Global Cake Report

1. Global Cake Report A Snapshot of cakes from around the world….today, tomorrow, and insights/

2. Objective of this report • Understand the Role of Cakes in Various parts of the world • Share Trends in Regions and Globally • Conclusions from the Report • Methodology: • Telephone conversations with Rich’s Global Cake Team • 7 Interviews • 12 Countries represented • Years of experience in cakes!!

3. ASIA • Role of Cake in the Case • Reinforces destination • Cakes help position cake shops/bakeries as premium, mass appeal, economy • Key driver of Profit – approximately 50-70% GM vs Bakery at 30-50% • Cakes as gifts • Market Nuances • Level of decoration is exquisite • Cake shop presence in China, Taiwan • Packaging is very unique and higher end appearance • Ingredients used – seaweed, jellies, sesame, fermented rice Japan China China

4. ASIA • Influences • Europe, Japan and Taiwan • Media: Food Shows on television, internet • Travel • Suppliers • Trends • More Single Portions • Smaller Portions • Lighter cakes • More contemporary/higher end designs • More Fruit incorporated into cakes Mousse Cakes China • Mochi & Daifukuin China Mousse Cakes China

5. ASIA Japan Moon Cakes China Packaging in Asia Reinforces the Premium Positioning

6. ASIA China China China cakes will incorporate “Jellies” in their fillings

7. ASIA Continued effort by operators towards creating special occasions

8. Latin America Mexico • Role of Cake in the Case • Drives destination • Key driver of Profit – approximately 50% GM in In-store bakeries, approximately 70% in strong cake shops and artisanal bakeries • Cakes for special occasions and gatherings – high emotional connection with cakes • Market Nuances • TresLeches style cakes – soaked cakes • Fiesta Quinceañera – 15 year old female celebration • Strong cake orientation • Ornate Gelatin Cakes TresLeches Style Cakes Flower Gelatin Desserts

9. Latin America Mexico • Influences • United States & Europe • Consumers travelling more • Media – cooking shows, internet • Restaurants influence • Trends • Consumers becoming more sophisticated - travelling more, influnced by cooking shows, internet • Single Portions on the rise • Smaller cakes – more price sensitive in recessionary times • More contemporary cakes being offered • More fruit – exotic flavors like passion fruit, mango, berries • Combination of flavors, textures – smooth and creamy with crunchy, Jelly • “Healthier for you” options – reduced sugar, fruit Quinceañera

10. Latin America Brazil • Role of Cakes • Drive profit for operators! GM 50-60% • Growing importance in driving impulse • Nuances • Cakes are soaked Many Different Types of Soaked Cakes Chocolate and Vanilla Cakes are popular!

11. Latin America Brazil • Influences • European • Media influences consumers • Trends • Operators dedicating more space for cakes and desserts • More high end cakes with fine decorations • Smaller portions – 2 kilos to ½ kilo sizes • More competition leading to greater discounting • Mousse based desserts Smaller Portions Mousse Cakes

12. United States of America • Role of Cake in the Case • Profit driver! GM – 50-65% • Celebration and desserts primary focus. • Planned purchase that drives traffic into ISB. • Market Nuances • High incidence of seasonal in store programs to drive traffic • Cakes made/decorated in store to capture theater

13. United States of America • Influences • Media, Cake Shows on Food Network like Ace of Cakes and Cake Boss • Foodservice trends into bakery • Global cakes no longer seen as Ethnic • Trends • Decorations becoming more contemporary, less bright colors and shell borders • More flavor fusions of cakes and icings – berry cake & lemon icing • Smaller sizes and portions (5” on the rise) – price point, smaller family sizes • Split layers

14. Eastern Europe: Czech Republic • Role of Cake in the Case • Has changed over time….communist era (standardize cakes) vs today (rebirth of cakes) • Profit - Gaining importance in bakery industry, rebirth of patisserie/cakes in Czech • Every village has 2-3 patisseries selling cakes • Market Nuances • Moving from Soviet mindset to free market artisanal Traditional Cakes in Czech

15. Eastern Europe: Czech Republic • Influences • Austria, Italy, Germany, France, Asia • Availability of ingredients • Suppliers • Internet • People travelling more • Trends • Changing from cake by the weight to higher quality - Lighter, healthier - Lighter bases – more mousses • Cakes as gifts on the rise – gift boxes • Smaller Portions • Higher quality of ingredients • 14 New Trendy Cakes in Czech European Mousse Base – different shapes Single Serve

16. Eastern Europe and Russia • Role of Cake in the Case • Supports In-Store Bakery as destination • A driver of Profit – approximately 50% GM in In-store bakeries. More focus being placed on breads and pastries as of late. • Cakes for special occasions and gatherings – high emotional connection with cakes • There is substantial space dedicated to cake in retailers • Market Nuances • Heavy cream cake presence • More decoration on top with creams

17. Eastern Europe and Russia • Influences • Europe • Specifically France and Belgium who are regarded as experts in confectionary • Trends • More differentiated range being offered – premium to value driven • Lighter Cakes – 1-1.5 kg is moving towards 0.8 – 0.9 kg. • Smaller portions and single serve on the rise • More fruit

18. South Africa • Role of Cakes in the Case • Very Profitable – 45-50% GM, typically in the top 3 categories for In-Store Bakery • Customer expect and demand cakes in store • A cake for every socio-economic group in So. Africa • Drive traffic in store during seasonal promotions • Nuances • Cakes are an important piece of funerals, an event that most black South Africans spend a significant amount on that involves family and in many cases neighborhoods • Heavier Cream Cake Market • In-Store Bakery Cake Programs Upper Tier Mid Range Value

19. South Africa • Influences • United States & Europe • Suppliers with research in market and around the globe • Foodservice • Trends • Smaller sizes – cost, price • Individual portions • The rise of coffee and tea has driven occasion for consuming cakes • Cupcakes in specialty bakeries vs ISB Flavoured Icing Cakes Cake Carnival in Store

20. So what conclusions can we draw from all of this?

21. Conclusion #1: So what conclusions can we draw from all of this? • Cakes are becoming more sophisticated. • More European influence. United States of America South Africa Czech Republic

22. Conclusion #2: So what conclusions can we draw from all of this? • Cakes and Desserts are Getting Smaller!. • More Single Serve Portions & • Cupcakes too! China Russia India UK

23. Conclusion #3: So what conclusions can we draw from all of this? • Cakes & Desserts are Getting Lighter and More Fruit…. • Less focus on per Kilo more on Quality….. • More mousse cakes and fruit topping Fruit Toppings in Russia Mousse Cakes in Czech Mousse Cake in China

24. Conclusion #4: So what conclusions can we draw from all of this? • The World is getting Flatter and…. • Trends are spreading….. • Consumer are asking for innovation from around the world! • Stay open to new ideas…try new things! Travelling More Technology Cooking Shows

25. Conclusion #5: So what conclusions can we draw from all of this? • The Less obvious conclusion…. • Cake is about special moments, its about family, its about tapping into people’s emotions!

26. Can you Guess Which Market is Which?