Blueberries Global Processed Market Situation

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1 Blueberries Global Processed Market Situation Chilealimentos A.G. Berries 2010 Conference August 3 & 4 Santiago City Presented by John Shelford Shelford Associates Member of FreshXperts LLC Consultant to Berry Industry Consulting CEO Naturipe Foods LLC J. Shelford

2 Presentation Outline Analysis of supply A look at drivers of demand Consumer trends Opportunities and challenges Implications for Chilean frozen blueberry industry 2

3 World Highbush Blueberry Surface Hectares yr Annual Growth Rate North America % South America % Europe/Asia % South Africa % China/Japan % Oceania % World Total % Total Western Hemisphere % Western H. % 86% 83% 3

expectation - lowest in more than eight years Recent growth primarily targeted

4 Comment on New Plantings New plantings slowed significantly in 2009 o World economic recession August 2008 o 2009 prices, fresh and frozen, below expectation - lowest in more than eight years Recent growth primarily targeted for fresh market New districts planting: Mexico, India, Peru, Columbia impact uncertain 4

5 Western Hemisphere Production Highbush (000)Metric Ton 2005 actual 2010 forecast 2015 forecast Growth Growth N. A. Fresh N. A. Process Total N.A S.A. Fresh S.A. Process Total S.A W.H. Fresh W.H. Process W.H. Total

6 Western Hemisphere Process Production Highbush & Wild-Lowbush (000)Metric Ton 2005 actual 2010 forecast 2015 forecast Growth Growth N. A. Highbush N.A. Wild Total N.A S.A. Process W.H. Process Grand Total Fresh & Frozen

7 World Acreage Production 7

8 2008 Total World Production 8

9 2008 World Highbush Processed Production 9

o Wild to highbush o Blues to blackberries or other berry

10 Demand Drivers Price New product development Product reformulations to lower cost ingredient o Highbush to wild o Wild to highbush o Blues to blackberries or other berry Consumer price sensitivity what price will change purchase patterns 10

11 Worldwide Blueberry New Products 11

12 2008 World Highbush New Products 12

13 North America New Products Containing Blueberries 13

14 2009 Product Categories 14

15 North America - New Products 15

16 New Blueberry Products 16

17 Europe New Products Containing Blueberries 17

18 Europe New Products 18

19 Asia New Products Containing Blueberries 19

20 Asia New Products 20

21 Africa / Middle East New Products Containing Blueberries 21

22 Africa / Middle East New Products 22

23 Latin America New Products Containing Blueberries 23

24 Latin America Processed Production 24

25 Demand / Price Determination Disappearance of N.A. Process Production Year Lowbush Highbush Import Exports Net Export Chg in Cold Storage N.A. Disappearance Mich Harvest Price 2010 Fore $.95 to $ * $.53 to $ $1.00 to $ $ $2 to $ Units: million pounds; *USDA purchased 25mm pounds Change in US Cold Storage: June 30 one year to next $1.20- $

26 High Low Avg Historical N.A. Pricing US $ per lb 26

27 Primary Product Usage Poly-bag Beverage o Smoothie o Juice drinks Baked goods Dried snack and ingredient 27

28 US Poly-bag Retail Category 52 weeks ending 13 June 2010 o Blueberries - 5% growth in unit sales o 26.15% of frozen fruit category sales, up from 25.77% PY o Strawberry Unit sales, down 2.6% o 29.04% of category sales, down from 29.63% PY o Red raspberry Unit sales, down 5.4% o 8.80% of category sales, down from 9.31% PY 28

29 US Poly-bag Retail Category 52 weeks ending 13 June 2010 o Mixed Fruit o 15.41% of sales up 7.4% from PY o Units up 7.9% from PY 29

30 Blueberry Consumer Trends Health, Health, Health Extremely high prices stall even health driven demand New product development essential to drive frozen and manufactured blueberry demand Recession increasing price sensitivity 30

31 Health & Nutrition Antioxidants KEY driver 80 calories per cup & virtually fat-free Source of fiber and vitamin C Scientific evidence blueberries are disease fighters Ranked highest in antioxidants when compared to 34 other fresh fruits and vegetables Antioxidants neutralize free radicals, the byproducts of metabolism that can damage cells and DNA and lead to some forms of cancer, heart disease, stroke and other chronic diseases of aging 31

Small Fruit Total Flavonoid Content Flavonoids 20 15 other dry matter 10 5 0

32 Small Fruit Total Flavonoid Content Flavonoids other dry matter Blueberries Cranberry Red Grape Red Raspberry Strawberry 32 mg equivalents/ g dry weight

33 Antioxidant Activity * Blueberry 22.3 Blackberry 20.4 Garlic 19.4 Strawberry 15.4 Consumer Confusion: Antioxidant level vs. antioxidant activity *Oxygen Radical Absorbance Capacity Source: Ron Prior, U.S.D.A. 33

34 Health Claims & Blueberries Folklore, now supported by research, ties blueberry consumption to benefits Wound healing Blood poisoning Stomach ailments Diarrhea Urinary tract infections Meat preservation Food color 34

35 Top 10 Benefits of Blueberries Blueberries: Ranked #1 fruit in the world of antioxidants, are powerhouses of nutrition, and are loaded with countless nutrients with numerous values and functions. 1. Providing antioxidants: Anthocyanins, vitamin A, vitamin C, vitamin E, B complex and several minerals boost immunity and prevent infections. 2. Neutralizing free radicals and slowing age process: The high concentration of antioxidantsprevents free radical damage and has proven to help slow the natural aging process by preventing age-related illnesses such as Alzheimer s and Parkinson s diseases, arthritis and macular degeneration. 3. Aiding in reducing belly fat: Low in calories and a good source of fiber, blueberries are high in manganese, which is important for metabolizing proteins, carbohydrates and fats. Source: AllVoices, Top Ten Benefits of Blueberries By: Amy Van Winkle, Hartford, CT: Jun 16,

36 Top 10 Benefits of Blueberries continued 4. Lowering risk of heart disease: The soluble fiber pectin and the powerful antioxidant pterostilbene lower cholesterol. The USDA Agricultural Research Service tested pterostilbene and found it to be as effective as the cholesterol-lowering drug, ciprofibrate without the negative side effects. In addition, anthocyanins may help prevent blood clots. 5. Helping prevent and cure cancer: Blueberries contain the compound pterostilbene, which helps treat colon and liver cancers. Phenolic compounds, ellagic acid, anthocyanins, kaempferol, vitamin C and copper also contribute to cancer prevention. 6. Improving brain function: Many of blueberries nutrients improve several brain functions including learning capacity, memory and motor skills. The berries also help protect the brain from oxidative stress, neurotic disorders and the decline of the central nervous system in addition to reducing effects of dementia and Alzheimer s disease. Source: AllVoices, Top Ten Benefits of Blueberries By: Amy Van Winkle, Hartford, CT: Jun 16,

37 Top 10 Benefits of Blueberries continued 7. Aiding in digestive system and urinary tract health: Tannins, antioxidants in blueberries, act as astringents to the digestive system and reduce inflammation. A compound found in cranberries and blueberries, tannins act as antibiotics by inhibiting bacteria growth in the urinary tract and preventing infections. 8. Improving vision: Eye health benefits from the flavonoids, carotenoids and vitamins A, C and E. Macular degeneration,cataracts, myopia and hypermetropia can be delayed, reduced or prevented simply by eating blueberries. 9. Slowing breakdown of bone: Blueberries fight osteoporosis by slowing the breakdown of bone with its multitude of vitamins and antioxidants. 10. Enhancing mood: Blueberries act as anti-depressants by keeping the mind sharp and the body fit. Source: AllVoices, Top Ten Benefits of Blueberries By: Amy Van Winkle, Hartford, CT: Jun 16,

38 Top 10 Benefits of Blueberries continued Anthocyanins are present in fresh and frozen raw berries, but are destroyed when processed. The berries in breads, cereals, canned foods and even baby foods do not have the same benefits. The highest antioxidant levels are reached when the fruit is fully ripe, just before it spoils. Source: AllVoices, Top Ten Benefits of Blueberries By: Amy Van Winkle, Hartford, CT: Jun 16,

39 Sales Growth of Fresh Berries

40 Growth Opportunities Untapped markets o China, India Increase market penetration North America o Europe Blends with less expensive berries; emphasis on blueberry to connect with health motivation 40

41 Implications for Chilean Industry Explore and develop markets other than N.A. o Frozen prices unlikely to return to the levels of o N.A. production will continue to grow Must keep the health message strong; it has been key in motivating consumer purchases 41

42 U.S. Highbush Blueberry Council Supported by all U.S. and imported blueberries at $12/ton Effective consumer publicity informing and engaging consumers Knowledgeable Industry professional Tom Payne Market Development

43 U.S. Highbush Blueberry Council Annual Report An essential contributor to blueberry demand success Chile appointments to the Council Member Sofia Jessica Refusta Rebolledo Alternative Nicolas Moller 43

44 U.S. Highbush Blueberry Council You are invited to the Fall Meeting October 13, 14, 15 Grand Rapids, Michigan Learn of the Demand Building Activity Blueberry Trade Show October 12, 13 at same location 44

45 Sources United States Highbush Blueberry Council Naturipe Foods LLC US Cold Storage Report Chilealimentos SA Industry colleagues 45

Phytochemicals. Phyto = plants Compounds in plants that protect them from pests, viruses, bacteria & sun damage. Only in plant foods.

Phytochemicals. Phyto = plants Compounds in plants that protect them from pests, viruses, bacteria & sun damage. Only in plant foods. Phytochemicals Phytochemicals Phyto = plants Compounds in plants that protect them from pests, viruses, bacteria & sun damage. Only in plant foods. 5 a Day - 5-9 servings of fruits & veggies recommended