November 2007 FOOD INTELLIGENCE - SERGE GUEGAN WORLD FOOD & BEVERAGE INDUSTRY 2010 - 2025  Serge Guégan

November 2007 FOOD INTELLIGENCE - SERGE GUEGAN Hello नमस्ते 你好 Здравствуйте こんにちは Olá Hola مرحبا สวัสดครับี Bonjour Demat

I - GLOBAL TRENDS II - STAKES & CHALLENGES III - GLOBAL PLAYERS IV - STRATEGIC PROFILES V - STRATEGIC FUTURE (S) V - WINNERS … November 2007 FOOD INTELLIGENCE - SERGE GUEGAN WORLD FOOD & BEVERAGE INDUSTRY 2010 - 2025

I - GLOBAL TRENDS

II - STAKES & CHALLENGES

III - GLOBAL PLAYERS

IV - STRATEGIC PROFILES

V - STRATEGIC FUTURE (S)

V - WINNERS …

I - GLOBAL TRENDS Maturity and aging of traditional western food markets Planetary Urbanization = key influence on consumption pattern (diets…) New "middle class" consumers in emerging countries Globalization (products, trade, spirits) : standardization (" hypernormalization" ) Concentration of actors, decisions , information & financial resources Global consumers, more educated & (mis?) informed (web…), more demanding but less loyal and… more "risk-averse", less enterprising Devalorization ("desecration") of Food Nutrition & Health and Environment- Resources : 2 key dimensions of the XXI Century Marketing Acceleration of technological progress (innovation…), change and complexity Multiplication of solutions & opportunities, but also of threats & uncertainties Shorter and shorter product life cycles November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 1 ▪ Globalization & Acceleration of Changes Accelerating of globalization & innovation : a new frontier …

Maturity and aging of traditional western food markets

Planetary Urbanization = key influence on consumption pattern (diets…)

New "middle class" consumers in emerging countries

Globalization (products, trade, spirits) : standardization (" hypernormalization" )

Concentration of actors, decisions , information & financial resources

Global consumers, more educated & (mis?) informed (web…), more demanding but less loyal and… more "risk-averse", less enterprising

Devalorization ("desecration") of Food

Nutrition & Health and Environment- Resources : 2 key dimensions of the XXI Century Marketing

Acceleration of technological progress (innovation…), change and complexity

Multiplication of solutions & opportunities, but also of threats & uncertainties

Shorter and shorter product life cycles

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN Building a sustainable world future with Africa : otherwise we all die Population Annual Average Growth Rate (2000)

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ World Food Consumption : Where, What ? Consumption of Cereals (2000) Globally, people around the globe derive 48 percent of their calories from grain-based foods ( despite increasing dietary diversity)

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ World Food Consumption : Where, What ? Consumption of Meat (2000) Livestock consume 35 percent of the world's grain, over 90 percent of the soybeans…And agri-fuels ? …

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ World Food Consumption : Where, What ? Consumption of Milk (2000) Milk is not a strategic element of asian & african population diets (except for babies …). It will easily have a better place if people coud buy it …

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ World Food Consumption : Where, What ? Consumption of Sugar & Sweeteners (2000) More Sugar in consumption diets : beverages, desserts, confectionery…

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ World Food Consumption : Where, What ? Consumption of Fruits & Vegetables (2000) US modernity, Chineese tradition & "Mediterranean Diet" …

I - GLOBAL TRENDS Taste/Pleasure…/Indulgence Freshness Naturality/Authenticity Health Environment Convenience Choice Functional Artificial (without any reference/link to a pre-existing conventional product) Desecration of Food Communitarianism (mass ►family ► I ►group / community ► war ► chaos ► mass ?) Security ≠ diversity, creativity, risk November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 3 ▪ Main "Rich" Consumers Expectations From a random tradition… towards a very very very secured modernity !

Taste/Pleasure…/Indulgence

Freshness

Naturality/Authenticity

Health

Environment

Convenience

Choice

Functional

Artificial (without any reference/link to a pre-existing conventional product)

Desecration of Food

Communitarianism (mass ►family ► I ►group / community ► war ► chaos ► mass ?)

Security ≠ diversity, creativity, risk

I - NUTRITION & HEALTH (3 ▪ figure A) November 2007 FOOD INTELLIGENCE - SERGE GUEGAN Functional Products Conventional Products Organic Products Natural Products Risk Health+ Risk Health- Natural Artificial Nutrition & Health Products

I - NUTRITION & HEALTH (3 ▪ figure B) November 2007 FOOD INTELLIGENCE - SERGE GUEGAN Weight and trend by sector 2005-2010 Dairy products : favorite territory of nutrition & health innovations Functional 2005 2010 Natural Functional 2005 2010 Natural

I - GLOBAL TRENDS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 4 ▪ Marketing Communication & Positioning Real  Virtual … Basic Nutrition, Body Functional Health & Wellness Status, Ethics, Spirit

II - STAKES & CHALLENGES (1/2) 1 - Meet the growing demand for food to feed a growing world population… and for agri-resources to provide alternative fuel sources 2 - Boost anemic traditional large food markets in developed countries : enlarge fast growing/moving markets ("niches") ; be much more innovative as to-day (true innovation)… 3 - Face & master the rapid downgrading of food products "values" : devalorization ("desecration") 4 - Stop and invert the weakening of brands and find leverages to catch the interest and regain the fidelity of consumers 5 - Take up deeply the challenge of environment, health and security , on a sustainable way (bringing long term true benefits to consumers, and beyond to humanity) November 2007 FOOD INTELLIGENCE - SERGE GUEGAN The Main Challenges for Food Industry

1 - Meet the growing demand for food to feed a growing world population… and for agri-resources to provide alternative fuel sources

2 - Boost anemic traditional large food markets in developed countries : enlarge fast growing/moving markets ("niches") ; be much more innovative as to-day (true innovation)…

3 - Face & master the rapid downgrading of food products "values" : devalorization ("desecration")

4 - Stop and invert the weakening of brands and find leverages to catch the interest and regain the fidelity of consumers

5 - Take up deeply the challenge of environment, health and security , on a sustainable way (bringing long term true benefits to consumers, and beyond to humanity)

II - STAKES & CHALLENGES (2/2) 6 - Adapt to the growing power of mass retailers (without becoming world subcontractors…) 7 - Globalization : how to preserve the food company identity while getting global ? 8 - Change the negative image of "multinational" food companies accused of starving the world, causing malnutrition & obesity ("junk food", "malbouffe"…), and accelerating rural exodus… 9 - Finally : can food companies durably increase real added value and profit (shareholders, banks, funds) and in the same time improve the lifes of people (consumers, workers) ? November 2007 FOOD INTELLIGENCE - SERGE GUEGAN The Main Challenges for Food Industry

6 - Adapt to the growing power of mass retailers (without becoming world subcontractors…)

7 - Globalization : how to preserve the food company identity while getting global ?

8 - Change the negative image of "multinational" food companies accused of starving the world, causing malnutrition & obesity ("junk food", "malbouffe"…), and accelerating rural exodus…

9 - Finally : can food companies durably increase real added value and profit (shareholders, banks, funds) and in the same time improve the lifes of people (consumers, workers) ?

III - GLOBAL PLAYERS World 100 Food & Beverage Industrial Leaders : 1000 milliards € (84% in F&B) = less than 10% of Global Top 100 (all sectors) Northern America (including Mexico) and USA account respectively for 51% and 45% of Top 100 total turnover (with 41 & 34 groups) compared to the 29% of EU (35 groups of which 8 French) and the 8% of Japan (15 groups) 56 firms in four sectors : agribusiness (14), dairy (16), meat (12), beer (14) 62/100 : listed ; 26/100 private ; 14/100 cooperative (of which 9 european) Attractive financial performance : 2005-2007 AAGR + 8,7% Net Income is often greater than 10% (Nestlé, Danone...), even 20% (Coca-Cola...) November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 1 ▪ WORLD FOOD COMPANIES (1/3) Powerful, profitebale - and in a majority northern american - global food players

World 100 Food & Beverage Industrial Leaders : 1000 milliards € (84% in F&B) = less than 10% of Global Top 100 (all sectors)

Northern America (including Mexico) and USA account respectively for 51% and 45% of Top 100 total turnover (with 41 & 34 groups) compared to the 29% of EU (35 groups of which 8 French) and the 8% of Japan (15 groups)

56 firms in four sectors : agribusiness (14), dairy (16), meat (12), beer (14)

62/100 : listed ; 26/100 private ; 14/100 cooperative (of which 9 european)

Attractive financial performance :

2005-2007 AAGR + 8,7%

Net Income is often greater than 10% (Nestlé, Danone...), even 20% (Coca-Cola...)

III - GLOBAL PLAYERS Only 5 food groups in emerging countries are in the World F&B Top 100 : FEMSA, BIMBO & MODELO (Mexico), WILMAR (Singapore), SAN MIGUEL (Philippines) But already a lot of almost 2 billion € operators in emerging countries Some conglomerates or big retailers play or could play a significant role in the Food or Retail sectors ; for example : India : Reliance, Tata, Bharti, Wadia, Aditya Birla China : China Resources Enterprises, Ting Hsin (Tingyi…) (Taiwan : Uni-President) Malaysia : Sime Darby, PPB Turkey : Koç, Sabanci November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 1 ▪ WORLD FOOD COMPANIES (2/3) In 2025 : a number of 3 to 4 billion € food & beverage groups in emerging countries

Only 5 food groups in emerging countries are in the World F&B Top 100 : FEMSA, BIMBO & MODELO (Mexico), WILMAR (Singapore), SAN MIGUEL (Philippines)

But already a lot of almost 2 billion € operators in emerging countries

Some conglomerates or big retailers play or could play a significant role in the Food or Retail sectors ; for example :

India : Reliance, Tata, Bharti, Wadia, Aditya Birla

China : China Resources Enterprises, Ting Hsin (Tingyi…)

(Taiwan : Uni-President)

Malaysia : Sime Darby, PPB

Turkey : Koç, Sabanci

III - GLOBAL PLAYERS Financial strategy ( 1° Investors, 2° Consumers, 3° Workers ) ; 62 on Top 100 listed Refocusing (activities, brands), cost killing policy ("restructuring") (Unilever, Sara Conagra, Lee,…) Internationalization (finding growth leverages in fast emerging countries) External growth (mergers & acquisitions, JV) and, recently, back to organic growth Downstream positioning, the closest to the consumer (Conagra,…) Brands : global (world), high-potential, leaders (N°1 ou N°2), ("Knorr " (Unilever) = a world turnover exceeding… 3 milliards €) Communication on brands ( secondarily and locally on products ) : "Our Brands !" ; "PULL" marketing approach Innovation (R&D) : financially and geographically concentrated, process focused on projects with a world sales potential of at least 0.5 to 1 billion € … November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 1 ▪ WORLD FOOD COMPANIES (3/3) Stock prices outperform all other criteria : only heroic CEO will take the risk of focusing on the long term

Financial strategy ( 1° Investors, 2° Consumers, 3° Workers ) ; 62 on Top 100 listed

Refocusing (activities, brands), cost killing policy ("restructuring") (Unilever, Sara Conagra, Lee,…)

Internationalization (finding growth leverages in fast emerging countries)

External growth (mergers & acquisitions, JV) and, recently, back to organic growth

Downstream positioning, the closest to the consumer (Conagra,…)

Brands : global (world), high-potential, leaders (N°1 ou N°2), ("Knorr " (Unilever) = a world turnover exceeding… 3 milliards €)

Communication on brands ( secondarily and locally on products ) : "Our Brands !" ; "PULL" marketing approach

Innovation (R&D) : financially and geographically concentrated, process focused on projects with a world sales potential of at least 0.5 to 1 billion € …

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ WORLD GROCERY RETAILERS 2006 (1/2) 1 Wal-Mart USA 376,430 16 Auchan France 53,608 2 Carrefour France 122,214 17 Walgreens A USA 49,874 3 Metro Group C Germany 87,360 18 Edeka Germany 48,525 4 Tesco UK 86,827 19 CVS USA 46,092 5 Seven & I N Japan 79,101 20 Safeway (USA) U USA 43,770 6 Ahold Netherlands 77,546 21 Leclerc France 40,435 7 Kroger USA 69,549 22 ITM (Intermarché) France 36,931 8 Sears USA 64,833 23 Sainsbury P UK 36,071 9 Costco USA 64,737 24 Woolworths ( AUS ) K Australia 34,255 10 Target USA 62,584 25 SuperValu USA 32,278 11 Rewe Germany 56,448 26 Tengelmann Germany 31,566 12 Casino France 55,298 27 Coles Group Australia 30,308 13 Schwarz Group Germany 55,160 28 Loblaw B Canada 26,629 14 AEON Japan 55,157 29 Delhaize Group T Belgium 26,004 15 Aldi Germany 54,104 30 Morrisons CC UK 24,924 Total Top 30 (USD mn) 1,928,618

III - GLOBAL PLAYERS T he first 30 grocery retailers (retailing generalists) : 1500 billion € including 59% in the food and only 26% in international markets Among them : 10 in North America, 2 Japanese, 2 Australians and 16 Europeans including 5 french : Carrefour (# 2), Casino (# 12), Auchan (# 16), Leclerc (# 21) and Intermarché (# 22) Low value-added services to consumers. Focused management on procurement (how to put the best pressure on suppliers is the cultural "Omphalos" of retailers). Low g rowth and low profitability in developed countries (particularly in France) :  Geographical r efocusing and selective search of new growth to 2 digits in the emerging countries (Carrefour leaves Portugal, Switzerland and Italy for China, and soon Russia and India…). Top retailers try to sign JV agreements with big, attractive but touchy local players in China, India & Russia …  Diversification of product mix (formats, non-food products, universe, private labels…) ; in France the ability to communicate on TV will accelerate the necessary modernization of marketing of French distributors (and perhaps, but less probable, reduce tonnage flyers and leaflets in the mailboxes)  Increasing adaptability of the offer in time (events, availability and price) and in space (local competition) November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ WORLD GROCERY RETAILERS (2/2)

T he first 30 grocery retailers (retailing generalists) : 1500 billion € including 59% in the food and only 26% in international markets

Among them : 10 in North America, 2 Japanese, 2 Australians and 16 Europeans including 5 french : Carrefour (# 2), Casino (# 12), Auchan (# 16), Leclerc (# 21) and Intermarché (# 22)

Low value-added services to consumers. Focused management on procurement (how to put the best pressure on suppliers is the cultural "Omphalos" of retailers). Low g rowth and low profitability in developed countries (particularly in France) :

 Geographical r efocusing and selective search of new growth to 2 digits in the emerging countries (Carrefour leaves Portugal, Switzerland and Italy for China, and soon Russia and India…). Top retailers try to sign JV agreements with big, attractive but touchy local players in China, India & Russia …

 Diversification of product mix (formats, non-food products, universe, private labels…) ; in France the ability to communicate on TV will accelerate the necessary modernization of marketing of French distributors (and perhaps, but less probable, reduce tonnage flyers and leaflets in the mailboxes)

 Increasing adaptability of the offer in time (events, availability and price) and in space (local competition)

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 3 ▪ World Top 30 F&B Global Leaders Strategic groups taking shape … COMPANIES T / F Net Sales (bn €) COMPANIES T / F Net Sales (bn €) 1 CARGILL 70,4 16 CADBURY SCHWEPPES  10,9 2 NESTLÉ 62,6 / 58,3 17 DIAGEO  10,7 3 ARCHER DANIELS MIDLAND 35,1 18 GENERAL MILLS 9,9 4 PEPSICO  28 19 ASAHI BREWERIES 9,9 5 KRAFT FOODS 27,4 20 ANHEUSER-BUSCH 12,5 / 9,9 6 UNILEVER 39,6 / 21,3 21 SUNTORY 9,7 7 BUNGE 20,9 22 CONAGRA FOODS 9,6 8 TYSON FOODS 20,4 23 SMITHFIELD FOODS 9,5 9 COCA-COLA  19,2 24 KELLOG 8,7 10 MARS  15,9 25 SARA LEE 9,8 / 8,2 11 SABMILLER  14,8 26 DEAN FOODS 8,1 12 DANONE  14,1 27 CHS 11,4 / 8 13 LOUIS DREYFUS 20 / 13,6 28 KIRIN (MITSUBISHI) 8,7 / 7,8 14 INBEV  13,3 29 MCCAIN FOODS  7,5 15 HEINEKEN  11,8 30 LACTALIS 7,5

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 4 ▪ World Top 30 Private F&B Global Leaders 1 CARGILL USA Agribusiness 71 HERSHEY FOODS USA Confectionery 8 TYSON FOODS USA Meat 72 TCHIBO D Coffee 10 MARS  USA Confect., Pet F. 74 WRIGLEY USA Confectionery 13 LOUIS DREYFUS F Agribusiness 80 OETKER D Diversified 21 SUNTORY J WS, Beer, NA 81 LOTTE K Div (conf, bev…) 29 MCCAIN FOODS  USA Frozen 83 BONGRAIN F Dairy 30 LACTALIS F Dairy 84 OSI USA Meat 35 ASSOCIATED BRITISH FOODS  UK Diversified 88 GEORGE WESTON  Can Bakery, Dairy 50 FERRERO I Confectionery 94 SAPUTO Can Dairy 54 DOLE FOOD USA Fruits & Veg. 96 PERDUE FARMS USA Poultry 60 BIMBO Mex Bakery 97 SUCRES ET DENREES F Agrib., Trading 64 PILGRIM'S PRIDE USA Poultry 102 SOUFFLET F Milling 65 CONSTELLATION BRANDS USA W&S 103 BARRY CALLEBAUT Switz Chocolate 68 BARILLA I Pasta, Baking 105 SCHWAN FOOD USA Frozen 70 BACARDI Berm W&S 106 KIKKOMAN J Sauces, W&S

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 5 ▪ World Top 20 Food & Fuel Cooperatives 27 CHS USA Agribusiness 85 AGRAVIS D Agribusiness 32 VION NL Meat 87 TEREOS F Sugar… 33 FONTERRA NZ Dairy 92 HUMANA MILCHUNION D Dairy 39 DANISH CROWN DK Meat 95 TERRENA F Agrib.,Meat, Dairy 42 DAIRY FARMERS OF AMERICA USA Dairy 110 SVENSKA LANTMÄNNEN F Agrib. , Fl our , Bak ery 44 ARLA FOODS DK Dairy 111 GROWMARK USA Agribusiness 47 SÜDZUCKER D Sugar… 118 SODIAAL F Dairy 49 LAND O'LAKES USA Dairy 121 INVIVO F Agribusiness 58 ROYAL FRIESLAND FOODS NL Dairy 134 BAYWA D Agribusiness 75 CAMPINA NL Dairy 138 DLG DK Agrib. (Feeds)

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 6 ▪ World 20 Dairy Groups 2. NESTLÉ (62,6/16,3) CH 58. ROYAL FRIESLAND F. (4,7) NL 6. UNILEVER (39,6/9) UK/NL 13. MORINAGA M. I. (4) J 12. DANONE (14,1/7,9) F 73. PARMALAT (3,8) I 26. DEAN FOODS (8,1/7,9) USA 75. CAMPINA MELKUNIE (3,6) D 30. LACTALIS (7,5/7,3) F 83. BONGRAIN (3,3) F 33. FONTERRA (7,2) NZ 92. HUMANA MILCHUNION (2,9) D 42. DFA (6,3) USA 94. SAPUTO (2,8) Canada 44. ARLA (6,1) DK 109. NUMICO (2,6)  DANONE NL 5. KRAFT FOODS (27,4/5,2) USA 49. LAND O'LAKES (5,7/2,6) USA 56. MEIJI DAIRIES (4,8) J 118. SODIAAL (2,5) F

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 7 ▪ World 20 Meat & Poultry Groups 8. TYSON FOODS (20,4) USA m & p 84. OSI (3,2) USA m & p 21. SMITHFIELD FOODS (9,5) USA m & p 96. PERDUE FARM (2,8) USA p 191. JBS - SWIFT (9,2) Bra m 107. GRAMPIAN (2,7) UK m & p 32. VION (7,3) Nl m 67. MAPLE LEAF (4,1 / 2,6) Can m 37. NIPPON MEAT PACKERS (6,7) J m & p 25. SARA LEE (8,2 / 2,6) USA m & p 39. DANISH CROWN (6,5) DK m 108. CHAROEN POKPHAND FOODS (2,6) Thaï p 1. CARGILL (EXCEL…) (5) USA m 113. SADIA (2,5) Bra m & p 62. HORMEL FOODS (4,6) USA m & p 115. TÖNNIES FLEISH (2,5) D m 64. PILGRIM'S PRIDE (4,2) USA p 117. KEYSTONE FOODS (2,5) USA p & m 82. ITOHAM FOODS (3,5) J m 130. PERDIGAO (2) Bra m & p

III - GLOBAL PLAYERS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 8 ▪ Some Other Sectors (Main Groups) Wine & Spirits Fruits & Vegetables* Baking Seafood Ingredients 17. DIAGEO 40. Pernod Ricard 65. Constellation Brands 70. Bacardi 90. LVMH 137. Brown-Forman 140. Fortune Brands 143. Gallo Winery 54. Dole Food 79. Chiquita Brands 101. Del Monte 112. Fresh Del Monte 123. Fyffes 124. Pomona 135. Cobana … - Bonduelle (*) fresh (& other) 18. General Mills 25. Sara Lee 51. Yamazaki Baking 60. Bimbo 88. George Weston 35. Associated British Foods (ABF) 132.Interstate Bakeries 144. Gruma 53. Maruha 76. Nissui 87. Nichirei 127. Katokichi Cap Vest (Young's + Findus) Icelandic (Is) Thai Union - Pescanova Marine Harvest (N) Alfesca (Is) 1. Cargill 2. ADM 31. Ajinomoto 35. ABF 46. Tate & Lyle 47. Südzucker 61. Kerry 87. Tereos 100. Danisco 122. Royal DSM 123. CSM 148. Corn Products 153. Roquette 173. Givaudan

53. Maruha

76. Nissui

87. Nichirei

127. Katokichi

Cap Vest (Young's + Findus)

Icelandic (Is)

Thai Union - Pescanova

Marine Harvest (N)

Alfesca (Is)

IV - STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 30 Global Leaders : 4 Strategic Profiles Upstream or downstream, specialization, internationalization … "Agri-Food" "Diversified" "Specialists  " "Be(er)verage" Our Company, Our Brands, Our Commitments !

"Agri-Food"

"Diversified"

"Specialists  "

"Be(er)verage"

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 1 ▪ "Agri-Food" Leaders (1/2) 1 CARGILL USA 70,4 € 70,4 € 3 ARCHER DANIELS MIDLAND USA 35,1 € 35,1 € 7 BUNGE Bermuda 20,9 € 20,9 € 8 TYSON FOODS USA 20,4 € 20,4 € 13 LOUIS DREYFUS France 20 € 13,6 € 23 SMITHFIELD FOODS USA 9,5 € 9,5 € 26 DEAN FOODS USA 8,1 € 8,1 € 27 CHS USA 11,4 € 8 € 29 MCCAIN FOODS Canada 7,5 € 7,5 € 30 LACTALIS France 7,5 € 7,5 € Billions Euros 210,7 € 200,9 €

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 1 ▪ "Agri-Food" Leaders (2/2) Growth champions (8,3%: commodities soaring world prices,...), but low profits (2,7) World strategic influence of Cargill & ADM, lack of internationalization of the others Businesses & Clients : dependent on agriculture (positively and negatively) … : Agribusiness & Trading : … but not directly on consumers Meat & Dairy : and also on consumers ! Meat & Dairy Giants : "poorly" consumer oriented with still low added value products and lack of innovation & creativity ; no global brands Negative Global Public Image of Agribusiness Challenges : Cargill & ADM are embracing 2 major opportunities : "the growing demand for food to feed a growing world population…, and the quest for alternative fuel sources…" (Patricia A. Woertz, ADM Chairman & CEO) Meat & Dairy Giants : dramatic strategic changes coming soon ( "see next series …")

Growth champions (8,3%: commodities soaring world prices,...), but low profits (2,7)

World strategic influence of Cargill & ADM, lack of internationalization of the others

Businesses & Clients : dependent on agriculture (positively and negatively) … :

Agribusiness & Trading : … but not directly on consumers

Meat & Dairy : and also on consumers !

Meat & Dairy Giants : "poorly" consumer oriented with still low added value products and lack of innovation & creativity ; no global brands

Negative Global Public Image of Agribusiness

Challenges :

Cargill & ADM are embracing 2 major opportunities : "the growing demand for food to feed a growing world population…, and the quest for alternative fuel sources…" (Patricia A. Woertz, ADM Chairman & CEO)

Meat & Dairy Giants : dramatic strategic changes coming soon ( "see next series …")

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ "Diversified" Leaders (1/3) 2 NESTLÉ Switzerland 62,6 € 58,3 € 5 KRAFT FOODS USA 27,4 € 27,4 € 6 UNILEVER UK/NL 39,6 € 21,3 € 18 GENERAL MILLS USA 9,9 € 9,9 € 22 CONAGRA FOODS USA 9,6 € 9,6 € 25 SARA LEE USA 9,8 € 8,2 € Billions Euros 158,9 € 134,7 €

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ "Diversified" Leaders (2/3) Performance : good net margin (8,2%), hardly satisfactory net sales growth (5,3%) International : Nestlé, Kraft & Unilever are global, the 3 others are still very "american" Business segments : everywhere except tobacco & alcohols, agribusiness, "fresh" Market positioning : close to consumers ; value added , convenient , nutritious products Innovation : large, strong, long term programs but lacking of flexibility, rapidity… Trusted value and global Brands : "Global" (world), large (1 billion $), strong potential, leadership (#1 or #2), sustainable, profitable, in tune with global image strategy … & "Local" : leading & powerful "National Brands" wherever it's possible Global Image : social responsability, taste, convenience, nutrition, health & wellness Challenges : Restructuring, Focusing (fewer…), Renovation, Innovation, Back to Organic Growth (external gowth is a necessity, not a finality)

Performance : good net margin (8,2%), hardly satisfactory net sales growth (5,3%)

International : Nestlé, Kraft & Unilever are global, the 3 others are still very "american"

Business segments : everywhere except tobacco & alcohols, agribusiness, "fresh"

Market positioning : close to consumers ; value added , convenient , nutritious products

Innovation : large, strong, long term programs but lacking of flexibility, rapidity…

Trusted value and global Brands :

"Global" (world), large (1 billion $), strong potential, leadership (#1 or #2), sustainable, profitable, in tune with global image strategy

… & "Local" : leading & powerful "National Brands" wherever it's possible

Global Image : social responsability, taste, convenience, nutrition, health & wellness

Challenges : Restructuring, Focusing (fewer…), Renovation, Innovation, Back to Organic Growth (external gowth is a necessity, not a finality)

IV - STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 2 ▪ "Diversified" Leaders (3/3) NESTLÉ KRAFT UNILEVER GENERAL MILLS CONAGRA SARA LEE Food Net Sales (Bn €) 58,3 27,4 21,3 9,9 9,6 8,2 1. "ANIMAL" DAIRY 11,5 5,1 1 2. "ALTERNATIVE" "DAIRY" 0,9 4,8 3. ICE CREAM 4,9 4,2 0,8 4. CEREALS (FAMILY) (CPW : 0,7) 0,9 1,6 (+CPW : 0,7) 5. BAKING & MILLING 3,2 1 3 6. BISCUITS, SNACKS, DESSERTS 0,7 6,3 0,9 1,7 7. CHOCOLATE, CONFECTIONERY 6,5 2,9 8. COFFEE 6 3,8 2,2 9. TEA* (*): + various 3,3 0,2 10. WATER 6,1 11. OTHER NA BEVERAGE 4,3 2 0,2 12. MEALS, ENTREES 5,5 2 4,3 1,6 2 13. COOKING, SIDES, CONDIMENTS 4,6 1,1 4,7 0,8 2 14. MEAT & POULTRY 1 2,4 2,6 15. PET CARE 7,2 16. INGREDIENTS 1,8 17. AGRIBUSINESS / TRADING 1,1

November 2007 FOOD INTELLIGENCE - SERGE GUEGAN

November 2007 FOOD INTELLIGENCE - SERGE GUEGAN

November 2007 FOOD INTELLIGENCE - SERGE GUEGAN

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 3 ▪ "Specialists" Leaders (1/2) 4 PEPSICO USA 28 € 28 € 9 COCA-COLA USA 19,2 € 19,2 € 10 MARS USA 15,9 € 15,9 € 12 DANONE France 14,1 € 14,1 € 16 CADBURY SCHWEPPES UK 10,9 € 10,9 € 24 KELLOGG USA 8,7 € 8,7 € Billions Euros 96,8 € 96,8 €

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 3 ▪ "Specialists"    Leaders (2/2) High net margin (12,7 %), good & sustainable growth (7,4%) Stars of Internationalization : global products for everybody, everywhere, at any time Business universe : meeting world consumer "desires & needs" Marketing : very close to consumers with value added effective products distributed thanks to specific schemes : bottling, technology licensing, advertising, cash flooding retailers… Anticipating & Innovating : focused "craft" expertise, understanding consumers Excellence : Number One in its business fields (market share, quality, supply chain…) Global Brands ("Icons") Two crucial challenges for improving Image and ensure future Growth : Nutrition & Health (Danone is the "natural" pioneer) More expertise but less dependence on a dominant product family or iconic brands : how to win the battle of "Soft Diversification" ?

High net margin (12,7 %), good & sustainable growth (7,4%)

Stars of Internationalization : global products for everybody, everywhere, at any time

Business universe : meeting world consumer "desires & needs"

Marketing : very close to consumers with value added effective products distributed thanks to specific schemes : bottling, technology licensing, advertising, cash flooding retailers…

Anticipating & Innovating : focused "craft" expertise, understanding consumers

Excellence : Number One in its business fields (market share, quality, supply chain…)

Global Brands ("Icons")

Two crucial challenges for improving Image and ensure future Growth :

Nutrition & Health (Danone is the "natural" pioneer)

More expertise but less dependence on a dominant product family or iconic brands : how to win the battle of "Soft Diversification" ?

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 4 ▪ "Be(er)verage" Leaders (1/3) 11 SABMILLER UK 14,8 € 14,8 € 14 INBEV Belgium 13,3 € 13,3 € 15 HEINEKEN Netherlands 11,8 € 11,8 € 17 DIAGEO UK 10,7 € 10,7 € 19 ASAHI BREWERIES Japan 9,9 € 9,9 € 20 ANHEUSER-BUSCH USA 12,5 € 9,9 € 21 SUNTORY Japan 9,7 € 9,7 € 28 KIRIN ( MITSUBISHI ) Japan 8,7 € 7,8 € Billions Euros 91,4 € 87,9 €

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 4 ▪ "Be(er)verage" Leaders (2/3) High net margin (9,8 %) & growth (7,4%) driven by mergers & acquisitions Beer is by far the most concentrated big food & beverage business in the world Business segments universe : A & NA beverages, waters, liquids, by-products, bio-pharma The Top 4 are very internationalized ; all have built large worlwide partnerships JV exemples : ABI*/Tsingtao, ABI/Kirin, ABI/Modelo, SabMiller/China Resources Snow Breweries, SabMiller/Castel, russian JV Carlsberg/S&N (BBH : Baltika… ). (*): holds Harbin

High net margin (9,8 %) & growth (7,4%) driven by mergers & acquisitions

Beer is by far the most concentrated big food & beverage business in the world

Business segments universe : A & NA beverages, waters, liquids, by-products, bio-pharma

The Top 4 are very internationalized ; all have built large worlwide partnerships

JV exemples : ABI*/Tsingtao, ABI/Kirin, ABI/Modelo, SabMiller/China Resources Snow Breweries, SabMiller/Castel, russian JV Carlsberg/S&N (BBH : Baltika… ). (*): holds Harbin

IV- STRATEGIC PROFILES November 2007 FOOD INTELLIGENCE - SERGE GUEGAN 4 ▪ "Be(er)verage" Leaders (3/3) Global & local strong Brands : Budweiser, Skol, Corona, Brahma … Heineken is " the world’s most valuable international premium beer brand". Diageo accounts for 55% of the volume of the world's top 10 premium spirits brands, etc. Brewerers are imprisoned in a too specific (and alcoholic!) products universe ( ≈ "ghetto) Three crucial challenges : China is by far the world’s largest and fastest growing beer market Nutrition & Health : rapidly declining image of alcohol in developed countries … More expertise but less dependence on a dominant product family or iconic brands : how to win the battle of "Soft Un- Ghettoization " (like ABI with its Entertainment business) ?

Global & local strong Brands : Budweiser, Skol, Corona, Brahma … Heineken is " the world’s most valuable international premium beer brand". Diageo accounts for 55% of the volume of the world's top 10 premium spirits brands, etc.

Brewerers are imprisoned in a too specific (and alcoholic!) products universe ( ≈ "ghetto)

Three crucial challenges :

China is by far the world’s largest and fastest growing beer market

Nutrition & Health : rapidly declining image of alcohol in developed countries …

More expertise but less dependence on a dominant product family or iconic brands : how to win the battle of "Soft Un- Ghettoization " (like ABI with its Entertainment business) ?

V - STRATEGIC FUTURE : CLASHES AREAS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN Concentration aggravated by Globalization will continue to hit traditional / basic / "unhealty" / international product sectors : meat, sugar, fats … However the big stakes and conflict areas will concern more strategically : Value-added, convenience, functional and nutritious products : dairy, non- or low- alcoholic beverages, biscuits & snacks, culinary, pet food, child care, seniors, efforts… Big markets in the process of globalization like bakery, wine, cheese, meals, desserts Developed regions with an important population : USA, Japan/Koreas, west EU Major emerging countries : cost of labor, agri-sea resources, consumers Strategic and/or high-tech sectors like ingredients, agribusiness (seeds, pesticides…).

Concentration aggravated by Globalization will continue to hit traditional / basic / "unhealty" / international product sectors : meat, sugar, fats …

However the big stakes and conflict areas will concern more strategically :

Value-added, convenience, functional and nutritious products : dairy, non- or low- alcoholic beverages, biscuits & snacks, culinary, pet food, child care, seniors, efforts…

Big markets in the process of globalization like bakery, wine, cheese, meals, desserts

Developed regions with an important population : USA, Japan/Koreas, west EU

Major emerging countries : cost of labor, agri-sea resources, consumers

Strategic and/or high-tech sectors like ingredients, agribusiness (seeds, pesticides…).

V - STRATEGIC FUTURE : GROUPS November 2007 FOOD INTELLIGENCE - SERGE GUEGAN I - "Agri-food" : 2 big players : Cargill, ADM ; concentration : trading, meat, dairy II - "Diversified" : 2 big players : Nestlé & Kraft . Pepsico will enter the club. The future of some mammoths like Sara Lee, Conagra, even Unilever (a two-headed, heavy and slow monster : soap & margarine makes no glue !), is not assured III - "Specialists" : Coca-Cola will keep crown. Danone, provided to continue its targeted JV policy (especially in Asia) and to merge with another player could avoid a highly probable unfriendly bid… To buy Numico style operators is not enough. Pepsico will wait until Kraft and Nestlé have each a big prey in their mouth. IV - "Be(er)verage" : 3 or 4 giants : Sabmiller, Inbev, Diageo and Anheuser-Busch . Big asiatic brewers - unless an improbale merger between the historical enemies Asahi & Kirin - are not presently in the best position.

VI - AND THE WINNERS ARE … November 2007 FOOD INTELLIGENCE - SERGE GUEGAN … The game is not over ! Each company owns major strategic assets 30 = 13/14 Winners + 10/11 "?" + 6 Newcomers I - Bigger II - Acquired or split III - Still there IV - Newcomers 13/14 8/9 2 6 CARGILL NESTLÉ ADM PEPSICO KRAFT BUNGE TYSON / SMITHFIELD COCA-COLA SABMILLER DANONE INBEV DIAGEO ANHEUSER BUSCH CHS UNILEVER ? LOUIS DREYFUS ? HEINEKEN ? CADBURY ? GENERAL MILLS ? CONAGRA ? KELLOG ? SARA LEE ? DEAN FOOD ? ASAHI ? KIRIN ? LACTALIS ? MARS ? MCCAIN ? SUNTORY ? Emerging Countries : JBS & other "Brazil", "Mexico", "Malaysia", "Thailand", "China" / "Taiwan", "India", "Turkey", "Russia", "Argentina" Mega Coops mergers such as : Fonterra + … DFA/Land O’Lakes Arla/Campina/RFF Vion/Danish-Crown, Agravis/Invivo/Baywa Terrena/Svenska … And… of course different groups absorbed by I or II or III

Emerging Countries : JBS & other "Brazil", "Mexico", "Malaysia", "Thailand", "China" / "Taiwan", "India", "Turkey", "Russia", "Argentina"

Mega Coops mergers such as :

Fonterra + …

DFA/Land O’Lakes

Arla/Campina/RFF

Vion/Danish-Crown, Agravis/Invivo/Baywa

Terrena/Svenska

… And… of course different

groups absorbed by I or II or III

November 2007 FOOD INTELLIGENCE - SERGE GUEGAN "Feeding Minds, Fighting Hunger" "Small is Beautifull" THANK YOU FOOD INTELLIGENCE Serge Guégan Tél. 33 (0)2 28 13 03 67 [email_address] http://www.foodintelligence.fr