Karel Stoschek Director Infant Nutrition Infant Nutrition
Infant Nutrition January to September 70 60 50 40 30 20 10 0 66 52 55 48 32 2010 2011 2012 2013 2014 140 120 100 80 60 40 20 0 123 104 82 59 16 2010 2011 2012 2013 2014 Volumes ('000 MT) Operating profit (SEK million) 2.50 2.00 1.50 1.00 0.50 0.00 2.24 1.58 1.58 1.23 0.50 2010 2011 2012 2013 2014 Operating profit per kilo (SEK) 2
The first 1,000 days Pregnancy Breast feeding Baby Toddlerhood Infant milk formula includes all essential nutrients and energy for infants to grow and develop normally Vegetable oils and fats provide the essential building blocks for the body, including the brain and the eyes Oils and fats account for 50% of the energy in the formula 3
Global baby food retail value Estimate 2014 70 60 50 2.7US$ B. 5.4US$ B. 8.9US$ B. Special formula 8% Premature, allergy Standard formula 30% 0-6 months 40 30 61.8US$ B. 72% Follow-on formula 23% 6-12 months 20 44.8US$ B. Toddler formula 39% +12 months 10 Source: Euromonitor International, Sep 2014 0 Global market Other baby food Dried baby food Prepared baby food MILK FORMULA 4
Infant milk formula market Estimate 2014 2.4 million MT/yr infant milk formula ~660,000 MT /yr oils & fats Consolidated market: Top 4 companies have 57% share Top 10 companies have 73% share 29% global value share Local companies increasing share >100 brands in the market Source: Euromonitor International, Sep 2014 5
China: new infant milk powder policy August 2013 Fonterra December 2013 China FDA revised version of policy May 2014 China FDA published the list of companies that passed the audit September 2014 NZ companies got import licences back to China China FDA announced they will review the IMF production policy China FDA audits for IMF producers Audit in China - integrated supply chain: Local toll-production stopped Local base-powder production stopped Local packing operation stopped Outcome: China FDA approved 82 Infant Milk Formula producers They are approved for 2014-2017 1/3 of producers licenses not renewed 6
China market remains attractive 000 MT $ Bn 25 20 15 10 5 0 1000 800 600 400 200 0 China infant milk formula retail value 22,3 % 25 17 8 2010 e2014 e2016 China infant milk formula total volume 15,6 % 989 727 407 2010 e2014 e2016 Source: Euromonitor International, Sep 2014 100% 80% 60% 40% 20% 0% China infant milk formula - brand share Future consolidation expected 76% 24% IMF Market growth remains attractive Other Top-5 brands Market value is likely to grow faster than volume Future market consolidation expected E-commerce channel expanding 7
Go to market The first choice for value-added vegetable oil solutions Single oils Organic (approved by COFCC) MCT Low 3MCPD The natural choice for healthy development Customised oil blends The ideal combination Security from start to finish Specifications guaranteed A clinically-proven ingredient One step closer to human milk INFAT is sold by Advanced Lipids a joint venture of AAK and Enzymotec. 8
AAK Customer case Toll producer Brand Owner End consumer Customer Pain: With Brand owner: Food safety Tailored fat composition CSR AAK co-development: With Brand owner: Sourcing the raw materials Global view on market Developing an unique blend With Toll producer: Correct quality Effective logistics solution Product analysis With Toll producer: Regulatory and specifications Logistics solution Tailored service package 9
Expanding organic category Organic baby food market is strong in EU 120 100 80 60 40 20 0 New launches Organic baby food 2010 2011 2012 2013 2014 Fast growing in China and Asia AAK is the only company in Europe to have a certificate from COFCC to produce vegetable oils for organic infant milk formulas for China Akonino Organic Source: Mintel, November 2014 10
Average annual volume growth 2010-2016 (Euromonitor total milk formula volume growth) Global growth rate: +7% by volume -1% +1% +4% +16% +4% +7% +6% +10% Source: Euromonitor International, Sep 2014 11
AAK increasing market share 20% CAGR (MT) 2010-2014 15% 10% 5% 0% Market AAK 12
AAK position for future growth Category Growth Trends Economic growth and job creation Increase number of women in workforce Middle class and dual-income family emerge Increasing spend on premium nutrition Commitment on quality Continues investment in customer co-development Balanced portfolio to match customer needs: Semi-speciality blends Speciality blends Speciality single oils Geographical development: Malaysia Brazil greenfield China greenfield Europe preparing for customers capacity increases 13