Project Forrest – Understanding the macadamia consumer from a premium perspective - Australia Prepared by: Brent Wallace

CEO Galileo Kaleidoscope

16 October 2014

Premium perceptions of Macadamias …

Brands that demonstrate clear expressions of nature – simplicity, purity can move beyond a ‘sustainability’

message

BROADLY TODAY CONSUMERS SEEK PROTECTION IN A WORLD OF UNCERTAINTY…..

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In an increasingly hectic and uncertain world consumers look more for sanctuary

and safety.

COCOONING

More creative cooking at home

More focus on home renovations

INVESTING IN THE HOME

Brands that promise a moment of everyday luxury offer a small indulgence to be enjoyed within the

sanctuary of home

As a reaction to omnipresent technology, consumers look for signs of naturalness in

their lives

NATURALNESS

SIGNS OF NATURE

Moving away from ‘manmade’

Back to nature – clothing, food

OPPORTUNITY

PROTECTION

DEMOGRAPHIC SHIFTS ARE IMPACTING ON THE SNACKING CATEGORY: AN AGING POPULATION LOOKS FOR EVERYDAY LUXURIES

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Demonstrating ‘everyday luxury’ becomes a powerful way to engage this aging population with a compelling proposition that taps into this reward and indulge attitude.

• As we grow older as a Nation (with more than 1000 people over the age of 100 in Victoria alone, compared with 100 in 1974), tour tastes and priorities are changing

• After years of family life and sacrifice - older consumers focus more on everyday luxuries as a way of rewarding themselves

• Choosing a healthy and somewhat richer snacking nut‘ is one such way to enjoy some of life’s little luxuries everyday

• This choice becomes a part of a broader self-centric approach to life, finding ways to enjoy life in autumn years

Macadamias play to this trend – offering an aging population an

‘everyday luxury’

I’ve worked all my life, I’ve not got that long left – I just want bit

of luxury now…”

MACADAMIAS PROVIDE A TASTE OF THE LUXURIOUS LIFE WITH THE SIMPLICITY OF A DAILY PURCHASE

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HIGH END LUXURY EVERYDAY LUXURY EVERYDAY

MACADAMIAS ARE IN A GOOD POSITION TO DELIVER ON QUALITY AND PREMIUMNESS

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“Macadamias are a premium product and should be treated and eaten that way.” Light, Male

PRODUCT QUALITY

SOURCE MATERIAL

HOW MADE

We spoke to experts to determine what makes up a premium or quality product:

Macadamia delivers this via

product attributes and

taste

Macadamia delivers this via the Australian

heritage (known in Australia)

Macadamia delivers this via the reasons to believe of harvesting and

carful farming

= PREMIUM

MACADAMIAS ADD A QUALITY FEELING TO WHATEVER PRODUCT THEY ARE IN

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Quality is delivered by many of the product attributes itself, and how that product is brought to market

“Pretty much any cake or biscuit, ice cream, maybe a macadamia pesto instead of pine nuts, maybe those cheese logs- they could all be made better quality with macadamias”

“Adding macadamias to food is a great idea and adds quality. You can't say that with all of the other nuts”

“They are so much more expensive than other nuts– so I think that means they are better quality”

“Quality. Macadamia are generally an expensive option to add to a product when I see a product that has macadamias in it I generally think it is a higher quality product”

QUALITY

MACADAMIAS ADD A PREMIUM FEEL TO ANYTHING– THEY ARE SEEN AS WELL ABOVE AVERAGE

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“I think macadamias add a little bit of 'special flair' to supermarket products. I think it would also go well with

chicken, as a crust”

“Macadamias are still a relatively rare nut products (peanuts are everywhere) so when I see them to buy or in a food product

I think premium”

“Products that I see as 'little affordable luxuries' - gourmet ice-cream like Connoisseur, magnums. Also single serve dessert

treats, such as a sticky date pudding, or crème caramel”

“I think including macadamias in other products would add a premium feel. Eg. Macadamia cookies seem more luxurious

than plain or choc-chip ones”

Macadamias are above average, and provide something a little bit extra and associated with luxury– premium.

“I consider them premium because of their price. Peanuts are cheap and almonds are reasonably priced. I think macadamias are in a premium class”

PREMIUMNESS

BECAUSE OF QUALITY AND PREMIUMNESS, PEOPLE EXPECT TO PAY MORE FOR PRODUCT WITH MACS

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“I think it raises the perception of the quality of the product based on the fact that they are more expensive.. Maybe about 10%

“I would expect a small price increase. About 5% or less would be within my perceived price… because they are grown naturally and need to be harvested”

“Slightly higher because macadamias aren’t cheap… I wouldn’t expect it to be more than 3-5%”

“Definitely add to the price. You’re adding an expensive and quality product to an existing product, simple logic says the price will rise… maybe 10-20%”

Only about ½ of the participants said they would expect to pay more for macadamias, and that did not correlate with loyal vs. light as much as with those who know the prices of varied nuts

It should be noted that much of the quality perceptions of macs comes mostly from the high price

This price increase expectation is incumbent on price first, but secondly on quality and premium perceptions. This means holding up the health and provenance support points is VERY important to the future of Australian Macadamias, especially if a lower-priced challenger comes to market.

CONSUMERS WANT TO SEE MACADAMIAS IN MORE PRODUCTS THAN THEY CURRENTLY DO

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DESIRE FOR INDULGENT MACADAMIA PRODUCTS, FEEL MORE LUXURIOUS

• Energy bars • Snack mixes • Museli • Biscuits

• Take-home desserts • Chocolate bricks • Chocolate biscuits • Cakes and muffins

• Beyond chocolate, ice cream, and biscuits– people are looking for more macs

OPPORTUNITY FOR MACS TO PROVIDE MORE HEALTH CREDENTIALS / BENEFITS

DESIRE for macadamia products outstrips SUPPLY

“I haven't seen too many new things with macadamias. I have seen chocolate coated macadamias and some very large cookies with macadamias and white chocolate. I don't think there have been too many new products on the market recently incorporating macadamias. Pity!” – LIGHT user

HANKERING TO CHANGE UP THE CURRENT OFFERINGS OF MANY

PRODUCTS

CONSUMERS WANT TO SEE MACADAMIAS IN MORE PRODUCTS THAN THEY CURRENTLY DO

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Top of mind for many when thinking about

more existing macadamia products

Connoisseur- a hero brand, considered premium for macadamia NPD

ICE CREAM

First association for many, and closely linked

with cooking and baking at home

Organic, Indulgent

BAKERY

CONFECTIONARY - PREMIUM CEREALS – HEALTH & ORGANIC OPPORTUNITY

Opportunity to partner with established high end brands which are affordable, and not at too high a price point. (Some of the above are consumer-generated). Opportunity to tap into the macadamia moment, which was an occasion enjoyed with alcohol for many. Although outside the 4 categories mentioned, alcoholic beverages were an integral part of the macadamia moment for many.