The document summarizes key points from a meeting of the Australian Society of Baking. It discusses current market trends in the bakery industry including demographic shifts, consumer preferences, and retail environment dynamics. It also summarizes insights from the 2011 International Dairy Deli and Bakery Association trade show, noting a focus on natural, clean label, functional, and portion-controlled products. Future growth opportunities identified include expanding specialty offerings and implementing shopper marketing strategies.

1. Australian Society of Baking 19 th October 2011 Shannon O’Connell, National Sales Manager Kate Hurley, Category Development Manager

2. Agenda Market Trends Kate Hurley Category Development Manager International Trade Show Shannon O’ Connell National Sales Manager Bakery industry influences & drivers The bakery shopper Bakery mega trends Future growth opportunities International Dairy Deli and Bakery Association (IDDBA) June 2011 New products

3. Market Insights Kate Hurley __________________________________________________________________________________

4. Consumer/Shopper Retail Environment Grocery 46% share Specialty/Route/P&C 33% share Foodservice/Away from Home 21% share The major supermarkets will continue to dominate and grow their share of Australian’s bakery goods expenditure. Source: BIS Shrapnel, Aztec, Internal Estimates

5. The Shopper SINKS/DINKS % of Pop: 48% Defined: Single Income No Kids (SINKS) and Double Income No Kids (DINKS) are typically aged between 25-35 More disposable income Quality, premium & gourmet Willing to try new products Entertain regularly Single serve options FAMILIES % of Pop: 35% Defined: Younger families have kids aged 5-12 years and older families have kids aged 13-17 years Younger Families Switch between brands Older Families Volume and private label based EMPTY NESTERS % of Pop: 17% Defined: Empty nesters are parents whose children have flown the family nest. They are aged 55 years+ High disposable income Brand loyal Value for money Less open to new products More likely to buy mainstream Source: Retail World, Australian Bureau of Statistics Sinks/Dinks and Empty Nesters, currently two thirds of the market and growing, will be the key target groups with higher incomes seeking specialty products.

6. Demographic & Socio-Economic Drivers 65% of population growth is driven by migration Population Couples will outnumber families in the next 5 years Households The proportion of Australians over 65 is projected to increase from 13.9% to 22.6% in 2050 Age Average household income grew by 4% year on year Income Increased demand for more ethnic products Rising demand for smaller portion sizes Products will need to be adapted to appeal to mature customers Ongoing demand for premium products The demographic and socio-economic factors in Australia will drive the need for more ethnic products, smaller portion sizes, high quality premium offerings and products that appeal to the over 65 age group Source: ABS, Datamonitor

7. Influences When Choosing A Food Product Influence of the following factors choosing food and beverage products 81 69 55 55 42 41 39 37 37 27 22 21 20 13 Taste or flavor Price Health Habit or preferred brand Convenience Country of origin Scent or aroma Ability to share Recommendations from friends/family Production methods Ethics/Sustainability benefits Brand name or image Customization benefits Packaging design Showing ‘high’ or ‘very high’ influence Source: Datamonitor % Source: Datamonitor BFCM0401, August 2010 The fundamental importance when choosing a food or drink is sensory appeal and value for money. Over half of Australians are also highly influenced by health.

8. Bakery Mega Trends Natural/clean label Functional ingredients Seeds, grains & oats Nuts & fruits Organic Gluten Free Customised Occasion Specific Consumer Focused Ethnic Proposition Gourmet/Indulgent Exotic flavours Traditional/Authentic Experience Exclusive Portion Control Real Value for Money Address a need Bakery Innovation Drivers New product launches need to deliver against mega trends to be successful Product innovation is a key driver of growth within the Bakery market

9. Bakery Industry Influencers Private label market share is expected to double to 50% by 2025 Increased labour and rent costs are big challenges Consumer confidence is in decline Increase in imported products Growth in the demand for convenient fully finished formats 2 3 1 5 4 The baking industry will be influenced by private label growth and imported products, increased labour costs, declining consumer confidence and increased demand for convenient formats. Source: Rabobank, Datamonitor

10. Future Growth Opportunities Expand tiered offering Increase specialty offering Smaller convenience store formats Retailers and suppliers working together Implementing shopper marketing strategies Online retailing Social media ‘ Village market’ feel Retail Foodservice Regional expansion Product range expansion & improvements Celebrity endorsements 24 hour service Moving out of shopping centers Day part marketing Social media Experiential Merchandising

11. What does this mean? Consumers are highly influenced by taste, price and health Future product innovation and investment need to correlate with these trends IMPLICATIONS MARKET TREND Increase in migrants, smaller households, over 65 population and average income Develop ethnic, mini, premium product concepts and adapt products to mature consumers The major supermarkets will continue to dominate and grow Shift in manufacturers to entertain more private label manufacturing Retail and foodservice players are under pressure from increasing costs Decreased shop footprints and a move towards convenient formats

12. International Trade Show Shannon O’ Connell __________________________________________________________________________________

13. IDDBA Show held in June 2011 at Anehaim CA A 3 day event once a year Largest show in the world serving these categories 1,500 booths focussed on new products Broad spectrum of exhibitors from large multinational exhibitors (CSM, Richs, General Mills) to small independently owned businesses Over 8,000 attendees Fantastic guest speakers (Dr Condeeleza Rice, Joe Montana etc)

15. Rich’s Ancient Grain Range of all natural breads, one popular flavour being Ancient Grains supported by the Whole Grain stamp

16. Rich’s Par Bake All Natural range

17. Thin please…. sandwich buns Turning thin…… sandwich thins popular in US and UK.

19. The bagel has also turned thin.. Not just sandwich thins….introducing the `thin` Bagel

20. Various different flat breads with unique shapes Flat bread across a variety of shapes, ingredients and formats. Is this also a case of clutter claim?

21. Functional Probiotic bread with GanedenBC30 to promote digestive health

22. Calorie counting across bread, cupcakes, biscuits etc…. Calorie Counting to encourage sensible indulgence

23. Sugar Free (just add splender) Sugar alternatives with splender

25. Or is it……With Out Wheat Improvement in taste and texture performance across gluten free products as technology improves

27. Kuko Bites Wheat and dairy free. Packed with seeds, nuts, dried fruit, goji berries and cocoa nibs. Wheat free and dairy free. Packed with seeds, nuts, dried fruit, goji berries and cocoa nibs

30. Supporting Breast Cancer Awareness with a Berry 5” Cake

31. Novelty donuts drive incremental sales during key seasonal or event activities

33. Key Focus Is Artisan

34. Canadian Baker – Boulart. Unique shapes all par bake

35. Ace Bakery - Raisin and Walnut

36. Focaccia flat style also popular

37. More shapes…..

39. Chunky hand cut cookies Handcrafted chunky cookies with natural ingredients

40. Textured…filled and centred All about texture….filled, soft, crunchy, oozing

41. Filled scones

42. `Centerfuls are delectable dollops of flavour surrounded by a soft chewy cookie`

43. Layer upon layer upon layer…….

44. “ Desserts can fit into an overall healthy diet when used in small portions and balanced with healthy foods," said Melanie Douglass, a dietitian, personal trainer and author of a new weight-loss book called "Losing It! 5 Keys to Successful

45. Just for me….

46. Layer upon layer upon layer……. Bite sized treats…..another dimension to portion control

47. Bite size Brownies

49. $19.00 4” – 6” cakes $8.00 For the couple households – 5 “ cakes are exploding!

52. An American classic….. Red Velvet donuts, cookies, cupcakes, whoppies…..

53. In summary…… Natural clean label Thin/Flat Functional Calorie Counting No Added Sugar Gluten Free Kids Celebration Cakes Cause-related Seasonal Events Artisan Texture Handcrafted Portion Control Exotic Flavours Real Value for Money Address a need Bakery Innovation Drivers

54. Thank you… Please feel free to approach Kate or myself if you wish to obtain our contact details.