1. Food Bites Ice Cream Annual Market Quantification September 2011

2. Setting the scene 2 Ice cream is a popular frozen dairy dessert and comes in different formats. BMI has traditionally segmented the ice cream market into three segments: Non-Portioned (Bulk, Scoop/ Tub and Speciality Non-Portioned) Portioned (Cones, Cups, Sticks and Speciality Portioned) Soft-serve Non portioned ice cream is the most popular category in South African with almost two-thirds of the market in the base year. Portioned and soft serve are distant seconds with less than one fifth share each. Portioned ice cream is the most expensive ice cream type and contributes a fair amount to value despite its lower volume contribution. Ice cream is a retail driven product, with over half of South Africa’s ice cream production sold in this channel. Soft serve ice cream is more popular in the foodservices market while portioned and non-portioned are retail centred. A fair amount (8.4% in 2010) of ice cream is sold via the informal sector. Regional consumption is concentrated to metropolitan areas with Gauteng, KwaZulu-Natal and Western Cape combined making up about three-quarters of the market.

3. 2010 Category Breakdown 3

4. 2010 Category Distribution 4 Ice cream remains a retail driven product with slightly more than half of the industry’s output consumed via this channel. Foodservices direct is a distant second with approximately one quarter share.

5. Annual Growth Rates 5

6. Non-portioned makes partial recovery 6 At 65.9% contribution to total ice cream volume, non-portioned ice cream remains by far the most popular ice cream type. The category experienced 7.3% volume growth during the base year and recovered some of the volume lost during the previous two years. Non-portioned ice cream is, however, not expected to fully recover from the 2009 dip in the medium term. Scoop/tubs remain the most popular non-portioned ice cream type at 60.3% in 2010, while bulk is second popular at 38.2% and speciality non-portioned remains a niche offering at 1.5% of the volume. The industry selling price of non-portioned ice cream went up 9.8% during 2010 as a result of price increases seen in raw materials; sugar in particular. In the medium term, innovation with non-portioned ice cream is expected to be centred around the following; Focus on health and wellness as the health trend continues to gain momentum in the South African market. Innovations will be on around the use of natural colourants, reduction in sugar as well as trans and saturated fat content while maintaining product quality and taste. Flavour innovation has kept interest in the category alive over the years and is expected to continue into the future, but the traditional flavours such as chocolate, strawberry and vanilla are expected to continue to dominate.

7. Good growth for portioned ice cream 7 Portioned ice cream is the second largest ice cream category achieving an 18.5% share in 2010. The category represents 43.5% of the total market value. The category saw good growth in 2010 and is expected to maintain above average growth over the short to medium term and return to 2006 levels by 2012. Portioned ice cream experienced a 6.2% price increase during the base year and this was led by increases in cones and sticks. Portion control had a major impact on stick pack sizes with volume gains seen in the 80- 90ml size and losses seen in the 100-180ml size. The good growth seen within the portioned ice category during 2010 could be attributed to the following; In 2010 Nestlé extended their Milo and Nesquick brands through the introduction of stick multipack ice cream in these brands. Nestlé also launched the bubble gum and vanilla flavour Ben 10 cups during 2010. Television adverts by the category volume leaders such as Unilever’s new Magnum White Almond as well as Nestlé's range of adverts for their ‘sneak in an ice cream’ campaign. These were coupled with below the line promotional activity such as the Magnum White Almond pleasure card promotion, while the ‘sneak in an ice cream’ campaign also involved in-store promotions.

8. High prices for soft serve 8 Soft serve remains the smallest of the ice cream categories with a 15.7% and 8.3% volume and value share respectively. The category experienced the highest price increase during the base year (12.3%) and went above the R10.00 per litre mark, with price increases being driven by the foodservices channel, the most popular soft serve distribution channel. The outlook for the soft serve market is positive, with 3.4% growth expected in 2011 and 1.5% in 2012.

9. Food Bites Ice Cream For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za