Snacking: a Top Food Trend in the Americas

1. SNACKING: A TOP TREND IN THE AMERICAS FEBRUARY 2016

2. © Euromonitor International 2 Americas: a tale of two distinct regions OVERVIEW * Excluding Argentina and Venezuela due to distortionary foreign exchange effects. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2010 2011 2012 2013 2014 2015 Currentvaluegrowth,fixed2015exchangerates Packaged Foods Growth Latin America * North America World The Americas • 1/3 of global US$ Packaged Foods sale. • US sales are 4 times Brazil’s, 7 times Mexico’s. North America • Retail volume sales are down since 2010. • Value-added products and snacking buoy the industry. Latin America • Continued impressive, but decelerating value growth. • Retail expansion and lifestyle changes drive growth.

3. © Euromonitor International 3 The Snacks Universe OVERVIEW Packaged Food Snacks Universe Biscuits & Snack Bars Cakes Confectionery Ice Cream Pastries Sweet & Savoury Snacks Yogurt Snacking occasions have increased as have the types of products that are being consumed as snacks. It is important to consider the full Snack Universe when looking to reach today’s consumer.

4. © Euromonitor International 4 A Diverse Region of Snacking OVERVIEW Brazil ChileColombia Costa Rica Mexico Peru Canada US 0% 2% 4% 6% 8% 10% 12% $0 $100 $200 $300 $400 $500 2010-2015CAGR US$ per capita Snacks Universe 2015 Opportunities as consumers shift away from artisanal / unpackaged snacks. Strong historic growth will confront difficult economic circumstances ahead. Developed, but still growing by successfully meeting the latest consumer needs. CAGR : compound annual growth rate In this graphic we consider the trajectory of select countries’ US$ snacking per capita consumption over the previous five years to arrive at their 2015 level.

5. © Euromonitor International 5 The Snackification of Packaged Foods OVERVIEW 25% 30% 35% 40% North America Australasia Asia Pacific World Latin America Western Europe Eastern Europe Middle East and Africa % Snacks in Packaged Foods Snacks Penetration 2005 2015 The World Snacks % has remained flat at 32%… …while Snacks in Latin America and North America advance faster than other regions. In the US 10% of Packaged Food sales go to Sweet & Savoury Snacks only

6. © Euromonitor International 6 Fastest Growth Snacks Categories in 2015 OVERVIEW Increasingly consumers are looking to a variety of packaged food products to satisfy their snacking needs. As seen here in the diversity of the fastest growth categories, success is not one- size-fits-all. Consumer demand is driving categories that best adapt to their daily routine and meet their evolving tastes. Cakes Sweet & Savoury Snacks Yogurt 2015 Fastest Growth Category

7. © Euromonitor International 7 Elements of Convenience Busier Lifestyles (Especially in Capital Cities) Packaging Innovation (Re-closable, Portable) Expanded Distribution (Easier Access) Convenience Plays a Vital Role in Snackification SNACKING DRIVERS

8. © Euromonitor International 8 Example Driver Country Argentina Distribution: Expanded infrastructure for frozen snacks Freezers for products like Chocotorta ready-to-go dessert by Arcor Packaging: Focus on more portable product packaging Arcor Cereal Mix bars, Yogurisimo Cremix Dessert Convenience Drivers in the Americas SNACKING DRIVERS Costa Rica Distribution: Retailer engagement in snack trends Convenience stores and supermarkets giving snack foods prime shelf space Packaging: Focus on more portable product packaging Bioland and NutriSnacks snack bars; multipack ice cream from Dos Pinos

9. © Euromonitor International 9 Example Driver Country Mexico Distribution: Rapid growth in convenience- focused retailers Rapid growth in convenience stores like Oxxo; driving snack food availably Busier Lifestyles: Socioeconomic trends promote snacking Urbanisation and more working women make yoghurt, biscuits and snack bars popular breakfast alternatives Convenience Drivers in the Americas SNACKING DRIVERS USA Packaging: Focus on more portable product packaging Belvita Biscuits, Kit Kat Minis, Nutella & Go, KIND Snack Bars, Chobani Yoghurt; Meat Snacks Distribution: Consumers favour convenience- based channels Snack sales at forecourt retailers grow with lower gasoline prices, consumers spend savings inside the store on snacks

10. © Euromonitor International 10 Demand for Health & Wellness Snacks Obesity crisis: Consumers looking to eat a healthier diet Indulgence: Consumers still want to treat themselves Regulation: Taxes or other regulations against junk food Health & Wellness also Drives Snack Innovation SNACKING DRIVERS

11. © Euromonitor International 11 In Mexico, an 8% special tax on high-caloric food took effect in January 2014, impacting many snack food categories. In response, manufacturers in categories like confectionery introduced smaller portion sizes to reduce the selling price of the product and maintain sales. In Chile, new regulation will tag all products that exceed a certain threshold of sugar, saturated fat, or sodium with a notorious “high in” label. Companies are working to change their product formulations or stand to witness declines in sales. Bolivia, Costa Rica, Peru and Uruguay introduce bans on the sale of foods high in salt, sugar or fat content at schools. In some cases, these regulations have helped other categories. In Peru, snack bars has grown, including brands like Angel Break, which are marketed for children. Regulation Drives Better Snacking SNACKING DRIVERS Regulation drives consumer snack habits

12. © Euromonitor International 12 Yoghurt: A high-protein, low-fat snack • Trending In: Bolivia, Canada, Chile, Costa Rica, Dominican Republic Ecuador, Mexico, USA • Examples: Yaqú (Ecuador), Pil Andina (Bolivia), Yoka Yoghurt Slender (Dominican Republic), Digess de Migurt (Venezuela) Snack Bars: Natural Ingredients, minimal processing • Trending In: Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, US • Examples: Trio Nuts (Brazil), Angel Break (Peru), Simsa (Bolivia), KIND (USA), Arcor Cereal Mix (Argentina) Premium Offerings: Higher-Quality Indulgences • Trending In: Bolivia, Canada, Chile, Colombia, Mexico, USA • El Ceibo confectionery (Bolivia), Santander confectionery (Colombia), Talenti ice cream (USA) Demand Drives Growth from Healthier Snacks SNACKING DRIVERS

13. © Euromonitor International 13 Winners & Losers SNACKING DRIVERS Premium, Less-Processed, Better-for-You Snacks Highly-Processed, Less Healthy Snacks Snack foods that are high in sugar, fat or calories face challenges from both government regulation and consumer preferences. In several countries, state action like taxes or even outright bans of “junk foods” – often employed in the fight against obesity – have become increasingly common. At the same time, consumers want “healthy indulgence” offerings that they can enjoy with less guilt. Consumers increasingly want snack foods that they can eat in place of traditional meals. This benefits higher-protein snacks which aid in satiety, as well as better-for-you offerings that cut the amount of salt, fat or sugar in a consumer’s diet. At the same time, shoppers are increasingly turning away from artificial ingredients in favour of more natural snacks. WINNERSLOSERS

14. © Euromonitor International 14 THANK YOU FOR LISTENING Jared Koerten Senior Food Analyst Jared.Koerten@Euromonitor.com Sean Kreidler Research Manager Sean.Kreidler@Euromonitor.com Request a demo for more information about our market Research solutions.