Challenges and Opportunities for Food Manufacturers: Market Trends and Future Prospects in Packaged Food and Nutrition

1. © Euromonitor International 1 CHALLENGES AND OPPORTUNITIES FOR FOOD MANUFACTURERS MARKET TRENDS AND FUTURE PROSPECTS IN PACKAGED FOOD AND NUTRITION Presented by: Dimitrios Dimakakos, Lead Analyst, Western Europe Lianne van den Bos, Food Analyst Lauren Bandy, Senior Nutrition Analyst #TUTTOFOOD

2. PACKAGED FOOD IN WESTERN EUROPE: CHALLENGES AND OPPORTUNITIES IN A TOUGH ECONOMIC ENVIRONMENT DIMITRIOS DIMAKAKOS LEAD ANALYST AIDEPI EUROMONITOR SEMINAR TUTTOFOOD 2015 4TH MAY 2015 @DimiDimakakos

3. © Euromonitor International 3 Euromonitor International: Strategic Global Market Research PACKAGED FOOD IN WESTERN EUROPE

4. EUROPEAN ECONOMY AND PACKAGED FOOD PACKAGED FOOD IN WESTERN EUROPE • PASTA • BAKERY • CONFECTIONERY • ICE CREAM PROSPECTS AND OPPORTUNITIES

5. © Euromonitor International 5 Key Facts of Packaged Food in Western Europe EUROPEAN ECONOMY AND PACKAGED FOOD Total Size 2014 641 bn $ Growth 2009-2014 5% Per Cap Expenditure in 2014 1,297 $

6. © Euromonitor International 6 GDP Growth Directly Affects Packaged Food Performance EUROPEAN ECONOMY AND PACKAGED FOOD -8 -6 -4 -2 0 2 4 6 8 08 to 09 09 to 10 10 to 11 11 to 12 12 to 13 13 to 14 %Growth Real GDP Growth Vs Packaged Food Performance 2009-2014 Real GDP Growth Packaged Food Growth

7. © Euromonitor International 7 Consumer Expenditure Increases Because of Higher Prices EUROPEAN ECONOMY AND PACKAGED FOOD 150 160 170 180 190 200 210 1,040 1,060 1,080 1,100 1,120 1,140 1,160 1,180 1,200 1,220 1,240 2009 2010 2011 2012 2013 2014 IndexOfConsumerPrices2009-2014 ConsumerExpenditureinRetailValueTermsUS$fixed-exg-YrCur Consumer Expenditure on Food Vs Consumer Price Index Consumer Expenditure on Food Index of Consumer Prices

8. © Euromonitor International 8 Packaged Food Growth Across Western Europe in 2014 EUROPEAN ECONOMY AND PACKAGED FOOD Country 2014% Turkey 8.5 Norway 4.4 Austria 3.3 Finland 3.3 United Kingdom 2.3 Sweden 2.3 Belgium 1.9 Ireland 1.9 Germany 1.8 France 1.6 Denmark 1.5 Spain 1.0 Netherlands 1.0 Switzerland 0.9 Portugal 0.4 Italy -0.3 Greece -2.2 US$ Current Value Growth

10. © Euromonitor International 10 Pasta Sales in Western Europe PASTA IN WESTERN EUROPE 10.3 Bn US$ Retail Value Sales 0.5% Value Growth 0.4% Increase in Retail Unit Price in 2014 Gluten-free Pasta was the fastest growing category in 2014 with 8% Value Growth

11. © Euromonitor International 11 Price Continues to Play an Important Role in Volume Consumption PASTA IN WESTERN EUROPE 0 5 10 15 20 25 30 Italy Greece Switzerland France Germany PerCapitaConsumptioninKg Per Capita Consumption of Pasta in Kg 2009 2014

12. © Euromonitor International 12 Increased Sales for Chilled Pasta in Western Europe PASTA IN WESTERN EUROPE 2% 25% 73% Value Sales in 2009 Canned/Preserved Pasta Chilled Pasta Dried Pasta 2% 28% 70% Value Sales in 2014 Canned/Preserved Pasta Chilled Pasta Dried Pasta Chilled Pasta 2% CAGR in 2009-2014

13. © Euromonitor International 13 New Product Developments for Pasta across Western Europe PASTA IN WESTERN EUROPE Gluten- free Pasta New Flavours Packaging

15. © Euromonitor International 15 Sales of Bakery Have Been Rising Steadily BAKERY IN WESTERN EUROPE 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 Baked Goods Biscuits Breakfast Cereals RetailValueGrowthinUS$ RetailValueSalesinUS$ Bakery Value Sales in Western Europe in 2014 Retail Value Sales Retail Value Growth

16. © Euromonitor International 16 Multi-grain, Seeds and Whole-wheat Add Value in Packaged Bread BAKERY IN WESTERN EUROPE 27,000 28,000 29,000 30,000 31,000 32,000 33,000 0 2 4 6 8 10 12 2009 2010 2011 2012 2013 2014 RetailValueSalesinUS$ RetailValueGrowthinUS$ Value Sales of Bread Vs Value Growth of NH Bread Bread NH High Fibre Bread

17. © Euromonitor International 17 HEALTH & WELLNESS More nutritional benefits CONVENIENCE Changing lifestyle, small day-to-day luxuries NATURALNESS Distrust for „artificial‟ ingredients, sustainability The Pursuit of Health Remains Key BAKERY IN WESTERN EUROPE

18. © Euromonitor International 18 New Product Launches in Bakery BAKERY IN WESTERN EUROPE Flavours Indulgence Health and Wellness

20. © Euromonitor International 20CONFECTIONERY IN WESTERN EUROPE Chocolate Confectionery Continues to Dominate 66% 9% 25% % 2014 Value Sales Breakdown Confectionery Chocolate Confectionery Gum Sugar Confectionery %CAGRGrowthinRetailValueTerms -1 0 1 2 3 4 5 Bagged Selflines/Softlines Tablets Seasonal Chocolate Countlines Other Chocolate Confectionery Boxed Assortments Chocolate with Toys 2009-2014 Value CAGR Chocolate Confectionery Categories 09 to 14 CAGR

21. © Euromonitor International 21 Key Trends Fair Trade Premiumisa tion Sharing The Biggest Themes for Confectionery Brands to Consider CONFECTIONERY IN WESTERN EUROPE

22. © Euromonitor International 22 New Product Launches in Confectionery CONFECTIONERY IN WESTERN EUROPE Functionality Cross Category Products Healthier Options

24. © Euromonitor International 24 Key Figures for Ice Cream in 2014 in Western Europe ICE CREAM IN WESTERN EUROPE 23 mn US$ Retail Value Sales 2% Increase in Retail Value Sales Frozen yoghurt was the fastest growing category with 27% increase in Retail Value Sales Multipacks continue to gain ground within take-home ice cream

25. © Euromonitor International 25 Northern Europe Performs Better than Southern Europe ICE CREAM IN WESTERN EUROPE Strongest Performance Country Growth 2013-2014 Turkey 9.8 Sweden 7.3 Norway 5.1 United Kingdom 4.2 Belgium 3.8 Weakest Performance Country Growth 2013-2014 Switzerland 1.4 Austria 1.2 Spain -0.1 Italy -0.3 Greece -7.3 Ice Cream Value Growth 0 20 40 60 80 100 120 Frozen YoghurtRetail ArtisanalRetail ArtisanalFrozen Yoghurt Multi-Pack Sweden Norway Turkey United Kingdom Belgium %ValueGrowth Fastest Growing Categories in the Top Five Markets Value Growth 2013-2014

26. © Euromonitor International 26 New Product Developments In Ice Cream ICE CREAM IN WESTERN EUROPE Premium Packaging Dairy Free New Flavours

28. © Euromonitor International 28 Forecast of Value Growth in Western Europe PROSPECTS AND OPPORTUNITIES IN PACKAGED FOOD Country 14 to 19 CAGR Norway 1.8 Ireland 1.8 Turkey 1.2 Finland 1.1 Austria 0.9 Denmark 0.9 Sweden 0.7 Spain 0.6 Switzerland 0.6 Belgium 0.6 Germany 0.5 Portugal 0.5 France 0.5 United Kingdom 0.4 Netherlands -0.1 Italy -0.3 Greece -2.1 US$ Constant Value Growth

29. © Euromonitor International 29 Indulgent Products to Perform Better in the Future PROSPECTS AND OPPORTUNITIES IN PACKAGED FOOD -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 14 to 15 15 to 16 16 to 17 17 to 18 18 to 19 RetailValueGrowthinUS$ Value Growth in Western Europe 2014-2019 Bakery Ice Cream Pasta Confectionery

30. © Euromonitor International 30 Different Performance Across the Biggest European Economies PROSPECTS AND OPPORTUNITIES IN PACKAGED FOOD

31. © Euromonitor International 31 Packaged Food Success Factors PROSPECTS AND OPPORTUNITIES IN PACKAGED FOOD GrowthPrice Sustainability Concerns Distribution Health & Wellness New Product Developments

32. © Euromonitor International 32 Key Takeaways PROSPECTS AND OPPORTUNITIES IN PACKAGED FOOD Innovation Positive growth for indulgent products Health conscious consumers Germany, UK, Turkey and Scandinavian countries are the ones to watch

33. © Euromonitor International 33 THANK YOU FOR LISTENING ANY QUESTIONS? Dimitrios.Dimakakos@Euromonitor.com

35. KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION LIANNE VAN DEN BOS, FOOD ANALYST AIDEPI EUROMONITOR SEMINAR TUTTOFOOD 2015 4TH MAY 2014 @LIANNE_VD_BOS

36. © Euromonitor International 36 Defining Sweet Snacks KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION Sweet Snacks Confec- tionery Cakes Sweet Biscuits Pastries Ice Cream Snack Bars Nuts Fruit Snacks Savoury Snacks

37. WHERE IS SWEET SNACKS NOW WHAT IS DRIVING SWEET SNACKS GROWTH WHAT ARE FUTURE OPPORTUNITIES WITHIN SWEET SNACKS

38. © Euromonitor International 38 Over 20% of the packaged food we eat today are Sweet Snacks… Sweet Snacks: a Vast Chunk of Packaged Food Sales KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION 41% 17% 16% 14% 13% Sweet Snacks 21% Proportion of Global Sweet Snacks of Total Packaged Food, 2014 Confectionery Cakes Ice Cream Sweet Biscuits Pastries

39. © Euromonitor International 39 … and it is the second largest growth category compared to other packaged food items in absolute growth Sweet Snacks: a Vast Chunk of Packaged Food Sales KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION 0 50 100 150 Soup Snack Bars Meal Replacement Pasta Spreads Ready Meals Canned/Preserved Food Noodles Sauces, Dressings and Condiments Frozen Processed Food Baby Food Chilled Processed Food Bread Oils and Fats Dried Processed Food Sweet Snacks Dairy US$ billion Packaged Food Absolute Value Growth 2009-2014

40. © Euromonitor International 40 Choice of Sweets Across the Globe….. KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION Relative Per Capita consumption of Sweet Snacks, 2014

41. © Euromonitor International 41 Asia Pacific • Accounts for the majority of global growth of pastries • China, largest growth market • Western style bakeries popular such as BreadTalk and 85° Café • Affordable, pastries US$3/kg vs confectionery US$10/kg Western Europe • Confectionery accounts for the majority of Sweet Snack growth • Consumers in Western Europe eat 7 times more confectionery than in Asia Pacific • UK, Germany, France and Italy in top 10 largest confectionery markets • Tablets and Countlines highest performance …What is Causing Such a Difference in Our Sweet Tooth? KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION

43. © Euromonitor International 43 Why do we Snack? KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION

44. © Euromonitor International 44 Why do we Snack? KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION Lifestyle Nutritious Indulgence To indulgeHungryBreak To be social Refreshment Performance To celebrate BoredHabit

45. Changing Lifestyles Fundamentally Change Eating Habits KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION 34% OF CONSUMERS PREPARE BREAKFAST UNDER 5 MINUTES 70%OF GLOBAL HOUSEHOLDS WILL LIVE IN URBAN AREAS BY 2030 20%OF GLOBAL HOUSEHOLDS WILL BE SINGLE BY 2030 Lifestyle

46. © Euromonitor International 46 Consumers Wake up to More Breakfast Options KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION -1 0 1 2 3 4 5 6 7 Breakfast Cereals Breakfast Bars Bread Chilled Meat Pastries Cheese Plain Biscuits Spreads Drinking Milk % CAGR Retail Value vs Volume Historic Growth CAGRs for Various Breakfast Items RSP 2009-14 CAGR % Retail Volume 2009-14 CAGR Lifestyle

47. © Euromonitor International 47 “Healthy” Fuel All Natural Where Do We Get Our Fuel From? KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION Images: Courtesy of Flickr user Alpha 0 2 4 6 8 10 12 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 %CAGRGrowth US$million Global Snack Bar Performance by Category 2009-14 Absolute 2009-14 CAGR % Nutritious

48. © Euromonitor International 48 Time of day Novel ingredients Healthy snacks Best of Both Worlds… KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTIONNutritious

49. © Euromonitor International 49 Tablets Countlines New Retail Value Sales Global Chocolate Confectionery 2009-2014 Tablets Countlines Bagged Selflines/Softlines Boxed Assortments Seasonal Chocolate Chocolate with Toys Other Chocolate Confectionery Sophisticating the Chocolate Experience KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTIONIndulgence

51. © Euromonitor International 51 The Future of Sweet Snacks KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION 0.0 2.0 4.0 6.0 8.0 Savoury Biscuits and Crackers Chips/Crisps Countlines Spreads Dairy Oils and Fats Dried Processed Food Extruded Snacks Tablets Other Sweet and Savoury Snacks Snack Bars Fruit Snacks Nuts Meal Replacement Baby Food Retail Value % CAGR Growth Other Snacks Top 15 Fastest Growing Categories 2014-2019 Majority will be snacks No time to eat On the go

52. © Euromonitor International 52 Millennials….. Aged 20-34 A lot to prove Snacking as a meal replacement A lot to share Which Consumers will Drive Sweet Snacks Growth? KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION

53. © Euromonitor International 53 Choice of Sweets Across the Globe….. KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION Relative Per Capita consumption of Sweet Snacks, 2014

54. © Euromonitor International 54 Asia…..Mixing it up KEY TRENDS AND DRIVERS IN GLOBAL SWEET SNACKS CONSUMPTION Relative Per Capita consumption of Sweet Snacks, 2014

55. © Euromonitor International 55 THANK YOU FOR LISTENING ANY QUESTIONS? Lianne.VanDenBos@Euromonitor.com

57. WHERE ARE OUR CALORIES COMING FROM? CHALLENGES AND OPPORTUNITIES IN NUTRITION LAUREN BANDY SENIOR NUTRITION ANALYST AIDEPI EUROMONITOR SEMINAR TUTTOFOOD 2015 4TH May 2015 @LaurenKBandy

58. INTRODUCTION THE WORLD’S EXPANDING WAISTLINE ACTIONS TO CURB APPETITES CHALLENGES FOR THE FUTURE KEY MESSAGES

61. © Euromonitor International 61 The Public Health Problem: The World’s Expanding Waistline THE WORLD’S EXPANDING WAISTLINE 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 %ofglobalpopulation Population(„000) Global Prevalence of Overweight and Obesity 2004-2013 Overweight Obese Overweight & obese

62. 3.4 mnADULTS DIE A YEAR AS A RESULT OF BEING OVERWEIGHT OR OBESE 23%OF DEATHS FROM HEART DISEASE ARE A RESULT OF OVERWEIGHT AND OBESITY $2 trillionESTIMATED GLOBAL ECONOMIC IMPACT 2013 Sources: WHO/McKinsey

63. © Euromonitor International 63 Belgium France Germany Spain UK China India Mexico 0 10 20 30 40 50 60 70 80 0 500 1,000 1,500 2,000 %populationoverweightandobese Calories per person per day Obesity Prevalence vs Calorie Purchasing by Country 2014 Developed Emerging The More Calories Consumed, the Higher the Obesity Levels THE WORLD’S EXPANDING WAISTLINE

64. © Euromonitor International 64 Calorie Purchase from Packaged Food and Soft Drinks in Western Europe, 2014 THE WORLD’S EXPANDING WAISTLINE 492 239 222 97 93 79 74 58 54 45 31 170 Baked Goods Oils and Fats Dairy Dried Processed Food Confectionery Chilled Processed Food Biscuits Frozen Processed Food Sweet and Savoury Snacks Carbonates Ice Cream Others 1,654

65. © Euromonitor International 65 Germany, Belgium and the Netherlands Top the List in Europe THE WORLD’S EXPANDING WAISTLINE 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Kcalpercapitaperday Calories purchased by category and country Sweet and Savoury Snacks Biscuits Carbonates Dried Processed Food Frozen Processed Food Chilled Processed Food Confectionery Oils and Fats Others Dairy Baked Goods

67. © Euromonitor International 67 …Western Markets Buy the Most Fat Too THE WORLD’S EXPANDING WAISTLINE 0 10 20 30 40 50 60 70 80 Western Europe North America Eastern Europe Australasia Middle East and Africa Asia Pacific goffat,percapitaperday Purchase of fat from packaged food and soft drinks by region, 2014

70. © Euromonitor International 70 Voluntary Actions vs Legislation ACTIONS TO CURB APPETITES Legislation - Advertising restrictions - Taxes - Age restrictions - Education - School food Government Voluntary actions - Reformulation - Low-calorie variants - Portion control - Labelling - Funding sports and healthy eating clubs Industry

71. © Euromonitor International 71 Fat is Still a Target for Reformulation CASE STUDY: DENMARK 0 5 10 15 20 25 30 35 Fat Purchased From Packaged Food and Soft Drinks Western Europe by Category 2014 Oils and Fats Bakery Dairy Sweet and Savoury Snacks Chilled Processed Food Sauces, Dressings and Condiments Confectionery Others CaseStudy:Denmark

72. © Euromonitor International 72 Industry Pressure Leads to Danish Fat Tax Being Rescinded CASE STUDY: DENMARK 0 10 20 30 40 50 60 70 80 90 0 2 4 6 8 10 Butter Cheese Cream Chilled Processed Meat Chocolate Confectionery Biscuits Cakes Chocolate Spreads Fatcontentper100g Grammespercapita perday Purchase of Fat by Product Category in Denmark 2014 Fat purchase Fat content per 100g $2.8 Tax added to products containing more than 2.3% saturated fat per 100g $215m Amount of revenue generated that was ring-fenced for public health 1000 Number of jobs reportedly lost as a direct results of implementing the tax CaseStudy:Denmark

73. © Euromonitor International 73 Retailers Role Just as Important as Manufacturers CASE STUDY: UNITED KINGDOM 12% Of calories in Western Europe purchased through top 10 companies‟ products 8% Of calories in Western Europe purchased through private label products -$1.4bn Value decline in sales of better-for-you food and beverages, 2009- 2014 CaseStudy:UnitedKingdom

75. © Euromonitor International 75 Number of Calories Purchased Could Potentially Rise Up to 2019 CHALLENGES FOR THE FUTURE -50 -30 -10 10 30 50 70 90 110 130 150 World AsiaPacific MiddleEastandAfrica EasternEurope LatinAmerica Australasia WesternEurope NorthAmerica Absolutegrowth(kcal) Forecast Growth in Food and Drink Calorie Purchasing by Region 2014-2019

76. © Euromonitor International 76 What Would happen if Consumers Bought 100kcal Less? CHALLENGES FOR THE FUTURE 100kcal = 21g 1-2 biscuits less per person per day -4% 100kcal = 51g ~1 bar -13% 100kcal = 22g Half a serving -3% 100kcal = 30g ~1 serving -4% Biscuits Ice Cream Chocolate confectionery Pasta

78. © Euromonitor International 78 Double Current Efforts or Prepare for Tighter Legislation RECOMMENDATIONS Sales of packaged food reached US$614 billion in 2014 in Western Europe, with 20% of these sales from sweet snacks With volume sales starting to stagnate, manufacturers need to focus on premiumisation, innovation and indulgence to ensure they see value growth The number of calories that will be purchased in 2019 from packaged products is expected to rise globally and in Western Europe compared to 2014 Manufacturers have already made a large effort to improve the nutritional content of their products, but more effort is needed

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