Industry analysis Competitive analysis Smartest & dumbest marketing tactics Previous KIND marketing elements Marketing research

Consumer touch points map Perceptual maps Lessons learned SWOT analysis Brand positioning

Industry Analysis

In 2011, retail current value sales of snack bars are expected to increase by 7% to US$5.7 BN, whilst retail volume sales are expected to increase by 5% Massive growth in energy and nutrition bars, stronger growth in breakfast bars. Energy and nutrition bars is expected to continue its recent boom with value sales increasing by 13% to reach US$2.0 BN in 2011 With an expected increase of 2% in 2011, unit prices increase faster than the annual average By 2016, snack bars is expected to increase by 14% to reach US$6.5 billion While the category has proven to be quite resistant to recession, there is some indication that growth will slow from 2011-15 due to market saturation and as the market reaches maturity Companies seeking significant growth from 2011-15 will want to focus some of their efforts on recruiting new customers, in particular those who have not traditionally been nutrition and energy bar users. Brands may find that schoolbased distribution effortsfrom elementary schools to college campusesmay prove to be an effective way to drive future sales and create long-lasting brand relationships

Consumers are reaching for energy and nutrition bars to supplement their regular eating habits, while some time-crunched consumers even substitute a bar or two for an entire meal Large % of ones daily requirement of vitamins, calcium, protein and fibre are increasingly being complemented with natural grains and berries Common perception of energy and nutrition bars has changed from chalky, utilitarian food for workout junkies or crash dieters to flavorful and healthy snacks Smaller brands have cultivated hip, socially-conscious lifestyle brands which appeal to younger, more affluent consumers. Fruit bars is not positioned well for growth. Many of the products in this category are laden with sugar, corn syrup, preservatives, artificial colours and partially hydrogenated oils. Whilst many of the products contain added vitamin C, they are not commonly viewed as healthy snacks.

By Volume ('000 tonnes)

300 280 260 240 220
200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

281.5 262.2

By Value (US $MM)

7,000 6,500 6,000 5,500
5,000

6,470 5,684

4,500 4,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2016
4.3%

19.0%

Breakfast Bars

2011
4.9%

30.5%

2016
4.3%

2016

Enerygy and Nutrition Bars

Fruit Bars

Granola/Muesli Bars

9.6%
19.5% 29.7%

36.6%
19.0% 30.5%

Breakfast Bars Other Snack Bars Enerygy and Nutrition Bars

Fruit Bars

34.3% 11.6%

Granola/Muesli Bars

9.6%

36.6%
Other Snack Bars

Industry Analysis

% retail value rsp) 0.9%

0.9%

00%

1.0% 27.0%
1.0%

1.0% 26.8%
1.0%

1.0% 26.8%
1.0%

1.1%

90% 28.5% (% retail value rsp) 4.3%

0.9%

27.5%
0.9%

26.4%
Non-Store Retailing
1.1%

80%

70%

100% 90% 80%

4.5%

4.7%

4.6%

4.5%

4.5%

Other Non Grocery Retailers

Health and Beauty Retailers

60%

27.0% 27.5% 17.1% 28.5% 17.1% 16.9%

26.8% 17.1%

26.8% 17.2%

26.4% 17.2%

50%

Non-Store Retailing

Other Grocery Retailers

40%

70% 9.2% 4.3%

9.2% 4.5%
17.1%

9.3% 4.7%
17.1% 9.3% 40.8%

9.4% 4.6%
17.1%
9.4% 41.0%

9.4% 4.5%
17.2%
9.4% 41.1%

9.5% 4.5%
17.2% 9.5% 41.2%

Small Grocery Retailers Other Non Grocery Retailers

Discounters Health and Beauty Retailers

60% 50% 40% 30%

30%

16.9%

Supermarkets/Hypermarkets Other Grocery Retailers

20%

9.2% 9.2% 40.6% 40.2%

10%

0%20%
10% 0%

40.2%

40.6%

40.8%

41.0%

41.1%

41.2%

Discounters Small grocery retailers include convenient stores, Supermarkets/Hypermarkets independent small grocers, and forecourt retailers Non-store retailing includes vending machine and online retailing

Small Grocery Retailers

And at an average of 2.48 occasions per day, snacking is more than just an occasional activity for most kids Kids cite a wide variety of snacking occasions. Watching TV is the most frequently cited snacking occasion in all gender/age groups, mentioned by more than three quarters of kids. Snacking while watching TV can happen nearly any time, including after dinner and on weekends, but likely most often happens after school The idea that snacking can be a family activity is reflected in the finding that more than half of kids, consistent across gender and age, say they snack with their mom or dad Kids are interested in trying new kinds of snacks, a finding consistent with the notion that novelty and fun are key ingredients in snacking. In fact nearly half of kids say they sometimes snack just for fun, even when theyre not hungry. The implication for marketers and retailers is that refreshing product lines with new flavors and textures is a key to maintaining interest and engagement.

Only 12% report buying snacks from school vending machines, a finding that reflects the lower incidence of vending machines in elementary schools. Six kids in 10 say they really like snacks that come with free surprises in the package. Between 2010 and 2015 the population of younger kids will grow faster than that of their older counterparts. Kids aged 11 and under are projected to increase 4.7%, more than twice the 2.2% rate projected for kids aged 12-17 While the difference is not dramatic, faster population growth among kids aged 11 and under ensures that they will remain a primary target for snack food marketers

Favorite healthy snack, among kids 6-11, by gender and age, March 2010 Question: Of the snacks that you eat, what are your three favorites?

Base: kids 6-11 who eat snacks/treats between meals Favorite (1st, 2nd or 3rd favorite)*: Chips or pretzels Cookies Fresh fruit Fruit snacks (like roll-ups or strips) Ice cream Yogurt or yogurt drinks Popcorn String cheese or sliced cheese Frozen treats (like popsicles) Crackers Pudding cup Cupcakes, snack cakes or pies Candy bars Nutritional snacks (like cereal or granola bars) Pizza rolls or bites Cereal by itself (plain and with no milk) Cold cereal with milk or soy milk Donuts Total Boys 6-8 Boys 9-11 Girls 6-8 Girls 9-11 480 120 120 120 120

32% 25% 23% 22% 20% 20% 19% 19% 12% 11% 11% 11% 11% 10% 9% 7% 6% 5%

37% 23% 19% 18% 20% 20% 20% 18% 14% 13% 14% 9% 7% 8% 13% 12% 7% 6%

36% 27% 13% 23% 23% 18% 14% 17% 9% 10% 13% 13% 20% 9% 14% 3% 9% 5%

20% 33% 33% 23% 18% 23% 18% 23% 12% 10% 7% 10% 3% 13% 4% 9% 3% 5%

35% 18% 28% 23% 20% 18% 25% 19% 13% 13% 9% 10% 13% 10% 6% 3% 3% 6%

Favorite healthy snack, among kids 6-11, by gender and age, March 2010

Question: Of the snacks that you eat, what are your three favorites*?
Total Boys 6-8 Boys 9-11 Girls 6-8 Girls 9-11 480 120 120 120 120

Base: kids 6-11 who eat snacks/treats between meals Healthy snacks: Fresh fruit Fruit snacks (like roll-ups or strips) Yogurt or yogurt drinks String cheese or sliced cheese Nutritional snacks (like cereal or granola bars) Raw vegetables Nuts Snack mixes (like nuts and raisins together) Dried fruit (like raisins or apricots)

63% 52% 48% 46% 42% 28% 25% 25% 19%

58% 48% 45% 43% 41% 23% 28% 21% 16%

58% 55% 46% 42% 38% 24% 25% 26% 15%

64% 53% 49% 52% 39% 32% 21% 24% 21%

69% 54% 53% 48% 49% 33% 28% 29% 23%

* Results show the percentage of respondents that indicate that a given snack is their favorite, second favorite, or third favorite snack. Source: Mintel

Key Players

Marketing Strategies

Spending & Advertising

Pricing

Merchandising

 Variety: Granola Nut Clusters (3) Crunchy Granola Bars (9 flavors) Granola Thins (2) Chewy Trail Mix Granola Bars (3) Sales ($mm): Chewy Granola Bars w/ Yogurt Coating (2) 2008 - $489 Sweet & Salty Nut Granola Bars (5) 2009 - $474 Roasted Nut Crunch Granola Bars (2) 2010 - $542 General Mills

11 varieties including: granola bars, oatmeal to go

Sales ($mm): 2008 - $345 2009 - $374 2010 - $402 PepsiCo

 19 flavors Sales ($mm): 2008 - $25 2009 - $37 2010 - $54 General Mills

4 flavors Sales ($mm): 2008 - $46 2009 - $39 2010 - $35 Coca-Cola Co

Variety: GOLEAN, Chewy/Crunchy Granola, Cereal Bars, Layered Granola 25 flavors Sales ($mm): 2008 - $132 2009 - $146 2010 - $153 Kellogg

 5 flavors Natures Path revenue was $150mm in 2007 and was growing annually at 20% Natures Path Foods

13 flavors Launched new kidapproved bars in August 2011 in two flavors: Oatmeal raisin and Peanut butter chocolate chip General Mills

7 flavors Total sales ($mm) for Clif Bar Inc: 2008 - $168 2009 - $189 2010 - $274 * Clif Kid Z Bar attributable for ~11% of total sales

10 flavors Sales ($mm): 2008 - $186 2009 - $204 2010 - $213 Kellogg

3 flavors General Mills

Variety: Fruit & Nut 11 flavors Plus 8 flavors Mini 4 flavors Healthy Grains 6 flavors

Competitors rely heavily on ATL advertising Big CPG companies do not have the same type of user community that KIND does Brand positioning is as a healthy snack simply because it falls in the granola bar category exploits consumer lack of education about healthy foods Discounting is used to encourage consumers to taste their product

Top Advertising Spenders Nature Valley (1) Soyjoy (2) Nutri-Grain (3) Quaker Chewy (4)

Dollars Spent on Advertising $10,342,720 $5,309,540 $4,875,590 $2,696,550

Main Medium Television Magazines Television Television & Magazines

KIND Snacks (9)

$191,000

Outdoor

* Price per single-serving bar calculated as average price across multiple retailers
$1.28 $1.29

$1.89 $1.92

$2.00

$0.39

$0.57 $0.46 $0.52

$0.69 $0.70

$0.83

Natural Grocery Channel

Crowded snack bar aisle. Brands Kashi, Clif, Lara, Cascadian Farm, KIND, and Natures Path enjoy dominant shelf positioning.

Drug Channel

Product assortment is a mix of Energy & Performance bars and Diet bars, positioned alongside energy drinks and supplements

Drug Channel

End cap displays feature brands Natures Valley and Kashi

Traditional Grocery Channel

Quaker Chewy features teen celebrity Nick Jonas on packaging . Brands Nature Valley, Quaker Chewy, and Fiber One enjoy dominant shelf positioning.

Other Channel: School Cafeteria

Other Channel: Airport

SMARTEST Quaker Chewy: Nourish their Play

DUMBEST Special K: Strut Your Sassy

Marketing strategy driven by sampling and POS display

Touching consumer when most effective when hungry or

Very limited use of advertising Cause marketing

brand mission

making purchase decision Coupons and mailers to promote sampling

Only a few billboards and street furniture

KIND Movement as a way of engaging customers with

Website & Social media

Interacting with customers online

Sampling
Goal to try and find people in a time of need

(when they are hungry), and sample them Best conversion rate of sample to regular consumer of any bar brand Best marketing dollar spent is to provide someone with a KIND bar in a time of need

Sampling KIND Food Truck

Sampling At the point of need

Point of Sale Marketing

In-store displays & placement near register

Point of Sale Marketing

In-store sampling

Targeting influential groups and individuals

Culinary Community Nutrition, bold taste, whole ingredients Health & Wellness Community Gym-goers, nutrition experts, yoga and pilates Support pro athletes avoid competitive athletics Culture Groups Art, music, and fashion Product seating in green rooms, VIP rooms, etc

Media & Advertising

Very limited use of advertising To-date only street displays billboards, posters, street furniture

Cause Marketing The KIND Movement

Cause Marketing The KIND Movement

Using cause to promote trial, word of mouth

Cause Marketing The KIND Movement

Social mission being pushed by charismatic

founder creates many PR opportunities KIND gets much more press coverage than CLIF, even though CLIF is a much bigger company

Website & Social Media

KINDAHOLICS & KIND Advantage Direct sales to customers & subscription service

Website & Social Media

Facebook & Twitter Use social media to interact with customers as well as merchants and partner brands Reinforce brand image & messaging

In-store Retail Regional Partners (e.g. Zip Car) Company Website

Other Retail (Caf, Airport)

Kind

Social Media

Outdoor Adv Grassroot Sampling Truck

PR & Media (TV, Print)

After School During School

YMCA Daycare Summer Camps Convenience Stores

School Cafeteria Vending Machines Sports Stadiums School Fundraisers

Whole Fruit/Nuts

Low Price

High Price

Processed

Gluten free

Kids Snack

Adult Snack

Gluten

Diverse Flavor Range

Unhealthy

Healthy

Uniform Flavor Range

Lesson Learned

Implication

KIND s strength is in sampling: it has a 70% conversion rate

To reach children, KIND should offer sampling when children have a time of need, such as at schools or childrens sporting events To reach the kids segment, KIND should target influencers in the sphere of childrens health and nutrition To compete with more established players, KIND needs to invest more in marketing, either by increasing sampling or trying ATL advertising

KIND has been able to attract positive media attention better than competitors

Competitors heavily use ATL advertising and discounting to create brand awareness

STRENGTH
* All natural fruit & nut positioning * Heavy PR & media exposure * High conversion rate * Gluten & wheat free. Non GMO * Wide flavor product range * Strong social mission INTERNAL ORIGIN

WEAKNESS
* Low brand awareness * High price point * Limited distribution * Limited advertising support * Lack of kid snack positioning

OPPORTUNITY
EXTERNAL ORIGIN * Sales via school-based distribution channels * Kid size package size * Multi-pack vs. single serving

all

THREAT
* Fragmented competitive landscape dominated by large CPGs with deep distribution * Heavy industry print advertising & celebrity endorsements * Deep retail promotions

To parents, teachers, and caretakers of school-aged children, Kind snacks is a convenient snack bar that is both nutritious and delicious with wholesome ingredients you can see and pronounce, which is good because growing children need healthy food to build healthy bodies