Global FMCG: Finding Opportunities

1. GLOBAL FMCG: FINDING OPPORTUNITIES PLMA ACCESSING EXPORT MARKETS CONFERENCE REHAN PANDITARATNE, AUGUST 2017

2. © Euromonitor International 2 How do brands achieve success in global markets? GLOBAL FMCG: FINDING OPPORTUNITIES Grown 5% annually over last 5 years globally despite stagnant domestic Japanese market to reach US$5 billion sales. Female Empowerment Ageing Ethical Consumerism Urbanisation Grown China outlets from 250 to 2,500 over the last 10 years to reach over US$2 billion in sales. 8% annual global growth over the last 5 years to reach over US$200 million in sales. Achieved US$1.8 billion absolute growth globally over the last 5 years. Time Poor Consumption Grew sales by 50% in Asia over the last 5 years to US$280 million.

3. INTRODUCTION: GLOBAL OVERVIEW URBANISATION TIME POOR CONSUMPTION EMPOWERED WOMEN ETHICAL AND GREEN CONSUMERISM AGEING POPULATIONS CONCLUSION

4. © Euromonitor International 4EUROMONITOR INTERNATIONAL Euromonitor International: Strategic Global Market Research

5. © Euromonitor International 5 Global packaged food by category INTRODUCTION: GLOBAL OVERVIEW -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 0 50 100 150 200 250 300 350 400 450 RetailvaluesalesCAGR2011-2016 Retailvaluesales2016(US$billion) Packaged Food: Size 2016 and Strength of Global Categories 2011-2016 Retail Value Sales 2016 Retail Value Sales % CAGR 2011-2016

6. © Euromonitor International 6 Dairy: Asia has surpassed North America and Western Europe in value INTRODUCTION: GLOBAL OVERVIEW

7. © Euromonitor International 7 0% 50% 100% 2000 2005 2010 2015 2020 2025 2030 World GDP by Region: 2000-2030 Other Emerging and Developing Countries Emerging and Developing Asia Developed Countries 0 60 120 Latin America MENA Sub-Saharan Africa Emerging and Developing Asia % growth Real GDP Growth in Emerging Regions: 2015- 2030 In 2030, this region will account for 44% of global GDP, up from just 18% in 2000. Why Asia Pacific? INTRODUCTION: GLOBAL OVERVIEW

9. © Euromonitor International 9 China’s urban population expanded by 37%. China’s rapid urban growth has resulted in a rising number of megacities with populations above 10 million. China: Nearly a billion people will live in urban areas by 2030 URBANISATION

10. © Euromonitor International 10 Rise of single persons Later parenting; shrinking families Expanding middle class with rising incomes Better access to education Better connectivity High costs of housing; small living spaces Pressure on infrastructure and services Less time for leisure and physical activity Pollution and related health issues Large gaps between ‘haves’ and ‘have nots’ Impacts of urbanisation URBANISATION

11. © Euromonitor International 11 Mega Trend: Changing Family Dynamics The growth of products such as coffee machines, smoothie makers and snack foods is largely linked to people who live alone. GOING SOLO Existing Industry Examples • The rise of single-portion cakes and frozen desserts. • Growth in per capita consumption of ready meals, share of small and micro packaging and more. Going solo URBANISATION

12. © Euromonitor International 12 Demand for smaller pack sizes and re-sealable packs, which stand-up pouches are growing. Much of the growth in stand up pouches will come from Asia Pacific. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0-50g 51-100g 101- 300g 301- 500g 501- 750g 751- 1,000g Millionunits Stand-Up Pouches in Sauces, Dressings and Condiments Packaging by Size Band 2010- 2015 2010 2015 Single-person households drive demand for smaller pack sizes and pouches URBANISATION

14. © Euromonitor International 14 Mega Trend: Time as Currency Focus on convenient and flexible products and solutions that enable consumers to either save time through outsourcing of tasks or multi-task through more flexible packaging options. OMNIPRESENT CONSUMPTION Existing Industry Examples • The rise of snack replacements from all corners of the supermarket. The growing availability of portable breakfast solutions. • A plethora of online food delivery options spanning scratch cooking options to ready- to-eat services. • Per capita consumption of snack replacements and stand up pouches. Omnipresent consumption TIME POOR CONSUMPTION

15. © Euromonitor International 15 Breakfast Combo Dual pots, especially those with disposable spoons, are fast becoming popular with commuting consumers. Drinking Yoghurt Now many yoghurt brands are simply selling their products with straws to allow consumption in beverage-like fashion. Yoplait variants in China are good examples of this trend. It’s All Greek Positioning as a high protein snack is. From the US to Australia, Brazil to the UK, consumers are buying into the thick yoghurt variant for satiety purposes. Dessertification “Dessertification”, a trend best exhibited in chocolate, which replicates restaurant desserts, has proven to be a valid alternative to mainstream snacks. Snacking yoghurts being used to meet a variety of purposes TIME POOR CONSUMPTION - - -

16. © Euromonitor International 16 PepsiCo expands Quaker oats into biscuits, granola and snacks TIME POOR CONSUMPTION On-the-go porridge Ready-to-eat supergrain cereals and granola Savoury snacks Breakfast bars and biscuits

18. © Euromonitor International 18 0 5 10 15 20 25 30 35 40 45 50 %constantgrowth Selected Leading Growth Markets For Female Disposable Income Per Capita 2011/2016 Female empowerment EMPOWERED WOMEN Female disposable incomes soared in China by 44% over the last 5 years

19. © Euromonitor International 19 What is driving the obsession with self-image? EMPOWERED WOMEN The empowerment of women The “selfie culture” Exposure to idealised images of beauty The power of the online influencer

20. © Euromonitor International 20 Euromonitor survey revealed that 22% of women were actively trying to lose weight in 2016. 36% claimed they were actively monitoring what they eat in order to manage their weight. The quest for weight loss EMPOWERED WOMEN

21. © Euromonitor International 21 The global retail market for weight management was worth US15.9 billion in 2016. Growth was driven by the two largest categories – meal replacement and weight loss supplements. 0 2,000 4,000 6,000 8,000 10,000 Meal Replacement Weight Loss Supplements Slimming Teas USDbillion,constant2016rsp Global Sales of Weight Management 2011/2016/2021 2011 2016 2021 0 1,000 2,000 3,000 4,000 5,000 6,000 India Mexico Japan China US USD billion Top Five Markets for Weight Management 2016 Growth in weight management EMPOWERED WOMEN

22. INTRODUCTION: GLOBAL OVERVIEW URBANISATION POOR CONSUMPTION EMPOWERED WOMEN ETHICAL AND GREEN CONSUMERISM AGEING POPULATIONS CONCLUSION

23. © Euromonitor International 23 Selling trust ETHICAL AND GREEN CONSUMERISM Mega Trend: Striving for Authenticity Trend Description In a bid to stay safe and knowledgeable about what goes into their bodies, consumers have moved towards “authentic” products. Traceability and transparency are key components of this movement and the digital economy is enabling solutions for brands. SELLING TRUST Existing Industry Examples • Single-origin cocoa used by a growing number of premium chocolate brands. • Growing demand for manufacturers to move towards clean label ingredients. • Growing anti-GMO sentiment in the US. • The return of heritage ingredients and ancient grains.

24. © Euromonitor International 24 Clean labelling ETHICAL AND GREEN CONSUMERISM 0 5 10 15 20 25 30 0 10 20 30 40 50 60 70 US$billionRSP Top 10 clean label markets 2015 2015-2020 % Growth

25. © Euromonitor International 25 Case study on selling trust ETHICAL AND GREEN CONSUMERISM Hipp Combiotic, United Kingdom Source: Ocado.com As consumers become more price conscious and increasingly mistrusting brands, especially those from the largest global food manufacturers, there is a shift towards more “authentic”, niche and natural products, with consumers seeking brands that they see as upholding key values.

26. © Euromonitor International 26 Scandals came thick and fast over 2013-2015 in China and Taiwan, shaking rebuilt but weak consumer confidence. That said, international brands are unlikely to carry their superior status as a USP for much longer, as more and more international brands are flogging these markets. Food scares increase demand, not just for foreign brands… ETHICAL AND GREEN CONSUMERISM Australia’s Own Milk for Children in China, 2015

27. © Euromonitor International 27 Environmental food and beverage forecast to grow strongly in China ETHICAL AND GREEN CONSUMERISM China: Ethical Labels Retail Value Market Size 2015-2020 (USD billion, Fixed 2015 Exchange Rate) Note: Light blue is forecast, dark blue is 2015 The market size of environment is expected to overtake people/value by 2020. This is partly due to multinationals’ contribution to supplying FSC packaging to major liquid carton brands, particularly in dairy.

28. © Euromonitor International 28 Consumers globally show a growing awareness of naturally derived ingredients, as well a desire that products are sustainably produced. These concerns are more prevalent in emerging markets, especially in Asia, than in developed markets. Asian consumers show highest preference for green beauty ETHICAL AND GREEN CONSUMERISM

29. © Euromonitor International 29 Islam is the most popular religion in Asia, so it is unsurprising that the researched countries in the region contributed heavily to sales of packaged food and beverages with a halal claim. Indonesia, for example, had US18 billion in value sales of products with a claim in 2015; a country where the Muslim population in the country stands at over 85%. In order to succeed both in Asia and in regions where Muslim populations are growing, particularly Western Europe. Halal certification in Asia Pacific ETHICAL AND GREEN CONSUMERISM

31. © Euromonitor International 31 0 100 200 300 South Korea Spain Thailand Mexico UK France Italy Germany Indonesia Brazil Russia Japan US India China Million The Biggest 60+ Populations in 2020 The global population will continue to age, on the back of rising life expectancy, falling birth rates and the ageing baby boomers. China and India will continue to have the largest over 60s populations, and will experience faster ageing than the global average. The world will continue to age, especially in China and India AGEING POPULATIONS

32. © Euromonitor International 32 Mental agility Brain Health Supplements Learning new skills Volunteering Brain training Health and wellbeing Disease prevention through self-care and good nutrition Keeping fit Monitoring weight Emotional wellbeing Outward appearance Use of anti-ageing beauty products and supplements Cosmetic treatments Stylish clothing and accessories How are consumers challenging ageing? AGEING POPULATIONS

33. © Euromonitor International 33 Older consumers are increasingly aware that they need to eat healthy and nutritious foods in order to help prevent chronic diseases. Convenience foods, such as snacks, ready meals, soups and supplement nutrition drinks, are popular among this demographic. In April 2016, Nestlé announced the opening of a new research and development centre in Singapore, for the creation of new products for ageing consumers in Asia Pacific and across the world. 0 50 100 150 200 250 300 Fortified/Functional Naturally Healthy USDbillion,constant2015rsp Global Sales Of FF And NH Products 2010/2015 2010 2015 In China, probiotic yoghurt is a burgeoning niche. In 2010 it was worth US$2 billion. In 2021 sales of this product will be around US$15 billion. Untapped potential for foods aimed at seniors AGEING POPULATIONS

34. © Euromonitor International 34  Health supplements; natural and fortified foodsChronic diseases  Vitamin D; calcium supplementsLoss of bone denisty  OTC antacids; laxatives; high-fibre foodsDigestive problems  Lutein and other eye supplements; reading glassesEye problems  Hair loss products; colourants; specialist shampoosHair loss  Anti-ageing creams; beauty supplementsLines and wrinkles  Calming and sleeping aidsSleeping difficulties and anxiety  Urinary health supplements; incontinence productsIncontinence  Lethicin and other memory supplements; brain gamesMemory loss Old age ailments and commercial opportunities AGEING POPULATIONS

35. © Euromonitor International 35 Product design •Nutritious foods that are easy to prepare and eat Packaging design •Clear labels with bigger fonts, •Easy-to-open packaging Distribution •Offer a variety of home delivery options •Local stores •Convenience Pricing strategy •Older consumers tend to be more value-conscious Manufacturers will have to think carefully about how to adapt their offer to suit the needs of an ageing population. Opportunities: Adapting the offer for older consumers AGEING POPULATIONS

36. INTRODUCTION: GLOBAL OVERVIEW URBANISATION WORKING WOMEN AND TIME POOR CONSUMPTION ETHICAL AND GREEN CONSUMERISM AGEING POPULATIONS CONCLUSION

37. © Euromonitor International 37 Engage older consumers. They are the future. Understand the evolving needs of female consumers. Account for the unique ethical and green considerations, especially in Asia. Leverage urbanisation trends. Recommendations for FMCG companies exporting globally CONCLUSION Time poor consumption in your NPD and channel strategy.

38. THANK YOU FOR LISTENING Rehan Panditaratne Consultant +61 2 9581 9232 rehan.p@euromonitor.com https://www.linkedin.com/in/rehanp/