Contents:

Scope and Themes What you need to know Definition Abbreviations and terms Abbreviations Terms Executive Summary The bottom line Opportunity to leverage protein factor Sales of lead segment proves to be the only growth area during 2004-06 Three major suppliers command 40% of FDM sales in the category Major category brands are challenged by growing private labels sales Supermarkets account for majority of breakfast and sandwich market sales Opportunity for packaged roast beef Category players will keep close watch on organic trend Forecast Market Drivers The family factor Figure 1: Household usage of breakfast and sandwich meats, by number of people in the household, January-October 2006 Figure 2: Households by size, 1995 and 2005 Breakfast habits Health considerations and breakfast Figure 3: Health-related breakfast food choices, September 2006 Time considerations and breakfast Figure 4: Breakfast consumption patterns, weekends and/or weekdays, by age, September 2006 Figure 5: Weekday and weekend breakfast eating styles, September 2006 Figure 6: Weekday breakfast food choices, September 2006 Eating breakfast out Figure 7: Top five most common breakfast menu items, 2006 Figure 8: Number of all menu items with bacon as an ingredient, 2004-06 Lunch trends Packing lunch Figure 9: Origin of workweek lunches, by age, August 2005 Skipping lunch Figure 10: Why skip lunch, August 2005 Competition from QSRs Figure 11: What consumers ordered on their most recent QSR lunchtime visit, 2002 and 2005 Figure 12: Top five most common sandwiches on lunch menus, 2006 More convenient hot breakfast and lunch options Health trends Premium purchases: organic, natural and gourmet Market Size and Trends Market size Figure 13: FDM sales of breakfast and sandwich meat, at current and constant prices, 2001-06 Wal-Mart estimate Market trends New product launches in meat and poultry Figure 14: New product releases in meat and poulty products, 2001-06 Figure 15: Top ten positioning claims of new meat and poultry products, January 2006-December 2006 Trends specific to breakfast and sandwich meats Market Segmentation Introduction Overview Figure 16: FDM Sales of breakfast and sandwich meat segmented by type, 2004 and 2006 Refrigerated sliced lunchmeat Figure 17: FDM Sales of refrigerated sliced lunchmeat, at current and constant prices, 2001-06 Refrigerated bacon Figure 18: FDM sales of refrigerated bacon, at current and constant prices, 2001-06 Refrigerated dinner sausages Figure 19: FDM sales of refrigerated dinner sausages, at current and constant prices, 2001-06 Refrigerated and frozen frankfurters Figure 20: FDM sales of refrigerated & frozen frankfurters, at current and constant prices, 2001-06 Refrigerated breakfast sausage/ham Figure 21: Sales of refrigerated breakfast sausage/ham, at current and constant prices, 2001-06 Supply Structure Companies and brands Figure 22: Manufacturer FDM sales of breakfast and sandwich meat in the U.S., 2004 and 2006 Refrigerated sliced lunchmeat Figure 23: Manufacturer brand FDM sales of refrigerated sliced lunchmeat in the U.S., 2004 and 2006 Refrigerated bacon Figure 24: Manufacturer brand FDM sales of refrigerated bacon in the U.S., 2004 and 2006 Refrigerated and frozen frankfurters Figure 25: Manufacturer brand FDM sales of refrigerated & frozen frankfurters in the U.S., 2004 and 2006 Refrigerated dinner sausages Figure 26: Manufacturer brand FDM sales of refrigerated dinner sausages in the U.S., 2004 and 2006 Refrigerated breakfast sausage/ham Figure 27: Manufacturer brand FDM sales of refrigerated breakfast sausage/ham in the U.S., 2004 and 2006 Refrigerated non-sliced lunchmeat Figure 28: Manufacturer brand FDM sales of refrigerated non-sliced lunchmeat in the U.S., 2004 and 2006 Frozen sausages Figure 29: Manufacturer brand sales of frozen sausages in the U.S., 2004 and 2006 Private label Figure 30: FDM sales of private label breakfast and sandwich meats, at current and constant prices, 2001-06 Figure 31: Private label FDM sales of breakfast and sandwich meats segmented by type, 2004 and 2006 Major manufacturer profiles Kraft Foods, Inc. Sara Lee Corporation ConAgra Advertising and Promotion Introduction Figure 32: Television ad for Blue Grass Meats, A Tradition of good taste, 2007 Figure 33: Television ad for Tyson Bacon, Have you had your Tyson Protein?, 2007 Kraft Foods Figure 34: Television ad for Oscar Mayer, Oh I Wish, 2007 Figure 35: Television ad for Oscar Mayer, Weinermobile, 2007 Sara Lee Corporation Figure 36: Television ad for Jimmy Dean sausage, The weathergirl, 2007 Hormel Figure 37: Television ad for Hormel all natural cold cuts, 2007 Figure 38: Television ad for Hormel Spam Singles, 2007 Retail Distribution Overview Figure 39: U.S. FDM sales of breakfast and sandwich meat, by channel, 2004 and 2006 Supermarkets Figure 40: U.S. supermarket sales of breakfast and sandwich meat, at current and constant prices, 2001-06 The Consumer Introduction Summary Cold cuts Household penetration Figure 41: Household usage of cold cuts, by race/Hispanic origin, January 2004-September 2004 and January 2006-October 2006 Types of cold cuts used Figure 42: Types of cold cuts used by households, fresh cut or deli, by region of residence, January 2006-October 2006 Flavors of cold cuts used Figure 43: Flavors of cold cuts used by households, January 2004-September 2004 and January 2006-October 2006 Figure 44: Flavors of cold cuts used by households, by race/Hispanic origin, January 2006-October 2006 Brands of cold cuts used Figure 45: Brands of cold cuts used by households, January 2006-October 2006 Amount of cold cuts used Figure 46: Number of pounds of cold cuts used by households in past 30 days, January 2006-October 2006 Bacon Household penetration Figure 47: Household usage of bacon, by race/Hispanic origin, January 2004-September 2004 and January 2006-October 2006 Brands of bacon used Figure 48: Brands of bacon used by households, January 2006-October 2006 Amount of bacon used Figure 49: Number of pounds of bacon used by households in past 30 days, January 2006-October 2006 Sausage Household penetration of sausage Figure 50: Household usage of sausages, by race/Hispanic origin, January 2004-September 2004 and January 2006-October 2006 Kinds of sausage used Figure 51: Kinds of sausage used, pre-cooked and not pre-cooked, January 2006-October 2006 Figure 52: kinds of sausage used, pre-cooked and not pre-cooked, by race/Hispanic origin January 2006-October 2006 Occasions for eating sausages Figure 53: Occasions for household consumption of sausages, January 2004-September 2004 and January 2006-October 2006 Flavors of sausages used Figure 54: Flavors of sausages used by households, January 2004-September 2004 and January 2006-October 2006 Varieties of sausages used Figure 55: Variety of sausages used by households, January 2004-September 2004 and January 2006-October 2006 Figure 56: Variety of sausages used by households, by race/Hispanic origin, January 2004-September 2004 and January 2006-October 2006 Brands of sausages used Figure 57: Brands of sausages used by households, January 2004-October 2006 Amount of sausage used Figure 58: Number of pounds of sausages used by households in past 30 days, January 2004-October 2006 Bratwurst Figure 59: Household usage of fresh bratwurst, by race/Hispanic origin, January 2004-September 2004 and January 2006-October 2006 Flavors of bratwurst used Figure 60: Flavors of fresh bratwurst used by households, by race/Hispanic origin, January 2006-October 2006 Brands of bratwurst used Figure 61: Brands of fresh bratwurst used by households, January 2006-October 2006 Hot dogs/frankfurters Household penetration of hot dogs/frankfurters Figure 62: Household usage of hot dogs/frankfurters, January 2004-September 2004 and January 2006-October 2006 Types of hot dogs used Figure 63: Types of hot dogs/frankfurters used by households, January 2006-October 2006 Brands of hot dogs used Figure 64: Brands of hot dogs/frankfurters used by households, January 2006-October 2006 Amount of hot dogs used Figure 65: Number of packages of hot dogs/frankfurters used by households in past 30 days, January 2006-October 2006 Brand loyalty across category segments Figure 66: Brands of sausage used by brands of bacon used, January 2006-October 2006 Figure 67: Brands of hot dogs/frankfurters used by brands of cold cuts used, January 2006- October 2006 Teenagers Figure 68: Usage of cold cuts among teens, May 2005-June 2006 Figure 69: Times per 30 days cold cuts are eaten by teenagers, May 2005-June 2006 Figure 70: Teenagers’ preferred types of cold cuts, May 2005-June 2006 Children Figure 71: Usage of cold cuts by children, May 2005-June 2006 Figure 72: Children’s preferred types of cold cuts, May 2005-June 2006 Where breakfast meat is eaten: Home versus restaurant Figure 73: Whether eat breakfast meats and where, January 2007 How breakfast meats are eaten and at what time of day Figure 74: How and when breakfast meat is eaten, January 2007 Types of lunch meat eaten and in what form (deli versus pre-packaged) Figure 75: Types of lunchmeats eaten and how purchased, January 2007 Flavors of dinner sausage eaten Figure 76: Types of dinner sausage eaten, if any, January 2007 Figure 77: Types of dinner sausage eaten, if any, by gender, January 2007 Figure 78: Types of dinner sausage eaten, if any, by race/Hispanic origin, January 2007 Figure 79: Types of dinner sausage eaten, if any, by region of residence, January 2007 Figure 80: Types of dinner sausage eaten, if any, by number of children in the household, January 2007 Important attributes in selecting a dinner sausage Figure 81: Type of dinner sausage most enjoy/look for, January 2007 Future and Forecast Future trends Category players need to address increasing ethnic diversity Figure 82: Population by race and Hispanic origin, 2002-12 Market to offer more meal solutions for large and small households Health trends fuel interest in premium products Market forecast Breakfast and sandwich meat market Figure 83: Forecast of total U.S. fdm sales of breakfast and sandwich meat, at current and constant prices, 2006-11 Refrigerated sliced lunchmeat Figure 84: Forecast of U.S. sales of refrigerated sliced lunchmeat, at current and constant prices, 2006-11 Refrigerated bacon Figure 85: Forecast of U.S. sales of refrigerated bacon, at current and constant prices, 2006-11 Refrigerated dinner sausages Figure 86: Forecast of U.S. sales of refrigerated dinner sausages, at current and constant prices, 2006-11 Refrigerated and frozen frankfurters Figure 87: Forecast of U.S. sales of refrigerated & frozen frankfurters, at current and constant prices, 2006-11 Refrigerated breakfast sausage/ham Figure 88: Forecast of U.S. sales of refrigerated breakfast sausage/ham, at current and constant prices, 2006-11 Forecast factors Appendix: Trade Associations Appendix: New Product Briefs Target: Spinach & Garlic with Feta Chicken Sausage Lopez Foods: Port Sausage Patty Leon’s Sausage: Leon’s Andouille Sausage Boulder Sausage Company: Boulder Sausage Italian Hormel Foods: Hormel Black Label Schwan’s Home Service: Schwan’s Fully Cooked Bacon Slices Supervalu: Farm Fresh Thin Slice Lunchmeat Chicken Applegate Farms: Applegate Farms Great Organic Hot Dog Kraft Foods: Oscar Mayer Smoked Uncured Natural Beef Franks Sara Lee: Sara Lee Thin Sliced Virginia Brand Baked Ham Kroger: Kroger Meals Fully Cooked Bacon Trader Joe’s: Trader Joe’s Apple Smoked Fully Cooked Uncured Bacon ConAgra Foods: Banquet Brown ‘N Serve Sausage Patties Target Corporation: Market Pantry Pork Sausage Patties Applegate Farms: Applegate Farms Peppered Bacon Lightlife Foods: Lightlife Fakin’ Bacon (Organic Smoky Tempeh Strips)

Companies Mentioned

Applegate Farms Boulder Sausage Company ConAgra ConAgra Foods Hormel Foods Kraft Foods, Inc. Kroger Leon’s Sausage Lightlife Foods Lopez Foods Sara Lee Corporation Schwan’s Home Service Supervalu Target Corporation Trader Joe’s