Brand Loyalty Suffers During Recession

According to the recent results of a comScore study on brand loyalty among consumer
goods products, showing a significant decline in consumers' allegiance to their favorite
brands during the past two years, the percentage of shoppers who typically buy the
brands they want most has steadily declined across the categories examined. In March
2010, less than 50% of shoppers reported purchasing the brand they want most.

comScore chairman, Gian Fulgoni, said "A decline in loyalty to consumer goods brands
is typically one of the byproducts of a recession as consumers give greater consideration
to price... (our) research... has quantified the impact of the ‘trading down' effect...
highlighting consumers' increasing willingness to switch brands in the face of pocketbook
constraints."

In some categories, particularly CPG household products and housewares, consumers

were already more likely to buy a brand they didn't "want most" at the start of the
recession. Some categories (e.g., paper towels, facial tissue) have not seen increased
trading down from a brand perspective, possibly because such categories have led the
way in tiering, allowing consumers to stick with their preferred brand at a more attractive
price point.

As the economic downturn has persisted, this trading down behavior appears to be
spreading to categories that were previously immune. The increases in trading down in
these categories have largely occurred in the last year. Higher ticket items have seen large
increases in trading down possibly due to larger absolute savings on a single purchase.

Percent of Respondents Who "Buy The Brand They Want Most" (March 2010 vs.
March 2009 vs. March 2008, Total U.S.)
Category Segment Mar-‘08 Mar-‘09 Mar-‘10 Net Shift 2010 vs.
2008
Health & Beauty Aids
Toothpaste 67% 64% 57% -10
Mouth rinse 61% 59% 44% -17
Shampoo 65% 64% 52% -13
OTC Cough/Cold/Allergy 58% 59% 43% -15
Apparel Jeans 54% 49% 39% -15
Food
Soup 56% 51% 52% -4
Pasta sauce 53% 48% 45% -8
Fruit juice 51% 44% 40% -11
Household Products
 Laundry detergent 57% 50% 47% -10
Facial tissue 43% 40% 39% -4
Paper towels 36% 34% 35% -1
Housewares Small Appliances 45% 38% 34% -11
Source: comScore ARS, May 2010

U.S. consumers were also asked about the type of brand they did buy when not their
preferred one, with a focus on the importance of promotional discounts and lower price in
causing the shift.

Consumer Sentiment on "Trading Down" (March 2010 vs. March 2008 Total U.S).
Category Net Shift 2008 to 2010
"I buy the brand "I sometimes buy a "I buy less expensive
I want most" different brand if it is on brands to save money"
sale"
Health & Beauty -14% 7% 7%
Aids
OTC -15% 10% 5%
Medications
Apparel -15% 3% 12%
Food -7% 4% 3%
Consumables -5% 4% 1%
Housewares -11% 7% 4%
Source: comScore, Inc, May 2010

For most categories, the drop in likelihood to shop for the brand wanted most is not
restricted to buying other brands on sale. Rather, a sizeable percentage of the change in
shopping approach is being driven by a decision to convert to less expensive brands to
save money.

Mr. Fulgoni added: "Despite these shifting consumer dynamics, research has repeatedly
shown that premium brands which invest in marketing and promotion activities aimed at
maintaining buying at ‘preferred' levels are able to minimize short-term erosion of share
to less expensive brands and position themselves for a bounce-back when the economy
improves."