csm consumer & market insight final

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Workshop : CSM & Fonterra

Amsterdam, 1th of February 2012

Creating Value

for our Consumers

Together

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Objectives:

To identify potential opportunities for joint product development;

Using our dairy ingredients in your bakery applications

In the areas of “Better For You” and/or “Good for You”.

Agenda Workshop

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10:30 – 11:00 : Introduction

11:00 – 11:30 : CSM: Profile & Strategy

11:30 – 12:00 : Fonterra: Profile & Strategy

12:00 – 13:00 : LUNCH

13:00 – 13:30 : Looking insiGHT consumers’

13:30 – 14:00 : Dairy ingredients: a taste, texture & nutrition solution

14:00 – 15:00 : Illustrations

15:00 – 15:30 : Conclusions & Next Steps

15:30 : Closure

Agenda Workshop

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12:00 – 13:00 : LUNCH





15:30 : Closure

Agenda Workshop

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12:00 – 13:00 : LUNCH





15:30 : Closure

Agenda Workshop

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Fonterra – Global Snapshot

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The natural source of dairy nutrition for

everybody, everywhere, every day

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As the world’s largest dairy ingredients company we source, partner and supply globally to our customers

Sell ingredients in over 100 countries

Process 50+ billion lbs of milk per year

Manage more than 40% of global dairy trade

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World leading expertise in unlocking the natural goodness of dairy

Innovation & expertise

• One of the world’s largest investors in dairy innovation – current R&D investment of NZ$86m per year

• Backed by 83 years of experience

• Research centre , pilot plant and four in-market technical centres close to customers

• More than 400 scientists and support staff based at the Fonterra Research Centre alone

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Core research in New Zealand; application work at technical centres close to our customers & consumers

Palmerston North, NZ

Amsterdam, NetherlandsTokyo,

Japan

Chicago, USA

Melbourne, Australia

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Fonterra Europe – Strategic Change

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Our European headquarter is in Amsterdam

UKFonterra (Logistics):

Swindon3 staff

FRANCEParis branch:

1 staff

THE NETHERLANDSFonterra (Europe) Cooperative U.A.:

Amsterdam65 staff

RUSSIAFonterra (CIS):Moscow4 staff

ITALYFonterra Italy:Veneto10 staff

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Refocusing our European business model

NZ sourced

From a tactical commodity player…

From a tactical commodity player…

Commodity / Commodity+Mostly Butter & Cheese

Quota

Commodity / Commodity+

QuotaValue-add

…to a valued ingredients partner

…to a valued ingredients partner

A different portfolio of

products and solutions

A mix of ex-NZ and domestic

sourcing

A strategic approach to

partners

Europe sourced

Transactional relationships Strategic relationships

Transactional

relationships

Strategic

relationshipsV

alue-addE

urope sourced

NZ

sourced

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Fonterra’s Approach

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Innovation Programmes are built on 4 pillars:

Delivering

better for you convenient food

Best nutrition

for mother and child

Enabling the aging to maintain healthy, active lifestyles

Controlling unhealthy

cravings to address the overweight epidemic

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Our ingredients deliver optimal nutrition, without compromising taste and texture

Match flavor

Match texture

Natural/authentic taste

New flavor

New texture

Same

Differentiated Good For You

SaltSugarFatAdditives

ProteinFiberProbioticsPrebiotics (eg. GoS)

Better for You

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What we learned : CSM’s Innovation Strategy

Focus on Health and Nutrition Eliminate undesirable components and ingredient levels

o Trans fats and salto Reduced caloric density o More well-balanced

Health: "Better for You“: improve nutrient profiles “Good for You“: create products designed for specific nutritional

needs

Nutrition: Support intestinal health Help to manage body weight; offer healthier choices

Match !

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The way we workRecent Studies:UKFranceGermanySpainRussia

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Fonterra believes in Partnership

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12:00 – 13:00 : LUNCH





15:30 : Closure

Agenda Workshop

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12:00 – 13:00 : LUNCH





15:30 : Closure

Agenda Workshop

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Recap: The way we work

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Subjects

Consumer trends in food

Consumer & Market trends

Looking insiGHT consumers’ lives

Dairy ingredients as a taste, texture & nutrition solution

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Consumer trends

Wha

t is

on

cons

umer

s m

ind?

what benefits are more and more out there?

what concerns & worries do consumers have?

what do consumers find important?

is this a growing worry?

25

Increasing health consciousness among consumer drives them into naturally healthy & better-for-you food

• Fonterra sees 5 key global consumer trends;

• Increased consumer health consciousness is the main force

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The increased health awareness/ consciousness sees Weight wellness & linked with health issues

Source: Euromonitor, New nutrition business

Top of Minds health & wellness concerns

• High cholesterol

• Cardiovascular diseases

• Immobility

• Diabetics

• Good digestion

• Osteoporosis

• Balanced nutrition

Weight is the key indicator for being healthy

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New Nutrition Business recognize trends in “Better-for-you” area & see opportunities in bakery & dairy

10 Key Trends in Food, Nutrition & Health 2012

Naturality Movement

Energy Senior nutrition

Digestive health Fruit & Vegetables

Feel the benefit Dairy

Weight management Good grains

Source: New Nutrition Business, 10 Key Trends in Food, Nutrition & Health 2012

better-for-you

better-for-you

better-for-you

better-for-you

better-for-you

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“Good grains” and “dairy (protein)” are linked in consumers mind with similar benefitsStrong “naturally healthy” imageSustained/ slow energy (Low GI / protein)Link to specific health benefits consumers look for – i.e. cholesterol-

lowering, satiety

Possibility for “Health Halo” combining good grains with dairy

Source: New Nutrition Business, 10 Key Trends in Food, Nutrition & Health 2012

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Market facts

wha

t ar

e th

e la

test

NP

D’s

?what products are out

there?

how big is this market?who is influencing these trends?

is this market growing?

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Naturally healthy & Better-for-you food drives growth of naturally healthy foods

Source: Euromonitor

European Health & Wellness market is a billion market and growing

MARKET

$166

+ 11%

$51$66

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Good news: new EU food labelling rules support consumers in making better informed, healthier purchase decisions

Source: Euromonitor

Implications for manufacturers:

• Labels will spell out; in a way easy for consumers to read• Increased nutritional transparency may influence food choices

Good news for healthy convenient bakery products

Minimum font sizes will be regulated

Nutritional labelling becomes mandatory in 2014REGULATORY

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NPD trends :Consumers’ “Better-for-you” needs causes Protein to pop up as a key trend

Source: Innova: Trends 2012

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Multiple examples of these “Better-for-you” products in bakery

Source: Mintel NPD database, Foodnavigator.com, new Nutrition Business 2012

Probake biscuits provide protein that’s easy for

elderly consumers to eat.

Slow released energy

Natural energy

Gluten-free oat cakesMuffins with only 100kcal each

Satisfies hunger longer

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European Consumer Insights

why

doe

s (s

)he

eat

that

?

can she find what she want?

when does (s)he eat that?

what does like at what moment of the day?

what does (s)he eat?

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Despite difference, there are some consistencies in meal occasions and what benefits consumers look for.

What consumers eat when and why in Europe

Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

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What consumers want from their food difference during the day


Food satisfies different needs during the cause of the day.

No additives

Low fat

Low sugar

Low calorie

Taste

Texture

Naturalness

Good for you

Better for you

Better for you

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Example: The snacking paradox (BFY)

• Consumers believe they should not eat anything in-between. However, they do.

• So it should not contain anything that “matters”.

• However most options – especially the good tasting ones – add significantly to the daily intake

Opportunity

Getting closer to “does not matter” and good taste & being healthy

“Permissible” snack that is healthier while still tasting good. Making current offerings more appealing Make new offerings around the better-for-you benefits.

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Example: Getting all you need in an easy way (GFY)

• Consumers want to have something in the morning that can keep them going

• They’d like to have something with the right nutritional value to give them energy

• However most options take quite some time to prepare & are not per se healthy

Opportunity

Getting closer to time saving convenience and that’s what good for them

“All inclusive morning” solution that is ready made, has protein in it for sustainable energy and still tastes good.

Making current offerings more appealing Make new offerings around the better-for-you benefits.

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• ~20% is prepared to pay more for protein enhanced products• Knowledge about protein increases by age

Protein knowledge consumers


Dairy was mentioned 2nd as a source of protein (after meat)

I get enough protein if I

eat balanced

Protein is crucial for growth & development

Protein is good for muscles

Protein is healthy

How much protein should

I take?

Protein supplements is

for body builders

What makes protein important for human beings?

% consumer mention

Essential for a healthy diet 98%

Provides energy 80%

Is an essential part of the body / to live 65%

Health 19%

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12:00 – 13:00 : LUNCH





15:30 : Closure

Agenda Workshop

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Technical expertise

how much protein does a human being need?

are there differences between the

different sources of protein?

what does Buttermax™ really do?

how

doe

s pr

otei

n w

ork?

when should protein

be eaten?

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How does it work: Protein – the building block


• An organic compound formed of units called amino acids, arranged in a chain

• Amino acid sequence is unique for each protein, and determines a protein’s shape and role.

• The nutritional value of a protein (eg - how useful it is in the human diet) has been based on it’s amino acid composition.

• Amino acids are the “building blocks” of the body

• Every body tissue contains protein– Muscle, Liver, Kidney, Brain, Intestines,

Bone, Blood

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Muscle is key…


• Largest tissue in the human body

• Responsible for the majority of energy expenditure

• Essential for every single daily activity

• Optimal muscle maintenance process is dependant on a specific amino acid (leucine), and timing of consumption

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....

Dairy protein, particularly whey, provides optimal build


Why Whey?

Promotes more muscle massCHO/

PlaceboSoy Milk Whey

0

0.5

1

1.5

2

2.5

3

3.5

4

Fol

d ch

ange

in le

an m

ass

gain

s(f

rom

CH

O/P

lace

bo)

Adapted from:

Tang et al, (2009)

Adapted from:

Phillips et al, (2009)

0

0.5

1

1.5

2

2.5

0 30 60 90 120 150 180

Minutes following consumption of protein

Fo

ld c

han

ge

in p

lasm

a le

uci

ne

(fro

m b

asel

ine)

Whey

Soy

CaseinRapidly digested

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Fonterra Nutrition goal is to …..

Improve the nutritional balance of foods to aid in healthier lifestyle –Substituting for carbohydrate and fat

Spread protein intake over the day to optimise muscle maintenance process– Breakfast– Lunch– Dinner

Without compromising taste and texture or naturalness....

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12:00 – 13:00 : LUNCH





15:30 : Closure

Agenda Workshop

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Hand-outs Tasting Session

Let’s have a look, feel & taste

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Example 1: Granola Bar

Powerprotein 515 – Good for You / Better for You

Enhances with dairy/whey proteinand 30% less fat & sugar• 25% of daily required needs• Equals 1 glass of milk

Helps to build and maintain muscle mass; Healthy Choice

Improve body tone, stay mobile longer, re-energises without the sugars/fats

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Example 2: Chocolate Brownie (glutenfree)

Powerprotein 515 – Better for You

Does not contain gluten

Reduces the risk of allergy

Fits in a gluten free diet

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Example 3: Chocolate Muffin (eggfree

WPC 131– Better for You

Does not contain eggs,

Reduces allergies and risk; helps to prevent high cholesterol

and has 50% cholesterol

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Example 4: Yellow Cake (Buttermax

Buttermax – Better for you

Contains concentrated dairy fat / ButtermaxTM30% less saturated fat

Helps prevent obesity, cardiovascular disease and diabetics.

Less saturated fat; Healthy Choice

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Different consumer benefits (claims) can dairy provide tackling the consumer needs in the better-for-you area

Consumer benefit Functional benefit Ingredient Application

Body tone, (re)energy, mobility

Builds & maintains muscle mass& low fat/ low sugar

PowerProteinTM 515 WPC

Granola bar

Reduced allergen risk

Gluten-free PowerProteinTM 515 WPC

Chocolate Brownie*

Reduced allergen risk, Lower cholesterol (-50%)

Egg-free PowerProteinTM 131 WPC

Chocolate Muffin

Obesity, Cardiovascular disease, Diabetics

Lower saturated fat (upto -30% vs butter)

ButtermaxTM Yellow Cake

All without jeopardizing good TASTE & TEXTURE and NATURALNESS

* or any other non-rising products