World Food & Beverage Industry 2010-2025 Serge Guégan - Food Intelligence - 2008

Slide 1: WORLD FOOD & BEVERAGE INDUSTRY 2010 - 2025  Serge Guégan November 2007

Slide 2: Hello नमसते 你好 Здравствуйте こんにちは Olá Hola ‫مرحبا‬ สวัสดครับี Bonjour Demat November 2007

Slide 3: WORLD FOOD & BEVERAGE INDUSTRY 2010 - 2025  I - GLOBAL TRENDS  II - STAKES & CHALLENGES  III - GLOBAL PLAYERS  IV - STRATEGIC PROFILES  V - STRATEGIC FUTURE (S)  V - WINNERS … November 2007

Slide 4: I - GLOBAL TRENDS 1 ▪ Globalization & Acceleration of Changes  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 Accelerating of globalization & innovation : a new frontier … November 2007

Slide 5: I - GLOBAL TRENDS Population Annual Average Growth Rate (2000) Building a sustainable world future with Africa : otherwise we all die November 2007

Slide 6: I - GLOBAL TRENDS 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) November 2007

Slide 7: I - GLOBAL TRENDS 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 ? … November 2007

Slide 8: I - GLOBAL TRENDS 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 … November 2007

Slide 9: I - GLOBAL TRENDS 2 ▪ World Food Consumption : Where, What ? Consumption of Sugar & Sweeteners (2000) More Sugar in consumption diets : beverages, desserts, confectionery… November 2007

Slide 10: I - GLOBAL TRENDS 2 ▪ World Food Consumption : Where, What ? Consumption of Fruits & Vegetables (2000) US modernity, Chineese tradition & "Mediterranean Diet" … November 2007

Slide 11: I - GLOBAL TRENDS 3 ▪ Main "Rich" Consumers Expectations  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 From a random tradition… towards a very very very secured modernity ! November 2007

Slide 12: I - NUTRITION & HEALTH (3▪figure A) Risk Health+ Natural Products Functional Organic Products Products Artificial Natural Conventional Products Nutrition & Health Risk Products Health- November 2007

Slide 13: I - NUTRITION & HEALTH (3▪figure B) Weight and trend by sector 2005-2010 970 Functional 870 770 670 2010 2010 570 2005 2005 470 370 270 170 70 Natural Natural -30 0 50 100 150 200 250 Grain Dairy Meat/Fish F&V Traiteur Sauces Sugar Beverage Dairy products : favorite territory of nutrition & health innovations November 2007

Slide 14: I - GLOBAL TRENDS 4 ▪ Marketing Communication & Positioning Status, Ethics, Spirit Health & Wellness Functional Basic Nutrition, Body Real  Virtual … November 2007

Slide 15: II - STAKES & CHALLENGES (1/2) 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) November 2007

Slide 16: II - STAKES & CHALLENGES (2/2) 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) ? November 2007

Slide 17: III - GLOBAL PLAYERS 1 ▪ WORLD FOOD COMPANIES (1/3)  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...) Powerful, profitebale - and in a majority northern american - global food players November 2007

Slide 18: III - GLOBAL PLAYERS 1 ▪ WORLD FOOD COMPANIES (2/3)  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 In 2025 : a number of 3 to 4 billion € food & beverage groups in emerging countries November 2007

Slide 19: III - GLOBAL PLAYERS 1 ▪ WORLD FOOD COMPANIES (3/3)  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 € … Stock prices outperform all other criteria : only heroic CEO will take the risk of focusing on the long term November 2007

Slide 20: III - GLOBAL PLAYERS 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 November 2007

Slide 21: III - GLOBAL PLAYERS 2 ▪ WORLD GROCERY RETAILERS (2/2)  The 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 growth and low profitability in developed countries (particularly in France) :  Geographical refocusing 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

Slide 22: III - GLOBAL PLAYERS 3 ▪ World Top 30 F&B Global Leaders 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 Strategic groups taking shape … November 2007

Slide 23: III - GLOBAL PLAYERS 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 November 2007

Slide 24: III - GLOBAL PLAYERS 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., Flour, Bakery 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) November 2007

Slide 25: III - GLOBAL PLAYERS 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 November 2007

Slide 26: III - GLOBAL PLAYERS 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 November 2007

Slide 27: III - GLOBAL PLAYERS 8 ▪ Some Other Sectors (Main Groups) Fruits & Wine & Spirits Baking Seafood Ingredients Vegetables* 17. DIAGEO 54. Dole Food 18. General Mills 53. Maruha 1. Cargill 40. Pernod Ricard 79. Chiquita Brands 25. Sara Lee 76. Nissui 2. ADM 65. Constellation 101. Del Monte 51. Yamazaki 87. Nichirei 31. Ajinomoto Brands 112. Fresh Del Baking 127. Katokichi 35. ABF 70. Bacardi Monte 60. Bimbo - Cap Vest 46. Tate & Lyle 90. LVMH 123. Fyffes 88. George (Young's + Findus) 47. Südzucker 137. Brown-Forman 124. Pomona Weston - Icelandic (Is) 61. Kerry 140. Fortune 135. Cobana 35. Associated - Thai Union 87. Tereos Brands British Foods - Pescanova … 100. Danisco (ABF) - Marine Harvest (N) 143. Gallo Winery - Bonduelle 132.Interstate 122. Royal DSM - Alfesca (Is) Bakeries 123. CSM (*) fresh (& other) 144. Gruma 148. Corn Products 153. Roquette 173. Givaudan November 2007

Slide 28: IV - STRATEGIC PROFILES 30 Global Leaders : 4 Strategic Profiles , 1."Agri-Food" pany r Com ds, Ou Bran itments ! 2."Diversified" Our omm Our C 3."Specialists" 4."Be(er)verage" Upstream or downstream, specialization, internationalization … November 2007

Slide 29: IV- STRATEGIC PROFILES 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 € November 2007

Slide 30: IV- STRATEGIC PROFILES 1 ▪ "Agri-Food" Leaders (2/2) 1. Growth champions (8,3%: commodities soaring world prices,...), but low profits (2,7) 2. World strategic influence of Cargill & ADM, lack of internationalization of the others 3. Businesses & Clients : dependent on agriculture (positively and negatively) … :  Agribusiness & Trading : … but not directly on consumers  Meat & Dairy : and also on consumers ! 4. Meat & Dairy Giants : "poorly" consumer oriented with still low added value products and lack of innovation & creativity ; no global brands 5. Negative Global Public Image of Agribusiness 6. 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…") November 2007

Slide 31: IV- STRATEGIC PROFILES 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 € November 2007

Slide 32: IV- STRATEGIC PROFILES 2 ▪ "Diversified" Leaders (2/3) 1. Performance : good net margin (8,2%), hardly satisfactory net sales growth (5,3%) 2. International : Nestlé, Kraft & Unilever are global, the 3 others are still very "american" 3. Business segments : everywhere except tobacco & alcohols, agribusiness, "fresh" 4. Market positioning : close to consumers ; value added, convenient, nutritious products 5. Innovation : large, strong, long term programs but lacking of flexibility, rapidity… 6. 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 7. Global Image : social responsability, taste, convenience, nutrition, health & wellness 8. Challenges : Restructuring, Focusing (fewer…), Renovation, Innovation, Back to Organic Growth (external gowth is a necessity, not a finality) November 2007

Slide 33: IV - STRATEGIC PROFILES 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

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Slide 37: IV- STRATEGIC PROFILES 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 € November 2007

Slide 38: IV- STRATEGIC PROFILES 3 ▪ "Specialists" Leaders (2/2) 1. High net margin (12,7 %), good & sustainable growth (7,4%) 2. Stars of Internationalization : global products for everybody, everywhere, at any time 3. Business universe : meeting world consumer "desires & needs" 4. Marketing : very close to consumers with value added effective products distributed thanks to specific schemes : bottling, technology licensing, advertising, cash flooding retailers… 5. Anticipating & Innovating : focused "craft" expertise, understanding consumers 6. Excellence : Number One in its business fields (market share, quality, supply chain…) 7. Global Brands ("Icons") 8. 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" ? November 2007

Slide 39: IV- STRATEGIC PROFILES 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 € November 2007

Slide 40: IV- STRATEGIC PROFILES 4 ▪ "Be(er)verage" Leaders (2/3) 2. High net margin (9,8 %) & growth (7,4%) driven by mergers & acquisitions 3. Beer is by far the most concentrated big food & beverage business in the world 4. Business segments universe : A & NA beverages, waters, liquids, by- products, bio-pharma 5. The Top 4 are very internationalized ; all have built large worlwide partnerships 6. JV exemples : ABI*/Tsingtao, ABI/Kirin, ABI/Modelo, SabMiller/China Resources Snow Breweries, SabMiller/Castel, russian JV Carlsberg/S&N (BBH : Baltika…). (*): holds Harbin November 2007

Slide 41: IV- STRATEGIC PROFILES 4 ▪ "Be(er)verage" Leaders (3/3) 2. 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. 3. Brewerers are imprisoned in a too specific (and alcoholic!) products universe ( ≈ "ghetto) 4. 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) ? November 2007

Slide 42: V - STRATEGIC FUTURE : CLASHES AREAS 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…). November 2007

Slide 43: V - STRATEGIC FUTURE : GROUPS 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. November 2007

Slide 44: VI - AND THE WINNERS ARE … 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 UNILEVER ? MARS ? Emerging Countries : JBS & NESTLÉ LOUIS DREYFUS ? MCCAIN ? other "Brazil", "Mexico", ADM HEINEKEN ? SUNTORY ? "Malaysia", "Thailand", PEPSICO CADBURY ? "China" / "Taiwan", "India", KRAFT GENERAL MILLS ? "Turkey", "Russia", BUNGE CONAGRA ? "Argentina" TYSON / SMITHFIELD KELLOG ? COCA-COLA SARA LEE ? Mega Coops mergers such as : SABMILLER DEAN FOOD ? • Fonterra + … DANONE ASAHI ? • DFA/Land O’Lakes • Arla/Campina/RFF INBEV KIRIN ? • Vion/Danish-Crown, DIAGEO LACTALIS ? Agravis/Invivo/Baywa ANHEUSER BUSCH • Terrena/Svenska CHS …And… of course different … The game is not over ! Each company owns major strategicby I or II or III groups absorbed assets November 2007

Slide 45: "Feeding Minds, Fighting Hunger" "Small is Beautifull" THANK YOU FOOD INTELLIGENCE Serge Guégan Tél. 33 (0)2 28 13 03 67 foodintelligence@foodintelligence.fr http://www.foodintelligence.fr November 2007