1. What are some examples of the specialty stores shown on slide 50? 2. Two questions regarding certifications relative to animal production practices

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1 The Power of Meat Anne-Marie Roerink, Principal, 210 Analytics LLC 1. What are some examples of the specialty stores shown on slide 50? These include stores such as Whole Foods, Sprouts, Mariano s, Dorothy Lane, Central Market, Fresh Thyme, Trader Joe s, etc. Formats that tend to have an above-average focus on gourmet, premium, organic and other specialty areas. 2. Two questions regarding certifications relative to animal production practices a. Are single topic (i.e. welfare only) or multipoint attribute certifications (GAP 2) more impactful in the marketplace? We ve not gone that deep in the Power of Meat research that covers all five proteins. Across the five, there are so many claims that we just looked at the ones that are common across many or all. We tested awareness and the impact of the claim on purchase likelihood (without pointing out the price differential). In general, we re seeing massive consumer confusion about claims, whether produce, meat or other center store categories. They read and see many, but often have little understanding of what the actual benefits are. I recommend the Nielsen research in this area where they tested consumer understanding of the labels. I like the angle for the Power of Meat 2019 though! b. Are certifiers/auditors from the government (i.e. USDA AMS) more trusted by consumers than private certifiers/auditors (i.e. American Humane Certified)? We didn t ask this question in the Power of Meat 2018, but I m making note of this angle for Thank you. 3. Looking at claims and price it seems consumers behavior is loyal to price, less willing to pay for claims? Why?

2 Four reasons: one, many household have a lot of income pressure and struggle to make ends meet. In that light, meat/poultry is simply one of the most expensive components of dinner, which results in many shoppers chasing the lowest price. Two, lack of knowledge means shoppers don t want to risk wasting their dollars on something they may mess up, which results in buying inexpensive items and ordering some of the more prime cuts in restaurants. Three, lack of understanding what the various claims actual mean in consumer terms. The claim is a mere feature, are we clear enough about the benefits? Do shoppers have an actual understanding of why they may want to make room in their budget for the various claims? Or do they just see the price differential between conventional and claims they don t understand? Lastly, as an industry we ve made it about price in many cases. We need to find a way to compete beyond price, based on service, brands, special assortment, claims, etc. If we can get the consumer to move past price alone, we all win. 4. Why did home cooked meals dip in the recession of 2007/8? Shouldn t it have increased? You re absolutely right. Home-cooked meals increased as a first step to saving money. Unfortunately, people also focused on stretching the meat dollar. We saw meat move from a center-of-plate item to more of a meal ingredient, we saw an increased focus on portion control and limiting second helpings and more shoppers started experimenting with cheaper proteins, such as beans or eggs. This put a lot of pressure of volume and some of those behaviors are still sticking around today. 5. Can you tell us more about the shoppers who are eating meat 5-7 meals/week? Age? HHI? Knowledgeable about meat? Healthy? In total, they make up 26 percent of the population. Here are their demographics: However, the big question is, how can we copy what these guys are doing onto the share who only cooks 1-3 meals a week with meat!!! - gender: females slightly more likely (29%) - age: Younger Boomers (36%) and Older Boomers (30%) versus just 17% of Young Millennials and 22% of Older Millennials - Knowledge: much more likely to self-rate as knowledgeable across all knowledge factors - Decision tree: more likely to focus on appearance, in line with population for price, package cost and nutrition. Much less likely to emphasize ease and knowledge. - Promotions: Check promotions more often than the average population - Store: brick-and-mortar shoppers, overindexing for supermarkets and limited assortment. They are much less likely to switch stores between groceries in general and meat. (= more loyal) - Region: slightly higher in the Midwest (28%) - Area: Rural areas (35%) with urban being the lowest at 23% - HH composition: Slightly lower among singles, but no significant differences. - Income: Below-average HH income of $35K or less per year (30%) (High income overindexes for 4-5 meals)

3 - Weekly spending: Above-average spenders of more than $125 per week (32%) - Weekly trips: High trip frequency of 5 or more trips a week: 30% 6. With all this noise over antibiotic free and crate free do people understand it is not sustainable and uses more natural resources? Not something we covered in the Power of Meat, but based on research in cage-free eggs and other categories, typically consumers don t have any understanding of supply chain issues or impacts. Many assume organic, crate free, etc are better for the environment, but few actually understand each of the unique claims and their impact on the supply chain/environment. A potential angle for 2019, thank you! 7. The increased ethnic diversity of consumers how do you see the variety meats in retail case and nose to tail dishes in food service change the case or menu in the future? The increasingly diverse makeup of the population will require change. For instance, consumption numbers show Hispanics overindex for pork, or likewise we see certain cuts like chicken feet or turkey necks be a must in some stores and wouldn t move an inch in others. With food being so culturally interwoven to traditions and preferences, the growth of various demographic graphs will mean a shift in the demand for certain protein types, cuts and preparation levels. Additionally, many shoppers (particularly younger shoppers) have a great affinity for fun, flavorful foods with a story. With the increase in travel, TV shows featuring exotic cuisines, ethnic restaurants, etc, ethnic food has mainstreamed to a large extent, especially when considered a safe experiment with somewhat familiar ingredients. But absolutely, keeping track of who shops where from a cultural point of view will be crucially important to get meat right. In fact, it is those specialty items, including claims, that often prompts people to divert trips elsewhere. 8. Are there any key insights regarding consumer preference for domestically sourced meat vs global supply. We asked a question on that in the 2016 Power of Meat. Happy to share that chapter; just me! We did not rotate that information back in for In short, only 4 percent of Americans are willing to pay significantly more for domestically sourced meat. Then 54% say they would be willing to pay a little more, but that share is much higher among Boomers than Millennials (48%) and 42% say that price is more important than country of origin. In produce, we see local and USA play out much stronger. In fact, in produce the definition and preferences continue to tighten. In meat, there appears to be an understanding that the supply chain may be further away. I think there are great stories to tell about globally sourced meat and we actually see that play out on the foodservice side quite successfully when the story is told right. If you think about the whole marketing setup of Irish Pubs with not an Irishmen in the establishment or an

4 Outback Steakhouse that uses the imagery and people s intrigue with the Outback regardless of where the meat is sourced, I think it comes down creating a positive image and explaining what the benefits are. For instance, in the Netherlands, Albert Heijn very clearly explains why they source locally for items like produce, but import from Ireland and Uruguay for several meat products. They show the space aspect and talk about family farms. The 2016 report can shed some light on that. 9. We have seen household incomes lower at the same time the price of live animals at all-time highs while the retailers maintain the all-time high margins. Will the retailers help the consumers want to buy proteins? It s an individual decision in each marketplace, depending on what the competition is doing, how other departments in the store are performing, the importance of meat to the total bottom line. In the end, each retailer decides individually on their goals for dollars, volume, margin, shrink, labor productivity, etc. In some markets, retailers have had to cut margins to be competitive and drive traffic to the store by leveraging meat. 10. I am hearing a lot about featuring grass-fed As a corn finishing beef producer how can we help retailers share our story building trust transparency and confidence in our product with consumers How can retailers utilize our beautiful sustainable beef story more effectively? Do we as grain finished need a brand to highlight that story? Do processors need to be the connecting point to move the story from the farm to the fork? In the end, it is about finding a way to differentiate. For instance, many stores have Angus programs, but other retailers have done really well with Hereford programs as a way to be different. Likewise, grass-fed and pasture fed have risen in consumer interest as a production claim that may fit their interests, lifestyle and values. The vast bulk of beef sales are still conventional. What are the benefits of your product over another? What is the farm or environmental story you can tie to it? Are their beef-inherent attributes you can focus on, such as protein, iron, and other functional/emotional benefits. Is there a story in the consistency in product marbling for flavor? So many consumers avoid marbling and want the reddest piece they can find. Educating them on flavor and tenderness can be a big win. So yes, absolutely, this is a supply-chain wide challenge to reconnect the consumer back from fork to farm. 11. If you worked for a supermarket and you read the Power of Meat 2018, what would be your first priority? There are tons of big and small findings and insights in the report and presentation. I had retailers tell me they scribbled down a list of 20 ideas during the presentation alone from the various marketplace examples and points. In the end, what works, depends on your focus and current performance. But as it s not easy to execute change, I d say start with finding 1-3 lowhanging fruit improvements. Pick one meat cut a month, say flank steak. Educate your staff on

5 how to best pick it, cook it, have some recipe ideas, how to talk to the customer about it. Each month feature something new, particularly if you can tie it into other items on promotion in produce and center store. Think through growth drivers and what may be of interest to your customers.