Dairy

Lena Ingvarsson Marketing Director Dairy

Dairy – January to September

77

84

77 78

87

70

75

80

85

90

2010 2011 2012 2013 2014

Volumes ('000 MT)

29

6652

6477

0

20

40

60

80

100

2010 2011 2012 2013 2014

Operating profit (SEK million)

0.38

0.790.68

0.82 0.89

0.00

0.20

0.40

0.60

0.80

1.00

2010 2011 2012 2013 2014

Operating profit per kilo (SEK)2

Source: Euromonitor 3

Global Dairy market in scope

Applications: Cream/Toppings Ice cream Powdered milk Milk drinks Non-dairy milk alternatives Coffee whiteners Butter Cheese Condensed milk

Market size year 2013 MT 66,2 million Market size year 2013 USD 309 billion Market growth 2014-2016 CAGR 3,4%

4

Dairy market by main applications - Forecasted growth vs. fat volume 2013

Source: Euromonitor

Cheese 4 200

Milk drinks 300

Coffee whiterners

240 Cond milk

360

Cream 1 300

Ice cream 1 000

Butter 2 600

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0

Fat

volu

me

000

tonn

es

CAGR in % 2014-2016

The use of vegetable fat is limited and varies depending on application

Market growth 3.4%

5 Source: Euromonitor

Dairy market by regions - Forecasted growth vs. fat volume 2013

AP 1 300

EE 1 320

LA 1 390

MEA 720

NA 2 500

WE 3 000

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

0 1 2 3 4 5 6 7

Fat

volu

me

000

tonn

es

CAGR in % 2014-2016

Market growth 3.4%

The use of vegetable fat is limited and varies depending on application

6

Trends for key players within scope (2013 - retail value %)

Key players Market share Growth trend

Company A 6,5

Company B 5,4

Company C 3,3

Company D 2,8

Company E 1,7

Company F 1,5

Company G 1,4

Company H 1,3

Company I 1,2

Company J 1,2

Diverse market, the 20 biggest players make up < 1/3 of the market

- Generally good growth, specifically for Asian players - Newcomers increasing market shares on milk drinks

Source: Euromonitor

7

Trends in Dairy market - from a fat perspective

Health and wellness

Sustainability

Back to nature

Non-trans Non-hydro SAFA reduction Decreased cholesterol Omega 3 and Omega 3/6

Responsible and sustainable sourcing Carbon footprint

Natural – Organic

Free from Clean label

8

Dairy market characteristics

Key revenue drivers

Key profit drivers

Key pains

Population growth Growing middle class in developing countries Urbanisation

Health categories Natural Convenience

Dairy Side Stream Affordable dairy products for a larger market Lack of milk in some markets General health concern

9

Number of Dairy product launches - with vegetable oils and fats

0200400600800

100012001400160018002000

2009 2010 2011 2012 2013

Num

ber

of la

unch

es

Steady increase of numbers of product launches with vegetable oils and fats in dairy products Source: Mintel

10

Potential markets - Dairy Extension and Dairy Side Stream Management

-500

-400

-300

-200

-100

0

100

200

300

400

x100

0 to

nnes

Skim Milk Powder

Net importers Net exporters

Source: IDF, 2013

11

Dairy Extension - An opportunity for Dairies

Affordability

Availability

Sustainability

Volatility

Dairy Extension Affordable food

Dai

ry E

xten

sion

man

age:

Possibility to have stable availability of raw material

Vegetable fat reduces the volatility

Add vegetable fat to create affordable food

Act responsibly by addressing Global Sustainability Initiative

12

Side Stream Management - creating new value for Dairies

Sustainability and Cost efficiency

Side Stream Management

Recycle waste

Act responsible Profitable

Creating value

Waste – Recycled into affordable food

Turn side stream fractions into value Reduce waste, act responsibly Steady output of the side stream fractions Creating new valuable extension of the product range Possibility to create healthier product segment Improve profitability for the total business

13

Akotop NH - non-hydro solution for whipped toppings

Functionality and health

Non-hydro and Non-trans Clean label Excellent physical and sensory properties

0

50

100

150

200

250

60 120 150 210 270

Ove

rrun

%

Time sec

Akotop NH

Cream

Reference hydro

Whipping test

14

Akomix LS 25 - improved nutritional profile in ice cream

Akomix LS 25 reduces saturated fats in the ice cream

Ice cream based on Akomix LS 25 is allowed to carry, the EFSA approved nutrition and health claims in the EU

Functionality and health - taking ice cream innovation to the next level

An opportunity to profile your ice cream as a better-for-you product in the premium range! 0

20

40

60

80

100

Coconut oil Milk fat Akomix LS25

SAFA

MUFA

PUFA

Trans

%

15

Akoblend SB - structure builder in churned butter blends

Functionality and cost efficiency

Increase the amount of vegetable fats with maintained structure Non-hydro Non-trans Cost efficiency Same equipment can be used Example:

By addition of 8% Akoblend SB NH, the butter content can be reduced with 25%, with maintained structure and functionality

16

Dairy for the future The segment will grow by offering:

Dairy Extension for affordable food

Side Stream Management

Consistent supply

Improved functionality

Cost efficiency

Improved health profile

Total concept