The document summarizes a workshop between CSM and Fonterra focused on identifying opportunities for joint product development using dairy ingredients in bakery applications. The agenda covers introducing the companies, discussing strategies and consumer insights, and exploring how dairy ingredients can provide taste, texture and nutrition solutions. Key topics include growing consumer interest in "better for you" and "good for you" products, the role of protein and dairy, and technical details on how protein provides benefits. The companies aim to leverage their complementary expertise to develop innovative products meeting consumer demands.

1. Workshop : CSM & Fonterra
Creating Value
for our Consumers
Together
Amsterdam, 1th of February 2012 1

2. Agenda Workshop
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”.
2

3. Agenda Workshop
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
3

4. Agenda Workshop
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
4

5. Agenda Workshop
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
5

6. Fonterra – Global Snapshot
6

7. The natural source of dairy nutrition for
everybody, everywhere, every day
7 7

8. 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
8

9. 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
9

10. Core research in New Zealand; application work at
technical centres close to our customers & consumers
Amsterdam,
Tokyo, Netherlands
Japan
Palmerston North, NZ
Chicago, Melbourne,
USA Australia
10

11. Fonterra Europe – Strategic Change
11

12. Our European headquarter is in Amsterdam
THE NETHERLANDS
Fonterra (Europe) Cooperative U.A.:
Amsterdam
65 staff
RUSSIA
Fonterra (CIS):
UK Moscow
Fonterra (Logistics): 4 staff
Swindon
3 staff ITALY
Fonterra Italy:
FRANCE Veneto
Paris branch: 10 staff
1 staff
12

13. Refocusing our European business model
From a tactical …to a valued
commodity player… ingredients partner
Transactional
relationships
A strategic
relationships
Strategic
approach to Transactional relationships Strategic
partners relationships
A different Commodity / Commodity+ Commodity /
Value-add
Mostly Butter & Cheese Commodity+
portfolio of
products and Value-add
Quota Quota
solutions
A mix of ex-NZ
NZ sourced
sourced
Europe
and domestic NZ sourced Europe
sourcing sourced
13

14. Fonterra’s Approach
14

15. Innovation Programmes are built on 4 pillars:
Delivering Best nutrition
better for you for mother
convenient food and child
Enabling the aging Controlling unhealthy
to maintain healthy, cravings to address
active lifestyles the overweight
epidemic
15

16. Our ingredients deliver optimal nutrition,
without compromising taste and texture
Same Better for You
Match flavor Salt
Sugar
Match texture Fat
Natural/ Additives
authentic taste
Protein
New flavor Fiber
Probiotics
New texture Prebiotics (eg. GoS)
Differentiated Good For You
16

17. What we learned : CSM’s Innovation Strategy
Focus on Health and Nutrition
 Eliminate undesirable components and ingredient levels
o Trans fats and salt
o Reduced caloric density
o More well-balanced
Health:
Match !
 "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
17

18. Recent Studies:
The way we work UK
France
Germany
Spain
Russia
18

19. Fonterra believes in Partnership
19

20. Agenda Workshop
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
20

21. Agenda Workshop
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
21

22. Recap: The way we work
22

23. Subjects
Consumer trends in food
Consumer & Market trends
Looking insiGHT consumers’ lives
Dairy ingredients as a taste, texture & nutrition solution
23

24. Consumer trends
What is on consumers mind?
is this a growing worry?
what do consumers find
important?
what benefits are more
and more out there?
what concerns & worries
do consumers have?
24

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
25

26. The increased health awareness/ consciousness sees
Weight wellness & linked with health issues
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
26
Source: Euromonitor, New nutrition business

27. New Nutrition Business recognize trends in “Better-
for-you” area & see opportunities in bakery & dairy
10 Key Trends in Food,
Nutrition & Health 2012
better-for-you Naturality Movement
better-for-you Energy Senior nutrition better-for-you
better-for-you Digestive health Fruit & Vegetables
Feel the benefit Dairy
better-for-you Weight management Good grains
27
Source: New Nutrition Business, 10 Key Trends in Food, Nutrition & Health 2012

28. Possibility for “Health Halo” combining good grains
with dairy
“Good grains” and “dairy (protein)” are linked in consumers mind with
similar benefits
Strong “naturally healthy” image
Sustained/ slow energy (Low GI / protein)
Link to specific health benefits consumers look for – i.e. cholesterol-
lowering, satiety
28
Source: New Nutrition Business, 10 Key Trends in Food, Nutrition & Health 2012

29. Market facts
what are the latest NPD’s?
how big is this market?
who is influencing these
trends?
what products are out
there?
is this market growing?
29

30. Naturally healthy & Better-for-you food drives growth
of naturally healthy foods
European Health & Wellness market
is a
$166 billion market and growing
$51
$66 MARKET
+ 11%
30
Source: Euromonitor

31. Good news: new EU food labelling rules support consumers
in making better informed, healthier purchase decisions
REGULATORY
Nutritional labelling becomes mandatory in 2014
Minimum font sizes will be regulated
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
31
Source: Euromonitor

32. NPD trends :Consumers’ “Better-for-you” needs
causes Protein to pop up as a key trend
32
Source: Innova: Trends 2012

33. Multiple examples of these “Better-for-you” products
in bakery
Slow released energy
Probake biscuits provide
protein that’s easy for
elderly consumers to eat.
Satisfies hunger longer
Natural energy
Muffins with only 100kcal each Gluten-free oat cakes
33
Source: Mintel NPD database, Foodnavigator.com, new Nutrition Business 2012

34. European Consumer Insights
why does (s)he eat that?
can she find what she want?
what does like at what moment of
when does (s)he eat the day?
that?
what does (s)he eat?
34

35. What consumers eat when and why in Europe
Despite difference, there are some consistencies in meal occasions and what
benefits consumers look for.






35
Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

36. What consumers want from their food difference
during the day
Food satisfies different needs during the cause of the day.
Low sugar
Taste
Good
for you Low fat
Better
for you





 Better
for you
Low calorie
No additives
Texture
Naturalness
36
Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

37. 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.
37

38. 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.
39

39. Protein knowledge consumers
• ~20% is prepared to pay more for protein enhanced products
• Knowledge about protein increases by age Dairy was mentioned
2nd as a source of
Protein protein (after meat)
Protein is
healthy supplements is
for body builders Protein is Protein is crucial for
good for growth & development
I get enough muscles
protein if I How much
eat balanced protein should
What makes protein important for % consumer I take?
human beings? mention
Essential for a healthy diet 98%
Provides energy 80%
Is an essential part of the body / to live 65%
Health 19%
40
Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

40. Agenda Workshop
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
41

41. Technical expertise
how does protein work?
how much protein does a human
being need?
are there differences between the
different sources of protein?
when should protein
be eaten?
what does Buttermax™
really do?
42

42. 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
43
Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

43. 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
44
Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

44. Dairy protein, particularly whey, provides optimal build
....
Why Whey?
2.5 Whey
Fold change in plasma leucine
Soy
2
Rapidly digested Casein
(from baseline)
1.5
Adapted from:
1
Phillips et al, (2009)
4 0.5
Fold change in lean mass gains
3.5
(from CHO/Placebo)
0
3 0 30 60 90 120 150 180
2.5 Minutes following consumption of protein
2 Adapted from:
1.5
Tang et al, (2009)
1
0.5
0 Promotes more muscle mass
CHO/Placebo Soy Milk Whey
46
Source: Consumer Deep Dives Fonterra pan-Europe, August 2011

45. 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....
47

46. Agenda Workshop
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
48

47. Let’s have a look, feel & taste
 Hand-outs
 Tasting Session
49

48. Example 1: Granola Bar
Improve body tone, stay mobile
longer, re-energises without the
sugars/fats
Helps to build and maintain
muscle mass; Healthy Choice
Enhances with dairy/whey protein
and 30% less fat & sugar
• 25% of daily required needs
• Equals 1 glass of milk
Powerprotein 515 –
Good for You / Better
for You
50

49. Example 2: Chocolate Brownie (glutenfree)
Reduces the risk of allergy
Fits in a gluten free diet
Does not contain gluten
Powerprotein 515 –
Better for You
51

50. Example 3: Chocolate Muffin (eggfree
Reduces allergies and risk; helps
to prevent high cholesterol
and has 50% cholesterol
Does not contain eggs,
WPC 131– Better for
You
52

51. Example 4: Yellow Cake (Buttermax
Helps prevent obesity,
cardiovascular disease and
diabetics.
Less saturated fat; Healthy Choice
Contains concentrated dairy fat /
ButtermaxTM
30% less saturated fat
Buttermax – Better
for you
53

52. 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, Builds & maintains PowerProteinTM 515 Granola bar
(re)energy, mobility muscle mass WPC
& low fat/ low sugar
Reduced allergen Gluten-free PowerProteinTM 515 Chocolate
risk WPC Brownie*
Reduced allergen Egg-free PowerProteinTM 131 Chocolate Muffin
risk, Lower WPC
cholesterol (-50%)
Obesity, Lower saturated fat ButtermaxTM Yellow Cake
Cardiovascular (upto -30% vs
disease, Diabetics butter)
All without jeopardizing good TASTE & TEXTURE and NATURALNESS
54
* or any other non-rising products