milk category review

A LOOK AT FACTORS AFFECTING THE MILK MARKET

AN IN-DEPTH VIEW OF CONSUMER INSIGHTS

Overview Trends

2014: Consumers Insights

Source: Mintel

The big change in 2014 is the progression of “other

than soy” based drinks, i.e. made from rice, nuts, grains

and seeds

Many buyers are not purely motivated by dietary

restrictions, such as vegan diets and lactose sensitivity

to purchase

Flavor and health benefits are leading reasons to choose non-dairy milk

Milk and Non-Dairy Milk Consumption

Source: Mintel

42%

48%

22%

Purchase Non-Dairy Milk

Prefer the Taste of Non-Dairy

Consumers have Lactose sensitivity

In 2014, innovation in dairy-free milk – including soy, rice, nut, grain and seed based drinks – increased by 29% globally

Summary: • Huge opportunity for launching

non-dairy products based on taste and health platform

• Some consumers don’t enjoy the

taste and texture of dairy milk, describing it as too heavy and cloying in the mouth

• Almond Breeze heavily focuses on the taste experience – describing it as ‘extra-special treat’ with a creamy smooth texture that you don’t need to be lactose intolerant to enjoy

Who is Purchasing Non-Dairy Milk and Why?

Source: Mintel January through November

Female, age 55+

Male, age 18-34 Male, age

35-54

Millennials are leading the trend toward non-dairy milk, and believe non-dairy milks are higher in protein, calcium and other vitamins and minerals

Consumers Are Widening Their Milk Repertoire To Non-Dairy Milk

• 14% of dairy-free drinks

launched in 2014 contained

almond, compared to virtually

none 5 years ago

• Coconut milk is also on the

rise: the number of food and

drink products containing

coconut milk increased 56%

between 2013 and 2014

• Purchase overlap between

dairy and non-dairy milk

suggests that respondents buy

multiple varieties of milk for

different needs or occasions,

offering opportunities for

blends or other innovation

Almond and coconut milk are fast growers in the non-dairy segment

Source: Mintel January through November

Fairlife Boosts Protein, Calcium And The Price Of Milk

Launch Information • Launch Date: Feb 2015 • Manufactured by: Coca-Cola • Retailers: Nationwide i.e. Mariano’s,

Kroger, Wal-Mart, Target and Meijer • Avg. Price for 52oz: $3.77

Fairlife Milk vs. regular Milk: • 50% more protein

• 30% more calcium

• ½ the sugar

a2 Milk – The Milk That Might Change Everything

Launch Information • Launch Date: April 2015 • Location: California • Retailers: Safeway , Whole Foods and Kroger • Ave. Price: $4-4.50

A2 Milk vs. regular Milk: Regular Cows’ milk contains A1 and A2 proteins, and for some A1 may cause side effects such as bloating, nausea, gas and diarrhea. a2 Milk comes from specially handpicked diary cows that produce A2, so it may be gentler on your stomach

Alternative Milk Nutritional Chart vs. Whole Milk

per 1 cup Almond Coconut Flax Hemp Rice SoyCashew

Milk

Whole

Milk

Calories 40 552 25 60 45 90 25 146

Total Fat 3.58g 57g 0g 6g 2g 3.5g 0g 8g

Saturated Fat 0.275g 51g 0g 0.5g 0g 3.6g 0g 5g

Iron 0.72mg 0.36mg 0mg 0mg 0.48mg 0mg 0.36mg 0.7mg

Cholesterol 0mg 0mg 0mg 0mg 0mg 0mg 0mg 24mg

Sodium 5mg 36mg 80mg 25mg 135mg 95mg 160mg 98mg

Carbohydrate 1.4g 13g 1g 10g 10g 9g 1g 13g

Dietary Fiber 0.8g 5g 0g 0g 0g 1g 0g 0g

Sugars 0.34g 8g 0g 6g 6g 7g 0g 13g

Calcium 45% 45% 30% 46% 30% 45% 45% 33%

Protein 1.51g 5g 0g 2g 1g 6g 0g 8g

Cashew Milk

In Summary

Soy milk: High in protein but more expensive and large amounts of soy have the potential to alter menstrual cycles in women, and stimulate breast cancer cells

Coconut milk: Easily digestible, antifungal, and antiviral. High in vitamins and essential minerals magnesium, potassium, and iron

Hemp milk: Less common than other milk alternatives, and that can make it harder to find. Rich in nutrients and anti-inflammatory.

Almond milk: High mineral, vitamins, and healthy fats (monounsatured)

Flax milk: many minerals and nutrients, but contains phytoestrogens

Rice milk: High in carbohydrates and sugar, and low in protein and fat

Cashew milk: Good source of healthy fats, copper, manganese, magnesium, phosphorus, iron, and zinc

New Nut Milk - Pecan Milk

“Homemade Pecan milk is a great dairy-free alternative and is also very cost effective comparatively to buying store bought nut milks” -Shelley Alexander from A Harmony Healing Health Benefits: • Contains Omega-3 fatty

acids • Contain 20 grams of fat • 3 grams of protein and 4

grams of carbs • 3 grams of fiber • High in mineral -

magnesium and Copper

AN IN-DEPTH VIEW BASED ON CURRENT TRENDS

Milk Category Overview

Milk Market Share – 2013 vs. 2014 and 2015 YTD

65% 63% 62%

26% 27% 28%

4% 4% 4% 3% 4% 4%

2% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 Market Volume Share 2014 Market Volume Share 2015 YTD Market VolumeShare

Milk Market Share

All Other *

ALMOND MILK

FLAV MILK/EGGNOG/BUTTERMILK

WHOLE MILK

SKIM/LOWFAT MILK

*All Other includes Coconut Milk, Soy Milk, Kefir, Milkshakes/Non-dairy drinks, and Milk Substitutes

Skim/Low-fat Milk has given up share to Whole Milk and Almond Milk in 2014 Same trend in 2015 YTD totals

Source: IRI Calendar Year 2014 YTD 2/22/15

-2%

1%

1%

-1%

1%

=

58% 69% 70%

36% 25% 22%

4% 4% 4%

1% 1% 3%

0%

20%

40%

60%

80%

100%

120%

2013 Market Volume Share 2014 Market Volume Share 2015 Market Volume Share

Alternative Milk Volume Share

MILK SUBSTITUTES - ALL OTHER

COCONUT MILK

SOY MILK

ALMOND MILK

Milk Alternates – Share Shift 2013 vs. 2014 and 2015YTD

13%

-11%

Soy Milk has given up share to Almond Milk Coconut and All Other Milk Alternatives market share remain the same

Same trend in 2015 YTD

1%

-3%

Source: IRI Calendar Year 2014 YTD 2/22/15

*Milk Substitutes – All Other includes Goat Milk, Flax Milk, and Lactose Free Milk

Alternative Milk Volume Share vs. Growth - 2014

Overview • Overall Alternative Milk increased by 17% compared to prior year • Private Label represent 13% however it increased by 28% compared to prior year • Blue Diamond is the fastest growing brand in the category

Source: IRI Calendar Year 2014

7%

41%

28%

12%

-16%

272%

-50% 0% 50% 100% 150% 200% 250% 300%

WHITEWAVE FOODS COMPANY

BLUE DIAMOND GROWERS

PRIVATE LABEL

TURTLE MOUNTAIN

8TH CONTINENT

CALIFIA FARMS

Volume Share vs. Growth

% Volume Share YOY % Cat Change

Lactose Milk Volume Share vs. Growth - 2014

Overview • Overall Lactose Milk increased by 7% compared to prior year • Private Label represent 24% however, it increased by 13% compared to prior year • Horizon Organic represent 2% however, it increased by 35% compared to prior year


6%

13%

35%

16%

-42%

8%

-10%

-7%

-8%

-54%

-60% -40% -20% 0% 20% 40% 60% 80%

HOOD LACTAID

PRIVATE LABEL

HORIZON ORGANIC

ORGANIC VALLEY

SMART BALANCE

DARIGOLD

SHAMROCK FARMS CALCIUM PLUS

KEMPS

WHITE WAVE LAND O LAKES DRY EAS

SPECIAL REQUEST SKIM PLUS



Almond Milk Volume Share vs. Growth - 2014

29%

41%

105%

272%

107%

-5%

28%

0%

-50% 0% 50% 100% 150% 200% 250% 300%

WHITEWAVE FOODS COMPANY

BLUE DIAMOND GROWERS

PRIVATE LABEL

CALIFIA FARMS LLC

HILAND DAIRY FOODS CO LLC

TURTLE MOUNTAIN INC.

PRAIRIE FARMS DAIRY

OAKHURST DAIRY



Overview • Overall Almond Milk increased by 40% compared to prior year • Private Label only represent 10% however it increased by 105% compared to prior year • Two vendors dominate the segment Whitewave - 48% and Blue Diamond – 40%


Almond & Soy Milk Average Price - 2014


& $3.12

Private Label $2.89

$0.23

$3.48

Private Label $2.91

$0.57

Almond 64OZ Almond Milk Avg. Price Per Unit

Soy 64OZ Soy Milk Avg. Price Per Unit

AN IN-DEPTH VIEW BASED ON CURRENT TRENDS

Organic Milk Overview

Success Story: Kroger

“Simple Truth, Kroger Co.’s store brand for natural and organic foods, reached $1.2 billion in sales in 2014 after two

years on shelves”

- Kroger spokesman

The Organic Conversion

“Milk is often a consumer’s first organic food purchase”

- The Wall Street Journal

Organic Milk Trends

Source: IRI Calendar Year 2014 Source: Mintel January through November

Organic Milk is the gateway to the rest of your organic program

It takes an entire Organic program (multiple categories) to be successful

Organic Milk Volume Share vs. Growth - 2014

10%

1%

7%

2%

8%

13%

-2%

-3%

7%

-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

PRIVATE LABEL

WHITEWAVE FOODS

ORGANIC VALLEY

STONYFIELD FARM

STREMICKS HERITAGE FOODS

TURTLE MOUNTAIN

CLOVER STORNETTA FARMS

KEMPS

SHAMROCK FOODS

LIFEWAY FOODS



Overview • Overall Organic Milk Category increased 5% compared to prior year • Turtle Mountain shows a 8% growth compared to prior year • Clovers Stornetta shows a 13% growth compared to prior year • Private Label represent 47% of the Organic Milk Category and shows 9% growth


Organic Milk 64oz Average Price - 2014

$3.19

$4.08

$4.19

$4.43

$0.89

$0.12

$0.23


Organic 64OZ Organic Milk Avg. Price Per Unit

Very healthy Private Label

spread

SUGGESTIONS BASED ON CURRENT TRENDS

How to Improve Milk Sales

Market to the Millennials

Developing:

Focus on developing non-dairy products based on taste and heath platform

Consider in-store sampling to influence consumers perception

Advertising:

Ads should be targeted toward Millennials as they are leading the trend toward non-dairy milk

Focus on protein, calcium and other vitamins and minerals claims

42%

48%

22%

Purchase Non-Dairy Milk

Prefer the Taste of Non-Dairy

Consumers have Lactose sensitivity

milk category review

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