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Copyright © 2010 The Nielsen Company. Confidential and proprietary.

Title of PresentationCopyright © 2012 The Nielsen Company. Confidential and proprietary.

The French Connection

A View Into Québec

Carman Allison

Director of Consumer Insights

August 2012

A View Into Québec

Carman Allison

Director of Consumer Insights

August 2012

Today’s presenter

Carman AllisonDirector, Consumer Insights, Nielsen, Canada

Carman Allison is responsible for creating and delivering thought leadership to manufacturer and retailer clients and at CPG industry events. A frequently sought-after speaker, Carman is often quoted in the Canadian press on consumer trends including a monthly column in Canadian Grocer.

Carman has more than 20 years of experience in the consumer research industry with Nielsen, where he held various account management and analysis roles.

Québec : A Distinct Society

L’exception qui confirme la règle

One size does not fit all

Shopping behaviour and unique consumption

Distinct media behaviour

Market size and growth

Economic impact on the consumer

Emerging consumer segments

Our objective todayHelp you connect with Québec consumers and shoppers

1

2

3

4

5

Québec : A Economic Power

#1Canada’s largest land mass province

Canada’s largest land mass province

#2Canada’s 2nd most populous province

Canada’s 2nd most populous province

28.8 27.9 26.4 25.3 24.1 23.6

1961 1971 1981 1991 2001 2011

Despite declining in importance, close to 1 in 4 Canadians live in Québec

Source: Statistics Canada. 2011 Census

7.9 million in 2011

7.9 million in 2011

• will surpass 8 million in 2012

1.8

3.2

0.9

2.9

4.75.7

5.2

6.7

10.8

7.0

11.6

0.0

8.3

NL PEI NS NB Que Ont Man Sask Alta BC YT NWT Nvt

5 year population growth rates

Canada 5.9

Source: Statistics Canada – The Canadian Population in 2011 Analytical document

Québec lags population growth – an eastern trend

Western Canada has now surpassed the East as younger Canadians migrate for jobs

30.6%

East WestOntario

30.7%38.4%

• Migration• Fertility• Immigration

• Immigration

Lower levels of unemployment in Western Canada

Source: Statistics Canada – The Canadian Population in 2011 Analytical document

QuébecEconomic Impact

Québec lags retail sales growth – faced with higher cost of living increases

Source: Statistics Canada – Economic Observer Report – May 2012

1.21.5

2.0

3.1

Canada Quebec Canada Quebec

Retail TradeRetail Trade Inflation (CPI)Inflation (CPI)

Quebec increased PST +1% in Jan ‘12 to 9.5%

1.52.2 2.0 1.7

-0.8

2.02.8 2.5 2.7

0.4

Total Housing Food Health &Personal

Care

Energy

Canada Quebec

Source: Statistics Canada – Consumer Price Index June 2012

Québecers wallets are strained with having to pay more for life’s essentials

Inflation by sectorInflation by sector

Food and health make up a greater portion of the average expenditure in Québec

10.5

21.3

8.1

4.9

15.6

3.1

16.9

11.6

19.5

7.85.2

16.1

4.2

16.3

Food Shelter Householdoperation /

Furnishing andequipment

Clothing Transpor tation Health care Personal incometaxes

Canada Quebec

Source: Statistics Canada 2010 - Survey of household spending

% of Household Expenditures

Lower home values means less consumer debt ($60k vs. $100k National average)

The gas tank may be full, but the wallet is empty – especially in Québec

Source: gasbuddy.com – average price pre litre regular grade fuel - August 10, 2012

Price Per Litre

Canada $1.28

Quebec $1.40

10% higher

65.3%65.3%

% in workforce% in workforce

66.8 Canada

Source: Statistics Canada – Economic Observer Report – June 2012

7.27.7

Unemployment

Canada Quebec

-0.8 -0.3 vs. 2010

Québec’s smaller workforce is facing higher levels of unemployment

Québecers earn 10% less than the average Canadian and the gap is widening

$888

$803 $802$875

2011 2012 2011 2012

AverageWeekly Earnings

AverageWeekly Earnings

CanadaCanada QuebecQuebec

+2.4 +0.0

Source: Statistics Canada – Economic Observer Report – June 2012

18.6 18.3 18.8

29.3 30.6 28.2

52.1 51.1 53.0

Quebec Montreal Rem Quebec

About Same

Better Off

Worse Off

Compared to a year ago are Quebecers financially…

The impact: A greater portion of Québec households are worse off financially than a year ago

Source: Nielsen PanelViews Survey – Canada - May 2012

Consumer Profile

Québec

85%

>

25%

2nd

3rd

of Quebecers mother tongue is Frenchof Quebecers mother tongue is French

greatest portion of multilingual Canadiansgreatest portion of multilingual Canadians

speak 3+ languages on Montreal Islandspeak 3+ languages on Montreal Island

most taught language in the worldmost taught language in the world

most spoken language in the U.S.most spoken language in the U.S.

French: Québec’s Official Language

French: Official Language Policy Impact

Quebec’s Language Policy protects the long-term viability of the French language within it’s borders.

Adapting and thriving within the French culture

• French must ALWAYS have the greatest prominence over any other language

• Commercial advertising and public signs/posters must be in French

• Every inscription on a product, container or wrapping must be in French

• The name of an enterprise must be prominently displayed in French

Household Size QUEBECIndex Quebec

vs. Canada

1 member 27.9 31.9 114

2 members 34.4 35.9 104

3-4 members 29.7 26.7 90

5+ members 8.1 5.5 69

Distribution of shoppers

Households in Québec are generally smaller than the rest of Canada with over 2/3rds being 1-2 members

Source: Nielsen Homescan Account Shopper Profiler, 52 weeks ending December 31st 2011

29.8 36.4 36.0 36.7

63.370.2 63.7 64.0

Canada Quebec Montreal Rem Quebec

Female

Male

Primary Household Shopper

Quebec has a higher portion of primary shoppers who are male – consistent both in urban and rural areas

Source: Nielsen PanelViews Survey - Canada - May 2011

20.5 16.8 19.2 15.9

68.7 68.2

12.2 14.8 12.1 15.9

67.3 68.5

1996 2011 1996 2011

15-64

>14

65+

CanadaCanada QuebecQuebec

Québec has a proportion of seniors and is aging at a faster rate than the rest of Canada

+16

+3

+1

5 yr growth


By 2025, 50% of Quebec’s population will be > 45 years of age

% foreign born% foreign born

19.8

11.5

Canada

Quebec

% immigrant origin% immigrant origin

4

2.1

5.1

4.1

36.8

6.1

40.8

3.1

3.4

9.5

5.7

36.0

14.6

27.4

United States of America

Central America

Caribbean and Bermuda

South America

Europe

Africa

Asia / Middle East

Québec has a lower percent of immigrant population – driven primarily by language


30% of Canada’s Jewish population

Visible minorities varies from east to west


Shopping Behaviour

Québec

6.1

24.9

37.931.1

Maritimes Quebec Ontario West

$ % Chg +2 +3 +2 +3

U % Chg -1 +2 -1 +1

Québec accounts for 25% of CPG sales in Canada and is leading dollar growth with West

CPG Regional ImportanceCPG Regional Importance

Source: Nielsen MarketTrack, Regional All Channels, 52 weeks ending March 10, 2012 - Total Tracked Sales Total Tracked Sales excluding Fresh Random Weight

Index106*

* 23.6 of the population

Québec households spend less per trip but it’s offset by a higher trip frequency – spending more overall

Spend Per HouseholdSpend Per Household

$9,209

2% more than Canada2% more than Canada

189.8Trips

$48.51Basket

5% more5%

more

3% less3% less

Source: Nielsen Homescan Channel Watch, Quebec All Outlets, Total Expenditures, 52 weeks ending March 31st 2012.

43.2

7.212.6

8.6

28.3

46.0

9.4 9.0 8.7

27.1

GROCERYSUPERMARKETS

DRUG STORES MASS MERCHw/SUPERS

WAREHOUSECLUBS

OTHERCHANNELS

Canada Quebec

While Mass is largely underdeveloped in Québec , the Drug and Grocery channels hold strong

Retail Channel ShareRetail Channel Share

Source: Nielsen Homescan Channel Watch, All Outlets, Total Expenditures, 52 weeks ending March 31st 2012.

• Quebecers spend 9% more in Grocery and 27% more in Drug stores

Québec shoppers are becoming more cautious – spending less is the goal

Spending Less on CPG?Spending Less on CPG?

71%Yes!

+6 points in 12 months+6 points in 12 months

• 74% only buy on sale

• 62% use coupons

• 61% stock up on deals

• 50% seek out stores with low prices

• 50% buy store brands

• 74% only buy on sale

• 62% use coupons

• 61% stock up on deals

• 50% seek out stores with low prices

• 50% buy store brands

Source: Nielsen Panel Views Survey – May 2012

Saving StrategiesSaving Strategies

The consumer impact on CPG in Québec

35%

49%

+9%

+6%

+7%

of dollar sales are sold with a price cutof dollar sales are sold with a price cut

of units sales are sold with a price cutof units sales are sold with a price cut

growth in TPR sales - fueling growthgrowth in TPR sales - fueling growth

increase in the coupon activityincrease in the coupon activity

growth from Discount Retailers growth from Discount Retailers

Source: Nielsen MarketTrack & Homescan –Quebec - Q1 2012 CPG Review

Unique Consumption

Québec

158

139

125

122

10994

74

56

43

Cheese - Random Weight

Cheese - Exact Weight

Butter

Yogurt

Milk

Ice Cream

Frozen Yogurt

Cottage Cheese

Sour Cream

The fact French consume more cheese isn’t just a stereotype – very different Dairy consumption

100

Source: Nielsen MarketTrack, Quebec All Channels vs. ROC, Total Tracked Sales (excl Alcohol Bev), 52 Weeks ending May 5th 2012.

100


Not necessarily French Toast, but Québecers tend to eat more Toasts at breakfast

271160

126120

9266

22

15035

Sweet Spreads

Bread - Commercial

Peanut Butter

Jams & Jellies

RTE Cereal

Hot Cereal

Pancake & Waffle Mix

Pure Maple Syrup

Table Syrup

Poutine and Fondue are among regional specialties – Comfort Food

100


643

459

350

238

166

158

Gravy - C&B

Fondue

Stew & Meatballs

Bouillon Products

Sauce & Gravy Mix

Dry Soup Mixes

100

When it comes to what Québecers drink, there are some notable differences


386

242

193

134

111

63

62

Tomato Juice

Vegetable Juice

Carbonated Water

Instant Coffee

R&G Coffee

Tea

RTE Iced Tea

100


562

199

134

121

101101

82

46

14

Veal

Fresh Seafood

Beef

Pork

Chicken

Ham

Lamb

Turkey

Stuffing Mixes

Different meat consumption habits – Thanksgiving is much less important among French families

Connecting Brands & Consumers

Québec

Ad for Labatt (St-Jean Baptiste – Quebec holiday on June 24)

-The 24 for the 24

-Proud to be “Blue”

Resonate with Québecers by speaking their language

The preference for Québec-based names extends into the grocery aisle

Source: Nielsen MarketTrack; National vs. Quebec All Channels; 52 Weeks Ending June 2, 2012;

All Channels = Grocery Banners + Drug + MM/GM/WC/TRU

National Quebec

Quebon 11 1 Yoplait 7 2 Pepsi Cola 5 3 Kelloggs 1 4 Lactantia 51 5 Natrel 23 6 Pom 82 7 Oasis 36 8 Tropicana 12 9 Ptit Quebec 105 10 Lays 13 11 Gadoua 136 12 Beatrice 10 13 Cashmere 25 14 Saputo 58 15 Coca Cola 4 16 General Mills 9 17 Driscoll 21 18 Vachon 69 19 Van Houtte 60 21 Campbells 6 22 Black Diamons 16 23 Kraft 3 24 Liberte 43 25

Private Label share is weaker in Québec and lags National Brand growth

+3% +2% +2% +2% +4%

Dev Index 100 105 77 100 117

National Brand +3% +2% +4% +2% +3%

Private Label $ SharePrivate Label $ Share

Source: Nielsen MarketTrack, National All Channels, 52 weeks to March 10th, 2012 * Excludes Random Weight Fresh

Québecers are not getting the same price advantage of buying Private Label as the rest of Canada

Gap: 6% 7% 5%

Private Label Price DiscountPrivate Label Price Discount

Source: Nielsen MarketTrack, National All Channels 52 weeks to March 10th, 2012 – Avg Price Per Tonnage TPR = Temporary Price Reduction

Media Behaviour

Québec

20%20%

Share of VoiceShare of Voice

25% of the population

When it comes to media spend, Québec is not getting their fair share of voice

By sector:

Food 22%

Beverages 19%

Restaurants 19%

Québecers have created their own TV and Star universe

• “Both the commercial (TV) and the CBC audience prefer local content and local actors.

– It’s a cocoon, and it’s 180 degrees different from English Canada.”

• In English Canada, American hits aired by commercial broadcasters, such as Survivor, Grey’s Anatomy and Criminal Minds, rule the ratings.

• In francophone Canada, that list is dominated by Quebec game shows, talk shows, reality contests, soap operas and dramas, some of them created by Radio-Canada but the bulk of them produced by the commercial broadcaster TVA.

• 10 per cent of Quebec box office is spent on Quebec films

It is difficult to use North American entertainment properties to reach Québecers

QuebecQuebec CanadaCanadaTop TV Shows

Top TV Shows

Source: Nielsen Media Research Borealis, 36 weeks to May 27, 2012

1. NFL Super Bowl2. Academy Awards3. NFL Super Bowl Pre4. Grammy Awards5. Big Bang6. Golden Globe Awards7. Survivor8. Amazing Race9. American Idol10. Grey’s Anatomy

1. Bye Bye 20112. Star Academie3. On connait la chanson4. Celine: 3 gars et un nouveau show5. Occupation double au Portugal6. SP: Enfants de tele7. Tricheur, Le8. Gala Artis 20129. SP: Infoman10. Les Chefs

Smartphones will continue to grow but the potential is significantly less traction in Québec

24% 24%

48%

17%22%

39%

Currently Own Plan to Buy Potential

Canada Quebec% Smartphone Ownership

Canada 23%Quebec 14%

Use their phone to access the internet

Source: Nielsen PanelViews Survey, June 2011 – Canada

Top online activities relating to promotions and search

Quebec Canada

Recipe Search 59% 60%

Product Research 50% 52%

Look for Coupons 41% 49%

Promotions on Retailer Sites 40% 47%

Purchase from Online Store 34% 43%

Read Product Reviews 29% 38%

Consumers in Québec are less willing to use online sites to look for promotions or product information

Source: Nielsen PanelViews Survey, June 2011 – Canada

Social Media lags development in Québec

56%• visit social media sites• 4% less than the national average

35%

Source: June 2011 Nielsen PanelViews Media Survey - Individual responses

• agree it’s becoming more important• 6% less than the national average

39%

40%

35%

22%

24%

22%

21%

38%

34%

25%

23%

22%

18%

41%Surveys

Forward articles

Receive coupons

Receive/Share Recipes

Purchases

Join Loyaty group

Join retailer group

Canada

Quebec

Québec’s social media usage is very similar to Canada – more likely to be engaged with recipes

What are consumers doing on social media?

Source: June 2011 Nielsen PanelViews Media Survey - Individual responses

Summary

Québec

• Continued focused on value and bang for the buck

• Promotional activity will remain a key driver of sales

• Expect continued high low pricing strategies due to less

• Discount retailing expected to explode in the next year (new stores)

Québec: Making the Connection

Still economically stressed and cautious

• Smaller store formats and less need for larger sizes

• Key categories and segments are posed for growth: Health and wellness, portion control, smaller sizes, OTC etc.

• Look for ways to be more gender neutral – males are 36% of primary shoppers

Older and smaller households

• Different ethnic groups than the rest of Canada – unique needs, flavours, formats etc. need to be taken into consideration

• Fewer language barriers - French will still reach the majority of immigrants


Less multiculturally diverse and less challenged reaching

• More opportunities to engage the shopper with in-store activities: displays, sampling etc.

• Greater portion of trips and dollars spent in Grocery and Drug channels – allocate your sales support and trade dollars appropriately

Shop more often

• Tastes and food preferences are differ from the rest of Canada – more European based

• Recognize that your category may be consistently underdeveloped

• Look for ways to anchor to core categories – Frozen Fruit + Yogurt = Smoothies

• Be prepared to rebrand if you can’t gain equity OR you’re just too English. Example: SDM to ‘Pharmaprix’ -- Staples to ‘Bureau En Gros’


Unique consumption and brand preference

• Independent product, results in a different system of stars, events and cultural references – reach Quebecers through local TV and print

• Sponsorship and endorsement needs to a local a celebrity

• Media needs to be a genuine French message – not a simple creative translation from English Canada

Media: Local, Local, Local


• Despite lower levels of smartphone and social media penetration, Quebecers are willing to engage if the French content is there

• Web communications and apps need to be bi-lingual in order to maximize reach and use.

Less connected but willing

‘L’exception qui confirme la règle’

‘One size does not fit all’

Basically…

You need to localize in order to connect with the French consumer

Q&A

Thank you for attending

•If you have follow-up questions or want more information, please contact your Nielsen Professional Services Representative.

•If you are not a current Nielsen client, please contact us:

In the U.S. call: 800.553.3727 In Canada email: [email protected]

OR if you have any questions regarding the content of this webinar, you can also contact:

Carman Allison, email: [email protected]

Documents

Upcoming Webinars Cultivating Multicultural Success: From Opportunity to Growth - August 28th Diverse Intelligence Insights Series: Asian American Consumers