Australian Society of Baking 19 th October 2011 Shannon O’Connell, National Sales Manager

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

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

3. Market InsightsKate Hurley__________________________________________________________________________________

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

5. The Shopper SINKS/DINKS FAMILIES EMPTY NESTERS • % 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 • % 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 • % 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 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. Source: Retail World, Australian Bureau of Statistics

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

7. Influences When Choosing A Food Product 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. Influence of the following factors choosing food and beverage products Showing ‘high’ or ‘very high’ influence 81 69 55 55 42 % 41 39 37 37 27 22 21 20 13 Price Health Production methods Convenience Ability to share Taste or flavor Customization benefits Brand name or Scent or aroma image Country of origin Habit or preferred brand Packaging design from friends/family Ethics/Sustainability Recommendations benefits Source: Datamonitor BFCM0401, August 2010 Source: Datamonitor

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

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

10. Future Growth Opportunities Retail Foodservice • 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 • 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? IMPLICATIONS MARKET TREND 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 Increase in migrants, smaller households, over 65 population and average income Develop ethnic, mini, premium product concepts and adapt products to mature consumers Consumers are highly influenced by taste, price and health Future product innovation and investment need to correlate with these trends

12. International Trade ShowShannon 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 free and dairy free. Packed with seeds, nuts, dried fruit, goji berries and cocoa nibs Wheat 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. For the couple households – 5 “ cakes are exploding! $8.00 $19.00 4” – 6” cakes