what’s driving demand around the globe united states - dennis simonis

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International Macadamia Symposium Global Conference Brisbane, Australia U.S. Market Profile Dennis J. Simonis September 2012

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Page 1: What’s driving demand around the globe   united states - dennis simonis

International Macadamia Symposium Global Conference – Brisbane, Australia U.S. Market Profile

Dennis J. Simonis

September 2012

Page 2: What’s driving demand around the globe   united states - dennis simonis

U.S. Economic Environment

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Economic Measure 2008 2009 2010 2011

GDP (% chg) 2.2% -1.7% 3.8% 1.7%

Unemployment (%, SA) 5.8 9.3 9.6 9.2

Consumer Price Inflation (% Chg) 3.8% -0.3% 1.6% 1.7%

Retail Sales (% Chg) -1.0% -6.4% 6.6% 6.5%

Residential Permits, Total (Mil) 3.6 2.3 2.4 3.5

Source: Moody’s, February 2011

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Many consumers pessimistic

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Personal Financial Health versus Last Year

% of Consumers Source: Moody’s, February 2011

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And expect more COL increases

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Improve Pt Chg YA

(2.6)

(0.1)

(7.1)

Consumer Perceptions of Economic and Financial Health

% of Consumers Source: Moody’s, February 2011

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U.S. Snack Market Profile

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Snack food industry overview

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• Large industry generating $67.7 billion in FDMWC during 2010

Source: Symphony/IRI Group “State of the Snack Industry 2010”

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Snack food industry overview

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• Overall flat sales with some segments growing +5% annually

Source: Symphony/IRI Group “State of the Snack Industry 2010”

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Snack food market drivers

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Health &

Wellness Satiation Portability

Company

Values The

Economy

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Consumers more health focused

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of consumers

71%

are trying to eat

healthier

Source: Symphony/IRI Group “State of the Snack Industry 2010”

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Influencing snack choices

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40% of consumers

view snacks as an

important part of a

healthy eating

plan throughout

the day

60% of consumers

are trying to eat foods that

help prevent health problems

and/or manage existing health

conditions

24% of consumers

seek snacks that offer benefits

beyond basic nutrition

Source: Symphony/IRI Group “State of the Snack Industry 2010”

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Snack consumer drivers

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• Low Fat

• Low Cholesterol

• Low Sugar

• High Fiber

• Low Calorie

• Whole Grains

50%

47%

47%

46%

45%

44%

• Low Salt/Sodium

• All Natural/Natural

Ingredients

• Gluten Free

45%

39%

Proven attributes Emerging attributes

Important Product Attributes

% of Consumers Source: Symphony/IRI Group

“State of the Snack Industry 2010”

37%

Page 12: What’s driving demand around the globe   united states - dennis simonis

Emerging attributes potential

Organic/Natural Snacks Gluten Free Foods

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Source: Symphony/IRI Group “State of the Snack Industry 2010”

Packaged Facts, “2011 Gluten Free Foods Report”

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Healthy outpacing indulgent

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Nutritional Snacks/Trail Mixes

Yogurt

Snack Nuts

Snack/Granola Bars

Salsa

+9.8%

+8.1%

+7.6%

+7.4%

+6.7%

Total

Healthier

+4.4%

Prepared Pudding

Chocolate Covered Salted Snacks

Dried Meat Snacks

Rfg. Appetizers/Snack Rolls

Chocolate Candy

+13.7%

+13.5%

+10.0%

+8.9%

+4.7%

Total

Indulgent

+1.2%

FDMx $ Growth

2011 v 2010 Source: Symphony/IRI Group

“State of the Snack Industry 2010”

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Causing a share shift

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Share of Dollar Sales- FDMx

2010 v 2006 Source: Symphony/IRI Group

“State of the Snack Industry 2010”

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Satiation is an important benefit

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Perception of the Role of Snacks % of Consumers Source: Symphony/IRI Group

“State of the Snack Industry 2010”

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Portability is also important

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• Consumers are spending more time in transit

• Products that provide healthy satiation are benefitting

of consumers

seek snacks that can

be eaten on the go

39%

Source: Symphony/IRI Group

“State of the Snack Industry 2010”

Page 17: What’s driving demand around the globe   united states - dennis simonis

Company Values Do Matter

• Customers that care about healthy eating care about:

• Environmental and safe growing practices

• Green packaging

• Clean ingredient statements

• Do you have a higher “cause”?

• Key Partnerships and Influencers

• Doing business ethically

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Snack Nut Segment

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Page 19: What’s driving demand around the globe   united states - dennis simonis

Snack nut sales

• Nut sales were $5B in 2010, up 46% versus 2005

• Health is the primary sales driver

• Favorable trends will drive 6% CAGR through 2015 Source: The Mintel Group Nuts and Dried Fruit Report, January 2011

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3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

2005 2006 2007 2008 2009 2010

(est.)

2011

(fore.)

2012

(fore.)

2013

(fore.)

2014

(fore.)

2015

(fore.)

Millions o

f dollars

($)

Sales of nuts, 2005-15

Page 20: What’s driving demand around the globe   united states - dennis simonis

Snack nut consumer

• Over 60% of consumers snack on nuts monthly

• Only Fresh Fruit and Chips are consumed at a higher rate

Source: The Mintel Group Nut and Dried Fruit Report, January 2011

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79

83

60

62

56

51

41

26

26

84

82

68

64

66

59

44

30

27

0 10 20 30 40 50 60 70 80 90

Fresh fruit

Chips

Crackers

Nuts

Vegetables

Popcorn

Pretzels

Dried fruit

Trail mix

Percent of respondents (%)

Past month snack consumption, by gender, September 2010

Male

Female

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Snack nut consumer

• Consumers view nuts as a good source of energy

• Energy is a key benefit that is being used to increase sales

Source: The Mintel Group Nuts and Dried Fruit Report, January 2011

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U.S. Macadamia Nut Market

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Page 23: What’s driving demand around the globe   united states - dennis simonis

IMS Conference – September 2012 U.S. Supply

Metric Tons 2010 2011 2012 est.

Domestic Production 3,890 4,500 4,300

Kernel Imports

Kenya 1,498 2,578 2,600

S. Africa 2,336 2,437 2,500

Australia 1,384 396 750

All Others 2,013 2,026 1,950

Total 7,231 7,437 7,800

Kernel Exports (733) (735) (800)

Consumption 11,202 11,300 11,300

Est. Global Crop 27,574 29,000 32,500

Est. % of Global Crop 40.6% 39.0% 34.8%

Source USDA NSS Reports

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Page 24: What’s driving demand around the globe   united states - dennis simonis

Macadamia commodity price Historical and Projected

Price per pound

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

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• Pricing driven up primarily by increased demand, China

consumption and lower then expected Australian crop

• Weather has affected crop size

• Pricing is projected to decline as the global crop increases

• Normal weather in Australia

• New acreage in South Africa

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Continental U.S. macadamias

Situation

•52 weeks FDM sales ending were $10.0MM (-6.0%)

•Private label is the leading brand with a 49% share

•Mauna Loa is #2 with a 34% share

•Macadamia sales shifted to other nuts, primarily almonds

Key issues

•Loss of distribution in major continental US FDM retailers

•Lack of brand support with consumers and trade

•Lack of product innovation capitalizing on wellness trends

(1) IRI FDM Sales data

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Macadamia nut consumer

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Source: The Mintel Group Nuts and Dried Fruit Report, January 2011

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IMS Conference U.S. Macadamia Consumption

Mix by Geographic Market:

Hawaii 20 % 2.200 MT

U.S. Mainland 80% 9.100 MT

Total 100 % 11.300 MT

• Internal estimates only

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Page 28: What’s driving demand around the globe   united states - dennis simonis

IMS Conference U.S. Macadamia Consumption

Continental US

Macadamia Nuts and Related Products

Mix by Channel

($ million)

Grocery 23.0 38%

Drug 3.4 6%

Mass 0.8 1%

Club 33.3 55%

Total 60.5 100%

Internal estimates only.

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Page 29: What’s driving demand around the globe   united states - dennis simonis

IMS Conference U.S. Macadamia Consumption

US Market Potential

• If marketed aggressively and properly, the U.S. market could absorb 100% of the global macadamia crop.

• Direct selling opportunities offer tremendous potential

• Club stores, mainly Costco, are carrying the weight, but Food, Drug and Mass channels are largely underserved

• Health attributes have not been adequately communicated

• Inconsistent quality of foreign kernel has been an issue

• Consistent supply is a challenge in the current market