Canadian Market Overview Presentation by: Louise Roberge, President, Tea Association of Canada

AGENDA Introduction Market Place Overview Trends & Opportunities Barriers Tea Association of Canada Programs

Tea Imports Market Share by Country of Origin Consumption Grocery Sales Foodservice Sales MARKET PLACE OVERVIEW

Tea Imports Volume Metric Tons (000,000) Source: International Tea Committee

Tea Imports 2007 Category Percentage 22% 78% Source: International Tea Committee

Imports from Major Producing Countries

Producing Country Canadian Market Share Black

Producing Country Canadian Market Share Green

Imports $

Black Tea Imports Volume

Black tea Imports $

Green Tea Imports Volume

Green Tea Import $

Consumption

Canadian Beverage Consumption Share of Throat (Litres per Person)

Tea Sales by Category (Dollars)

TOTAL READY-TO-DRINK SALES CANADIAN DOLLARS

Tea Sales Yearly Trend (2003 – 2008) Dollars (000,000’s) Regular Tea BagsSpecialty Tea Bags

Total Tea Sales Maritimes 2008

Tea Sales (Hot) Maritimes

Tea Sales (RTD) Maritimes 2008

Total Tea Sales Quebec 2008

Tea Sales HOT- Quebec

Tea Sales RTD Quebec 2008

Total Tea Sales Ontario 2008

Tea Sales - Ontario

Total Sales RTD Ontario 2008

Total Tea Sales West 2008

Tea Sales – Western Canada

Tea Sales RTD West 2008

Tea rebounded in shelf presence at Grocery retailers driven by Green Tea and Flavoured Black Tea SKUs Source: ACNielsen MarketTrack, National Grocery Banner - Latest 52 Weeks Ending January 20, 2007

Penetration is growing faster among households who associate Hot Tea with health benefits Source: ACNielsen Homescan – 52 wks to July 7, 2007 vs YAG Household Penetration (Home Purchases) Total Tea Regular Black Specialty Green Note: Health Associated penetration is a percentage of total Hot Tea Drinkers household penetration

Foodservice Sales

Restaurants in Canada served 406,459,000 cups of Hot Tea in the past 12 months Hot Tea sales at Restaurants in Canada were approx. $609,688,000 * in the past 12 months *Based on AEC multiplied by servings YE May 2007 Total Canada Preliminary Data Subject To Change $

Servings Volume Hot Tea (000’s) Regular Tea in slight decline while Specialty Tea experiencing strong volume gains on the year CREST® YE May 2008 Total Canada Proprietary & Confidential for NPD clients

Tea occasions outside the home peak in the afternoon whereas evening is the peak for inside the home. Tea Consumption (Time of Day) - % Inside versus Outside the Home Base = Hot tea drinkers, N=11,234 Almost ¾’s of respondents consume tea at home in the evening

Thinking about the last three months, where have you consumed Hot Tea when you are outside of your home?* Three out of ten hot tea drinkers have consumed hot tea at the workplace or family restaurant. Base = Hot tea drinkers that drink hot tea outside of their home, N=7,497 *Multiple mentionsSource NPD Group Canada

Who is the Hot Tea Consumer? 18 to 24 Year Olds 9% 25 to 34 Year Olds 15% 35 to 44 Year Olds 15% 45+ Year Olds 57% CREST® YE May 2008 Total Canada Proprietary & Confidential for NPD clients

Snapshot of the Hot Tea consumer: Specialty Tea Regular Tea 38% between ages % Females 30% under the age of 34 59% Females 35% consumed at Supper 38% consumed at Morning Meal Friday is the most popular day of the week to consume Hot Tea!

Key Learning's For Tea in Commercial Foodservice… Key Trends in Commercial Foodservice: Ethnic Health Snacking Tea, more so than any other beverage, can capitalize on these influential trends

Trends & Opportunities  Green Tea  Tea as an ingredient in cooking and cocktails  Tea as a health and beauty aid  Fancy Tea bags  Cause related Tea  Organic Tea & foods in general

Size of the Tea Market in Canada 91% Increase in 11 years DOLLAR S $(000’s) IMPORTS77.1 SALES HOT115.2 REGULAR73 SPECIALTY42.2 SALES RTD70.4 RTD (excld cans)10.9 RTD Cans35 Ice Tea Mixes24.5 TOTAL HOT & RTD185.6 SALES FOODSERVICE (est.) 340 TOTAL602.7 DOLLARS $(000’s) %increase since 1997 IMPORTS (ITC 2007) SALES HOT REGULAR SPECIALTY SALES RTD RTD (excld cans) RTD Cans Ice Tea Mixes TOTAL HOT & RTD SALES FOODSERVICE (est.) TOTAL1,

Size of the Tea Market in Canada 11% Increase over last year DOLLAR S $(000’s) IMPORTS123.7 SALES HOT181.4 REGULAR88.8 SPECIALTY92.6 SALES RTD207.1 RTD (excld cans)92.2 RTD Cans65.7 Ice Tea Mixes49.1 TOTAL HOT & RTD388.5 SALES FOODSERVICE (est.) TOTAL1,039.7 DOLLARS $(000’s) %increase IMPORTS SALES HOT REGULAR SPECIALTY SALES RTD RTD (excld cans)98.87 RTD Cans Ice Tea Mixes TOTAL HOT & RTD SALES FOODSERVICE (est.) TOTAL1,

Health Claim After a period of extensive review, Health Canada as granted us with a health Claim for Green Tea: The consumption of green tea helps to protect blood lipids from oxidation Green Tea increases antioxidant capacity in blood Green tea has an antioxidant effect in blood ( blood lipids) We are pursuing to have a similar claim for Black tea

Barriers Regulatory Issues MEDIUM Priority HIGH Priority LOW Priority On the Radar PESTICIDE MRL’S Health &Safety Act MANDATORY NUTRITION LABELLING Healthy Living Allergen Regulation Organic regulation Stewardship Ontario Codex WHO report NHP’s Product Specific Health Claims CBSA-CFIA Generic Health Claim Caffeine Labelling

Pest Management Regulatory Agency (PMRA) Canadian MRL’s (default 0.01 ppm) We are actively pursuing our efforts for Global Harmonisation with the Pest Management Regulatory Agency keeping them inform of the progress from the Global Initiative Working

New Regulations New Organic Regulations will be in effect in June New Allergen Regulation:The proposed amendments to the Food and Drug Regulations- Enhanced Labelling for Food Allergens, Gluten Sources and added sulphites was published in Canada Gazette, Part I on Sat. July 26th. They are available at the Canada Gazette website: Labelling regulation Guide to Food Labelling and Advertising for CFIA contacts for other labelling enquiriesGuide to Food Labelling and Advertising for CFIA contacts for other labelling enquiries –

Organic Regulation Organic Products Regulations: CFIA Website: Canada Gazette Website: Organic Production Systems Standards: Canadian General Standards Board Website: Contact: Michel Saumur, Manager, Canada Organic Office (613)

Future Challenges Consumer 2012 Health and well being Higher Quality and premiumisation Stronger convenience More demanding More out-of-home consumption Greater environmental awareness of products More experience driven Price led value Exploring new tastes Industry 2012 Health and nutrition Growing importance of environmental and social factors Constant innovation Continuing industry consolidation The rise of the hard discounters An even tougher regulatory environment Service excellence Technology and value chain integration The role of private equity