy Cats Direct, Oreo – photos from CNN. com & Amazon. com 61

WHY GO OUT WHEN YOU CAN ORDER IN? Grubhub Statistics: • Partners with more than 105, 000 restaurants in over 2, 000 U. S. cities & London 2018 Highlights: • Revenues: $1. 0 billion, a 47% year-over-year increase • Net Income: $78. 5 million, a 21% year-over-year decrease • Active Diners were 17. 7 million, a 22% year-over-year increase • Gross Food Sales were $5. 1 billion, a 34% year-over-year increase Source: grubhub. com “We made great progress connecting hungry takeout diners …to capture a significant share of the more than $200 billion takeout industry in the U. S. ” 62

Copyright © 2018 The Nielsen Company. Confidential and proprietary. PIZZA HUT TESTING A TOYOTA TUNDRA WITH ROBOTIC OVEN “Seeking to recover ground that it's lost to Domino's over the last several years, Pizza Hut is testing a robot-operated mobile-pizza factory under its partnership with Toyota, Automotive News reported. The prototype in the back of a modified Toyota Tundra full-size pickup truck will use automatic technology to cook pies on the go in six to seven minutes. ” Forbes. com (10/30/2018) Source: Forbes. com 63

Copyright © 2018 The Nielsen Company. Confidential and proprietary. WHAT SHOULD THE INDUSTRY DO TO REVERSE TREND? 64

ACTIVATING GROWTH ü Optimize your product mix across dry, refrigerated & frozen ü Create the right balance between retail & food service offerings ü Step up efforts to build your purchase frequency: recipes, recipes & more recipes ü Make your product offerings and ads/web sites more generational & multicultural friendly ü Invest in studies to verify health claims of low-carb diets or go on the offense as to the benefits of a balanced meal with pasta ü Winning with wellness claims is not a given – do your research ü Understand how e-commerce matters to your consumers & your retail partners 65

PREDICTIONS 66

Stars Aligned For Growth – Are you? Clean Label, Ethnic, Comfort, & Convenience Innovation Seven Predictions Basket Building Personalized Marketing Fresh Ideas For Center-Store Department Trip Magnets Private Brands Resurgence Strange Bedfellows 67

KROGER & WALGREENS CONNECTING “A one-stop shop for your grocery and pharmacy needs is what Kroger and Walgreens have in store. Through “Kroger Express, ” the grocer will add more 2, 300 products at 13 Walgreens locations in Northern Kentucky, selling dairy, meat, produce, frozen foods and more. The first pilot store is already open in Florence, Ky. , with the remaining 12 locations debuting early next year. Shoppers can also order Kroger groceries online to be picked up at Walgreens. ” 2, 300 products within 4, 000 square feet The Washington Post (December 5, 2018) Sources: The Kroger Co. ; The Washington Post 68

SPEAKING OF STRANGE BEDFELLOWS Cannabis Consumption Likelihood by Format among cannabis-interested adults who have never consumed legally-purchased cannabis *Percentage indicating they “Definitely” or “Probably” Would Consume a format below “Would Consume” Average Across Formats 70% 68% 58% 62% 48% 40% Edibles Pre-Rolls Flower Topicals Concentrates Drinks & Tinctures Source: Canna. Use 2018 69

SPEAKING OF STRANGE BEDFELLOWS CANNABIS “The maker of Corona beer, Mondavi wines and Svedka vodka … announced an investment of $4 billion in Canadian marijuana grower Canopy Growth Corp. , giving Constellation what CEO calls a “total mood-modulation profile. ” Source: THE WALLSTREET JOURNAL (8/18 -19, 2018) 70

. SPEAKING OF STRANGE BEDFELLOWS CANNABIS “Coke Considers Adding Cannabis to Beverages” Source: NACS DAILY (9/19, 2018) “The beverage maker is “closely watching” the use of CBD, a non-psychoactive component in marijuana, in functional wellness drinks. ” 71

SPEAKING OF STRANGE BEDFELLOWS U. S. Store Counts 7 -Eleven Couche Tard 7, 132 Marathon/Speedway 5, 896 Shell 4, 280 Chevron Texaco (Mornbingnewsbeat. com, 2/25/2019) 2017 2018 3, 291 BP 3, 030 Casey's GPM Investments 2007 3, 730 Exxon Mobil Sunoco • Canadian convenience store company Alimentation Couche -Tard announced last week that it is plans to get into the retail marijuana business. 9, 270 2, 109 1, 778 1, 187 CANNABIS Source: Nielsen TDLinx, U. S. counts are for open stores during month of December 72

STAY CONNECTED Todd@Todd. Hale. LLC. com http: //www. linkedin. com/pub /todd-hale/a/353/613 @Todd. Hale. LLC 73