Natural & Organic Beef Sales in Retail Supermarkets

2

Natural BeefDefined

• Natural BeefNatural Beef

Minimally processedMinimally processed

Contains no additivesContains no additives

Applies to all meat that does not have an ingredient Applies to all meat that does not have an ingredient labellabel

• Most who label their product “natural” for Most who label their product “natural” for marketing purposes make additional claims marketing purposes make additional claims such as no hormones, no antibiotics, etc.such as no hormones, no antibiotics, etc.

3

Organic BeefDefined

• Certified Organic BeefCertified Organic Beef

Must meet USDA National Organic Program Must meet USDA National Organic Program standardsstandards

• 100% organic feed100% organic feed

• May not be given hormones or antibiotics May not be given hormones or antibiotics for any reasonfor any reason

• Access to pastureAccess to pasture

4

Category Growth

• Organic foods sales grew by 22.1 percent in Organic foods sales grew by 22.1 percent in 2006 to reach $16.9 billion. Sales in 2005 were 2006 to reach $16.9 billion. Sales in 2005 were $13.8 billion.$13.8 billion.

In 2006 organic foods represented approximately 3 In 2006 organic foods represented approximately 3 percent of all retail sales of food and beverage percent of all retail sales of food and beverage dollarsdollars

Source: Organic Trade Association's (OTA's) 2007 Manufacturer Survey, May 6, 2007

5

$149

$194

$232

$272

$151

$189

$225

$289

$9 $10 $12$18

$25

$40 $40 $44

CHICKEN BEEF TURKEY PORK

2003 

2004 

2005 

2006 

Natural & Organic Annual Dollar Sales

Source: FreshLook Total US Natural Organic $ Sales for 2003-2006 by primal.

Millions

6

Natural & Organic Annual Pounds Sold

Source: FreshLook Total US Organic/Natural pounds sold data for 2003 through 2006 by primal.

Millions

53

63

71

82

32

38

43

54

8 9 913

69 9 9

CHICKEN BEEF TURKEY PORK

2003 

2004 

2005 

2006 

7

$38

$964

$2,420

$2,762

$2,357

$1,972

$1,536$1,525

$412

$825

$1,081

$2,285

$473

$914

$1,315

$1,510

SPECIALTY VEAL SAUSAGE LAMB

2003 

2004 

2005 

2006 

Natural & Organic Annual Dollar Sales

Source: FreshLook Total US Natural Organic $ Sales for 2003-2006 by primal.

Thousands

8

87

166

210

527

10

195

480 493

353

290

214 205

43

81

111

203

SAUSAGE SPECIALTY VEAL LAMB

2003 

2004 

2005 

2006 

Natural & Organic Annual Pounds Sold

Source: FreshLook Total US Organic/Natural pounds sold data for 2003 through 2006 by primal.

Thousands

9

$0

$5

$10

$15

$20

$25

$30

$3520

03/0

1 20

03/0

2 20

03/0

3 20

03/0

4 20

03/0

5 20

03/0

6 20

03/0

7 20

03/0

8 20

03/0

9 20

03/1

0 20

03/1

1 20

03/1

2 20

04/0

1 20

04/0

2 20

04/0

3 20

04/0

4 20

04/0

5 20

04/0

6 20

04/0

7 20

04/0

8 20

04/0

9 20

04/1

0 20

04/1

1 20

04/1

2 20

05/0

1 20

05/0

2 20

05/0

3 20

05/0

4 20

05/0

5 20

05/0

6 20

05/0

7 20

05/0

8 20

05/0

9 20

05/1

0 20

05/1

1 20

05/1

2 20

06/0

1 20

06/0

2 20

06/0

3 20

06/0

4 20

06/0

5 20

06/0

6 20

06/0

7 20

06/0

8 20

06/0

9 20

06/1

0 20

06/1

1 20

06/1

2 20

07/0

1 20

07/0

2 20

07/0

3 

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800ORGANIC/NATURAL BEEF

ALL BEEF

Linear (ALL BEEF)

Linear (ALL BEEF)

Linear (ORGANIC/NATURALBEEF)

Organic/Natural vs All BeefMonthly Total US $ Sales

January 2003 - March 2007

Source: FreshLook Total US Beef & Natural Organic $ sales data for January 2003 through March 2007.

Na

tura

l/O

rga

nic

Be

ef

Sa

les

(M

illio

ns)

To

tal B

ee

f Sa

les

(Millio

ns)

10

-

1

2

3

4

5

6

720

03/0

1 20

03/0

2 20

03/0

3 20

03/0

4 20

03/0

5 20

03/0

6 20

03/0

7 20

03/0

8 20

03/0

9 20

03/1

0 20

03/1

1 20

03/1

2 20

04/0

1 20

04/0

2 20

04/0

3 20

04/0

4 20

04/0

5 20

04/0

6 20

04/0

7 20

04/0

8 20

04/0

9 20

04/1

0 20

04/1

1 20

04/1

2 20

05/0

1 20

05/0

2 20

05/0

3 20

05/0

4 20

05/0

5 20

05/0

6 20

05/0

7 20

05/0

8 20

05/0

9 20

05/1

0 20

05/1

1 20

05/1

2 20

06/0

1 20

06/0

2 20

06/0

3 20

06/0

4 20

06/0

5 20

06/0

6 20

06/0

7 20

06/0

8 20

06/0

9 20

06/1

0 20

06/1

1 20

06/1

2 20

07/0

1 20

07/0

2 20

07/0

3 

-

50

100

150

200

250

300

350

400

450

500ORGANIC/NATURAL BEEF

ALL BEEF

Linear (ALL BEEF)

Linear (ALL BEEF)

Linear (ORGANIC/NATURALBEEF)

Organic/Natural vs All Beef Monthly Total US Pounds Sold

January 2003 - March 2007N

atu

ral/

Org

an

ic B

ee

f S

ale

s (

Mill

ion

s)

To

tal B

ee

f Sa

les

(Millio

ns)

Source: FreshLook Total US Beef & Natural Organic pounds sold data for January 2003 through March 2007.

11

Natural/Organic Beef Market Share

Unit VolumeUnit Volume

• Natural/Organic Beef comprises 1.3% of total beef volume (pounds) and 2.0% of total beef sales (dollars) in the retail supermarket channel.

Natural/Organic Beef1.3%

All Other Beef98.7%

Source: FreshLook Marketing IRI Scanner Data for Natural/Organic Sales data compared to Total Beef, 52 weeks ending 4/1/07.

Dollar VolumeDollar Volume

Natural/Organic Beef2.0%

All Other Beef98.0%

Natural/Organic Beef ShareNatural/Organic Beef Share in the Retail Supermarket Channelin the Retail Supermarket Channel

(52 wks ending 4/9/06 through 4/1/07)

12

Beef Sales at Retail

Results of FreshLook Marketing Data for 52 Weeks Results of FreshLook Marketing Data for 52 Weeks Ending April 1, 2007:Ending April 1, 2007:

• Total Fresh Beef Total Fresh Beef

Sales = 15.4 Billion dollarsSales = 15.4 Billion dollars

Volume = 4.3 Billion poundsVolume = 4.3 Billion pounds

Sales grew 0.6% and volume grew 2.2% versus Year AgoSales grew 0.6% and volume grew 2.2% versus Year Ago

Average price per pound = $3.48 (1st quarter 2007)Average price per pound = $3.48 (1st quarter 2007)

• Natural/Organic BeefNatural/Organic Beef

Sales = 304.1 million dollars (2.0% of total annual beef sales)Sales = 304.1 million dollars (2.0% of total annual beef sales)

Volume = 57.1 million pounds (1.3% of total annual beef volume)Volume = 57.1 million pounds (1.3% of total annual beef volume)

Sales grew 25.9% and volume grew 31.8% versus Year AgoSales grew 25.9% and volume grew 31.8% versus Year Ago

Average price per pound = $5.23 (1st quarter 2007)Average price per pound = $5.23 (1st quarter 2007)

Source: FreshLook Marketing Data for Total US Total Beef & Natural Organic $ and Pound Sales the 52 Weeks Ending April 1, 2007.

13

• In the Q1 2007, natural/organic beef sales grew by In the Q1 2007, natural/organic beef sales grew by 20.6% vs. Year Ago compared to 2.5% for total beef.20.6% vs. Year Ago compared to 2.5% for total beef.

• Natural/organic Natural/organic beef volume beef volume increases range increases range from a low of from a low of 13.9% in Q2 ‘05 13.9% in Q2 ‘05 to a high of 32.9% to a high of 32.9% for Q1 ‘06.for Q1 ‘06.

6.3

15.4

6.1

13.9

3.4

20.4

5.7

27.5

5.4

19.3

2.2

32.9

0.9

28.2

0.3

31.4

-1.3

24.2

0.8

22.7

2.5

20.6

Q1 '05 Q2 '05 Q3 '05 Q4 '05 YE '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 YE '06 Q1 '07

Total Beef Natural/Organic Beef

Change in Dollar Salesvs. Last Year

Percent Change

Source: FreshLook Marketing IRI Scanner Data for Natural/Organic $ Sales compared to Total Beef, Q1 ‘05 through Q1 ‘07.

14

1.6

11.3

-0.2

5.9

1.3

12.3

4.3

16.7

1.7

11.5

3.2

23.6

2.5

25.6

2.4

26.3

-1.3

24.8

2.0

18.6

2.0

22.6

Q1 '05 Q2 '05 Q3 '05 Q4 '05 YE '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 YE '06 Q1 '07

Total Beef Natural/Organic Beef

Change in Pound Volume vs. Last Year

• In 2006, natural/organic beef volume grew by 22.6% In 2006, natural/organic beef volume grew by 22.6% vs. Year Ago compared to 2.0% for total beef.vs. Year Ago compared to 2.0% for total beef.

• Natural/organic Natural/organic beef volume beef volume increases range increases range from a low of from a low of 5.9% in Q2 ‘05 5.9% in Q2 ‘05 to a high of 26.3%to a high of 26.3%for Q3 ‘06.for Q3 ‘06.

Source: FreshLook Marketing IRI Scanner Data for Natural/Organic Pounds Sold compared to Total Beef, Q1 ‘04 through Q1 ‘07.

Percent Change

15

• While natural/organic beef sales are gaining market share While natural/organic beef sales are gaining market share nearly every quarter, they still constitute only 2.1% of total beef nearly every quarter, they still constitute only 2.1% of total beef sales at retail.sales at retail.

Natural/Organic BeefDollar Share by Quarter

Percent of Total Beef Sales

Source: FreshLook Marketing IRI Scanner Data for Natural/Organic $ Sales compared to Total Beef, Q1 ‘04 through Q1 ‘07.

1.3 1.3 1.3 1.3

1.4 1.4

1.5

1.6

1.8 1.8

2.0 2.0 2.1

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07

16

• While natural/organic beef volume is growing, it still constitutes While natural/organic beef volume is growing, it still constitutes only only 1.4% of total beef volume at retail.1.4% of total beef volume at retail.

Natural/Organic BeefPound Share by Quarter

Percent of Total Beef Sales

Source: FreshLook Marketing IRI Scanner Data for Natural/Organic Pounds Sold compared to Total Beef, Q1 ‘04 through Q1 ’07.

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07

0.9 0.9 0.9

1.0 1.0 1.0 1.0

1.1

1.2 1.2

1.3

1.4 1.4

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07