AHAA Hisp Allocation - Rev Growth SSG Study - 3!7!12 - PostFinal

Hispanic Allocation on Revenue Growth, 3/7/2012
Background
Since 1998, AHAA has been helping its members serve its corporate clients through breakthrough independent studies that
increase understanding of what it takes to win the market, share new concepts and identify best practices of marketing to Latinos.
Most recently, in October 2011, Part 1 of AHAAs study series on drivers to growth found a strong positive correlation between allocation of ad resources and topline growth.
Hispanic marketing Best-In-Class companies have a sustainable competitive growth advantage over the Laggards.
Hispanic Allocation on Revenue Growth, 3/7/2012 Growth
Hispanic Market Highlights

MARKET SIZE
2010 Population 50.7M1
2011 Hispanic Share of US
17%2, 1 in 6
GROWTH
Hispanic Population 2000-2010 CAGR v Non-Hispanic Share of Total US 2000-2010 Growth Share of Labor Force Growth 2010-2020 3.6% v. 0.5%3 56%4 74%7
ECONOMIC
2012 Estimated Buying Power Hispanic Buying Power 2000-2010 CAGR v. Non-Hispanic
1, 3, 4 2010
$1.2 Trillion5 7.8% v. 3.4%6
Census ACS, 2 SSG Analysis of Census,
5,6
Selig Center at the University of Georgia, 7 Bureau of Labor Statistics
Challenge
Companies challenged by anemic growth more than ever
Consumers have changed; more fickle today Economic downturn will make consumers more frugal and valueoriented over the long run Technology and new media create both opportunities to reach audiences and complexity as well Possible Reset of economy could structurally impact certain sectors and jobs Changing demographics (age) and multicultural trends create new potential sources for growth
Challenge
All companies have growing challenge of balancing competing needs
1. Holding on to General Market 2. Finding new growth 3. Capturing fair share of growth markets
About the Author & Sources

The study was commissioned by AHAAs Research Committee and developed and executed by Santiago Solutions Group (SSG), a growth strategy consultancy. Independent methodological review performed by Dr. Cristina Garcia, professor of mathematics & statistics at USC. Financial revenue growth data extracted from companies 10Ks. Parent company ad spend data for 2006-2010 Hispanic media and non-Hispanic media collected from The Nielsen Company. Consumer habits, attitudes and values by GfK Roper & GfK MRI syndicated studies with sample of 53K (sampling details in Appendix E)
Study Objectives
Presented by Carlos Santiago, President & Chief Strategist, Santiago Solutions Group
Carlos@SantiagoSolutionsGroup.com (818) 736 5661 7
Study Objectives
Is there a significant difference in the revenue growth rate attained by
CPG companies which designate higher focus and resources to the Hispanic market and those that focus less? What factors distinguish companies that capture Hispanic growth successfully from those that underperform with this segment?
What do they do differently?
Study Variables
Aggregate Hispanic Allocation 20062010: Independent variable
1. The input being changed possibly impacting Revenue CAGR. 2. The % of total advertisement dollars spent in TV, Radio, and Print (per Nielsen tracking) assigned to Hispanic-centric media channels throughout 2006 to 2010.
2006-2010 Revenue CAGR: Dependent variable

1. Revenue CAGR is our dependent variable which was tested against different levels of Hispanic Allocation. 2. Revenue as reflected from topline, organic US-only consumer demand per 10Ks.
may have been adjusted to exclude extraordinary transactions and normalize revenue from acquisitions, if enough clear data has been stated in corporate financials.
Methodology
A main CPG regression with 39 companies was validated by three other test regression models with larger sample sizes. Four total regression tests
Aggregate 06-10 Hispanic Allocation N=211

Aggregate Hispanic 06-10 Allocation AND Year by Year Revenue Growth N=211
Aggregate Hispanic 0610 Allocation, Year by Year Revenue Growth, AND Super Categories
N=211
All confirmed the same findings at statistical significance

Details of statistical analysis will follow after Q&A section.
CPGs N=39
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CPGs & Retailers in Study
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Study Significance
All findings discussed in the presentation are statistically significant at a

95% confidence level or better.
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Study Findings
13
Are CPGs Growth Rates Related to Hispanic Focus?

There is a direct & positive relationship between CPGs Hispanic ad allocation and their topline revenue growth.
Please see Appendix D (Graph 1) for Detailed Graph and Graphical Analysis.
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Key Findings
For Consumer Packaged Goods and their retailers
Hispanic Allocation alone explains about 35% of CPGs change in topline revenue growth
The other 65% may include other critical factors such as brand awareness/equity, new product development, management focus, measurement tools, distribution, sales force, past performance, community position, organization structure, talent, overall segmentation expertise, etc.
Further analysis is needed to determine what exactly the other drivers of revenue growth are.
CPGs & Retailers Revenue Growth Drivers
Hispanic Marketing 35%
Other Drivers of Growth 65%
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Key Findings
Organic revenue growth rates decline sharply as Hispanic share of budgets decrease and vice versa.
Allocation Tiers
Average 06-10 Hispanic Allocation Average 06-10 Revenue CAGR
7.7%
8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
6.8%
4.7%
2.2%
0.9%
0.6%
Top Allocation (70th Percentile)
Middle Allocation (40th 70th Percentile)
Low Allocation (<40th Percentile)
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Top 30 Percentile Hispanic Marketers By Allocation And Overall Revenue Growth
Top 30 Percentile
Please see Appendix D (Graph 1) for Detailed Graphical Analysis.
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Key Findings
All tests validated the same findings. Hispanic Allocation has a direct & significant impact on companies overall revenue growth.
Aggregate 06-10 Hispanic Allocation
N=211
Aggregate Hispanic 06-10 Allocation AND Year by Year Revenue Growth N=211
Aggregate Hispanic 0610 Allocation, Year by Year Revenue Growth, AND Super Categories N=211
CPGs N=39
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Why Hispanic Consumers Are So Important Today?
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Much faster household formation has exponential impact on continued growth opportunity
Non-Hispanic Hispanic
6x NH CAGR
Households CAGR
0.4%/yr.
2.5%/yr.
1SSG
Analysis of US Census, Data Set: 2008-2010 American Community Survey 1-Year Estimates
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Much larger Households means heavier usage

Non-Hispanic Hispanic
52% larger HH
Persons Per HH1
2.5
3.8
1SSG
Analysis of US Census, Data Set: 2008-2010 American Community Survey 1-Year Estimates
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Which Consumer Is Worth More?

Hispanic households food at home expenditures will grow at 5.7% annually, more than twice the rate for Non-Hispanic households of 2.5%.
Hispanics Food at HH Expenditures

$100 $80
$ Billion
Historic CAGR: 5.4% Forecast CAGR: 5.7%
$94 $78
$59 $42
$60 $40 $20 $1995 $27
$33
2000
2005
2010
2015
2020
Source: Bureau of Labor Statistics, Credit Suisse estimates 2011
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Which Consumer Is Worth More?

The younger age and larger Hispanic household size contributes to Hispanic households having the highest consumer spending potential for necessary spending on Food at Home and Personal Care.
Hispanic Food at Home cumulative lifetime spending is over 50% higher than that of NonHispanic White. Hispanic Personal Care cumulative lifetime spending is about 33% higher than that of NonHispanic White.
Source: 2010 Geoscape Consumer Spending Dynamix.
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Hispanics are CPG valuable customers

More influenced by strong brands
Top Box: Agree Completely or Agree Mostly or Very Important I am more influenced by what seems hot and whats not Hispanic Index 139
Brand name is the best indication of quality I only buy food items that are name brands, not generic brands
152 150
Source: 2011 Doublebase GfK MRI - Base: All (n= 6.6K Hispanics & 46.5K Non-Hispanics)
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Less price sensitive
Top Box: Agree Completely or Agree Mostly or Very Important
Id pay extra for products that are consistent with the image I want to convey I tend to make impulse purchases I know the price I pay for most of the foods & packaged goods I buy
Hispanic Index
125 117 83
Source: 2011 Doublebase GfK MRI - Base: All (n= 6.6K Hispanics & 46.5K Non-Hispanics
25

Status & Image Conscious
Top Box: Agree Completely or Agree Mostly or Very Important I like to live a lifestyle that impresses others I prefer to buy things that my friends/neighbors would approve of Seeking the utmost attractive appearance Hispanic Index 149 167 122
26

See Shopping as Fun
Top Box: Agree Completely or Agree Mostly or Very Important Hispanic Index
I enjoy wandering the store looking for new products

Im always first of friends to try new products/services Shopping is a great way to relax
131
145 147
27

Key Category Influentials
My family/friends often ask for and trust my advice on this topic Babies/Children Beer Alcoholic Beverages Beauty Cleaning Products New Food Items Food Snacks Dieting Healthy Lifestyle
Hispanic Index
130 121 135 138 112 126 112 123 115 112
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Conclusions & Implications
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Key Takeaways For Consumer Packaged Goods

Statistical evidence demonstrates that: Consistent/significant Hispanic marketers drive superior revenue growth. Hispanic as a priority drive sustainable growth into future.
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Implications for Companies

Real bottom-line benefits come from consistent approaches. Marketing is only the beginning, corporate-wide integration and investment is key
Responding to the most appropriate cultural insights Broad use of all elements of marketing Developing strategies from communications to customer experience
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The U.S. Hispanic Consumer Opportunity

Robert Moskow, Research Analyst Marcela Giraldo, Research Associate
robert.moskow@credit-suisse.com (212) 538 3095 marcela.giraldo@credit-suisse.com (212) 325 6764

DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
The materials may not be used or relied upon in any way.
CREDIT SUISSE (USA), INC.
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Top Five Observations

Wall Street should be paying more attention to the companies that get this right
Good Hispanic marketing companies attract and retain best-in-class managers Commitment from the top and accountability at the bottom are key
Kraft has engineered a turnaround

Goya is the premier asset in Hispanic CPG
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Why Does Wall Street Tend To Overlook Hispanic Marketing Expertise?

Difficult to isolate the impact of Hispanic marketing on growth rates Even when you do isolate it, it doesnt look that meaningful to valuation Investors attention has shifted to emerging markets
U.S. Approx. % of Growth Rate Growth Rate Division Sales To With With NonGrowth Hispanics Hispanics Hispanic Rate Tier Leaders 18% 7.0% 2.5% 3.3% Followers 13% 5.5% 2.5% 2.9% Laggards 8% 4.0% 2.5% 2.6% High/Low Difference 0.7%
Companies KO, GIS, NESN.VX, MKC KFT, K, UN HNZ, CPB, HSY, PEP, CAG
+ Most of these companies have 60% of their sales in North America + Therefore, an incremental 0.7% to North America growth rate translates to only 0.4% for total company sales + In terms of valuation, 0.4% of incremental growth translates to a valuation differential of only 8%
Source: Company information. CS estimates
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In reality, Leaders have outpaced Laggards in North America by 3.1% on average

6.0%
Historic organic revenue growth NA (3 yrs)
5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0%
4.4%
4.6% 3.3%
Leaders: Average 2.6%
Followers: Average 2.2%

2.9% 2.3%
Laggards: Average -0.5%
1.4% 0.7%
1.0%
1.3% 0.5%
1.4%
-0.1%
McCormick
General Mills
- Translates into a much more meaningful 20%+ valuation differential!

Source: Company information. CS estimates
Pepsi (beverages)
Unilever
Nestle
Coke
Heinz
Kraft
Cambpell
Colgate
P&G
Kellogg
ConAgra
-3.7%
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Good Hispanic Marketing Organizations Attract Best-In-Class Managers

Good managers want to be on the cutting edge of marketing They create shareholder value
Examples
Coke shifting their mindset to the Latin American point-of-sale merchandising approach General Mills leveraging the Que Rica Vida platform and partnering with Univision
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The trend is to push more of the responsibility into the brand teams
Stage 1 Low level of top management commitment Stage 2 Creation of a high profile management role to oversee the Hispanic efforts Creation of a Center of Excellence dedicated to sharing best practices Support function with no P&L responsibility Stage 3 Accountability at the brand level for Hispanic sales. Hispanic advertising budget is integrated within the brands. ROI goals for Hispanic marketing investment within the brand teams
Young brand managers get assigned to monitor the Hispanic efforts
- Coke, Wal-Mart, P&G, Unilever are all doing this - The risk is that upper management lose will some of their control and visibility - Maintaining accountability will be the key to success
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Kraft has engineered a turnaround
Strong support from top management

The strategy is to increase Hispanic spending on top 10 brands including Oreo, KoolAid and Kraft Singles. Re-established their Latino Center of Excellence in 2008
Hispanic Advertising Investment as % of Total

14% 12% 10% 8% 6% 4% 2% 0% 2.1% 2.4% 3X increase in 2011 13.1%
4.4%
2008
2009 Kraft Foods Inc
2010 Average group
2011 (E)
Source: Kantar media. KFTs management comments
Risks
Its hard to regain momentum after several years away
Kool-Aid, in a first for any Kraft brand, has allocated the majority of its 2011 marketing budget to reach Hispanics
Spin off of companies may dilute Hispanic efforts and impact scale advantage
Source: NY Times
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Goya is the premier asset in the Hispanic food space
US Hispanic Population by Country of Origin
75-year-old family-owned and family-managed company Approximately $1B in annual revenues Best at understanding food preferences by country of origin Tailor product portfolio by region in the US Relationships with bodegas are important asset
Central American 8.3% Dominican 2.8%
South American Other 5.1% 5.8%
Cuban 3.4% Mexican 65.7%
Puerto Rican 9.0%

Source: U.S. Census 2008
Mexican Caribbean
Central And South American
Source: www.goya.com
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Companies Mentioned (Price as of 06 Mar 12) Campbell Soup Company (CPB, $33.04, NEUTRAL, TP $33.00) Clorox Co. (CLX, $67.92, NEUTRAL, TP $72.00) Colgate-Palmolive (CL, $93.35, NEUTRAL, TP $90.00) ConAgra Foods, Inc. (CAG, $26.36, NEUTRAL, TP $27.00) Danone (DANO.PA, Eu50.58, UNDERPERFORM, TP Eu44.00) General Mills (GIS, $38.60, NEUTRAL, TP $41.00) H.J. Heinz Company (HNZ, $53.09, NEUTRAL, TP $54.00) Hormel Foods (HRL, $28.50, NEUTRAL, TP $32.00) Kellogg Company (K, $52.09, NEUTRAL, TP $56.00) Kimberly-Clark Corporation (KMB, $72.66) Kraft Foods, Inc. (KFT, $38.35, OUTPERFORM, TP $45.00) McCormick & Company (MKC, $50.82, NEUTRAL, TP $50.00) Nestle (NESN.VX, SFr55.30, NEUTRAL, TP SFr58.00) PepsiCo, Inc. (PEP, $62.79) Procter & Gamble Co. (PG, $66.95, OUTPERFORM, TP $70.00) Ralcorp (RAH, $74.41, NEUTRAL, TP $75.00) Reckitt Benckiser (RB.L, 3469 p, OUTPERFORM, TP 3,800.00 p) Sara Lee Corporation (SLE, $21.24, NEUTRAL, TP $20.00) The Coca-Cola Company (KO, $69.23) The Hershey Company (HSY, $60.93, OUTPERFORM, TP $68.00)
Analysts stock ratings are defined as follows: Outperform (O): The stocks total return is expected to outperform the relevant benchmark* by at least 10-15% (or more, depending on perceived risk) over the next 12 months. Neutral (N): The stocks total return is expected to be in line with the relevant benchmark* (range of 10-15%) over the next 12 months. Underperform (U): The stocks total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months. *Relevant benchmark by region: As of 29th May 2009, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stocks absolute total return potential to its current share price and (2) the relative attractiveness of a stocks total return potential within an analysts coverage universe**, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industry factors. For Latin American, Japanese, and non-Japan Asia stocks, ratings are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; for European stocks, ratings are based on a stocks total return relative to the analyst's coverage universe**. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. **An analyst's coverage universe consists of all companies covered by the analyst within the relevant sector. Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts coverage universe weightings are distinct from analysts stock ratings and are based on the expected performance of an analysts coverage universe* versus the relevant broad market benchmark**: Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. *An analysts coverage universe consists of all companies covered by the analyst within the relevant sector. **The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 500 in the U.S.) over the next 12 months. Credit Suisses distribution of stock ratings (and banking clients) is: Global Ratings Distribution Outperform/Buy* 46% (60% banking clients) Neutral/Hold* 42% (57% banking clients) Underperform/Sell* 10% (48% banking clients) Restricted 2%
Disclosure Appendix
Important Global Disclosures I, Robert Moskow, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. See the Companies Mentioned section for full company names.
3-Year Price, Target Price and Rating Change History Chart for NESN.VX
NESN.VX Date 16-Nov-09 11-Feb-10 30-Nov-10 9-Jun-11 11-Jul-11 16-Dec-11 Closing Price (SFr) 47.88 49.69 54.55 53.15 52.6 51.2 Target Price Initiation/ (SFr) Rating Assumption 55 60 N 55 R 58 N
60 55 50 45 40 SFr 35 55 60 58 N 55 R N
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
Closing Price
Target Price
Initiation/Assumption
Rating
O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered
3-Year Price, Target Price and Rating Change History Chart for HSY
HSY Date 3/24/09 7/8/09 7/24/09 12/31/09 2/1/10 4/22/10 7/23/10 2/2/11 2/28/11 3/18/11 4/26/11 10/21/11 10/27/11 Closing Price (US$) 35.41 37.01 40.97 35.79 36.81 48.08 47.21 48.61 52.32 53.87 57.27 60.26 57.46 Target Price Initiation/ (US$) Rating Assumption 30 U 33 43 N R 40 N 50 52 55 O 56 58 64 70 68
70 65 60 55 50 45 40 35 US$ 3030
09 3/7 /
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O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities.
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7Ma r -0 9 7Ma y-0 9 7Ju l-0 9 7Se p09 7No v09 7Ja n10 7Ma r -1 0 7Ma y-1 0 7Ju l-1 0 7Se p10 7No v10 7Ja n11 7Ma r -1 1 7Ma y-1 1 7Ju l-1 1 7Se p11 7No v11 7Ja n12
70 68 64 58 55 56 50 43 U 52 O
40 R N
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Rating
CREDIT SUISSE (USA), INC. Hispanic Allocation on Revenue Growth, 3/7/2012
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41
Q & A Discussion
42
Statistical Detail & Model Validation

Presented by Dr. Cristina Garcia Math & Statistics Professor at USC SSG Methodology Advisor
43
Methodology Highlights
Started by looking at the Top 500 overall Advertisers (TV, Radio, Print) by year and in aggregate between. Matched each parent company to available published financial revenue data, and calculated 2006-2010 compounded annual growth rates. Companies which did not have consistent published financials such as companies which grew on M&As that werent adjustable rather than organic consumer driven growth were eliminated from the final regression set.
Top 500 U.S. Overall Advertisers 2006-2010
(500)
Public (418)
Private (-82)
Consistent Advertisers (220)
Inconsistent Advertisers (-198)
Publicly Traded w/ clear Organic US Revenue (211)
Unadjustable M&As Inconsistent Data (-9)
CPGs (39)
44
Test Validations
Aggregate 06-10 Hispanic Allocation N=211
All models validated the same findings. Hispanic Allocation has a direct & significant impact on companies overall revenue growth.
Aggregate Hispanic 06-10 Allocation AND Year by Year Revenue Growth
N=211
Aggregate Hispanic 0610 Allocation, Year by Year Revenue Growth, AND Super Categories N=211
CPGs
N=39
45
Consumer Packaged Goods Regression Model

Aggregate Hispanic Allocation 2006-2010
Hispanic Allocation alone explains about 35% of changes in revenue growth over a 5 year period for Consumer Packaged Goods (R2=0.35)
An R squared of .35, tells us that roughly 35% of a companys revenue growth is driven by changes in Hispanic Allocation. The expected range for a 1 percent increase in Hispanic allocation is an increase of .48% to 1.28% in overall corporate revenue growth rate.
Revenue Growth over 5 year period (CAGR 06-10)

CPG (N=39)
46
CPG Model Findings

For every additional percentage point increase in Hispanic allocation, we would expect revenue growth of 0.883% over the 5 years for Consumer Packaged Goods
Revenue Growth Drivers for CPGs & Retailers
In other words, on average, a 10% allocation of a CPG companys ad spend to Hispanic media over 5 years would generate revenue growth of 8.83% over the 5 year period.
Hispanic Marketing 35% All Other Drivers of Growth 65%
47
Test 1: Is Aggregate Hispanic Allocation Important? YES! Hispanic Allocation directly impacts topline revenue growth for Top 500 Advertisers
On average, for every additional percentage point increase in Hispanic allocation, we would expect revenue growth of .40% over the 5 years.
In other words, allocating 10% of the companys ad spend to Hispanic media over 5 years would generate revenue growth of 4.00% over the 5 year period
Aggregate Growth CAGR 06-10

TOP ADVERTISERS (N=211)
48
TEST 2: Individual Years Growth and Aggregate Hispanic Allocation Revalidated! Both directly impact topline revenue growth
Of course, each years CAGR most significantly affects the companys revenue growth over 5 years R-square 0.608 In other words, 60.8% of the variation in growth over the 5 years (CAGR 0610) is explained by the ad spend in Hispanic media over the 5 years and each years annual growth. On average, for every additional percentage point increase in Hispanic allocation, we would expect revenue growth of .34% over the 5 years. In other words, allocating 10% of the companys ad spend to Hispanic media over 5 years would generate revenue growth of 3.44% over the 5 year period.
49
CAGR 06-07, 07-08, 08-09, 09-10
Revenue Growth over 5 year period

Test 3: Hispanic Allocation, Super Categories and Revenue CAGR Revalidated Again! Hispanic Allocation Is Relevant to Revenue Growth!
CAGR: 06-07, 07-08, 0809, 09-10 Categories: Auto, Tech & Entertainme nt, Retail, CPG, Finance/Insu rance Hispanic Allocation: 06-10
R-square .64, in other words, 64% of the variation in growth over the 5 years (CAGR 06-10) is explained by the ad spend in Hispanic media over the 5 years and each annual years growth. On average, for every additional percentage point increase in Hispanic allocation, we would expect revenue growth of 0.29% over the 5 years. In other words, allocating 10% of the companys ad spend to Hispanic media over 5 years would generate revenue growth of 2.89% over the 5 year period
Revenue Growth over 5 year period

50
Conclusions of Tests
In all tests, Hispanic Allocation consistently comes up as a statistically significant variable positively affecting revenue growth rates.
Along with showing the importance of investing in the Hispanic market, our model also shows that performance during the turn into the recession 2007 to 2008 and recovery from the recession 2009 to 2010 time periods serve as good indicators for relative long term performance (06-10).
51 1
Appendix
52
Sectors/Super Categories Breakdown

Top 500
Advertisers SuperCategories
Included
Omitted Advertisers
(Reasons)
Auto
Packaged Goods
Private
NonProfits
Govt
53
Appendix A Ranking By Hispanic Allocation

Company
WALGREEN CO WAL-MART STORES INC COCA-COLA CO CLOROX CO RALCORP HOLDINGS GROUPE DANONE KIMBERLY-CLARK CORP UNILEVER TARGET CORP GENERAL MILLS INC NESTLE SA LOREAL SA PROCTER & GAMBLE CO HERSHEY CO TYSON FOODS INC BROWN-FORMAN CORP CVS/CAREMARK CORP JM SMUCKER CO BEIERSDORF AG
2006-2010 Hispanic Allocation Percentage

10.05% 9.70% 8.79% 8.09% 8.08% 7.81% 7.09% 6.92% 6.68% 6.27% 6.25% 6.20% 6.13% 5.72% 5.71% 5.09% 5.01% 4.90% 4.11%
Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Percentile
100.00% 97.30% 94.70% 92.10% 89.40% 86.80% 84.20% 81.50% 78.90% 76.30% 73.60% 71.00% 68.40% 65.70% 63.10% 60.50% 57.80% 55.20% 52.60%
2006-2010 Growth Rate

9.20% 5.12% 12.39% 3.30% 11.82% 11.82% 2.74% 1.39% 3.25% 6.50% 10.59% 3.86% 2.30% 2.22% 3.70% 1.62% 5.03% 3.44% -1.34%
54
Ranking By Hispanic Allocation Cont.

Company
PEPSICO INC KRAFT FOODS INC DIAGEO PLC KELLOGG CO ESTEE LAUDER COS BIG LOTS INC CONAGRA FOODS INC HORMEL FOODS CORP PERNOD RICARD SA LVMH MOET HENNESSY LOUIS VUITTON SA MCCORMICK & CO INC SARA LEE CORP
2006-2010 Hispanic Allocation Percentage

3.80% 3.77% 3.53% 3.42% 2.80% 2.33% 2.24% 1.97% 1.57%
Rank
20 21 22 23 24 25 26 27 28
Percentile
50.00% 47.30% 44.70% 42.10% 39.40% 36.80% 34.20% 31.50% 28.90%

-0.21% 0.90% 2.73% 3.40% -0.03% 1.08% 1.06% 5.60% 3.06%
0.64%
0.55% 0.53%
29
30 31
26.30%
23.60% 21.00%
3.91%
5.01% -9.25%
FORTUNE BRANDS INC

HENKEL KGAA CHURCH & DWIGHT CO
0.53%
0.48% 0.26%
32
33 34
18.40%
15.70% 13.10%
-4.32%
-0.78% 7.40%
DEAN FOODS CO
CAMPBELL SOUP CO KAO CORP NEWELL RUBBERMAID NUTRI/SYSTEM INC
0.20%
0.15% 0.13% 0.04% 0.01%
35
36 37 38 39
10.50%
7.80% 5.20% 2.60% 0.00%
4.67%
2.98% -4.50% -3.76% -2.59%
55
Appendix B Ranking By Growth Rate

Company
COCA-COLA CO RALCORP HOLDINGS GROUPE DANONE NESTLE SA WALGREEN CO CHURCH & DWIGHT CO GENERAL MILLS INC HORMEL FOODS CORP WAL-MART STORES INC CVS/CAREMARK CORP MCCORMICK & CO INC DEAN FOODS CO LVMH MOET HENNESSY LOUIS VUITTON SA LOREAL SA

12.39% 11.82% 11.82% 10.59% 9.20% 7.40% 6.50% 5.60% 5.12% 5.03% 5.01% 4.67% 3.91% 3.86%
Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Percentile
100.00% 97.30% 94.70% 92.10% 89.40% 86.80% 84.20% 81.50% 78.90% 76.30% 73.60% 71.00% 68.40% 65.70%
2006-2010 Hispanic Allocation

8.00% 8.77% 10.53% 5.24% 9.32% 0.41% 9.21% 0.30% 7.33% 2.84% 0.22% 0.10% 0.62% 51.57%
TYSON FOODS INC

JM SMUCKER CO KELLOGG CO CLOROX CO TARGET CORP
3.70%
3.44% 3.40% 3.30% 3.25%
15
16 17 18 19
63.10%
60.50% 57.80% 55.20% 52.60%
0.04%
5.52% 3.77% 10.04% 7.16%
56
Ranking By Growth Rate Cont.

Company
PERNOD RICARD SA CAMPBELL SOUP CO KIMBERLY-CLARK CORP DIAGEO PLC PROCTER & GAMBLE CO HERSHEY CO BROWN-FORMAN CORP

3.06% 2.98% 2.74% 2.73% 2.30% 2.22% 1.62%
Rank
20 21 22 23 24 25 26
Percentile
50.00% 47.30% 44.70% 42.10% 39.40% 36.80% 34.20%
2006-2010 Hispanic Allocation

0.39% 0.02% 7.07% 1.53% 6.91% 4.74% 6.01%
UNILEVER
BIG LOTS INC CONAGRA FOODS INC KRAFT FOODS INC ESTEE LAUDER COS INC PEPSICO INC HENKEL KGAA BEIERSDORF AG NUTRI/SYSTEM INC NEWELL RUBBERMAID INC FORTUNE BRANDS INC KAO CORP SARA LEE CORP
1.39%
1.08% 1.06% 0.90% -0.03% -0.21% -0.78% -1.34% -2.59% -3.76% -4.32% -4.50% -9.25%
27
28 29 30 31 32 33 34 35 36 37 38 39
31.50%
28.90% 26.30% 23.60% 21.00% 18.40% 15.70% 13.10% 10.50% 7.80% 5.20% 2.60% 0.00%
8.27%
48.70% 2.95% 4.46% 47.88% 51.62% 0.04% 1.66% 0.01% 0.01% 0.01% 0.09% 0.74%
57
Appendix C Regression Analysis Results

Test 1 Variable in Model Unstandarized Beta Standardized Beta (Significance) NA Test 2 Unstandarized Beta Standardized Beta (Significance) .038 .189 (.000) .291 .511 (.000) .019 .202 (.000) .435 .581 (.000) .344 .125 (.005) NA Test 3 Unstandarized Beta Standardized Beta (Significance) .039 .195 (.000) .269 .472 (.000) .016 .176 (.000) .448 .598 (.000) .288 .104 (.018) -5.458 -.128 (.007) 2.229 .042 (.385) 4.095 .112 (.026) 1.226 .037 (.459) 2.399 .068 (.168) .644 211 CPG Model Unstandarized Beta Standardized Beta (Significance) NA
CAGR 06-07
CAGR 07-08
NA
NA
CAGR 08-09
NA
NA
CAGR 09-10
NA
NA
Hispanic Allocation 06-10 Auto
.396 .143 (.037) NA
.883 .592 (.000) NA
Insurance/Finance
NA
NA
NA
Technology
NA
NA
NA
Retail
NA
NA
NA
CPG
NA
NA
NA
R-Square N= Dependent Variable
.021 211 CAGR 06-10
.608 211
.350 39
58
Appendix D Graphical Analysis
Graph 1
59
Chart 1
60
Chart 2
61
Appendix E
GfK MRI Hispanic Data Notes

GfK MRI has measured Hispanics within its National Study (Survey of the American Consumer). Since 2003, GfK MRI began translating all survey materials into Spanish and hiring bilingual interviewers to capture the Spanish dominant Hispanic. Other enhancements to data sampling since then include:
Hispanic language capability sample balanced against Nielsen Language estimates Additional Hispanic specific demographics (language capability outside the home, language capability inside the home, country of origin, foreign born, length of time in the U.S., additional Hispanic adults in the home, how well do you speak English) Hispanic specific media (3 Magazines, 135+ Television Programs, 2 Cable stations, 3 Radio formats, 3 websites)
Hispanic specific segmentations (Geoscape Hispanicity, Hispanic Cohorts, Hispanic PersonicX)

Hispanic Networks/Programs available in NPM Fusion database
62

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Hispanic Allocation on Revenue Growth, 3/7/2012

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanic Market Highlights

2011 Hispanic Share of US

$1.2 Trillion5 7.8% v. 3.4%6

Census ACS, 2 SSG Analysis of Census,

Selig Center at the University of Georgia, 7 Bureau of Labor Statistics

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

About the Author & Sources

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Carlos@SantiagoSolutionsGroup.com (818) 736 5661 7

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

What do they do differently?

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

2006-2010 Revenue CAGR: Dependent variable

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Aggregate 06-10 Hispanic Allocation N=211

All confirmed the same findings at statistical significance

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

CPGs & Retailers in Study

Hispanic Allocation on Revenue Growth, 3/7/2012

All findings discussed in the presentation are statistically significant at a

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Are CPGs Growth Rates Related to Hispanic Focus?

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

CPGs & Retailers Revenue Growth Drivers

Hispanic Marketing 35%

Other Drivers of Growth 65%

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

Top Allocation (70th Percentile)

Middle Allocation (40th 70th Percentile)

Low Allocation (<40th Percentile)

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Top 30 Percentile Hispanic Marketers By Allocation And Overall Revenue Growth

Please see Appendix D (Graph 1) for Detailed Graphical Analysis.

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanic Allocation on Revenue Growth, 3/7/2012

Why Hispanic Consumers Are So Important Today?

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Much larger Households means heavier usage

Persons Per HH1

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Which Consumer Is Worth More?

Hispanics Food at HH Expenditures

$60 $40 $20 $1995 $27

Source: Bureau of Labor Statistics, Credit Suisse estimates 2011

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Which Consumer Is Worth More?

Source: 2010 Geoscape Consumer Spending Dynamix.

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanics are CPG valuable customers

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanics are CPG valuable customers

Hispanic Allocation on Revenue Growth, 3/7/2012 Growth

Hispanics are CPG valuable customers

Hispanic Allocation on Revenue Growth, 3/7/2012

Hispanics are CPG valuable customers