1. David Jago FDIN Free From Seminar 2008 Free From: Market Perspective 1 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel.

2. 2 Today’s presentation Free From Foods: a growing market... Growing numbers of new products… Leading countries and categories Where is the focus for NPD? Positioning: nutritional factors versus lifestyle factors Market developments and the future

3. 3 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Back in September 2006... UK market estimated value £90m, with 60% value growth over previous 5 years Steady (not spectacular) growth in NPD Gluten-free products: strongest in UK; mainly held by private label and a few specialist suppliers Lactose-free and lactose-reduced: Scandinavia leading; emerging elsewhere Forecast: £195m UK market for Free From Foods by 2010 –Driven by lifestyle and wellness issues –Increasingly mainstream (distribution and consumer uptake) –Industry consolidation on the horizon

4. 4 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. And now... The market grows… –Estimated value now £180m (2007) Shifts in segmentation: –Dairy-free overtakes wheat-/gluten-free NPD activity dips in latest quarters… –The onset of the economic downturn? Long-term prospects are generally good…!

5. 5 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Source: Mintel  More awareness  Greater advertising spend (Alpro)  Wider availability  More media interest  Greater product differentiation  Dovetailing with wider health concerns  New product development  Market in growth due to: Retail sales of free from foods, value, 2002-07 UK market value

6. 6 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. UK market segmentation

7. 7 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Dairy free growth: health concerns awareness of dairy hypersensitivity ‘vegan’ lifestyle notable success of the Alpro brand Wheat/gluten free growth: popular wheat free slimming diets growth in IBS sufferers - trial the product in an answer to the cure Source: Mintel Retail value sales of free from foods, by sector, 2002-06 UK market segmentation

8. 8 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. “Do you buy free from foods for either you or your family?” The consumer

9. 9 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Source: Mintel Female ABs The role of the healthy wealthy consumer

10. 10 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. The consumer - frequency of purchase

11. 11 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. The consumer - attitudes

12. 12 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. NPD and allergens, the global picture Europe accounts for more than 40% of all introductions globally Note rapid development in Latin America in last quarter, while North America declines New product introductions of low/no allergen foods, January 2005 to September 2008

13. 13 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Gluten-free NPD, Europe Introductions peaked in Q2-2008 at over 660 Decline in Q3-2008 but NPD levels still double what they were in 2005 New product introductions of gluten-free foods, Europe, January 2005 to September 2008

14. 14 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Gluten-free NPD, Europe New product introductions of gluten-free foods by country (%), last 12 months

15. 15 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Gluten-free NPD, Europe New product introductions of gluten-free foods by category (%), last 12 months

16. 16 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Private label Asda Free From Mini Cheese Crackers, free from gluten and wheat, £1.08 for a 60g pack Asda Free From Apricot, Sultana & Cinnamon Bars, free from gluten, wheat and milk, £1.47 for a pack of 5 x 35g bars

17. 17 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Private label Sainsbury's Free From Rich Tea Biscuits, gluten- and wheat free, £1.49 for a 150g pack Sainsbury's Free From Double Chocolate Cake, gluten-, wheat- and dairy-free, indulgent chocolate cake with Belgian chocolate chips, £1.99 for 300g pack

18. 18 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Private label Carrefour Sin Gluten snack cakes, Spain Carrefour Sin Gluten (corn-based) pizza bases, Spain

19. 19 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Lactose-free NPD, Europe Introductions peaked in Q4-2007 at nearly 350 Some decline in latest quarters but NPD levels still more than double what they were in 2005 New product introductions of lactose-free foods, Europe, January 2005 to September 2008

20. 20 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Lactose-free NPD, Europe New product introductions of lactose-free foods by country (%), last 12 months

21. 21 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Lactose-free NPD, Europe New product introductions of lactose-free foods by category (%), last 12 months

22. 22 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Brands Alpro Soya Probiotic Yofu, 100% vegan, dairy-free alternative to probiotic yogurts, made with fermented soybeans and real fruit pieces, free from lactose and cholesterol, Europe Alpro Soya Macchiato, 0% cholesterol, added calcium and vitamins B2 and B12, easily digested, low in saturated fats, contains eight essential amino acids, is a natural source of isoflavones and contains no preservatives, artificial flavours or colours, Europe

23. 23 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Brands Léa Vital’s Jardin Bio low fat organic soy- based desserts, France Léa Vital’s Jardin Bio organic soy-based coffee flavoured drink, France

24. 24 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Brands have multiple values Plamil Foods’ premium organic impulse chocolate bars, including Dark Chocolate with Dairy Free Alternative to White Mint Chocolate, made using 100% renewable energy and free from nuts, gluten, wheat and GMOs, UK Stiletto Foods’ Mrs Crimble's Corn Cakes, slightly salted, low in fat, ideal for dieters, free from wheat, gluten and dairy, UK

25. 25 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. The lifestyle factor Unilever’s Breyers Lactose Free All Natural Ice Cream, USA Monoprix Bien Vivre line of “wellness-oriented” foods, including gluten- and egg-free chocolate chip & coconut cookies, France Muh Fit Milch, 1% fat lactose-reduced milk with calcium and 10 vitamins “for the whole family”, Germany

26. 26 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Source: Mintel Brand positioning: lifestyle versus nutritional

27. 27 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. A note re pricing The average “free from” shopping basket is 10% more expensive than conventional products (study by the Anaphylactic Society) But the price premium differs by category, and free from products can be priced competitively against premium or organic foods DS Warburtons Organic

28. 28 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel.  Market distribution of immature market = strong growth potential.  Opportunity for product diversity  Repeat purchase rate is good  Suppliers are willing to invest in above-the- line support  Greater media exposure – increases consumer awareness  Wider health concerns - becoming more pressing  Increased (mis)diagnosis  Niche brands with strong brand values  Product differentiation is weak  Price erosion – due to private label growth  Manufacturing difficulties in achieving long shelf-life product  High price premiums  Confusion between free-from and health products.  Low consumer uptake of products amongst sufferers - & predominance of occasional buyers  Lengthy and costly NPD process with a difficult supply chain Market summary: strengths & weaknesses

29. 29 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Retail value Sales of Free From Foods, 2002 - 2012  Continued growth in awareness and subsequent diagnosis will boost the market  Consumer preoccupation with healthy eating will continue unabated  Convenience and health will be the driving forces behind the market, and the industry’s ability to satisfy these demands will define the extent of future success Source:Mintel UK market forecast

30. 30 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. Points for the future Mintel forecasts that the “Free From” market in the UK will reach £350m by 2012 Growth will come from “restricters”, rather than allergic or intolerant consumers Note continued emotional weight behind media coverage of food allergies, celebrity focus, growing self-diagnosis… Price is still an inhibitor to growth Free from is perceived as “better for you” Free from foods are often organic/natural, free from animal by- products - “extra” attributes are critical for mainstream appeal Free from foods can benefit from the general wellness trend, and become part of the “cultural fabric”, like vegetarian foods The market is ripe (now more than ever) for consolidation

31. 31 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel. David Jago djago@mintel.com Tel. +44-207-606-4533 www.gnpd.com For further information