Food Bites Confectionery Bars

1. Food Bites Confectionery Bars • Snacks and Confectionery • Annual Market Quantification • March 2011

2. Setting the scene • The bars market is made up of three products: • health bars • sports enhancement bars, and • count lines • These three are marketed to different targets and differ in material composition but are similar in that all three are presented in an individually wrapped, single serving size. • Health bars are targeted at the health, fitness and weight conscious segments of the market. Sports bars on the other hand are aimed at sport, endurance and fitness enthusiasts, while count lines have a comparatively greater mass market appeal. • Count lines make up 72.3% of the total market for bars with the top three players in the category contributing over 75% to total market volumes. The remainder of the volumes is split between imported brands and smaller regional players. Health bars make up 15.8% of the bars market, driven mainly by two players. Sports bars on the other hand contribute 12.0% to total volumes with the two top players in the sports enhancement bar market leading in that segment. 2

3. 2010 Category Shares 3

4. Count lines recover lost volumes, drive category growth Count lines recovered from losses seen over the previous two years with 17.6% growth in 2010, the highest growth rate recorded since 2000. The market for count lines is expected to remain stable in the future with 1.8% growth expected in 2011 and 0.5% growth forecast for 2012. This category grew despite the high price increases seen during the base year, reflecting the low price sensitivity of count line consumers. The channel and regional distribution patterns for count lines remained more or less the same to the ones seen in 2009. General retail continues to dominate as the prime channel. The growth seen in this sector can be attributed to extensive promotional activity, both above and below the line. This served to keep count lines top of mind for consumers. Added to this, price promotions, product extensions and new packaging designs lead to increased consumption across the board. 4

5. Health bars show consistent increases Health bars experienced 4.5% growth during the base year and are expected to grow at higher rates in 2011 and 2012. Health bars have shown consistent year on year growth and this is mainly attributed to the healthy eating trend that has been growing in popularity over the years. General retail remains the most popular distribution channel for health bars, although it lost some share to other channels in 2010. Gauteng continues to consume the greatest health bar volumes countrywide, with 56.7% of the industry’s output sold in this region. The growth seen in this category over the years could be attributed to regular innovation and reformulation, as well as new brands and flavours. This generates consumer interest particularly with the innovator group of consumers. Health bars represent a convenient meal replacement solution, which is congruent with the trend to on-the-go consumption. The addition of “natural or wholesome” ingredients is also believed to drive sales. 5

6. Good growth for sports bars Sports bars experienced 17.5% growth in 2010, returning to pre-2009 two digit growth levels. They have experienced the greatest average growth per annum since 2000 when compared to both count lines and health bars. However, given their niche appeal and relatively limited volumes, this has not had a significant impact on the bars category as a whole. Sports bars are expected to show lower growth rates in the future with 4.0% expected in 2011 and 1.3% expected in 2012. The channel landscape of sports enhancement bars experienced a higher degree of shifts from 2009 levels relative to count lines and health bars. General retail remained the most popular channel with 43.2% share, reflecting an 8.9% share growth from 2009. The foodservice channel was the only other channel that experienced share growth from 2009. The balance of the channels lost some share with the wholesale channels and garage forecourts leading in the share declines. 6

7. Food Bites Confectionery Bars For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za