New Opportunity Analysis in Nutrition

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Research Methodology

For this study, Harrison Hayes conducted primary research interviews with eleven (11) Key

Opinion Leaders related to “health foodie” groups and nutrition. Key Opinion Leaders and their

background highlighted at the end of this report.

To supplement information uncovered in the qualitative Key Opinion Leader interviews, Harrison

Hayes also conducted secondary research from publicly available information, syndicated

materials, and past research within Harrison Hayes.

Executive Summary and Key Recommendations

Key Takeaways and Recommendations

Based on Key Opinion Leader feedback the following areas were identified as the best possible

opportunities within the consumer food nutrition space:

Frozen, organic, culinary inspired dinner meals or meal components.

Dinner is considered sacred and valuable family time and parents desire a quick and

convenient healthy meal option. Consumers want meal components or ready made meals

that can be assembled with simple steps in family size portions.

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Key Takeaways and Recommendations

Based on Key Opinion Leader feedback the following areas were identified as the best possible

opportunities the consumer food nutrition space:

Dehydrated / dried and “raw” foods are a growing area of interest for consumers.

Key Opinion Leaders noted that a large majority of consumers would welcome low

sugar, stand alone dried fruits. (i.e. apple chips). Consumers are craving more new

and exotic flavors, which can also be incorporated to increase the overall taste profile

and offer more variety.

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Key Takeaways and Recommendations

Based on Key Opinion Leader feedback the following areas were identified as the best possible

opportunities the consumer food nutrition space:

Quick prepare Natural, Non-GMO “Right Start” breakfast items, refrigerated or

frozen.

There are opportunities in the breakfast arena, an “All Natural” Branded pancake, waffle

or toaster pastry would be quickly accepted as a healthy option for breakfast and it could

be an easy on the go meal eaten by hand for kids on the go.

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Key Takeaways and Recommendations

Frozen, organic, locally grown (USA) fruit in pre-made smoothies packages.

Consumers prefer frozen, locally grown in the USA, fruits and vegetables, rather

than fresh imported fruits and vegetables from outside the USA. Frozen fruit is ideal

for smoothies and a pre-portioned bag that just needs milk and a blender would be

ideal.

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Key Takeaways and Recommendations

The incorporation of some of the emerging “Super Foods” into current products.

Many KOL’s made it clear that the emergence of “super foods” was an obvious next

step in healthier eating and these “super food” components could be more prevalent

and highlighted in new and improved natural, non-GMO and organic products.

The 2 most commonly mentioned emerging “super foods” by our KOL’s were Chia

Seeds and Quinoa. The Benefits of both are detailed on slides ???

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Recommendations

Recommendation I: Define “Natural”

It is clear that the definition of “Natural” foods needs to be a market push approach.

Consumers need to be educated on the term “Natural” and what it means in the

nutrition space.

Nutrition companies need to define this space for consumers.

Harrison Hayes is of the opinion that “Natural” products should contain simplistic

ingredients.

To successfully define the market, it must be accomplished through social media and

packaging, with easy to read ingredients listed; along with traditional market

methods.

Consumer will trust existing brands that have withstood the test of time and are proven

to be healthy, rather than trusting new brands entering the market.

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Recommendation II: Pre-Assembled Culinary Inspired Meals

There is a clear need and opportunity for pre-assembled and on-the-go organic meals.

Pre-assembled and on-the-go food products are applicable for breakfast and lunch.

Meal components and family size culinary inspired meals are better dinner options

when the family is looking for a convenient, easy to assemble, healthy dinner option.

Lunch products should focus on pre-mixed salads with dressing included and healthy

pre-made wraps. High protein, low fat meals should also be considered in this mix.

Breakfast on-the-go meals should include protein based foods and “deep greens” such

as spinach. One example by a Key Opinion Leader was breakfast burritos with spinach

included.

Several Key Opinion Leader stated that a brand like Larabar may be positioned to lead

with a breakfast product, like Natural non-GMO or organic waffles or pancakes.

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Recommendation III: Pre-portioned frozen fruit for smoothies

There is great opportunity for organic frozen fruit for the growing popularity of

smoothies.

Health foodies are very conscious of buying organic products. This is the most

important element in their purchase decisions.

Nutrition companies should target these customers who are looking for an organic

smoothie option that is quick and easy and available in the frozen aisle.

These pre-made or assembled parts for a smoothie, just add milk and blend, this is a

fast growing area without any current organic players.

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Recommendation IV: Super Foods

Super Foods should be considered as an addition

There is a high level of interest in Chia Seeds and Quinoa.

Each of these products would be well received by health foodies, vegans, vegetarians,

and other health conscious groups.

Per several KOL’s, these and/or other Super Foods can potentially be integrated into

existing product lines, this would maintain the Naturalness of the product and new

claims of health benefits could be presented to the consumer.

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Recommendation V: Innovation Opportunities

Harrison Hayes believes there are innovation opportunities for the nutrition space.

Nutrition companies should explore the future of sodium free, many consumers need

to reduce salt in their diet, sodium is a preservative and many natural and organic

items are high in sodium. Having Sodium-Free products would open more channels

for salt conscious consumers, a growing segment of the American population.

Sugar-Free without chemical sweeteners is another area of opportunity, potentially

incorporating a natural calorie free sweetener like Monk Fruit from China and

bringing it to the forefront of consumers would be a game-changer.

Organic Gluten-Free is an area that is vastly underserved with good tasting quality

food. This is an area of opportunity for long-term innovation.

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General Observations and Key Opinion

Leader Feedback

What is “Natural”?

It was unanimous among all Key Opinion Leaders that “Natural” was misunderstood,

there was not a true definition and that is a major issue within the healthier food space.

Key Opinion Leaders stated that consumers are confused about the term “Natural”

and are unsure of its true meaning? This is leading to a “black eye” on the industry.

Consumers trust a brand that has a reputation as being Natural rather than a new

product that makes claims about being all-natural and is unproven.

Many less knowledgeable consumers assume that if a product is labeled “Natural”,

then it is healthy and some will even assume it is non-GMO or even organic.

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What is “Natural”?

It was unanimous among all Key Opinion Leaders that “Natural” was misunderstood,

there was not a true definition and that is a major issue within the healthier food space.

The most recent example of consumers misunderstanding of the definition of

“Natural” is the disaster that Kellogg is currently going through with their Kashi

brand. Consumer’s outcry over GMO’s being used in their products will cost them

many previously loyal customers and ultimately many lost dollars of revenue.

“In the minds of consumers, “natural” is associated with being healthy. Consumers

are simply trusting what the brand or companies are advertising. Unfortunately,

being “natural” doesn’t mean it is healthy.”

- Elizabeth Jarrad

Culinary Specialist at Whole Foods

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Meals v. Snacking

There was no real consensus among the Key Opinion Leaders about whether or not snacking

is replacing traditional meals; however, trends among Americans are changing.

Key Opinion Leaders did note that snacks are becoming more prevalent throughout the

day and there is a push from consumers for more variety and healthier “on the go” meal

and snack options.

With the fast-paced lifestyle most American families live today, consumers are

demanding quicker, more healthy, and “on the go” breakfasts and lunches. In-between

meal snacking is making up for the less nutritiously satisfying breakfasts and lunches

consumers have to choose from.

The availability of snack foods / mini-meals at so many different outlets, i.e. drug stores,

convenience stores, gas stations and even coffee houses, has impacted the less than

healthy snacking that takes place throughout the day.

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Meals v. Snacking continued.

Snacking is changing and consumers are demanding more.

Consumers want snacks that they perceive as being “healthy”, like bars, berries, nuts

and smoothies/drinks.

KOL’s agreed that the best and healthiest snacks are fresh fruits and fresh vegetables.

Healthy snacks should be simple with very few ingredients.

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Meals v. Snacking

Snacking is changing and consumers are demanding more.

Traditionally, American snacks were “sweet and/or salty”. Chips, pretzels or candy,

everything from one bag and each bite will taste the same.

“Savory” is emerging as what consumers are considering when purchasing snack based

products. Savory is defined as having a variety of tastes and textures, potentially

coming from more than one food group and having a longer lasting effect on hunger

cravings.

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Organic Food Marketplace

All of the Key Opinion Leaders agreed that organic foods are healthier, the market is

growing but there is not one dominant player, competition for shelf space is fierce.

Consumers view organic food as healthier, the knowledgeable consumer knows there

are strict guidelines for a product to be labeled organic.

For the retailer, there is potential for increased revenue from the organic space; there

is not as much competition in some categories as there is in other grocery categories.

There is strong motivation for retailers to stock organic products.

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Organic Food Marketplace

All of the Key Opinion Leaders agreed that organic foods are healthier, the market is

growing but there is not one dominant player, competition for shelf space is fierce.

Life changing events like the birth of a child or a diagnosis of a medical condition

often cause consumers to re-evaluate the types of foods their families are consuming

and therefore they begin to buy healthier organic foods.

Many KOL’s mentioned that the more educated consumers buy organic products in

order to avoid GMOs (genetically modified organisms), chemicals and pesticides.

Organic and locally grown, within the USA, is a real concern for the knowledgeable

consumer when it comes to fruits and vegetables. There is less concern for some of

the hard shell products like pineapples and avocados.

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Organic Food Marketplace- continued.

KOL’s agree, as the organic food market continues a steady growth, the core group of

health food consumers will become more demanding and expect higher standards.

Consumers are becoming more educated and expect higher standards; from what

ingredients are included, to how it is processed and even the packaging is coming into

question.

There is a push away from wheat based products in favor of gluten-free products, not

just because of the gluten in the wheat, but also the way wheat is overly processed.

There is a perception among some consumers that organic foods lack the taste of the

more processed foods.

Organic is considered a “Premium” item, therefore the consumer must be more

diligent in their choices in regards to what they should purchase organic.

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Breakdown of Organic Food Purchases

Produce and Dairy products have long been considered to be the bulk of organic food

purchases.

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Source: USDA and the Nutrition Business Journal, 2010.

Market Opportunities

Opportunities in Frozen Prepared Food Category

It was nearly unanimous amongst all the interviewed Key Opinion Leaders that

Refrigerated and Frozen Foods represent the largest opportunity for expanded growth.

The frozen food and refrigerated food aisle was noted to have very few organic and

non-GMO natural food options.

The emergence and popularity of culinary inspired and restaurant name brand frozen

foods has opened the door for culinary inspired non-GMO natural and organic meals.

These meals will meet the consumer’s demands for a family meal that is quickly

assembled while being in the “better for you” category.

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Opportunities in Frozen Prepared Food Category

It was nearly unanimous amongst all the interviewed Key Opinion Leaders that

Refrigerated and Frozen Foods represent the largest opportunity for expanded growth.

Currently Amy’s and Alexia brands are the dominant players in the organic frozen

food space, however, many KOL’s interviewed believe that there is a need for

competition and improvement in the organic frozen food market.

Amy’s and Alexia brands do not have the product line to meet all the consumer’s

needs. Amy’s products are mostly single serve and Alexia is mostly side items and

potatoes. Families need family sized portions.

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Dehydrated Food Options

A majority of Key Opinion Leaders noted dehydrated/dried and “raw” foods as a growing

area of interest for consumers.

The Larabar brand was specifically mentioned by several Key Opinion Leaders as “an

excellent raw bar.”

Larabar contains dried fruits and nuts, simply mixed together. This serves as a

convenience to consumers.

Key Opinion Leaders noted that a large majority of consumers would welcome low

sugar, stand alone dried fruits. (i.e. apple chips).

Consumers are craving more new and exotic flavors, which could also be incorporated

to increase the overall taste profile and offer variety.

LARABAR is a trusted brand name and is ideal for brand extension.

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Other Options in Prepared Meals

As previously noted Amy’s Kitchen frozen products is the clear leader in organic frozen

prepared meals, but they lack competition in this space.

Several KOL’s noted that many products within Amy’s line, although they are

organic are also high in calories and, in some cases, fat.

There is an unmet need for a low fat, high protein organic line of diet or weight loss

products, one KOL described it as a “Organic Lean Cuisine”

As noted on Slide 16, consumers trust in brands that have past the test of time in

regards to being Natural, non-GMO and healthier. The LARABAR brand was

mentioned many times as being one of those products and is therefore is a solid

position for a brand extension.

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Other Options in Prepared Meals

As previously noted Amy’s Kitchen frozen products is the clear leader in organic frozen

prepared meals, but they lack competition in this space.

There are opportunities is the breakfast arena, a “all natural” pancake or waffle would

be easily accepted as a healthy option for kids and if flavored properly could be an

easy on the go meal eaten by hand for kids.

Currently, most organic pastas are smaller specialty manufacturers, making it

difficult for the consumer to be loyal to one brand and it also keeps pasta at a

premium price point. Refrigerated fresh pasta is also an option.

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Super Foods

While all Key Opinion Leaders agreed that organic foods are healthy and better for you,

they made clear that “super foods” could be more prevalent.

“Super Food” is an unscientific marketing term, it is used to describe food with high

nutrient or phytochemical content with few properties considered to be negative.

One example of a super fruit is blueberries, other examples of “super foods” include

broccoli, spinach, pumpkin, bananas, pineapple and tomatoes which are all rich in

various nutrients.

Two (2) “super foods” stood out throughout the Key Opinion Leader interviews:

Chia Seeds and Quinoa.

Chia Seeds and Quinoa is a simple addition to nearly any food such as pasta, salads,

granola, fruits, etc.

Perhaps most importantly, Chia seeds and Quinoa are “filling” which my reduce over

eating.

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Chia Seeds Quinoa

Chia Seeds

Benefits of Chia Seeds (Source: Edible Paradise)

Help weight loss. Chia seeds are popular for weight loss. They reduce food cravings

by preventing some of the food that you eat from getting absorbed into your system.

This blockage of calorie absorption makes them a great diet helper.

Feel fuller faster: They can also help your diet by making you feel full. This is

because they absorb 10 times their weight in water, forming a bulky gel.

Hydration for athletes: They are also great for athletes because the "chia gel" can

hydrate the body.

Reduce your blood pressure: There's evidence to suggest they can reduce blood

pressure.

Omega-3: They are the richest plant source of Omega-3 (the vital fats that protect

against inflammation such as arthritis and heart disease). In fact, they contain more

Omega-3 than salmon.

Benefits for diabetes: Because chia seeds slow down how fast our bodies convert

carbohydrates into simple sugars, studies indicate they can control blood sugar. This

leads scientists to believe chia seeds may have great benefits for diabetics.

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Quinoa

Benefits of Quinoa (Source: Benefits of Quinoa)

High source of protein. One cup of quinoa has 9 grams, which trumps the protein-rich

egg (6 grams). Quinoa, which contains all 8 of the essential amino acids, is a

complete protein.

Quinoa is a satisfying, low-cholesterol source of complex carbohydrates.

Complex carbohydrate, quinoa acts an internal cleanser, easing the progress of food

through the digestive tract.

Quinoa is a flavorful source of plant-derived calcium. Calcium builds and maintains

bones and teeth, helps regulate the contraction of the heart, and facilitates nerve and

muscle function. One cup of cooked quinoa contains 30 milligrams of calcium.

A cup of cooked quinoa offers fifteen percent (15%) of the U.S. Recommended Daily

Allowance of iron.

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Monk Fruit

Benefits of Monk Fruit (Source: Monk Fruit- All natural sweetness)

A naturally sweet way to reduce sugar and calories, this fruit is native to China.

The monk fruit is a small gourd-like fruit, spherical in shape measuring 5 to 8 cm and

4 to 6.5 cm in diameter

It has traditionally been grown on steep forested mountains in small family orchards,

For centuries this fruit has been used to sweeten tea and other beverages.

The Monk Fruit was mentioned by two (2) KOL’s as an alternative to sugar as a

sweetener

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Foodie Trends

As healthy eating becomes more prevalent, “health foodies” will want to continue to

differentiate themselves. Key Opinion Leaders believe these “health foodies” will

distinguish themselves in the following ways:

Buy local, within 100 miles of home or at least within the USA.

Avoidance of Genetically Modified Food and chemicals in foods

Shop at local health food stores and farmer’s markets

Simple, easy to read labels listing all ingredients

Prepare food from scratch or easily assemble

Focus on organic products

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Identified Opportunities Outside

Based on Key Opinion Leader feedback the following areas were also identified as areas

of improvement in consumer nutrition:

Dairy (milk, yogurt, smoothies, etc.)

Ethnic foods

Meats (specifically beef, chicken, and fish)

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Dairy

As referenced on slide 14, Dairy is the second largest organic food category and the fastest

growing segment.

Key Opinion Leaders noted that dairy is seen as a “gateway to organic food” as a

whole.

Entry organic consumers typically choose milk as their first “organic” product due to

its simplicity. Often parents start with the dairy products when they have their first

child.

Yogurt was also mentioned as a dairy based organic product that is typically

purchased.

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Dairy Continued.

In addition to milk and yogurt, smoothies are a growing segment.

All Key Opinion Leaders specifically mentioned smoothies as one of the fastest

growing areas of the healthy eating on the go lifestyle.

Most smoothies are milk or dairy based.

Smoothies are most commonly being used as a snack or meal replacement.

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Ethnic Foods

Two (2) Key Opinion Leaders identified ethnic foods as an area of opportunity.

Ethnic food does not include pizza.

Both of these Key Opinion Leaders named “burritos” as an example that was

underserved in the frozen section. This included a breakfast wrap as well.

Interviewees noted that organic meal components (veggies, fruits, etc.) are present in

the frozen aisle, but organic frozen ethnic foods are non-existent beyond Amy’s.

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Unmet Needs

Unmet Needs

The interviewed Key Opinion Leaders identified three (3) primary areas of unmet needs

as it relates to health foodies and organic foods.

Frozen and refrigerated foods (all agreed this segment was underserved)

Breakfast products/opportunities

“On the Go” easy to prepare foods

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Frozen and Refrigerated Foods

As mentioned numerous times throughout this report, the frozen and refrigerated food

section is perceived to be underserved and in need of competition.

Healthy consumers and shoppers have limited “organic” and “healthy” food options in

the refrigerated or freezer aisle as a whole.

Based on Key Opinion Leader feedback, there appears to be only a couple of major

players in the space…Amy’s and Alexia brands.

A minority of Key Opinion Leaders mentioned Cascadian Farms as a notable brand in

the freezer aisle.

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Breakfast

Of all the meals and snacks, it is evident that breakfast has become “forgotten.”

A majority of Key Opinion Leaders noted that cereal has become a stagnant food,

although it can still be rejuvenated with proper education.

Simply stated, there are not many “organic” or “healthy” food options when it comes to

breakfast.

Breakfast has become the “lost meal” due to the on-the-go lifestyle that so many

Americans lead.

Most healthy breakfasts today consist of yogurts and granola, which are not necessarily

ideal for the on-the-go lifestyle.

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On-the-Go Meals

Within the organic and healthy food space, Key Opinion Leaders believe there is a gap

in regards to on-the-go prepared foods/meals.

These foods should be pre-prepared and easy to eat.

Hand-held foods for families with kids on the go, eating before school or on the way to

different after school activities like sports.

There is an opportunity for low calorie, high protein, weight loss meals.

One Key Opinion Leader specifically recommended a “compound salad that is easy and

ready to go. No preparation necessary.”

It is important that these meals or foods be pre-assembled. These consumers are

searching for ease of use and healthy alternatives.

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