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## We’re innovating to meet consumer needs. 

We’re focusing our product innovation efforts on the needs of consumers, par- ticularly groups that will drive our sales growth in the years ahead. The baby boomers, born between 1946 and 1964, are the largest age demographic in the U.S., representing one-quarter of the pop- ulation. It’s projected that adults ages 55 and over will represent more than 1 billion consumers worldwide by 2015. Millennials are between the ages of 16 and 33, and represent the next boomlet. Nearly two- thirds of births in the U.S. today are to millennial moms. Multicultural consumers are the fastest-growing U.S. demographic, 

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with Hispanic consumers leading that growth. Over the next five years, more than 85 percent of the projected increase in the U.S. population will come from multicultural groups. 

Many baby boomers look for foods that enhance their health and vitality. Our whole grain cereals are a great fi  t with that interest. Retail sales for the Cheerios franchise have grown at a 7 percent compound rate over the past three years due in part to the cholesterol-lowering benefi ts of Honey Nut Cheerios  and weight management credentials of MultiGrain Cheerios . In January 2010, we introduced Chocolate Cheerios , which is made with whole grain and is on track to become our biggest new product launch in the past decade. Betty Crocker  gluten free dessert mixes received tremendous consumer 

## U.S. Household Penetration for Our Categories 

(percent of households purchasing) 

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Source: ACNielsen Panel Data, 52 weeks ended 2/27/10 

We compete in attractive food categories. Each of these categories generates more than $1 billion a year in retail sales. They’ve gotten that big because many U.S. house- holds purchase and enjoy these foods. 

## A Baby Boomer’s Pantry 

Our product portfolio includes a wide vari- ety of foods that fi t a healthy lifestyle, from whole grain cereal to reduced calorie snack bars. We also have many options for a convenient meal with Progresso  soup, Green Giant  vegeta- bles, and Betty Crocker side dish and des- sert mixes. 

