European Consumer Trends and

The Seafood Opportunities

Johann C. LindenbergUnilever Deutschland

The Future of FisheriesReykjavik, 4th March 2005

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My Background: Unilever

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Unilever is one of the Top FMCG Companies

• Turnover: 40 bln Euro (57% Foods)

• Number of employees : 230 000• Companies in more than 100 countries • 400 Leading Brands• Advertising and promotions: 6 bln Euro• Research and development: 1 bln Euro• High Standard of Corporate Principles

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Unilever at a glance

Turnover: 43 Mrd. Euro

1%

26%

17%

16%

8%

12%

20%Savoury & Dressings

Spreads & Cooking Prod.

Health & Wellness, Beverages

Icecream, Frozen Food

Home Care

Personal Care

Others

Europe55 000

North America20 000

Africa, Middle East, Turkey52 000

Asia, Pacific77 000

Latin America30 000

People: 234 000

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No matter who you are, or where in the world you are, the chances are that our products are a familiar part of your daily routine. We have a portfolio of brands that are popular across the globe - as well as regional products and local varieties of famous-name goods. This diversity comes from two of our key strengths:

Strong roots in local markets and first- hand knowledge of the local culture. World-class business expertise applied internationally to serve consumers everywhere.

Every day, around the World, People reach for Unilever Products

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Unilever‘s best known brands

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One of the Major Global Food Companies with significant interest in (Frozen) Fish

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The Future of the European Fish and Seafood Business will be shaped by:

• Macro-Economic Trends• Social and Demographic Trends• General Consumer Behaviour Trends• Specific Consumer Attitudes vis-a-vis Fish

Consumption • Availability at Accepted Price Levels• Environmental (Sustainability) Consideration

Corporate Social Responsibility of the Fish Industries

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• Low growth rates of GNP, Income, Consumer Spending

• Share of Food & Drink Spending Declining• Smart Shopping: Quality „a Given“, but ...

– Price Consciousness– Stagnant Retail Trade– Rise of Discounters– Rise of Private Label

• Premium Brands under pressure• Pressure on Profitibility = Pressure on fish suppliers

Economic Growth and Prosperity improving only moderately over next 10

years in Europe Economic Pressures to Persist

Macro-Economic Trends

10 Source: ifo Institut, 12/04

Economic Growth Labour Market

1,8 1,50,5

2003 2004 2005

Change of real GDP (vs. Previous year in %)

Unemployment rate in % (in Mio.)

Change of Consumer Price Index vs. Previous year in %

Const. Prices; change vs. Previous year in %

Consumer Prices Private Consumption

8,90 8,808,90

2003 2004 2005

2,1 2,1 1,9

2003 2004 2005

1,61,0 1,3

2003 2004 2005

Weak Economic Developmentin Europe

Euro - Zone

11

2060 20902130

2170 2200 2230 2240 2260

1300 1320 1340 13701420 1430 1440 1470 1490

1150 1160 1170 1180 1200 1190 1190 1188

2040

18301910 1940

2010 2040

12501310 1310 1320 1320

11851250 1255 1220 1210 1190

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Brutto

Netto

Real *

(average income of employees per month in €)

Quelle: Statistisches Bundesamt, DIW, GLOBUS Infografik Oa-9370 v. 02.08.2004

Est.)

Decreasing Real Income in Germany

12

13,012,3

11,2 10,8 10,3 10,7 10,9 10,810,5

13,0

9,79,8

11,610,4 10,2

in % of disposible income

Quelle: Statistisches Bundesamt, * Prognose (DIW: 05.01.2005)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005*

136,1 133,6128,9 127,6 127,6

151,1155,5 158,1

141,0

125,1129,9

125,1129,3127,9

146,3

1 %-saving point € 14 Bill.

in Mrd. €

Private Savings in Germany

13

Share of Food & Drink Spending DecliningGermany

1991 2004

Consumer Spending in current prices

Food

Others18,3 %

15,7 %

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Economic situation and

future persectives

Constantlygrowingproductdiversity

Greater knowledge andexperience

with marketing mechanisms

Value hierarchyand dynamics; trends

Decreasingbrand

loyality

Increasingconsumer acceptance

of discounters

Newprice aggressive

sales channels

Special offers are common practice

Salesvia

InternetCleverness

as coreconsumption value

„Why should I pay more - what for?“

Conditions of Smart Shopping

Smart Shopping

15Kronberg 2005

42 44 45 50 59 62

58 56 55 50 41 38

GB I E F D PL

When shopping my top priority is quality

When shopping my topPriority is price

Quelle: GfK-Trendsensor Konsum 2003; Anteile in %

High Price Sensitivity of German Consumers

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Source: AC Nielsen

-20 -10 10 20 30 40

100 food brands price variance in %

Average

Germany

BelgiumItaly

Greece

Spain

FranceAustria

PortugalNetherlands

SwedenGreat Britain

Finland

Denmark

Switzerland

Norway

Ireland

-16,4 %

The biggest consumer challenge in Germany:The lowest price levels in Europe

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61,9 59,5 57,5 55,4 52,8 49,8 47,0

25,4 23,3 21,8 20,6 18,8 17,0 15,6

16,4 16,9 17,3 18,1 18,819,7

31 29,3 29,8 30,1 32,1 33,7 36,8 38,4 44

9,0 9,6 9,9 9,9 10,5 11,2 11,6 39,1 40,2 41,0 39,8 39,8 38,4 38,1

12,7 14,0 15,3 16,6 17,9 19,3 20,7

7,1 7,5 7,7 7,8 7,9

11

26

20,7

36

15

928

6,76,2

Drogerie-märkte

VM (ab800qm)

Discounter

Trad. LEH(bis 799qm)

GERMANY - Moderate Retail Growth - Continuing Rise of Discounters

Number of Outlets (% Share) Share of Turnover (in %)

IRI Grundgesamtheiten, Stand jeweils zum Jahresende

78.44078.44077.38077.380A

nza

hl

An

zah

l

Mrd

.€M

rd.€

133,5133,5124,7124,7

-2,2%-2,2%-1,3%-1,3% +2,6%+2,6%

19971997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2003 2002 2003 20102010

-1,7%-1,7%

76.09076.090 125,9125,974.59074.590 129,2129,2-2,0%-2,0% +0,0%+0,0%

72.92572.925134,7134,7

+3,3%+3,3%71.03571.035-2,6%-2,6%

125,9125,968.88068.880 136,7136,7

19971997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2003 2002 2003 2010 2010

-3,0%-3,0% +0,9%+0,9%+1,0%+1,0% +1,5%+1,5%60.00060.000 148148

GfK: LEH Prognose 2010

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Shopper Typology - Germany; Female -

Disciplined,Conservatives

53 %

Bon Vivants,Enjoyers

Hedonists

42 %

Experimental Shopping Easy, Efficient Shopping

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Private Labels in Europe

Value Volume2000 2002 2000 2002

UK 38,9 38,6 42,2 42,3

Germany 24,8 30,8 34,1 42,0

Spain 18,6 24,2 26,3 33,0

France 23,2 25,6 25,8 28,3

Italy 6,9 7,6 10,3 11,1

% Market Shares Key FMCG

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• Present Welfare Systems Unsustainable: Cuts in State Schemes; Privatisation of Social Security Insecurity Cautious Consumer-Spending

• „Value“ Shopping trends to continue • Polarisation

– Parts of society benefiting Top quality/luxury consumptionbut „Time Poor“ Convenience

– Larger Parts of society under economic pressures from globalised competition

• More Working Women Convenience• More Senior Citizens Convenience and Health

Social and Demographic Trends

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Demographic Trends in Germany

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2001 2010 2030 2050

60 and more 20-60 younger 20

37 %

55 %

21 %

47 %

16 %

24 %

Source: Stat. Bundesamt 8/03; mitll. Variante

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• Much More Demanding Consumers – top quality at low prices– always available– convenient but natural– environmentally responsible

• Quality and Convenience Quality Assurance!• Health & Wellness the Key Trend

Diet effects on health increasingly recognised (but only very slow behavioural change) Over-Weight, Obesity rising problem

• Vitality Demands

General Consumer Behaviour Trends

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• Physical development • Mental development.• Resistance to desease• Healthy weight

• Fit and active body• Weight management• Youthful appearance• Beauty from within

• Heart healthy• Flexible and strong body• No sensory deterioration • Virility• Immune health/•natural defence

• Enhanced physical energy• Enhanced mental energy• Recharge

• No allergies/intolerance• Digestive health• Health for diabetes• Cholesterol/blood pressure

• Balance• Relaxing the mind • Positive mood• Stress relief• Good sleep

Unilever Focus: Vitality

Feel good daily

Look better

Be healthy

for longerBe free from

health problems

Achieve more

Give children a good start

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Specific Consumer Attitudes vis-a-vis Fish Products

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Consumer Perception of Seafood

• Part of healthy and modern diet– Fresh– Natural– Well balanced– Varied– Light– Easy to digest– Low in fat and calories– Appetising

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Consumers‘ Considerations on Seafood

• Fish is an important part of healthy diet. Fish is so highly appreciated for its inherent nutritional values that it is consumed even when not really liked (10% of fish consumers in the UK and Italy)

• Fish is a considered safe and natural product: Less food scare cases compared to meat.

• Consumers would serve and eat more fish if– it was easier to prepare or cook and– if only they could conveniently prepare a larger

selection of simple fish recipes and dishes

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Availability of Fish Products at Acceptable Price Levels

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Total Fish & Seafood Catches: All Categories

0

20

40

60

80

100

120

140

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fresh-Water Fish Diadromous Seafish Crustaceans Shells

101 98 97 100104

120115111

122 118126

131

in M

io t

132130

Source: FAO Statistics

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85 86 939395938793939291848689

4038363431292724211816141312

0

20

40

60

80

100

120

140

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Wild Aquaculture

Mio Tons

Source: FAO statistics

Total Fish Catch: All CategoriesWild vs. Aquaculture

30

22

24

52

15

26

1910

1011

11

0

20

40

60

80

100

120

1983 2002

Fresh Frozen Smoked Canned Meal

Mio Tons

Utilisation of worldwide Fish Catch1983 vs. 2002

Source: FAO Statistics

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0

5

10

15

20

25

30

USA (fish & seafood total) EU (15) (fish & seafood total)

USA (demersal) EU (15) (demersal)

kg per capita/a

Groundfish Demand Development

Source: FAO

Note: kg/capita/a expressed in live weight

Total Fish & Seafood

Groundfish

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0

2

4

6

8

10

12

14

0

0,5

1

1,5

2

2,5

3

FAO ESTIMATE Saithe Hake Cod Alaska Pollock

m tonnes

Source: 88 - 2002 = FAO; 03 - 05 = PANELISTS / OWN ESTIMATES,

Groundfish Supply vs. Price DevelopmentPrices Indexed (1988 = 1)

Price IndexPrices for Fillet Blocks pbobased on Euro / kg, DDP Europe

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Sustaining & Improving Value Creation

• Re-Stimulate Groundfish Demand (USA - 3 kg p.c. over last 10 years 750.000t catch weight) through- enhanced marketing programmes- added value products / innovations

• Create Powerful Emotional Value for FISH FROM ICELAND- Build Credible Brand Personality- Live Up to Brand Characteristics and Communicate, Communicate, Communicate ... to Target Audience.

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Environmental (Sustainability) Considerations

• Necessary to safeguard longer term future of the industry. But: Short-term sacrifices necessary!

• Environmentally conscious consumers like to see nature protected.

• Icelandic Fishery Policies regarded as positive Model (Content & Transparency)

MSC Programme vital

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Problems of World Fisheries

• Management based on political and not on scientific decisions

• Insufficient evaluation of fish populations• Ineffective controls• Subsidy rates too high• Fleet capacities too large• By-Catch Rates too high

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AlaskaPollock

AlaskaPollock

CodSaithe

Haddock

HakeHake

HokiHake

In progress:

?

Status of our MSC CertificationsIn progress:Norweg. Saithe, Cod, Haddock

?

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FisheryResearch

Quota System Legal Set ofRules

ControlSystems

Long-TermStrategies

=> Sustainably Managed

Key Elements of a Sound Fishery Management

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Sustaining our Heritagefor a Viable Future