Support for Growth

Plant material commercialization of Kaleiand other club varietiesJune 2019

1. APAL

2. Kalei Results

3. Our Approach

4. Current Examples

Support for Growth

Who is APAL

27 June 20194

Apple and Pear Australia Limited (APAL) is the national peak industry body supporting nationally 1,500 apple and pear growers throughout Australia.

APAL Overview

27 June 20195

APAL Overview

Chief Executive Officer

Manager

Industry Services & Export

Future OrchardsManager

Regional Industry Coordinators

Chief Operating Officer

Group BrandRegional Manager SEA &

Americas

Group Quality & InnovationRegional Manager

Middle East & Oceania

Group Marketing

Regional Manager

Europe & Africa

Managing Director Coregeo

Future BusinessManager

Chief Financial Officer

Accounts Manager

Head of Legal

Strategic & Systems Implementation Project Manager

Data Scientist

Admin/Executive Assistant

IT Support

Head of Communications & Media

ManagerCommunications & Media

Manager Events & SponsorshipManager

Communications Graduate

Head of Government Relations & Advocacy

APAL has a team with global responsibilities. This team provides global expertise for quality management, brand management, marketing and legal support.

27 June 20196

APAL Overview

APAL Personnel

APAL Partners

APAL further extends its impact through a global network of subsidiaries, personnel and commercial partners.

27 June 20197

APAL Overview

Coregeo UK Limited: Licenses and markets fresh produce.

Pink Lady Development: Manages new and emerging Pink Lady markets.

Prevar Limited (NZ):Development of new varieties and brands for apples and pears.Exclusive option, testing and commercialisation for Australia.

APAL Commercial OperationsCommercialiation of new varieties into Brands.

Sakata Joint Venture:Strategic investment group for identification of new fresh produce varieties for commercialization.

Investments for now and the future. For domestic and global.

AboutBrand manager, Licensor and marketer of fresh produce in the UK and EMEAMaster Licensee of Pink Lady® UK

APALApple & Pear

Australia

COREGEOUK

100% Owned and Operated

AboutJoint Venture between Star Fruits Europe and APAL to develop SEA and The Gulf states

PLDAUSTRALIA51% Owned and

Operated

PREVARNEW

ZEALAND45% Owned and

Operated

AboutNew variety breeding companyDevelops new cultivars and commercializes.APAL has exclusive rights to Australia

StrategicInvestment

GroupUK

50% Owned and Operated

AboutJoint Venture with Sakata Europe to develop and manage brands for EMEA and UK.

APALCommercial Operations

27 June 20198

• APAL is a registered Not for Profit

• APAL represents Growers, not Shareholders

• APAL does not have to sell trees, or grow maximum fruit. We serve no masters

• APAL owns and manages the world’s largest Branded Variety

o We know what NOT to do

• APAL has first access to 2 x funded Australian Government breeding programs.

• APAL manages the Independent APFIP new variety testing program in Australia

• APAL receives government funding to employ technical capability resources and R&D

A Unique Model

Support for Growth

Trial Updates27 June 2019

27 June 201910

Middleton Report 2013Comprehensive Background

27 June 201911

Washington State, NY State, Michigan, Virginia, Canada

Cornell University resistance testing complete July 2019

North America

27 June 201912

Building interest amongst trial sites in the USNorth America

27 June 201913

Harvest Report Yakima (Stemilt) 10th October 2018

• Some great results, in the majority. Starches converting evenly, good sugar-acid balance, good pressure, low defects

Stemilt

Pick Date 10-10-2018

• Brix 13.5

• PH 3.61

• Acid 0.37

• Starch 2.9

• Avg Pressure 10.5

• Min Pressure 8.8

• Defects 3

Pre Pick 18-09-2018

• Brix 13

• PH 3.72

• Acid 0.42

• Starch 2.3

• Avg Pressure 11.8

• Min Pressure 10.7

• Defects 2

27 June 201914

Harvest Report Yakima (Stemilt) 10th October 2018

• Available on request

Washington

VarietyPre-harvest/ Post-harvest

Pick Date Brix pH AcidityAvg.

StarchStarch

1Starch

2Starch

3Starch

4Starch

5Starch

6Avg.

PressureMin.

PressureDefect 1

# for Defect 1

Kalei Pre 9/18/18 13.00 3.72 0.42 2.3 2 3 5 0 0 0 26.1 23.5 Bruising 2

Kalei Pre 9/24/18 13.30 3.60 0.44 2.1 0 7 1 0 0 0 24.4 21.4Stem Bowl Russetting

2

Kalei Pre 10/1/18 13.60 3.83 0.38 2.8 0 8 6 0 1 1 23.7 18.7 Bird Peck 1

Kalei Pre 10/8/18 14.30 3.69 0.41 2.9 0 4 8 2 0 0 23.5 19.7Stem Bowl Russetting

2

Kalei Harvest 10/10/18 13.50 3.61 0.37 3.4 0 5 3 1 0 3 23.2 19.4 Bruising 3

27 June 201915

Western NY State (Lyndonville)

• 70 Trees at 2nd leaf

• No scab present after 2 seasons

• Trees growing well, reaching 3rd wire easily

• 1,000 trees for 2020

Canada 2018:

• 65 trees performing very well. 1,000 more for 2020

• Consistent sugars and pressure, trees are easy to grow and train to the trellis, trees now above top wire on Nic 29 in third leaf

• Good crop third leaf - if planted "high density" - around 1500 to 2000 trees to the acre -- yield would be about 1000 bushels/acre in only third leaf

• Good clean white flesh, juicy, sugars and pressures, with exceptionally clean finish, harvested around 21/22 October

• Smooth skin, nice red colour

• Thinned chemically - singled out nicely

US Trial Sites

27 June 201916

Washington State Ephrata

• 20 trees on G41 rootstock

• tended to have higher sugars and ripened faster -- mid October 2018

• pressures over 16 psi even when overripe with light water core appearing

• Fruit not as bright as Canadian and NY fruit, but fuller colour

• Late pick dark and uniform in colour

• More uniform in shape than we see in Australia

• good sugars, with better texture, pressures and flavour than the Cosmic Crisp we tried

• Tree was nicely formed. We did not see the Cosmic Crisp trees which are erratic during growth.

US Trial Sites

27 June 201917

Michigan:

• North too cold

• 40 trees in north central part -- 2018 planting

• 40 trees in south Michigan -- 2018 planting

• 1,000 trees for release 2020

Hudson Valley:

• 50 trees in eastern and 50 trees in western part of lower Hudson Valley -- planted 2018

Virginia:

• 100 Trees – growing nice early fruit after 2 seasons

• To receive 1,000 trees for 2020 release

US Trial Sites

27 June 201918

East Coast Growers Initiative

APAL has assembled a group of 6 growers in the East Coast where fungal resistance is attractive. A Territory Management structure will be introduced to promote plantings and develop a marketing fund for launch to retail

• NY and New Eng - Ward Dobbins

• Central US: Applewood Orchards -- Scott and Jim Swinderman

• Canada: Norfolk Fruit Packers - Tom O’neill

• Mid Atlantic US - Keystone Fruit Sales - Lisa Fetterhoff

• Virginia – Turkeyknob – Jamie Williams

Willow Drive (West Coast) have provided nice trees to the group and will remain our Territory Nursery for propagation in North America.

They have excellent sublicensing processes and relationships with other nurseries and individuals to accomplish the goals of the variety manager (APAL/ DAF). They will manage scionwood.

US Trial Sites

27 June 201919

France & Italy

• First information due from 2016 plantings in Loire Valley, South West and Avignon and Italy

• Trees also in Germany under trial agreement in 2017

• Feedback: “The qualities are not unique enough for the conventional market, but could be interesting for Organic production due to scab resistance”

• Additional PBR extensions across Europe in 2019 for further evaluations

Europe

27 June 201920

DOSK

• Fruit from trial sites in Dresden, East Germany. Pillnitz fruit research station.

• Testing agreements were signed with DOSK and local testers.

• Feedback: “Fruit quality is outstanding, as is technical data”

• Presented fruits and technical data during the knowledge days of Eastern German fruit growers at Pillnitz in 2018

Germany

27 June 201921

• Craig presenting to grower symposium in June 2019

• Would like to re-connect with growers who have contacted us last year

• Would like to arrange for attendance at Kalei Field days in 2020

• Would like to see Brazil growers assemble a growers group to help manage the variety in the territory

Brazil

Support for Growth

Our commercial approach27 June 2019

27 June 201923

APAL commercialises, markets, manages and protects brands directly, and through its wholly owned subsidiary, Coregeo Limited UK.

APAL Commercial Projects

2.44kgPears Australians

eat per year

APPLES PEARS BROCCOLI

27 June 201924

Now In Development

Super Premium

Everyday Premium

Economy/ Commodity

RS103-110• 6 x Additional AVS Pears

including 534

• Various EDVs under evaluation for Pink Lady® and Joya®

*

Pipeline

* Developed Trademark & Brand Guidelines

These varieties and brands are managed, not ‘CLUBS’

27 June 201925

Choices

27 June 201926

Territory Management, Not Master Licence

1. PBR & TM: Breeder owns TM. Breeder profits from a perpetual share of:a) Global license feeb) Tree Royaltiesc) p/Ha Royaltiesd) Fruit Royalties®

2. GLOBAL BRAND MAMANGEMENT LICENCE (GLOBAL BRAND OWNER): APAL is the Global Brand Manager – NO Master Licensees

3. TERRITORY LICENCES: Appoints and Consults with Territory Managers, implements capability-based licenses by territory

a) Growersb) Packersc) Exporters/ Importersd) Marketing agencies

4. QUALITY: Global Quality Standards are Managed by Global Brand Manager and implemented at local level

5. BRAND MANAGEMENT: Brand Owner delivers brand strategy, brand planning, global brand assets, global campaigns and global licensee support centre

6. LEGAL TM DEFENCE: Brand Owner defends Brand globally

Ideal Model –Our Learnings

27 June 201927

Plant lots of trees and create supply

Create a great brand and prove demand

APALs Approach

APAL prefers to partner here and share the financial benefits

APAL is stronger here, and believes this is

guarantees success –people won’t plant

something without a consumer vision/ plan

Push Trees

Create Consumer Demand

27 June 201928

Stemilt (US) testing/ assessing over 160 new (mainly) red varieties

Prevar (NZ) introduced 9 at last board meeting

Mostly sweet, red, crisp varieties

Consumer first approach

APALs Approach

Consumer Propositionwith some

Novelty

Improve Successful

Current Products

Easy/ Cheap to

Grow

BrandManager

Nursery Grower

Successful New

Varieties

27 June 201929

• Sweet, block red, large, mostly firm (Australia & US), Envy-type taste

• Light, sweet flavour – Low to Mid range sugar, low acid

• Exceptional crispness even when left at room temperature for 3 x weeks

The VarietyConsumer

Propositionwith some

Novelty

Easy/ Cheap to

Grow

• Scab resistant – proven Australia, in testing @ Cornell in US, not present Europe or New Zealand

• No sprays in 17 seasons, highly suited for Organic

• Retains firmness and crispness whether sold fresh or out of long-term storage

• Tolerant to Alternaria and western flower thrip

• Late colour ensures picking at optimal maturity.

• By nature a large apple suitable for US, and the trees can support heavy crops.

• Lays out nicely to trellis – uniform shape and ripeningThis part drives consumer demand for the product. APAL asks is this Novel

enough for a new variety?

Support for Growth

Current Commercialisation27 June 2019

27 June 201931

Production Targets

412,189 trees planted by 2026.

9,274 MT yield annually at full maturity

APAL has revised targets upwards

RS103-130 KALEI August

Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Total Incremental Tree Plantings Australia 9,242 1,274 5,000 5,000 30,000 20,000 20,000 20,000 20,000

Cumulative Total Tree Number - Australia 37,199 38,473 43,473 48,473 78,473 98,473 118,473 138,473 158,473

Total Incremental Tree Plantings Overseas 716 4,000 4,000 15,000 30,000 50,000 50,000 50,000 50,000

Cumulative Total Tree Number - Overseas 716 4,716 8,716 23,716 53,716 103,716 153,716 203,716 253,716

Total trees 37,915 43,189 52,189 72,189 132,189 202,189 272,189 342,189 412,189

increase in tree number that year 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Production Scenario - Tree Ages

Trees 1 year old 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Trees 2 year old - 3,363 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Trees 3 yr old 13,695 - 3,363 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Trees 4 yr old 17,625 13,695 - 3,363 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Trees 5 year old 17,625 13,695 - 3,363 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Trees 6 years old 17,625 13,695 - 3,363 9,958 5,274 9,000 20,000 60,000 70,000 70,000 70,000 70,000

Mature trees 17,625 31,320 27,957 37,915 43,189 52,189 72,189 132,189 202,189 272,189 342,189 412,189

Calculation of Production

Year 2017 2018 2019 2020 2021 2022 2023 2024 2025

Tree Age 4 5 6 Mature Mature Mature Mature Mature Mature

Kg/tree at each age 7 12 18 25 25 25 25 25 25

Packed Kgs

Conventional & Organic 75% 85% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%

Kg produced in Australia 121,016 225,093 365,792 442,552 483,992 466,584 576,165 769,093 1,067,377 1,531,044 2,112,358 2,645,229 3,081,214 3,396,093 3,565,643

Kg produced in ROW 2,329 23,403 33,657 136,948 331,300 491,427 747,561 1,131,459 1,708,875 2,451,208 3,381,895 4,235,024 4,933,038 5,437,160 5,708,610

TOTAL KG PRODUCED 123,345 248,496 399,449 579,500 815,292 958,011 1,323,726 1,900,553 2,776,253 3,982,253 5,494,253 6,880,253 8,014,253 8,833,253 9,274,253

250,000 tree target by 2026

27 June 201932

How do we reach our numbers?

Current Situation

• 30% of term elapsed since trials, 26% of planting target

• 4,000 trees released to East Coast US 2018

• NZ trial sites producing great fruit

• Trees cleared quarantine in South Africa 2018

• Europe released, trial report pending

• Added Switzerland, Serbia and UK under EU PBR.

What we are doing

• APAL to set minimum targets

o Domestic tree numbers 2026 +400k, OS +400k

• US Focus NH strategy

• Incentive based licences for Territory Nurseries

• Re-present the variety in Vacaria

• Re-launch Kalei this winter

• Grower focussed licenses – low cost of entry to the variety

• Territory Management roles in development

• New ‘brand’ identity 2019

27 June 201933

Kalei has many great benefits for growers…

But Kalei branding has limited consumer appeal.

• Old fashioned, duplicated many times in apple brands.

o Scriptive font (Pink Lady®)

o ‘Just love that apple’

o Lots of love already: Pink Lady (Heart), Smitten, Eve, Envy, Sweetie, Dazzle – no real point of distinction

• There are hundreds of good red apples currently in commercialisation

• APAL create Brands, not Trademarks

Kalei Re-brand

27 June 201934

Kalei re-brand

27 June 201935

Kalei re-brand

27 June 201936

Category Disruptive Brand Identity Development

27 June 201937

New brand in development

Honesty – it’s a nice red apple…

27 June 201938

APAL Overview Our ProcessAPAL strength

APALAdvise PBR –

Territory Managers Licensed

COREGEO100% Owned and

Operated

AboutFruit/ IP Royalty sharing through licenses

PREVARNEW

ZEALAND45% Owned and

OperatedAboutTree and p/Ha royalty sharing through licenses

Australian Govt.

Breeding Programs

APFIP Trial and Testing

APAL Selected &

IncentivisedNurseries

APAL Selected Grower

Members –Trial Sites

APAL Grower Members Licensed

Selected Exporters

BRAND

APALTechnical

Team

APALHead of Brands

APALLegal Counsel

Licensed Importers &

Retailers (Pink Lady)

APALHead of Brands,

Quality, Data

AboutFruit/ IP Royalty Generates Marketing Fund

AboutFruit/ IP Royalty Generates Marketing Fund

Thank-you

Support for Growth