European Consumer Trends and The Seafood Opportunities

1. European Consumer Trends and The Seafood Opportunities Johann C. Lindenberg Unilever Deutschland The Future of Fisheries Reykjavik, 4th March 2005

2. My Background: Unilever

3. Unilever is one of the Top FMCG Companies • Turnover: 40 bln Euro (57% Foods) • Number of employees : 230 000 • Companies in more than 100 countries • 400 Leading Brands • Advertising and promotions: 6 bln Euro • Research and development: 1 bln Euro • High Standard of Corporate Principles

4. Unilever at a glance Turnover: 43 Mrd. Euro Others Savoury & Dressings Personal Care People: 234 000 Spreads & Cooking Prod. Latin America 30 000 Home Care Europe 55 000 Health & Wellness, Beverages Icecream, Frozen Food North America 20 000 Asia, Pacific 77 000 Africa, Middle East, Turkey 52 000

5. Every day, around the World, People reach for Unilever Products No matter who you are, or where in the world you are, the chances are that our products are a familiar part of your daily routine. We have a portfolio of brands that are popular across the globe - as well as regional products and local varieties of famous-name goods. This diversity comes from two of our key strengths: • Strong roots in local markets and first- hand knowledge of the local culture. • World-class business expertise applied internationally to serve consumers everywhere.

6. Unilever‘s best known brands

7. One of the Major Global Food Companies with significant interest in (Frozen) Fish

8. The Future of the European Fish and Seafood Business will be shaped by: • Macro-Economic Trends • Social and Demographic Trends • General Consumer Behaviour Trends • Specific Consumer Attitudes vis-a-vis Fish Consumption • Availability at Accepted Price Levels • Environmental (Sustainability) Consideration Corporate Social Responsibility of the Fish Industries

9. Macro-Economic Trends • Low growth rates of GNP, Income, Consumer Spending • Share of Food & Drink Spending Declining • Smart Shopping: Quality „a Given“, but ... • Price Consciousness • Stagnant Retail Trade • Rise of Discounters • Rise of Private Label • Premium Brands under pressure • Pressure on Profitibility = Pressure on fish suppliers Economic Growth and Prosperity improving only moderately over next 10 years in Europe Economic Pressures to Persist

10. Weak Economic Developmentin Europe Euro - Zone Economic Growth Labour Market Unemployment rate in % (in Mio.) Change of real GDP (vs. Previous year in %) Private Consumption Consumer Prices Const. Prices; change vs. Previous year in % Change of Consumer Price Index vs. Previous year in % Source: ifo Institut, 12/04

11. Decreasing Real Income in Germany (average income of employees per month in €) Est.) Quelle: Statistisches Bundesamt, DIW, GLOBUS Infografik Oa-9370 v. 02.08.2004

12. in Mrd. € 1 %-saving point  €14 Bill. Private Savings in Germany 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005* in % of disposible income Quelle: Statistisches Bundesamt, * Prognose (DIW: 05.01.2005)

13. Share of Food & Drink Spending DecliningGermany Consumer Spending in current prices Food 15,7 % 18,3 % Others 2004 1991

14. Smart Shopping Conditions of Smart Shopping Increasing consumer acceptance of discounters Decreasing brand loyality Constantly growing product diversity New price aggressive sales channels Value hierarchy and dynamics; trends Sales via Internet Economic situation and future persectives Cleverness as core consumption value Special offers are common practice Greater knowledge and experience with marketing mechanisms „Why should I pay more - what for?“

15. GB I E F D PL 38 41 When shopping my top 50 55 56 58 priority is quality 62 59 When shopping my top 50 45 44 42 Priority is price High Price Sensitivity of German Consumers Quelle: GfK-Trendsensor Konsum 2003; Anteile in % Kronberg 2005

16. The biggest consumer challenge in Germany:The lowest price levels in Europe 100 food brands price variance in % -16,4 % Germany Spain Belgium Italy Greece Austria France Netherlands Portugal Sweden Great Britain Ireland Switzerland Finland Norway Denmark Average -20 -10 10 20 30 40 Source: AC Nielsen

17. GERMANY - Moderate Retail Growth - Continuing Rise of Discounters Number of Outlets (% Share) Share of Turnover (in %) 1997 1998 1999 2000 2001 2002 2003 2010 1997 1998 1999 2000 2001 2002 2003 2010 Anzahl 76.090 Mrd.€ 78.440 72.925 68.880 124,7 125,9 133,5 136,7 125,9 129,2 134,7 77.380 74.590 71.035 60.000 148 -1,3% -1,7% -2,0% -2,2% -2,6% -3,0% +0,0% +2,6% +0,9% +1,0% +1,5% +3,3% GfK: LEH Prognose 2010 IRI Grundgesamtheiten, Stand jeweils zum Jahresende

18. Shopper Typology - Germany; Female - Experimental Shopping Easy, Efficient Shopping Bon Vivants, Enjoyers Hedonists 42 % Disciplined, Conservatives 53 %

19. Private Labels in Europe % Market Shares Key FMCG

20. Social and Demographic Trends • Present Welfare Systems Unsustainable: Cuts in State Schemes; Privatisation of Social Security  Insecurity  Cautious Consumer-Spending • „Value“ Shopping trends to continue • Polarisation • Parts of society benefiting  Top quality/luxury consumptionbut „Time Poor“  Convenience • Larger Parts of society under economic pressures from globalised competition • More Working Women  Convenience • More Senior Citizens  Convenience and Health

21. Demographic Trends in Germany 21 % 16 % 55 % 47 % 24 % 37 % Source: Stat. Bundesamt 8/03; mitll. Variante

22. General Consumer Behaviour Trends • Much More Demanding Consumers • top quality at low prices • always available • convenient but natural • environmentally responsible • Quality and Convenience  Quality Assurance! • Health & Wellness the Key TrendDiet effects on health increasingly recognised (but only very slow behavioural change) Over-Weight, Obesity rising problem • Vitality Demands

23. Balance • Relaxing the mind • Positive mood • Stress relief • Good sleep Unilever Focus: Vitality • Enhanced physical energy • Enhanced mental energy • Recharge • Fit and active body • Weight management • Youthful appearance • Beauty from within Achieve more Feel good daily Look better Be healthy for longer Give children a good start • Physical development • Mental development. • Resistance to desease • Healthy weight • Heart healthy • Flexible and strong body • No sensory deterioration • Virility • Immune health/ • natural defence Be free from health problems • No allergies/intolerance • Digestive health • Health for diabetes • Cholesterol/blood pressure

24. Specific Consumer Attitudes vis-a-vis Fish Products

25. Consumer Perception of Seafood • Part of healthy and modern diet • Fresh • Natural • Well balanced • Varied • Light • Easy to digest • Low in fat and calories • Appetising

26. Consumers‘ Considerations on Seafood • Fish is an important part of healthy diet. Fish is so highly appreciated for its inherent nutritional values that it is consumed even when not really liked (10% of fish consumers in the UK and Italy) • Fish is a considered safe and natural product: Less food scare cases compared to meat. • Consumers would serve and eat more fish if • it was easier to prepare or cook and • if only they could conveniently prepare a larger selection of simple fish recipes and dishes

27. Availability of Fish Products at Acceptable Price Levels

28. Total Fish & Seafood Catches: All Categories 132 131 130 126 122 120 118 115 111 104 101 100 98 97 in Mio t Source: FAO Statistics

29. Total Fish Catch: All CategoriesWild vs. Aquaculture Mio Tons Source: FAO statistics

30. Utilisation of worldwide Fish Catch1983 vs. 2002 Mio Tons Source: FAO Statistics

31. Groundfish Demand Development Note: kg/capita/a expressed in live weight kg per capita/a Total Fish & Seafood Groundfish Source: FAO

32. Groundfish Supply vs. Price DevelopmentPrices Indexed (1988 = 1) Prices for Fillet Blocks pbo based on Euro / kg, DDP Europe Price Index m tonnes Source: 88 - 2002 = FAO; 03 - 05 = PANELISTS / OWN ESTIMATES,

33. Sustaining & Improving Value Creation • Re-Stimulate Groundfish Demand (USA - 3 kg p.c. over last 10 years  750.000t catch weight) through- enhanced marketing programmes- added value products / innovations • Create Powerful Emotional Value for FISH FROM ICELAND- Build Credible Brand Personality- Live Up to Brand Characteristics and Communicate, Communicate, Communicate ... to Target Audience.

34. Environmental (Sustainability) Considerations • Necessary to safeguard longer term future of the industry. But: Short-term sacrifices necessary! • Environmentally conscious consumers like to see nature protected. • Icelandic Fishery Policies regarded as positive Model (Content & Transparency) MSC Programme vital

35. Problems of World Fisheries • Management based on political and not on scientific decisions • Insufficient evaluation of fish populations • Ineffective controls • Subsidy rates too high • Fleet capacities too large • By-Catch Rates too high

36. Status of our MSC Certifications In progress:Norweg. Saithe, Cod, Haddock Cod SaitheHaddock ? ? Alaska Pollock Alaska Pollock Hake Hake Hake Hoki In progress:

37. Key Elements of a Sound Fishery Management FisheryResearch Legal Set ofRules Quota System Long-TermStrategies ControlSystems => Sustainably Managed

38. Sustaining our Heritagefor a Viable Future