Total Tea Sales Were Relatively StableConsumer Sales of Total Tea Total Grocery-Mass-Drug (Millions)% ChgPoundsDollars% ChgTotal U.S. -*52 Weeks Ending 7/22/00

2%-1%

7%5%

The Pounds Sale Decline Was Driven By Less Tea Purchasing Per Shopping TripHousehold Purchase Dynamics of Total Tea All Outlets

Penetration (Millions Households Purchasing)+2.2%Buying Rate (Annual Spending per Household)-1.3%

Average Purchasing Trips per Year+1.6%Average Total Shopping Basket when Tea Is Purchased+0.7%

Grocery Remains The Dominant Tea ChannelConsumer Sales Of Total Tea (Millions)PoundsDollarsNote: Mass Merch includes SuperCenters Total U.S. -*52 Weeks Ending 7/22/00

Grocery Dollar Sales Are Gaining Due To Higher Prices And The Increasing Importance Of R-T-DConsumer Sales Of Total Tea Dollars Grocery $2MM+ (Millions)Total U.S. - *52 Weeks Ending 7/24/99 or 7/22/00

However, Grocery Tea Dollars AreContinuing Recent DeclinesConsumer Sales Of Total Tea Pounds Grocery $2MM+ (Millions)Total U.S. - *52 Weeks Ending 7/24/99 and 7/22/00

The Growth Of Mass And DrugHave Offset GroceryConsumer Sales Of Total Tea Total Grocery-Mass-Drug (Millions)Total U.S. -*52 Weeks Ending 7/22/00

Total All OutletsGroceryMassDrug

130$1,715112$1,48615$1573$72

All Kinds Of Tea

Ready-To-Drink Contributes Significantly To Dollars, But Is A Great Deal Less Important To Pound SalesShare Of Tea Sales By Type Dollars Versus Pounds Total Grocery-Mass-DrugPoundsDollarsTotal U.S. -*52 Weeks Ending 7/22/00 ** Three Outlets = Grocery $2MM+, Drug, Mass Merch

Tea Bags/Green Tea Has Stabilized, While RTD Continues To Impact Iced And InstantShare Of Tea Pound Sales By Type Grocery $2MM+Note: Tea Bags include Green Tea (4.9 share in 2000*) Total U.S. - *52 Weeks Ending 7/24/99 or 7/22/00

R-T-DIced TeaInstantHerbalTea Bags (includes Green Tea)Loose Tea

Volume Expansion Was Fueled By Green Tea Gains, While Dollar Growth Was Powered By Ready-To-DrinkTea Sales Growth 1999-2000 By Type Total Grocery-Mass-Drug (000)PoundsDollarsTotal U.S. -*52 Weeks Ending 7/22/00

Total TeaRegular Tea BagsIced Tea MixInstant TeaReady-To-Drink TeaHerbal TeaGreen TeaLoose Tea

Both Buying Households And Increased Tea Purchasing Drove Green And R-T-D Gains% Change in Penetration All OutletsTotal U.S. -*52 Weeks Ending June 2000

Iced Tea MixHerbal TeaGreen TeaRTD Tea

Dollar Sales Growth Was Fueled By Increased Pricing Across All Tea Types Tea Price Per Pound Changes Total Grocery-Mass-DrugPrice Per Pound % Chg vs Year AgoTotal U.S. -*52 Weeks Ending 7/22/00

Total TeaRegular Tea BagsDecaf Tea BagsIced Tea MixInstant TeaRTD TeaHerbal TeaLoose TeaGreen Tea

Green & Herbal Achieve Significantly Higher Premium Pricing To Mainstream TeaTea Dollar Sales by Price Point Total Grocery-Mass-DrugOpportunity?$Price per PoundDollars (Millions)Instant TeaRegular Tea BagsIced TeaDecaf Tea BagsLoose TeaGreenHerbalTotal U.S. -*52 Weeks Ending 7/22/00

Ready-To-Drink Is Especially Important In Drug, However Tea Bags Dominate Across All OutletsDivision of Tea Pound Sales within Channels By Type Grocery $2MM+Mass MerchantGrocery $2MM+Drug StoresTotal U.S. -*52 Weeks Ending 7/22/00

Grocery Is Still The Key OutletFor Regular Tea Bag SalesConsumer Sales Of Regular Tea BagsPoundsDollarsTotal U.S. -*52 Weeks Ending 7/22/00

Regular Tea Bag Volumes Declined Slightly, But Dollars Sales GainedConsumer Sales Of Regular Tea Bags (Millions)Total U.S. -*52 Weeks Ending 7/22/00

Total All OutletsGroceryMassDrug

71$49762$43110$572$9

RTD Tea Continues Strong Dollar Growth, Capturing 37% Of Tea Grocery DollarsReady-To-Drink Tea Grocery $2MM+Dollar Sales (Millions)Dollar Share of TeaTotal U.S. -*52 Weeks Ending 7/24/99 or 7/22/00

Ready-To-Drink Provided The Sole Tea Gains Within The Supermarket ($2MM+) ChannelVolume Gains 1999-2000 Tea Pounds (000s)Regular Tea BagsHerbal TeaInstant TeaIced Tea MixLoose TeaGreen TeaReady-To-Drink TeaRegular Tea BagsHerbal TeaInstant TeaIced Tea MixLoose TeaGreen TeaReady-To-Drink TeaRegular Tea BagsHerbal TeaInstant TeaIced Tea MixLoose TeaGreen TeaReady-To-Drink TeaDrug StoresMass MerchandisersGrocery $2MM+

Finally, There Are Distinct Differences In The Demographics For The Growth SegmentsDemographic Insights

Tea BagsLarge Families, Older Children, South, Rural, Less Affluent

Green TeaSmall Households, No Kids, 55+, East/West, Urban

Ready-To-DrinkLarge Families, Middle-Aged (35-54), East, UrbanKids 6-17 Ethnic Households, Affluent

Demographic profiles are largely unchanged since 1996 Total U.S. -*52 Weeks Ending June 2000

A Closer Look At Decaffeinated Tea

Decaf Tea Growth Is Outpacing Regular, Accounting About 13% Of SalesTotal Grocery-Mass-DrugTotal U.S. -*52 Weeks Ending 7/22/00

+4%-1%

+9%+4%

DecafRegular

In Fact, Decaf Tea Bag Sales Helped Offset Regular (Caffeinated) Tea Bag LossesTea Bags Gains By Caffeination Total Grocery-Mass-Drug (000s)DollarsPoundsTotal U.S. -*52 Weeks Ending 7/22/00

RegularDecafRegularDecaf-2.0%+4.4%-0.8%+9.4%

Decafs Presence Is Strongest In Tea BagsVolume Share Of Decaf Tea By Type Total Grocery-Mass-DrugNote: Dollar Mix is similar to Volume Mix Total U.S. -*52 Weeks Ending 7/24/99 and 7/22/00 ** Three Outlets = Grocery $2MM+, Drug, Mass Merch

Decaffeinated Growth Was Sourced Almost Entirely From Tea Bags And Ready-To-Drink Decaffeinated Tea Sales Growth 1999-2000 By TypeTotal Grocery-Mass-Drug (000s)PoundsDollarsTotal U.S. -*52 Weeks Ending 7/22/00

Regular Tea BagsIced Tea MixInstant TeaReady-To-Drink TeaHerbal TeaGreen TeaLoose Tea

Dont Miss The Opportunity

Bottled Water Market Has Grown10 Fold Since 1976U.S. Bottled Water Market 1976-1997, GallonageThousands of GallonsYearSource: Beverage Marketing Corporation, New York

Water Is A $2.6 Billion Dollar Market, Growing Over 20%U.S. Bottled Water Market 1976-1997, Gallonage* Food, Drug, Mass, Convenience, Petro

% Chg13%12%17%21%

We Must Continue To Find New Ways To Leverage The Benefits Of Tea

Tea Based Beveragesi.e. Minute Maid and Snapple Iced Tea, Lemonade/Lemonade Iced Tea

Tea Based Frozen Specialtiesi.e. Tea Flavored Ice Pops (recruit young consumers early)

Dietary Supplementsi.e. Anti-Oxidant Tea Pills

Tea Based __________________