Creating Consumer Demand for American Hardwoods

1. Creating Consumer Demand for American Hardwoods

2. Creating Consumer Demand: Two Parallel Industry Efforts • American Hardwoods Promotion • Coalition of 20+ trade associations and industry leaders • Voluntary funding of Logo/Theme/Promotion Effort • Hardwoods Checkoff • Industry proposal to USDA for a Hardwood Industry Checkoff Program

4. American Hardwoods Promotion • Research: • Harris Poll – 650+ Consumers/Prosumers • Findings – Attitudes toward Hardwoods • Develop Logo/Tagline/Messaging that resonates with Consumers • Promote the Promotion!! • Engage the hardwood industry & product manufacturers to spread the word

5. 90% of consumers like hardwood as a material, 70% like it a lot. Overall Impression of Hardwood LIKE IT (NET) 93% 93% Like it a lot Like it somewhat Neither like it nor dislike it B n=228 (B) n=424 (A) BASE: ALL RESPONDENTS Q905. What is your overall impression of hardwood as a material for furniture, flooring, cabinets or building materials?

6. Only 10% of Consumers feel Very Informed about Hardwoods BASE: ALL RESPONDENTS Q900. How well informed would you say you are about hardwood?

7. Consumer attitudes about Hardwoods BASE: ALL RESPONDENTS Q1006. Below are pairs of words that are opposites of each other. For each pair, please indicate which word better describes your perception of hardwood.

8. 90% of Consumers say Hardwood inspires pride in the home 94% 89% 1% BASE: ALL RESPONDENTS Q1011. How strongly do you agree or disagree with each of the following statements about hardwood?

9. And agree that hardwood is a good investment The Value of Hardwood TOTAL AGREE 91% 92% 90% 94% Strongly Agree Somewhat Agree Neither Agree nor Disagree TOTAL DISAGREE Somewhat Disagree Strongly Disagree 1% 2% 1% 2% (B) (A) (B) (A) BASE: ALL RESPONDENTS Q1011. How strongly do you agree or disagree with each of the following statements about hardwood?

10. A great message, no one telling it Research shows that 90%of consumers agree that hardwood products are attractive and inspire pride in the home. Only 10% consider themselves very informed. • Hardwood is BEAUTIFUL, NATURAL, SUSTAINABLE • Consumers are confused by competing materials (laminates, bamboo/the Ikea mind-set)

11. Manufacturers can help tell our story! On average, flooring industry spent $425 million in retail brand and consumer advertising in 2009 • OEMs understand the benefits and are eager to talk to the advantages of American Hardwoods • Capture % of manufacturers’ existing marketing spend • We have the platform and a message that can help them sell

13. Public Relations Plan • Encourage adoption and use of messaging across industry platforms • HardwoodsInfo.com, • Trade media outreach • Speakers bureau

14. Pantone Solid Color • Pantone 390 • Pantone 350 • Pantone 209

15. Treasured for Generations Strategic Positioning Umbrella Natural Beauty Enduring Value There is no substitute for American Hardwoods Core Messaging Platforms • American Hardwoods are the foundation of the home; have been used for centuries in flooring, cabinetry and furniture for their lasting value. • Products made with American Hardwoods span generations, making them more cost-effective over their lifecycle than other materials • The looks are timeless • American Hardwoods can be refinished and re-stained, even after being passed from generation to generation, to meet changing design styles and to repair any nicks or scratches • In a study conducted by the NWFA, 99% of U.S. real estate agents asserted that homes with hardwood flooring are easier to sell; 90% said homes sell for more money—up to 10% more, in fact • A safe recommendation for prosumers that results in happy customers • 90% of consumers and prosumers agree that hardwood is a good investment and that its durability makes it a good, confident choice for the home* • 80% of prosumers agree customers who use hardwood tend to be happy with their decision and feel they got the most out of their investment* • 85% of consumers and prosumers feel that hardwood is synonymous with quality and durability* • For warmth, value, longevity and durability in the home, American Hardwoods are the only natural, non-manufactured choice • Made in America • It’s the premium choice available at multiple price points to fit any budget • American Hardwoods are renewable and sustainable • American Hardwoods are abundant, renewable and self-regenerating • American Hardwoods are naturally prolific – nearly twice as much hardwood grows each year as is harvested • American Hardwoods are responsibly managed – the predominant harvesting method is single-tree • Harvested in America – less energy and cost to transport, unlike imported product • Virtually every part of the log is used for lumber or by-product • You can have it all with American Hardwoods • Lasting value • Flexibility • Durability • Longevity • Rich, quality look • Natural resource • American Hardwoods are the only natural product that offers both quality and durability • Brings the beauty of nature into the home • Not inspired by nature, it is nature • Beauty cannot be replicated in substitutes • Wood grains make each product unique • American Hardwoods are available in a variety of species and lumber grades, providing different colors, patterns and character • Unmatched design flexibility • Different species offer different looks to meet any customer décor • Offers the ability to create a traditional OR modern/trendy look • Available at various price points to meet any customer budget • 95% of consumers and prosumers enjoy the natural look of hardwood, and agree that the natural beauty of hardwood makes a home feel warm and comfortable* • 90% of consumers and prosumers agree that hardwood products are attractive and would inspire pride in the home* • 93% of consumers and prosumers like hardwood as a material for furniture, flooring, cabinets or building materials, nearly 70% like it a lot* Sample Support Points For internal Use Only *Based on quantitative research conducted in January 2011 by Harris Interactive

17. Hardwood CheckoffWould Generate Funding For: Promotion Education Research

18. Hardwood Checkoff What is a Check-Off? • Industry approved fee on it’s own product • USDA Program / USDA Oversight • Board of Managers directs Spending on Promotion and Research. • Board is Industry nominated, USDA selected

19. Hardwood Checkoff Checkoff Provides • Fairness –captures fee on lumber & panel sales – clear fee structure • Flexibility –allows adaptation to changing circumstances • Experience – learn from other agricultural sectors • Durability – longevity to make a difference

20. Hardwood CheckoffIndustry Organizing Committee Jim Howard (Co-Chair), Atlanta Hardwood Corp. Ted Rossi (Co-Chair), Rossi Lumber Nancy Arend, Northwest Hardwoods Victor Barringer, Coastal Lumber Chris Bingaman, Bingaman & Son Lumber, Inc. Bill Buchanan, Buchanan Hardwoods John Crites, Allegheny Wood Products Don Finkell, Anderson Hardwood Floors, Inc Jamey French, Northland Forest Products, Inc. Pem Jenkins, Turn Bull Lumber Jeff Meyer, Baillie Lumber Co., Inc. Jack Shannon, The Shannon Group Brad Thompson, Columbia Forest Products Chris Zinkhan, The Forestland Group LLC

21. Process Hardwood CheckoffGrowing Future Markets • Committee works with USDA,drafts order • 60-Day Public Comment period (published in Federal Register) • Companies who pay into program VOTE • Majority vote by sales value approves • Industry nominates board – USDA selects • Board directs projects and work begins • Other industry segments considered • Checkoff revisited at least every 7 years

22. Hardwood CheckoffGrowing Future Demand • Timing: • Now: Order is drafted, submitted to USDA • Next: USDA reviews – may change • ?? Comment period – this year • ?? Vote – likely late 2011 or 2012 Q1-2 • Who will it include: • Hardwood lumber and Plywood producers

23. Hardwood CheckoffGrowing Future Demand Funding Plan Sawmills • Facilities with over $2 million in sales • $1 for every $1,000 in lumber sales

24. Hardwood CheckoffGrowing Future Demand Sawmill example Company Sales Fee Joe’s Sawmill $1.75m $0 Carl’s Sawmill $8M $8,000 Bob’s Sawmill $15m $15,000

25. Hardwood CheckoffGrowing Future Demand Funding Plan Hardwood Plywood • Producers over 10 million square feet • $3 per $1,000 sales

26. Hardwood CheckoffGrowing Future Demand Sawmills-Green $3.5 mil. Sawmills-KD $2.5 mil. Yards & value added $1.5 mil. Hardwood plywood $3.0 mil. TOTAL $10.5 mil. Projected Revenue

27. Commodity Checkoffs • Established Yearly revenue • Cotton 1966 $66 million • Potatoes 1972 $20 million • Eggs 1976 $21 million • Pork 1986 $65 million • Beef 1986 $80 million • Honey 1987 $3.8 million • Watermelons 1990 $1.6 million • Soybeans 1991 $90 million • Milk 1993 $281 million • Mushrooms 1993 $2.6 million • Popcorn 1997 $1.5 million • Peanuts 1999 $6 million • Avocados 2002 $24 million • Lamb 2002 $2.3 million

28. Hardwood CheckoffGrowing Future Markets Checkoff’s PotentialFor the Hardwood Industry?

29. Hardwood CheckoffGrowing Future Demand

30. Hardwood CheckoffGrowing Future Demand Cotton Inc. has estimated a return of $8 for every $1 of investment

31. Hardwood CheckoffGrowing Future Markets Dairy Inc. reports the per capita consumption of all dairy products increased 16% from 1983 to 2008

32. Hardwood CheckoffGrowing Future Markets Potato Board estimates $4.74 return for every $1 invested

34. Hardwood CheckoffGrowing Future Markets Questions?