iFAB 2013 DAIRY REVIEW January 2014 v1.00

iFAB 2013

The Food and Beverage Information Project The Food & Beverage Information Project is the first comprehensive overview of the state of New Zealand’s Food & Beverage (F&B) industry. Part of the Government’s Business Growth Agenda (BGA), it is an integrated programme of work focusing on the six key inputs businesses need to succeed, grow and add jobs; export markets, capital markets, innovation, skilled and safe workplaces, natural resources and infrastructure. Essentially, the BGA Export Markets goal will require lifting the ratio of exports from today’s rate of 30% of GDP to 40% by 2025. This equates to doubling exports in real terms (or tripling exports in nominal non-inflation adjusted terms). This in turn equates to achieving a 7% per annum growth rate over the next twelve years. This five-year project analyses the main sectors in F&B, including dairy, meat, seafood, produce, processed foods, and beverages, as well as providing an overview of how the industry is fairing in our major markets. It also conducts in-depth sector reviews on a rotating basis. The information is updated annually and feedback from users shows the project is acting as a vital tool for companies looking to expand and grow exports. Why Food & Beverage? The Food & Beverage industry is vitally important to the New Zealand economy. Food & Beverage accounts for 56% of our merchandise trade exports and one in five jobs across the wider value chain. In addition, F&B acts as a vital ambassador for the country, being in most cases the first exposure global consumers get to “Brand New Zealand.” New Zealand’s F&B exports are growing strongly and the country’s export performance is strong and improving relative to peers. In the 15 years leading up to 2010, New Zealand's food and beverage exports grew at a compound annual rate of 7% per annum. So one way to look at the challenge is to ask – can we continue to grow our food & beverage exports at the same rate? To understand if this is possible we need to know what has been driving our success.

What is the purpose of the food and beverage information project? The project pulls together the available information on the food and beverage industry into one place, in a form which is familiar and useful to business. The reports contain analysis and interpretation of trends and opportunities to materially assist with business strategy and government policy. The information will be of vital use to businesses, investors, government, and research institutions as the industry expands and diversifies. This industry view will be very useful to government, enabling better dialogue and the opportunity to address issues collectively. What benefit will this bring to businesses? The Project will have many uses for businesses. These include:

– As a base of market intelligence to enable business to be much more targeted in their own market research

– Reviewing and informing offshore market development (including export and investment) strategies

– Assisting in identifying areas of innovation and R&D for the future

– Identifying strategic partners and collaborators – Enabling a company to benchmark performance with that

of its competitors – Monitoring industry activity – Gaining a better understanding of their own industry

sector – Identifying internal capability needs or external inputs

How will government use the reports? This information will provide much greater insight into the industry, which is useful for a range of policy development, from regulatory frameworks to investment in science and skills and facilitating access to international markets. In particular, a single source of factual information will enable government agencies to better coordinate their efforts across the system and be more responsive to addressing industry issues.

iFAB 2013

iFAB 2013 OTHER RELATED iFAB REPORTS

3

This analysis of the New Zealand dairy sector forms a part of the wider Food & Beverage Information Project

Other reports, including those from previous years, are available on the MBIE or Coriolis website…

http://www.med.govt.nz/sectors-industries/food-beverage/information-project/ www.foodandbeverage.govt.nz

http://www.coriolisresearch.com/reports/

iFAB 2013

DEFINED AS DAIRY DEFINED AS PROCESSED FOODS

WHAT: Products exclusively or predominantly made from milk; firms that predominantly make these products

WHAT: Products made from a mixture or combination of ingredients, rather a single ingredient; firms that predominantly make these products

EXAMPLES: Fluid milk, milk powder, infant formula base powder, cheese, butter, lactose, dairy casein

EXAMPLES: Chocolate, ice cream, retail-ready infant formula, frozen croissants, Milo & similar, Anlene and other similar dairy nutritionals

TRADE CODES: Primarily classified in the global Harmonised Standard trade codes as HS04

TRADE CODES: Primarily classified in the global Harmonised Standard trade codes as HS 16-21

EXAMPLE FIRMS:

EXAMPLE FIRMS:

NOTE ON DEFINITIONS The iFAB project splits the total New Zealand food & beverage industry into six separate sectors; to avoid double counting, products and firms are only defined and counted in one; some firms may be in another report

4

Ingredients: Dried milk

Ingredients: Nonfat Milk Powder, Lactose, High OleicSafflower Oil, Soy Oil, Coconut Oil, Whey Protein Concentrate. In addition, less than 2% of the following: Potassium Citrate, Calcium Carbonate, Ascorbic Acid, Potassium Chloride, Magnesium Chloride, Ferrous Sulfate, Choline Chloride, Choline Bitartrate, Ascorbyl Palmitate, Sodium Chloride, Taurine, m-Inositol, Zinc Sulfate, Mixed Tocopherols, Niacinamide, d-Alpha-Tocopheryl Acetate, Calcium Pantothenate, L-Carnitine, Cupric Sulfate, Vitamin A Palmitate, Thiamine Chloride Hydrochloride, Riboflavin, Pyridoxine Hydrochloride, Beta-Carotene, Folic Acid, Manganese Sulfate, Phylloquinone, Biotin, Sodium Selenate, Vitamin D3, Cyanocobalamin, Calcium Phosphate, Potassium Phosphate, Potassium Hydroxide, and Nucleotides (Adenosine 5’-Monophosphate, Cytidine 5’-Monophosphate, Disodium Guanosine 5’-Monophosphate, Disodium Uridine 5’-Monophosphate)

THIS REPORT SEE RELATED REPORT

iFAB 2013

iFAB 2013

ANNUAL CHANGE IN EXPORT VALUE BY TYPE US$m; 2012 vs. 2011

BENCHMARK – EXPORT GROWTH BY SECTOR In 2012 the value of New Zealand’s dairy exports shrunk slightly in US$ terms, a relatively poor performance compared to many other food & beverage sectors

6 Source: UN Comtrade database; Coriolis classification and analysis

PERCENT CHANGE IN EXPORT VALUE BY TYPE %; US$m; 2012 vs. 2011

$117

$66

$51

$35

$35

-$23

-$36

-$180

$30

$27

$16

$3

$3

-$2

-$7

Beverage

Processed Food

Seafood

Pet & Animal Foods

Other Foods

Dairy

Produce

Meat

Seed for sowing

Live Animals

Tobacco

Supplements

Fertilisers

HBC/Household

Pharmaceuticals

Net Core F&B +$67m

F&B RELATED CATEGORIES

CORE F&B CATEGORIES

23%

14%

10%

4%

4%

0%

-2%

-4%

57%

48%

33%

28%

15%

-1%

-3%

Other Foods

Pet & Animal Foods

Beverage

Seafood

Processed Food

Dairy

Produce

Meat

Fertilisers

Tobacco

Supplements

Seed for sowing

Live Animals

HBC/Household

PharmaceuticalsNet Related F&B +$70m

iFAB 2013 DAIRY – SITUATION

New Zealand

New Zealand is the 9th largest milk producing country in the world and accounts for 2.4% of global milk production. New Zealand produces a similar amount of milk as other temperate countries its size (e.g. Italy, the UK, France). However as it only has a small population (similar to Singapore), it exports the excess.

The success of New Zealand in dairy is built around a natural environment conducive to agriculture. New Zealand, surrounded by the Pacific Ocean, has the light of Spain with the climate of Bordeaux. This climate will also moderate the effects of global warming going forward (relative to large continents). However this relatively remote location means New Zealand exports transport friendly dairy ingredients (e.g. milk powder) rather than perishable products.

About 88% of New Zealand milk supply is controlled by Fonterra, a farmer-owned cooperative. Fonterra was formed in 2001 in a mega-merger of dairy cooperatives and the export dairy board (a government-mandated) monopsony.1

New Zealand continued to experience strong prices for its dairy products. Global dairy prices remain high by historical standards in US$ terms driven by growing demand in China, SE Asia and NA/ME/CA2.

Competitors

As regional dairy collection is a natural monopsony, dairy farmers in all developed countries control milk collection and primary processing through farmer-owned cooperatives. Dairy co-ops transform their farmers milk into bulk dairy ingredients or basic dairy products, sold under the co-ops own brand or retailer store brands.

New Zealand primarily competes with other dairy cooperatives from developed Western countries to supply bulk dairy ingredients. South America cooperatives are an emerging rival. While the BRIC3 countries are 4 of the top 5 milk producers in the world, they are not yet major exporters as they effectively consume all they produce and will do for the foreseeable future.

New Zealand does not directly compete with major corporate dairy players (e.g. Nestle, Kraft, Abbott), who are in most cases its major customers.

Consumers/Markets

Dairy consumption is flat in the developed world; developed temperate countries (e.g. Canada, Japan) typically produce all the milk they consume and use trade barriers to protect their dairy farmers; therefore New Zealand has limited access to these markets.

Dairy consumption is growing in the developing world faster than domestic production; in addition, dry and tropical countries are unable to efficiently produce all the milk they consume, therefore they import bulk dairy ingredients.

In most markets, developed or developing, corporate consumer-focused dairy manufacturers buy ingredient dairy and transform ingredients into defensible consumer dairy-based foods (e.g. yoghurt).

In Australasia (AU/NZ), Fonterra and Goodman Fielder/Meadow Fresh (but not other key NZ milk processor/exporters) sells significant amounts of branded consumer dairy products to consumers4.

7 1. A monopsony is a monopoly on buying not selling; 2. North Africa Middle East, Central Asia; 3. BRIC = Brazil, Russia, India and China; 4 Fonterra also sells about NZ$1b worth of Anmum outside Australasia

New Zealand competes with other dairy cooperatives to supply bulk dairy ingredients to corporate consumer-focused dairy manufacturers primarily in dry/tropical areas

iFAB 2013 DAIRY – SWOT ANALYSIS The global competitive environment will likely become more competitive going forward

8 Source: various company annual reports; various company websites; Interviews; Coriolis

STRENGTHS WEAKNESSES

- Low cost pasture-based dairy production system

- National champion Fonterra with resources to address global markets and opportunities

- High standards of food safety and animal welfare

- Regulatory credibility

- 130 years experience in exporting dairy

- Strong position in global dairy industry

- Growing market leadership position in Australasia/Oceania

- All our eggs in one basket (Fonterra); Fonterra is limited in its ability to add value due to the risks associated with competing with its own customers

- No rich dairy cultural heritage or tradition to draw from for new product development (vs. France or Italy)

- Small milk producer in an absolute sense

- Limited defensibility of commodity and ingredient position

- Significant trade barriers limiting New Zealand access to North America and Europe

- Farmgate price mixes returns on milk with returns on Fonterra ownership leading to dairy land price increases leading to decreased international competiveness

- Despite strong food safety systems & reputation, a number of recent high-profile issues (e.g. whey, nitrates)

OPPORTUNITIES ISSUES/THREATS/RISKS

- Intensification through additional supplementary feed smoothing seasonal peak increasing total milk production and improving return on assets

- Growing dairy product consumption in developing world; dry and tropical countries not able to produce all the milk they consume

- Chinese dairy consumption per capita growing rapidly drawing in significant imported dairy product (in the short to medium term)

- Asians more likely to be dairy intolerant, therefore different consumption patterns (e.g. yoghurt drinks; infant formula)

- Ongoing dairy industry consolidation, particularly in South America

- Changing global weather patterns (also a threat)

- Further investment in in-market production

- Removal of dairy subsidies into Europe (may also be a threat)

- Intensive feedlot dairy model (e.g. California) improving productivity faster than pasture system (e.g. NZ/AU)

- Southern South America rapidly adopting the AU/NZ pasture system (e.g. Argentina, Uruguay, Brazil)

- The boom/bust economic cycle expresses itself in China

- Experience of Japan & South Korea suggest Chinese growth has another 5-7 years to run; after this point, China will be either self sufficient or a major exporter

- Announced EU regulatory changes coming into effect, leading to increased production by some countries (e.g. Ireland) and decreased production by others

- Developing countries consumers, currently perceive dairy as healthy; science/attitudes/opinions could turn negative

- Adoption of genetically modified animals or feed by poor countries changing international competitive dynamics

- Non-dairy substitutes (e.g. soy) more suited to Asian tastes and physiology

iFAB 2013 DAIRY – POTENTIAL AREAS FOR INVESTMENT

Farmers currently control about 92% of New Zealand dairy industry limiting opportunities for external investment. Farmers own Fonterra, Westland, Tatua and Dairy Goat Coop. “[Globally, dairy cooperatives have] three main objectives: (1) maximise the milk price paid to farmer members, (2) to process and market the milk collected every day from member farms and (3) to maintain farmer control.”1 However the recent introduction of the Fonterra Shareholders’ Fund does make participation in the success of Fonterra possible. There are relatively low opportunities for new investment in ingredient dairy (particularly milk powder). Globally milk collection/disposal is dominated by farmer owned co-operatives (typically marginal cost sellers). Processing of raw dairy into simple ingredients is a relatively high capital, low return sector. New Zealand already fully capitalised with ingredient dairy processing plants and the existing co-ops continue to invest in new capacity to defend their position. As one example, Fonterra recently opened Phase II of it’s Darfield plant, a NZ$500m investment in the world’s largest milk dryer. The domestic New Zealand dairy market is small, saturated and low growth. New Zealand already has high levels of dairy consumption per capita and the market is dominated by two key players: Fonterra and Goodman Fielder/Meadow Fresh, each with fluid milk core. There is limited domestic product innovation and domestic innovations are typically copied from other markets (e.g. yoghurt). In addition, store brands are growing in most core dairy categories. This is not to discount the potential for further investment, particularly in export focused products. We believe there are three key opportunities for consideration:

1. Value-added dairy products There are strong opportunities for growth and investment in value-added dairy products, including infant formula and other dairy nutritionals (e.g. nutritional shakes). In the past three years more than NZ$700m in investment has been announced in infant formula, “growing up” milk (GUMP) and other dairy nutritionals. Fonterra, Westland, Synlait, Gardians/Sutton and New Image all now manufacture infant formula and related dairy nutritionals. In addition, three of the four largest dairy companies in China – Yili, Mengniu, and Bright - have invested in value-added plants in New Zealand, as have a wide range of other global dairy firms, including Friesland (Netherlands), Vinamilk (Vietnam) and Kirin (Japan) as detailed on page 46 of this report. 2. Export-oriented niche dairy There are opportunities for growth in smaller segments of export oriented specialty, niche dairy products that “fly under the radar”. Examples of successful segments in this space include shredded cheese (e.g. Grate Kiwi), single serve butter (e.g. Canary), and premium specialty cheese (e.g. Whitestone). 3. Dairy-based processed foods & beverages There are very strong opportunities for investment in processed foods and beverages that contain significant dairy ingredients. Examples of products with strong potential for further investment include chocolate, frozen bakery (e.g. croissants) and dairy-derived nutraceuticals. Further discussion of these opportunities occurs in the related “Processed Foods” report in this series.

9 1. F.A. Christiansen, Executive Director, MD Foods (now Arla), 1994; Source: Interviews; Coriolis

Potential areas for new and/or external investment primarily transforming ingredients rather than producing more ingredients

iFAB 2013

SIMPLIFIED MODEL OF NEW ZEALAND DAIRY SUPPLY CHAIN1

Model; ANZSIC codes as available; 2013

DAIRY – SUPPLY CHAIN New Zealand dairy products have a somewhat complex supply chain driven by the multiple-stage process of turning raw milk into final products for consumers around the world

10 1. Non-dairy supply chain is covered in the processed foods section; 2. There may be one or more layers of wholesaling, depending on product or market; some wholesale functions may be captive inside retailers or foodservice operators; Source: Coriolis

Milk & cream processing (C113-100)

Dairy produce wholesale (F360-300)

Seafreight Airfreight

Supermarkets & other retail

Foodservice

Dairy wholesale2 (in-market)

Supermarkets & other retail

Foodservice

International markets

Domestic market

Dairy cattle farming (A016)

Distributor wholesaler

Ice cream manufacturing (C113-200)

Cheese & other dairy processing (C113-300)

Infant formula manufacturing

Other food manufacturing

Ice cream manufacturing

Cheese & other dairy processing

Infant formula manufacturing

Other food manufacturing

For example, Fonterra requirement to on-sell

milk to other processors

Processed Foods

Processed Foods

Processed Foods

Processed Foods

iFAB 2013

iFAB 2013 GLOBAL MILK PRODUCTION BY SPECIES Global milk production 740m tons of milk (83% cow milk, 13% water buffalo, 4% all other); total global production has doubled in last fifty years; per capita consumption has been growing for the last decade

GLOBAL MILK PRODUCTION BY SPECIES Tonnes; million; 2011

50 YEAR GLOBAL MILK PRODUCTION BY SPECIES Tonnes; million; 1961-2011

12 * CAGR = Compound Annual Growth Rate; Note: 2011 is latest data available for all countries globally in FAO AgStat as of October 2013; Source: UN FAO AgStat database; Coriolis analysis

Cow 615 83%

Water buffalo 96 13%

Goat 17 2% Sheep 10 2% Camel

2 0%

Total = 739m tonnes

-

100

200

300

400

500

600

700

196

119

63

196

519

67

196

919

7119

7319

7519

7719

7919

81

198

319

85

198

719

89

199

119

93

199

519

97

199

920

01

200

320

05

200

720

09

2011

Cow

Buffalo Goat Sheep Camel

1%

3% 2% 1% 2%

50y CAGR*

50y CAGR

2%

50 YEAR GLOBAL MILK CONSUMPTION PER CAPITA Kilograms/person; 1961-2011

80

85

90

95

100

105

110

11519

61

196

319

65

196

719

69

1971

1973

1975

1977

1979

198

119

83

198

519

87

198

919

91

199

319

95

199

719

99

200

120

03

200

520

07

200

920

11

50y CAGR -0.1%

10y CAGR 1.1%

iFAB 2013

GLOBAL MILK PRODUCTION BY KEY COUNTRIES & REGION Tonnes; million; 2011

GLOBAL MILK PRODUCTION BY REGION New Zealand produces 2% of global milk; global production growth being driven by wider Asian region

13 Note: 2011 is latest data available for all countries globally in FAO AgStat as of October 2013; Source: UN FAO AgStat database; Coriolis analysis

Europe 231 31%

North America 97 13%

Australasia 27 4%

C/S America 82 11%

E Asia 52 7%

SE Asia 4 1%

S Asia 169 23%

NA/ME/CA 52 7%

SS Africa 25 3%

Germany 4% France

3% UK 2%

Poland 2%

Netherlands 2%

Italy 2%

Spain 1% Ireland 1%

Other Europe 7%

Ukraine 1%

Russia 4%

Turkey 2%

USA 12%

Canada 1%

New Zealand 2%

Australia 1%

Brazil 4%

Argentina 2%

Other S America 3%

Mexico 1%

Other C America 1%

China 6%

Japan 1%

Other E Asia 0%

India 17%

Pakistan 5%

Other S Asia 1%

Other 0%

Total = 739m tonnes

139 153 184 178 194 199

63 83

89 101 33 32

65

62

68 75

83 97 11

13

12 14

24 27

19

26

36 43

61

82

4

7

11

18 26

52

0

0

1

1 2

4

28

32

46

72 113

169

7

9

13

16

36

52

7

9

11

13

18

25

0

0

0

0

0

0

344

395

470

533

589

739

1961 1971 1981 1991 2001 2011

Europe

USSR/Russia

N America

Australasia

C/S America

E Asia

SE Asia

S Asia

NA/ME/CA

SS Africa Other

50 YEAR MILK PRODUCTION BY REGION Tonnes; million; 1961-2011

1%

-1%

1%

2%

3%

5%

5%

4%

4%

2%

50y CAGR

50y CAGR

2%

iFAB 2013 TOP 30 MILK PRODUCING COUNTRIES New Zealand is the ninth largest milk producing country in the world; it is the only major developed country producer significantly increasing production

TOP 30 PRODUCERS OF MILK FROM ALL SPECIES Tonnes; million; 2011

10 YEAR PRODUCTION GROWTH RATE CAGR %; tonnes; 2001-2011

14 Source: UN FAO AgStat database; Coriolis analysis

127 89

41 37

32 32

30 25

18 15 14

12 12 11 11 11 11

9 8 8 7 7 7 7 6 6 6 6 5 5

IndiaUSA

ChinaPakistan

BrazilRussia

GermanyFrance

New ZealandTurkey

UKPoland

NetherlandsArgentina

ItalyUkraineMexico

AustraliaCanada

SpainJapan

IranUzbekistan

BelarusEcuador

ColombiaEgypt

IrelandKazakhstan

Romania

4.3% 1.7%

11.4% 3.4%

4.2% -0.4%

0.7% -0.1%

3.2% 4.7%

-0.6% 0.5% 0.7%

1.4% -1.0%

-1.9% 1.3%

-1.5% 0.4% 0.4%

-1.0% 2.0%

6.4% 3.0%

10.1% 0.0%

3.9% 0.3%

2.9% 0.8%

IndiaUSA

ChinaPakistan

BrazilRussia

GermanyFrance

New ZealandTurkey

UKPoland

NetherlandsArgentina

ItalyUkraineMexico

AustraliaCanada

SpainJapan

IranUzbekistan

BelarusEcuador

ColombiaEgypt

IrelandKazakhstan

Romania

iFAB 2013

iFAB 2013 KEY PRODUCTION METRICS New Zealand is increasing milk production long term through (1) more cows on (2) more hectares (3) producing more milk per cow; 6% of the country is currently farmed as dairy

TOTAL EFFECTIVE HECTARES IN DAIRY VS. % OF NZ AREA Ha; 81/82-10/11

TOTAL DAIRY COWS Head; million; 81/82-10/11

16 Note: 2010/11 data latest available as of October 2013; 1. Uses CY data from UN FAO as DairyNZ data does not include town milk supply prior to 1998/99 season; Source: DairyNZ New Zealand Dairy Statistics 2010-11; UN FAO AgStat database; MAF/MPI; Coriolis analysis

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

1981/82

1982/83

1983/84

1984

/85

1985/8

6

1986

/87

1987/88

1988

/89

1989

/90

1990

/91

1991/92

1992/93

1993/9

4

1994

/95

1995/9

6

1996/97

1997/98

1998

/99

1999/0

0

200

0/0

1

200

1/02

200

2/03

200

3/04

200

4/0

5

200

5/06

200

6/0

7

200

7/08

200

8/0

9

200

9/10

2010

/11

29y CAGR 1.7%

TOTAL MILK PRODUCTION1

Tonnes; million; 1982-2011 AVERAGE KG MILKFAT PER COW Kilograms/cow; 81/82-10/11

Hectare m

% of NZ area

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1981/82

1982/83

1983/84

1984

/85

1985/8

6

1986

/87

1987/88

1988

/89

1989

/90

1990

/91

1991/92

1992/93

1993/9

4

1994

/95

1995/9

6

1996/97

1997/98

1998

/99

1999/0

0

200

0/0

1

200

1/02

200

2/03

200

3/04

200

4/0

5

200

5/06

200

6/0

7

200

7/08

200

8/0

9

200

9/10

2010

/11

29y CAGR 2.8%

0

20

40

60

80

100

120

140

160

180

200

1981/82

1982/83

1983/84

1984

/85

1985/8

6

1986

/87

1987/88

1988

/89

1989

/90

1990

/91

1991/92

1992/93

1993/9

4

1994

/95

1995/9

6

1996/97

1997/98

1998

/99

1999/0

0

200

0/0

1

200

1/02

200

2/03

200

3/04

200

4/0

5

200

5/06

200

6/0

7

200

7/08

200

8/0

9

200

9/10

2010

/11

29y CAGR 1.0%

-

2

4

6

8

10

12

14

16

18

2019

82

198

319

84

198

519

86

198

719

88

198

919

90

199

119

92

199

319

94

199

519

96

199

719

98

199

920

00

200

120

02

200

320

04

200

520

06

200

720

08

200

920

1020

11

29y CAGR 3.4%

iFAB 2013

R² = 0.9452

-

20

40

60

80

100

120

140

160

180

200

1917

1921

1925

1929

1933

1937

194

119

45

194

919

5319

5719

61

196

519

69

1973

1977

198

119

85

198

919

93

199

720

01

200

520

09

RATE OF IMPROVEMENT The efficiency of the New Zealand pastoral dairy system is improving, as are competing systems

93 YEARS GROWTH IN NEW ZEALAND BUTTERFAT PER COW (kg/cow; 1917-2011)

MILK PER COW: NZ VS. SELECT PEERS (t/cow; 1961-2011)

17 Source: UN FAO AgStat; Statistics NZ; Department of Statistics; DairyNZ; Coriolis analysis

USA

Denmark

Australia

Ireland Argentina

New Zealand

China

Brazil

CAGR (17-11) 0.9%

2.2%

1.7%

2.1%

1.9% 2.0%

0.6%

1.8%

1.3%

CAGR (61-11)

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

196

119

64

196

719

7019

7319

7619

7919

82

198

519

88

199

119

94

199

720

00

200

320

06

200

9

Chile 0.7%

Obviously milk per cow is only one variable in total system competitiveness

iFAB 2013 PRICES The price of milksolids per kilogram has been growing at 4.6% over the past two decades while the price of dairy farms per hectare has been growing at 9%

AVERAGE DAIRY COOP PAYOUT PER KG. MILKSOLIDS NZ$; actual and inflation-adjusted; 91/92-10/11

AVERAGE DAIRY LAND SALE VALUE PER HECTARE NZ$; 1991-2012

18 Source: DairyNZ; Quotable Value; Coriolis analysis

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

199

1/92

199

2/93

199

3/94

199

4/9

5

199

5/96

199

6/9

7

199

7/98

199

8/9

9

199

9/0

0

200

0/0

1

200

1/02

200

2/03

200

3/04

200

4/0

5

200

5/06

200

6/0

7

200

7/08

200

8/0

9

200

9/10

2010

/11

Nominal Inflation adjusted

19y CAGR 2.2%

19y CAGR 4.6%

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

199

119

92

199

319

94

199

519

96

199

719

98

199

920

00

200

120

02

200

320

04

200

520

06

200

720

08

200

920

1020

1120

12

21y CAGR

9%

N/A

iFAB 2013

iFAB 2013 NUMBER OF FIRMS The number of dairy processing firms has grown, particularly since the melamine crisis in China in 2008

NUMBER OF DAIRY PROCESSING ENTERPRISES1

Enterprises; 2002-2012

20 Note: 2012 data latest available as of October 2013; 1. Defined as C113-100 Milk & Cream processing and C113-300 Other dairy processing; Source: Statistics NZ business demographics database; Coriolis analysis

53 52

57 58 58 59 58

73

80

85 89

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

5.3%

8.6%

4.7%

CAGR 10y

CAGR 5y

CAGR 1y

CHANGE IN NUMBER OF DAIRY PROCESSING ENTERPRISES CAGR; absolute change; periods as given

36

30

4

ABS 10y

ABS 5y

ABS 1y

iFAB 2013

ANNUAL TURNOVER BY TOP 10 DAIRY FIRMS NZ$m; FY2012

iFAB TOP TEN DAIRY FIRM TURNOVER FY12 Fonterra continues as the largest dairy firm in New Zealand by turnover in FY12

21 Source: various company annual reports; NZCO; Coriolis estimates and analysis

$641

$546

$534

$377

$228

$125

$118*

$62

$28

Fonterra

Open Country

Meadow Fresh

Westland

Synlait

Tatua

Miraka

Dairy Goat

A2

Lion Dairy

$19,769 1

2

3

4

5

6

7

8

9

10

iFAB 2013

CHANGE IN ANNUAL TURNOVER BY TOP 10 DAIRY FIRMS NZ$m; FY2012 vs. FY2011

iFAB TOP TEN DAIRY TURNOVER GROWTH FY12 In FY12 Miraka, Synlait & Dairy Goat led in absolute growth and Miraka, A2 & Dairy Goat led in rate of growth

22 Source: various company annual reports; NZCO; Coriolis estimates and analysis

$125

$78

$30

$28

$20

$19

$0

-$21

-$38

-$102

Miraka

Synlait

Dairy Goat

Tatua

A2

Westland

Lion Dairy

Meadow Fresh

Open Country

Fonterra

48%

34%

26%

14%

4%

1%

-1%

-4%

-6%

Miraka

A2

Dairy Goat

Synlait

Tatua

Westland

Lion Dairy

Fonterra

Meadow Fresh

Open Country

ANNUAL TURNOVER % GROWTH BY TOP 10 DAIRY FIRMS NZ$m; FY2012 vs. FY 2011

∞% 1

2

3

4

5

6

7

1

2

3

4

5

6

7

iFAB 2013

5 YEARS ANNUAL TURNOVER BY TOP 10 DAIRY FIRMS NZ$m; FY2007-FY2012

TOP TEN DAIRY FIRM TURNOVER Five year growth highlights robust growth of new market entrants, Westland & Dairy Goat Cooperative

23 N/C = not calculable from data available; Source: various company annual reports; NZCO; Coriolis estimates and analysis

$13,882

$19,512

$16,035 $16,726

$19,871 $19,769

$84

$143

$289

$497

$679 $641

$439

$604

$569

$565

$567 $546

$295

$501

$364

$422

$515 $534

$-

$-

$112

$233

$299 $377

$145

$184

$204

$166

$200 $228

2007 2008 2009 2010 2011 2012

Fonterra

Open Country

Meadow Fresh

Westland Synlait Tatua

Lion Dairy A2 Dairy Goat Miraka

7%

50%

4%

N/C 9%

13%

-9% N/C 16% N/C

5y CAGR (07-12)

iFAB 2013 KEY PRODUCTION METRICS The dairy processing industry has not grown employment, suggesting productivity improvements

TOTAL EMPLOYMENT BY DAIRY PROCESSING ENTERPRISES Headcount; as of Feb; 2002-2012

24 Note: 2012 data latest available as of October 2013; 1. Defined as C113-100 Milk & Cream processing and c113-300 Other dairy processing; Source: Statistics NZ business demographics database; Coriolis analysis

9,910

10,950

11,640 11,960

12,620

10,870

9,950 10,440

10,810 10,890 10,750

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CHANGE IN DAIRY PROCESSING EMPLOYMENT CAGR; Absolute change; periods as given

1%

0%

-1%

CAGR 10y

CAGR 5y

CAGR 1y

840

-120

-140

ABS 10y

ABS 5y

ABS 1y

iFAB 2013 EMPLOYMENT BY REGION Dairy processing employment growing in Waikato and Canterbury over last five years; flat to down elsewhere

DAIRY PROCESSING EMPLOYMENT BY REGION Headcount; as of Feb; 2007-2012

5 YEAR CHANGE IN EMPLOYMENT BY REGION CAGR; Absolute change; 2007-2012

25 1. Data is geographic level; classified elsewhere would include non-dairy processing activities (e.g. wholesaling); Source: Statistics New Zealand, Coriolis analysis

1,080 740

1,142 1,025 820 845

950 910

980 1,070 1,180 1,300

240

230

230 240 240 260 116

96

90 95 106 104

1,060

1,080

1,190 1,040 800

830

1,870

1,850 1,180 1,570

1,913 1,823

75

95 60 50 55 39

410 503 510

510 610 420

2,510 2,610 2,565

2,830 3,030 3,045

890 670 920

920 765 815

715

480 480

490 560 520

954

686 1,093

970 811 749

10,870

9,950

10,440 10,810 10,890 10,750

2007 2008 2009 2010 2011 2012

Otago/Southland

Canterbury

West Coast Nelson/Tas/Marl

Taranaki

Hawkes Bay/Gisborne Bay of Plenty

Waikato

Auckland

Northland

Classified elsewhere1

Wellington/ Manawatu

-235

350

20

-12

-230

-47

-36

10

535

-75

-195

-205

Otago/Southland

Canterbury

West Coast

M/N/T

W/M

Taranaki

HB/Gisb

Bay of Plenty

Waikato

Auckland

Northland

Classified elsewhere

5y ABS -120

iFAB 2013

DAIRY PROCESSING EMPLOYMENT BY KEY FIRM

Headcount; 2013

EMPLOYMENT BY FIRM Fonterra accounts for ~85% of industry employment; all other dairy firms account for 15%

26 * Includes dairy, meat, plant and allocated staff from HO, freight, supply chain, sales and merchandising staff; Source: SNZ business demographics; Kompass; various firm websites; published articles; Coriolis interviews & analysis

Fonterra, 9,000

Meadow Fresh*, 930

Westland, 400

Tatua, 280

Open Country, 200 Synlait, 171

Dairy Goat, 170 Lion Dairy, 100

Miraka, 78

iFAB 2013

Rank Announced Investment Firm Facility Location Opened/planned

1 2010 $500 Fonterra World's largest 30 tonne an hour dryer Opened in two phases

Darfield Phase 1 : August 2012 Phase 2: Sept 2013

2 Apr 2013 $250m Fonterra Evaluating extending plant and building another spray dryer

Pahiatua -

3 Dec 2012 $214m Yili Infant formula plant (47,000t, 100 people)

Glenavy, Canterbury June 2014

4 Feb 2013

$212m Yashili Processing plant (52,000t, 120 people) Pokeno Feb 2015

5 Jan 2013 $126m Fonterra New UHT plant (Milk and cream for FS), 90 new staff

Waitoa, Waikato March 2014

6 2013 $103m + $17m

Synlait Dryer 3 (WMP, SMP, formulated) + new dry store (22,500m2)

Dunsandel, Canterbury Aug 2015 March 2014

7 June 2011 $100m Synlait New plant (Dryer 2, for IF and Nutritionals)

Dunsandel, Canterbury Sept 2011

8 Sept 2012 $100m Westland Three dryer powder plant, - consents granted Feb 2012

Rolleston -

9 July 2010

$90m Miraka Milk powder plant (35,000 WMP) Mokai, Taupo August 2011

10 April 2013

$67m Dairy Goat Second dryer (4x capacity), + canning Hamilton August 2014

IDENTIFIED MAJOR INVESTMENTS IN NEW PLANT/EQUIPMENT As of October 2013

iFAB TOP TEN NEW DAIRY INVESTMENT The top ten dairy investments that have emerged over the past few years total almost $2b

27 Source: Coriolis from various published articles and annual reports

iFAB 2013

Announced Investment Firm Facility Location Opened/planned

April 2013 $65m Tatua New specialty products drier planned Matamata 2015/2016 season

Sept 2012 - Westland Nutritional Products plant (wet mix) Hokitika April 2013

April 2013 - Paterson/Gardian New IF plant, (20,000.tpa, 11,500 cows) Balclutha, Otago Sept 2012

2011/2013 $53m Fonterra Further upgrades to dry distribution centre Whareroa, Taranaki 2012/August 2014

Oct 2012 $30m Fonterra Extension of Cream cheese mnfg. Te Rapa August 2013

May 2013 $27m Synlait Blending and consumer packaging 17,500MTpa Dunsandel, Canterbury June 2014

April 2013 $27m Miraka New UHT plant Mokai, Taupo Feb 2014

Nov 2012 $20m Open Country Plant upgrade (SMP, + Milk fats) Waharoa, Waikato June 2013

July 2010 - NZ Dairy Processing New UHT and dairy plant Tauranga

Jan 2011 $20m Westland Reverse osmosis plant Rolleston September 2011

2010 $20m Tatua New foods plant, specialty powders Matamata 2010/11 season

May 2013 $15m Synlait Upgrade to special drier, to produce lactoferrin in spray dry form ; 23 MTpa

Dunsandel, Canterbury January 2014

May 2013 $15m Synlait Ammix butter plant 25MTpa Dunsandel, Canterbury May 2015

June 2012 $11m Innovation Waikato Spray drier – pilot plant Hamilton June 2012

2011 $10m Tatua New permeate & hydrolstate plant Matamata August 2012

2013 - Kaimai Assets sold and company to convert to UHT milk Waharoa 2014

IDENTIFIED MAJOR INVESTMENTS IN NEW PLANT/EQUIPMENT As of October 2013

OTHER NEW DAIRY INVESTMENT A wide range of other dairy industry investments have been identified

28 Source: Coriolis from various published articles and annual reports

iFAB 2013

Rank Acquirer Target Price Date Details

1 Bright Dairy (China) Synlait $82m July 2010 51% of Synlait

2 Southern Pastures Limited Partnership (Forsta AP-fonden, Sweden)

CHH HBU & Rank Group Property (Graeme Hart’s dairy farms)

~$40-60m (TBC)

Aug 2013 Swedish Company investment includes 8 forestry converted dairy farms in the Waikato 3,205ha Operated by Southern Pastures Management – supplying Fonterra

3 Fonterra 6% of Bega Cheese Australia A$46m Nov 2013 Acquired 6% of Australian cheese firm; “longstanding partnership”

4 Fonterra New Zealand Dairies Nutritek Russia (in receivership)

$48.5m Sept 2012 Milk processing factory Studholme ,Waimate (former assets owned by Nutritek), purchased out of receivership

5 Olam International NZ Farming Systems Uruguay $40m (TBC)

Nov 2012 Increased ownership from 78% acquired in 2010 to 90% allowing Olam to compulsorily acquire the rest (valued at $178m)

6 FrieslandCampina 7.5% of Synlait $24.15m July 2013 Netherlands coop invests in NZ dairy industry taking 7.5% of Synlait

7 Yili Oceania Dairy Ltd US$2.5m (TBC)

Dec 2012 Land use consent for the construction of a whole milk processing plant/IF ($214m, 100 jobs, 47,000 tpa), environmental consents and purchasing rights on a 38 hectare site.

8 Synlait Milk Oceania Dairy Ltd - Feb 2011 Purchased supply contracts increasing farms from 105 to 135 in Waimate, South Canterbury (agreement to acquire all assets based on land and consents for plant failed).

9 Mengniu Yashili HK$12.5b (NZ$2b)

June 2013 #2 Chinese dairy producer acquired #3 Chinese–owned infant formula firm; including planned plant in Pokeno, Waikato

10 Pureland Dairy/ Yoomoo dairy

Kaimai assets - Sept 2013 Purchased by Pureland plans to export UHT milk

IDENTIFIED MAJOR ACQUISITIONS INVOLVING NEW ZEALAND DAIRY FIRMS As of October 2013

iFAB TOP TEN DAIRY ACQUISITIONS All recent major acquisitions in the New Zealand dairy industry have involved foreign buyers or sellers

29 Source: Coriolis from various published articles and annual reports

iFAB 2013

Date Investor Origin Investment Investor description

Oct 2013 SFL Holdings (Shanghai Pengxin 74%, Maclean,Penno)

China Offer to buyout remaining shareholders in Synlait Farms (awaiting OIO clearance)

Private: Chinese diversified conglomerate

July 2013 FrieslandCampina Netherlands 7.5% of Synlait Milk Coop; #1 EU Coop; #5 dairy firm globally

June 2013 Mengniu China Yashili (including Pokeno IF plant plans) Listed; #2 dairy in China; #15 dairy firm globally; COFCO SOE 19%

Dec 2012 Yili China Building ~$214m IF plant in New Zealand Listed; #1 dairy in China; #12 dairy firm globally

Nov 2012 Olam Singapore 90% NZ Farming Systems Uruguay (18% to 78% in Aug 2010)

Listed; agribusiness and food ingredients conglomerate

Sept 2010 Vinamilk Vietnam 19% of Miraka Listed; largest dairy company in Vietnam

July 2010 Bright China 39% of Synlait; diluted down from original 51%

Listed subsidiary of State Owned Enterprise

May 2010 Freedom Foods Australia 18% of A2 Corp Listed; 82% Arrowvest; free-from & organic foods;

July 2008 Olam International Singapore 25% of Open Country Cheese Company (via. Dairy Trust)

Listed; agribusiness and food ingredients conglomerate

Nov 2007 Kirin Japan Lion Dairy (Yoplait factory in NZ) Listed; member Mitsubishi keiretsu; #2 Japanese brewer

June 2007 Mitsui & Co Japan 14% of Synlait; raised to 22%; now 8.4% Listed; trading company; member of Mitsui Group

Sept 2005 Goodman Fielder Australia NZDF; later traded for Mainland Listed; Australian baked goods & other foods company

FOREIGN INVESTMENT IN MAJOR NEW ZEALAND DAIRY FIRMS As of October 2013

FOREIGN INVESTORS New Zealand dairy companies have attracted significant foreign investment

30 Source: Coriolis from various published articles and annual reports

iFAB 2013

iFAB 2013

FONTERRA CO-OPERATIVE GP Theo Spierings Chief Executive

OPEN COUNTRY Steven Koekemoer Chief Executive

GOODMAN FIELDER NZ MEADOW FRESH DIV. Peter Reidie Managing Director GFNZ

WESTLAND Rod Quin Chief Executive

DESCRIPTION: Fourth largest dairy company in the world by turnover; first by milk intake

DESCRIPTION: A dairy ingredient manufacturer, 3 plants; capacity 900m l/year; 500 suppliers, exports to 45 countries

DESCRIPTION: Dairy division of major Australasian food group (also includes meats businesses), milk and cultured foods plants in Palmerston North and Christchurch, and a speciality cheese plant in Puhoi Valley.

DESCRIPTION: Regional dairy cooperative based in West Coast region; expanding into Canterbury, 4% milk supply

KEY PRODUCTS: Milk powder, butter, cheese, yoghurt, formulas and other dairy products

KEY PRODUCTS: Full range of Milk Powders (Standard and UHT), Milk Proteins, Milk Fats and Cheese

KEY PRODUCTS: Milk, fresh and UHT, Cheese, Yoghurt, and other dairy products

KEY PRODUCTS: Milk powders, milk proteins, growing up milk powder, butter, base IF, bioactives, ‘own made’ yoghurt “Easiyo”, other dairy products

OWNERSHIP: New Zealand; cooperative (10,578 farmer shareholders)

OWNERSHIP: Private; AFFCO/Talley’s Group 54%; Olam (Singapore) 25%; others

OWNERSHIP: Australia; listed on ASX/NZX; wholly owned subsidiary of Goodman Fielder Ltd

OWNERSHIP: New Zealand; cooperative (380+ farmers)

COMPANY NUMBER: 1166320 COMPANY NUMBER: 1911063 COMPANY NUMBER: 1715832 COMPANY NUMBER: 153032

ADDRESS: 9 Princes Street, Auckland Central, Auckland 1010

ADDRESS: Unit L Building 4, 195 Main Highway, Ellerslie, Auckland 1051

ADDRESS: 2/8 Nelson Street, Auckland, 1010 PO Box 90450, Victoria Street West, Auckland 1142

ADDRESS: 56 Livingstone Street, Hokitika, 7810 , New Zealand

PHONE: +64 9 374 9000 PHONE: +64 9 589 1372 PHONE: +64 9 301 6000 PHONE: +64 3 756 9800

WEBSITE: www.fonterra.com WEBSITE: www.opencountry.co.nz WEBSITE: www.goodmanfielder.co.nz www.meadowfresh.co.nz

WEBSITE: www.westland.co.nz www.easiyo.com

YEAR FORMED: 2001 YEAR FORMED: 2004/2007 YEAR FORMED: 1909/1968/1986/2005 YEAR FORMED: 1937

STAFF EMPLOYED: 17,000 (Global) STAFF EMPLOYED: 200 STAFF EMPLOYED: Dairy & Meat Division 930* (GF total NZ = 2,190)

STAFF EMPLOYED: 400

REVENUE: $19,769m (FY12), $18,643m (FY13) REVENUE: $641m (FY12) REVENUE: Dairy NZ$546m (FY12) [ex-Intercompany] NZ Total NZ$1,088m (FY12)

REVENUE: $534m (FY12) $535 (FY13)

COMPANY HIGHLIGHTS: Drought; precautionary recall; plant expansions in NZ, New plants in Asia, Investment of ~$1b in dairy farms in China

COMPANY HIGHLIGHTS: Company has increased number of suppliers to 600 and will process 947m litres of their own milk for 2013/2014 season. Focused on high quality ingredients is providing steady growth and profitability.

COMPANY HIGHLIGHTS: Meadow Fresh formed as part of a brand swap in 2005 (ex Mainland Products). Export expansion plans from CHCH in UHT could significantly increase production

COMPANY HIGHLIGHTS: Commissioned a Nutritional wet products plant in Hokitika during 2013 and gained resource consents for new Rolleston plant

32 *Includes plant and allocated including HO staff, freight, supply chain, sales and merchandising staff; Source: Coriolis from various published articles and annual reports

TOP 10 DAIRY FIRM PROFILES 1 2 3 4

iFAB 2013

SYNLAIT MILK LIMITED John Penno Managing Director

TATUA CO-OPERATIVE DAIRY Paul McGilvary Chief Executive

MIRAKA Richard Wyeth Chief Executive

DAIRY GOAT CO-OPERATIVE Dave Stanley Chief Executive

DESCRIPTION: Synlait Milk is a Canterbury based dairy manufacturer focussed on supplying higher value dairy products to leading milk-based health and nutrition companies

DESCRIPTION: Specialist dairy ingredients and food products manufacturer, 190ML of milkpa exports 94% of its products, exports to 60 countries

DESCRIPTION: New Zealand dairy processing plant processing 240m litres of milk pa from 96 suppliers, manufacturing products for export to China and Vietnam

DESCRIPTION: Manufacturer of goat milk infant formula and other dairy goat milk based nutritionals

KEY PRODUCTS: Infant and adult nutritional formulations, Milk powders (WMP, SMP) functional food ingredients, and specialised products

KEY PRODUCTS: specialist ingredients (Caseinate, whey proteins, AMF), nutritionals, whipped cream, specialty cheeses

KEY PRODUCTS: WMP, SMP, Standard and UHT KEY PRODUCTS: Infant formula

OWNERSHIP: New Zealand; listed on NZX; Bright (China) 39% ; Mitsui (Japan) 8%; Friesland (Netherlands) 7.5%

OWNERSHIP: New Zealand; cooperative (108 farmers)

OWNERSHIP: Wairarapa Moana Incorp 27%; Tuaropaki Kaitiaki 27%; Vinamilk Vietnam Dairy Products 19%

OWNERSHIP: New Zealand; cooperative (65 farmers)

COMPANY NUMBER: 1600872 COMPANY NUMBER: 173822 COMPANY NUMBER: 2244299 COMPANY NUMBER: 421398

ADDRESS: 1028 Heslerton Road, Rakaia, Rd 13 , New Zealand

ADDRESS: State Highway 26, Tatuanui, Waikato ADDRESS: 108 Tuwharetoa Street, Taupo, 3330 , New Zealand

ADDRESS: 18 Gallagher Drive Hamilton

PHONE: +64 3 373 3000 PHONE: +64 7 889 3999 PHONE: +64 7 376 0075 PHONE: + 64 7 839 2919

WEBSITE: www.synlait.com WEBSITE: www.tatua.com WEBSITE: www.miraka.co.nz WEBSITE: www.dgc.co.nz

YEAR FORMED: 2000/2005 YEAR FORMED: 1914 YEAR FORMED: 2009 YEAR FORMED: 1984 (Inc. 1989)

STAFF EMPLOYED: 130 (FY12), 171 (FY13) STAFF EMPLOYED: 280 STAFF EMPLOYED: 78 STAFF EMPLOYED: 170

REVENUE: $377 (FY12) $420 (FY13) REVENUE: $228m (FY12) REVENUE: $125m (‘FY12) $164m (FY13) REVENUE: $118m (FY12), $130m* (FY13)

COMPANY HIGHLIGHTS: Went public in July 2013 $120m capital raising it restructure debt and reinvest; upgraded plant to produce spray dry lactoferrin

COMPANY HIGHLIGHTS: Plans for a new speciality products drier worth $65m

COMPANY HIGHLIGHTS: New dairy plant operating in Taupo with 36,000t WMP; New UHT plant to be built to process Shanghai Pengxin farms

COMPANY HIGHLIGHTS: Revenue exceeded $100m for first time in FY12; building second dryer with 4x capacity for $67m; 14 new suppliers for 13/14 season; CEO stepping down March 2014 after 20 years; being replaced by Tony Giles

33 * Estimate; Source: Coriolis from various published articles and annual reports

TOP 10 DAIRY FIRM PROFILES 5 6 7 8

iFAB 2013

A2 CORPORATION Geoff Babidge Managing Director

LION DAIRY & DRINKS NZ Peter Kean MD - Lion Dairy & Drinks

DESCRIPTION: Genetic testing for A2 gene, related IP and retailing of A2 brand dairy products

DESCRIPTION: New Zealand operations of licensed manufacturer of Yoplait brand in Australasia, NZ is regional division of large dairy, beverages company.

KEY PRODUCTS: Milk, infant formula, other dairy KEY PRODUCTS: Yoghurt

OWNERSHIP: New Zealand; listed on NZX; 17% Freedom Foods (Australia)

OWNERSHIP: Japan; Kirin Holdings; listed on TYO:2503 (via. National Foods Au )

COMPANY NUMBER: 1014105 COMPANY NUMBER: 1035697

ADDRESS: PO Box 109 349, Newmarket 1149, Auckland

ADDRESS: 27 Napier Street, Freemans Bay, Auckland 1011

PHONE: +61 2 9697 7000 PHONE: +64-6-355 1155

WEBSITE: a2corporation.com WEBSITE: www.yoplait.co.nz/ www.lionco.com/brands/dairy-and-drinks/

YEAR FORMED: 2000 YEAR FORMED: 2000

STAFF EMPLOYED: 70 (worldwide) STAFF EMPLOYED: 50 (plant), 49 (HO) = 99

REVENUE: NZ$62m (FY12), NZ$94.3m (FY13) REVENUE: $28m (FY12)

COMPANY HIGHLIGHTS: UK JV launched Robert Wiseman; launched A2 Platinum into Chinese market; $20m capital raising; moved to NZX ; contracted Synlait to manufacture a2 IF; new milk processing plant in Sydney, AU (2012)

COMPANY HIGHLIGHTS: Since 2011 known as Lion

34 Source: Coriolis from various published articles and annual reports

TOP 10 DAIRY FIRM PROFILES 9 10

iFAB 2013

Company

MD/CEO

Business description

Ownership Company #

Formed

Revenue

Staff

Address

Website

CANARY ENTERPRISES Derek Bartosh Director

Portion controlled butter Private 1116438

2001 $15-20m*

30 33 Kaimiro Street PO Box 20241, Te Rapa Hamilton

www.canarybutter.co.nz

BALLANTYNE FOODS NZ BUTTER CANNERS

Andrew Ballantyne Director

Canned butter factory in Morrinsville factory (NZ Butter Canners) is 50% owned by Fonterra

Private 2367708

1936 (AU) 1980 (NZ)

BF $6m (FY12) $31 (07)

n/a

Allen Street Morrinsville

www.ballantyne.com.au

KLONDYKE FRESH Nigel Gormack Director

Fluid milk manufacturing plant in Christchurch

Private 1409139

2003 $8-12m*

35 19 Klondyke Drive, Hornby, Christchurch

www.klondykefresh.co.nz

THE GRATE KIWI CHEESE CO. GKC 2013

Michael Laird Director

Processor & repacker of bulk cheese into large catering packs of cheese; store brand cheese

Private 1790551 (DIFL 30%)

1990/ 2006

TBD

40 67-69 Druces Rd Manukau Auckland

www.kiwicheese.co.nz;

MILLIGANS FOOD GROUP

Bruce Paton Managing Director

Milk Powders, Cheese, Cheese Sauce, Butter, AMF, WPC, WPI, Ice Cream, Syrups, Flour, Bakery Products, Mayonnaise

Private 565193

1896/ 1993

$20-25 (CE)

21-50 1 Chelmer Street, Oamaru, 9400

www.milligans.co.nz

BLUE RIVER DAIRY Keith Neylon Director

Sheep: Cheese, milk powder, ice cream (canning plant), starting sheep IF

Private 4583083

2013 $10-15m*

25 111 Nith Street, Invercargill, 9810

www.blueriverdairy.co.nz

EPICUREAN DAIRY Angus Allan Director

Gourmet soft cheeses, smoothies, yoghurt and haloumi

Private 3734658

2009/2012

$7-10m*

n/a

119 Lansford Crescent, Avondale, Auckland 1026

www.epicdairy.com www.thecollectivedairy.com

GREEN VALLEY DAIRIES

Bruce Pulman Director

Organic milk & cream, yoghurt & butter

Private (HEB Contstruction) 1280111

2003 $2-5m n/a

206 Bell Road Mangatawhiri, North Waikato 2471

www.gvd.co.nz www.marphona.co.nz/

WHITESTONE CHEESE Bob Berry Managing Director Simon Berry CEO

Specialty cheeses (blue, brie, feta, camembert, hard) butter

Private 147247

1966/ 1987

$5-10m 60 3 Torridge St, Oamaru 9400

www.whitestonecheese.co.nz

OTHER DAIRY FIRM PROFILES

35 * Estimate based on number of employees and type of business activity; Source: Coriolis from various published articles and annual reports

iFAB 2013

Company

MD/CEO

Business description

Ownership Company #

Formed

Revenue

Staff

Address

Website

KAIMAI CHEESE CO Jiahui Miao CEO

Soft and hard cheese manufacturer, inc. brie, blue, camembert

Private (Singapore) Pureland Dairy

2005 $2-5* 15 Hawes Street, Waharoa, Waikato

www.kaimai.co.nz acquired Te Mata in 2009 Oct 2013 sold assets for cheese and converting to UHT

BIOFARM Catherine Tait-Jamieson Director

Organic yoghurt, butter and milk products

Private 577954

1993 $2-5* n/a

118 Te Matai Road, Palmerston North

www.biofarm.com

YASHILI NZ DAIRY

William Zhao GM New Zealand

In progress dairy/infant formula plant in Pokeno; parent recently acquired by Mengniu

Public (China) 3922659

2012 $0 n/a 666 Great South Road,, Level 2, Building 10, Ellerslie, Auckland, 1051

www.yashili.hk www.mengniuir.com

Inner Mongolia YILI Industrial Group Co.

n/a

Purchased land to build a IF plant in Morven

Public (China) 90%, Hohhot Invest (10%)

n/a $0 n/a Morven, South Canterbury

OTHER DAIRY FIRM PROFILES

36 * Estimate based on number of employees and type of business activity; Source: Coriolis from various published articles and annual reports

iFAB 2013

iFAB 2013

10 YEAR NEW ZEALAND DAIRY EXPORT VALUE BY SUPER-REGION US$m; 2002-2012

DAIRY EXPORTS BY REGION Over the past decade New Zealand dairy exports have achieved strong growth driven primarily by the developing world; however they are down in the last year

38 Source: UN Comtrade database; Coriolis analysis

Europe 1% +$25m

N. America 6% +$358m

Australia/ Pacific Is. 11% +$289m

NA/ME/CA 19% +$1,609m

Indian Sub 17% +$293m

SE Asia 12% +$1,223m

E Asia 20% +$2,653m

TOTAL 13% +$7,085m

C/S America 8% +$467m

SS Africa 26% +$342m

CAGR Absolute

10 Year

10y CAGR 13%

$413 $471 $452 $453 $490 $504 $502 $416 $467 $545 $438

$447 $477 $545 $645 $611 $720 $826 $598 $541

$720 $805 $156 $163 $224 $234 $254 $334 $434 $311 $465

$520 $445 $396 $422 $441 $485 $514

$927 $1,005

$586 $784

$963 $862

$38 $67 $90 $95 $151

$201 $259

$212 $307

$403 $380

$336 $381

$492 $627

$779

$1,019

$1,315

$1,025

$1,309

$1,915 $1,945

$80 $92

$112 $140

$169

$229

$270

$226

$397

$481 $372

$581 $695

$772 $787

$896

$1,431

$1,634

$1,119

$1,592

$1,888 $1,805

$521 $572

$747 $772

$773

$980

$1,201

$1,241

$2,135

$2,813 $3,174

$2,966 $3,341

$3,875 $4,239

$4,639

$6,345

$7,445

$5,735

$7,995

$10,249 $10,226

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

iFAB 2013

TOP 25 DAIRY MARKETS BY EXPORT VALUE US$m; 2012

EXPORT DOLLARS China continues to be the number one dairy export market

39 *Hong Kong Special Administrative Region (SAR); Source: UN Comtrade database; Coriolis analysis

$2,142 $686

$395 $385 $375 $371 $367 $364 $355

$329 $326

$287 $252

$235 $209 $204 $203

$177 $171

$159 $139 $138

$113 $105 $96

ChinaUSA

JapanSaudi Arabia

United Arab EmiratesMalaysia

VenezuelaPhilippines

IndonesiaAlgeria

AustraliaEgypt

SingaporeThailandSri Lanka

Viet NamTaiwan

IranMexico

Rep. of KoreaNigeria

*Hong Kong SARGermany

BangladeshPeru

iFAB 2013

TOP 25 DAIRY MARKETS BY CHANGE IN EXPORT VALUE US$m

EXPORT DOLLAR GROWTH China & Middle East driving dollar value growth

40 Source: UN Comtrade database; Coriolis analysis

$1,839 $299

$172 $162

$106 $100 $99 $99 $98 $98 $97 $93 $87 $78 $76 $72 $64 $56 $49 $48 $47 $40 $40 $38 $36

ChinaUnited Arab Emirates

EgyptAlgeria

VenezuelaMalaysia

Hong Kong SARSingapore

IranUSA

IndonesiaSaudi Arabia

BangladeshPeru

NigeriaAustralia

Rep. of KoreaTaiwan

JapanLibya

Viet NamSri LankaThailand

SudanGermany

$365 $56 $54 $54 $50 $49

$42 $37 $32 $30 $27

$18 $17 $12 $12 $10 $8 $7 $5 $5 $5 $3 $3 $3 $3

ChinaHong Kong SAR

United Arab EmiratesEgyptUSAPeru

IndonesiaLibya

GermanyNigeria

Viet NamIran

BelgiumPakistan

ChileOman

South AfricaAzerbaijan

MalaysiaGuyana

Papua New GuineaSenegal

JordanCanadaUkraine

5 YEAR CHANGE; 07-12 1 YEAR CHANGE; 11-12

iFAB 2013

BOTTOM 25 DAIRY MARKETS BY CHANGE IN EXPORT VALUE US$m

EXPORT DOLLAR DECLINE Mexico, Denmark & Thailand leading declining markets by value

41 Source: UN Comtrade database; Coriolis analysis

-$1 -$1 -$2 -$2 -$2 -$2 -$3 -$3 -$3 -$4 -$6 -$8 -$9

-$10 -$11

-$16 -$18

-$27 -$38

-$50 -$63

-$67 -$70

-$179

Neth. AntillesSeychellesTajikistanPolandGhanaJamaicaKuwaitArgentinaPakistanBrazilEl SalvadorOmanUnited KingdomGuatemalaPanamaDominican Rep.PhilippinesSyriaItalyCanadaBelgiumCubaDenmarkMexico

-$6 -$8 -$9 -$9

-$12 -$13

-$19 -$19

-$20 -$21

-$22 -$26 -$26

-$35 -$37

-$41 -$45

-$49 -$54

-$58 -$64

-$67 -$79

-$95 -$110

MauritiusDominican Rep.BahrainBangladeshItalyVenezuelaSudanKuwaitMoroccoRep. of KoreaJapanGhanaSingaporeRussian FederationSyriaCubaTaiwanPhilippinesSri LankaIndiaAlgeriaAustraliaThailandMexicoDenmark

Net -$81m

5 YEAR CHANGE; 07-12 1 YEAR CHANGE; 11-12

iFAB 2013

TOP 25 DAIRY MARKETS BY CAGR PERCENT CHANGE IN EXPORT VALUE US$m; %

PERCENT GROWTH Strong growth rates coming out of Uruguay, Iraq & Africa

42 Source: UN Comtrade database; Coriolis analysis

162% 161%

146% 137%

78% 77% 76%

68% 63%

57% 49% 48% 46%

42% 40% 40% 39% 38% 38%

33% 33% 33% 32% 30% 29%

MongoliaIraq

UkraineCôte d'IvoireSierra LeoneMacao SAR

MozambiqueLibya

UruguayRomania

SurinameChina

TurkeyBangladesh

PeruSenegal

MadagascarMyanmar

United Arab…India

DjiboutiHaitiChile

BahrainHong Kong SAR

900% 387%

369% 245% 240%

221% 201%

167% 152% 145%

122% 108% 106% 104% 101%

84% 83%

68% 64% 62% 56% 51% 42% 41% 40%

UruguayIraq

TanzaniaLibya

Sierra LeoneSuriname

MozambiqueKazakhstanMacao SAR

KiribatiChile

TunisiaNiue

DominicaPeru

NepalDjibouti

Hong Kong SARSpain

SeychellesPakistan

GuineaEl Salvador

GuyanaGermany

5 YEAR CAGR; 07-12 1 YEAR CHANGE; 11-12

iFAB 2013

TOP 25 DAIRY MARKETS BY CAGR PERCENT CHANGE IN EXPORT VALUE US$m

PERCENT DECLINE Argentina & Eastern Europe stand out in declining markets

43 Source: UN Comtrade database; Coriolis analysis

-20% -22%

-25% -26% -26%

-28% -29% -29% -31%

-34% -38%

-100% -100% -100% -100% -100% -100% -100% -100% -100% -100% -100% -100% -100% -100%

CongoDominican Rep.SeychellesUnited Rep. of TanzaniaItalyCubaBoliviaGabonSwitzerlandTajikistanDenmarkEcuadorUgandaGibraltarBelarusCayman IsdsCroatiaMaltaCyprusAlbaniaBulgariaComorosNeth. AntillesZambiaArgentina

-53% -53% -53% -54% -54% -55%

-68% -70% -70%

-72% -72%

-81% -82% -83%

-89% -90% -92% -94% -95%

-97% -100% -100% -100% -100% -100%

ItalyCambodiaTuvaluSyriaBoliviaDominican Rep.BeninMarshall IsdsSwitzerlandIndiaCubaGabonLiberiaCongoHondurasGambiaPalauDenmarkTajikistanMauritaniaSloveniaChadLithuaniaZambiaArgentina

5 YEAR CAGR; 07-12 1 YEAR CHANGE; 11-12

iFAB 2013

TOTAL DAIRY EXPORT VALUE IN 2012: NZ VS. COMPETITORS US$m; 2012; 2012 vs. 2011

BENCHMARK – EXPORT GROWTH VS. COMPETITORS New Zealand’s dairy export performance in a difficult year globally was good relative to key competitors other than the United States (discussed next page)

44 Source: UN Comtrade database; Coriolis analysis

EXPORT VALUE 2012 1 YEAR $ CHANGE IN VALUE 1 YEAR % CHANGE IN VALUE

$10,509

$10,226

$8,001

$7,815

$4,991

$2,685

$2,470

$2,440

$1,390

$215

$39

Germany

New Zealand

France

Netherlands

USA

Denmark

Ireland

Australia

Argentina

Canada

Japan

$269

$9

$5

-$11

-$23

-$162

-$188

-$403

-$421

-$666

-$865

USA

Australia

Canada

Japan

New Zealand

Denmark

Argentina

France

Ireland

Germany

Netherlands

6%

2%

0%

0%

-5%

-6%

-6%

-10%

-12%

-15%

-22%

USA

Canada

Australia

New Zealand

France

Denmark

Germany

Netherlands

Argentina

Ireland

Japan

iFAB 2013

-$400 -$200 $- $200 $400 $600

Mexico

China

New Zealand

Philippines

Canada

Algeria

Brazil

Peru

Chile

Australia

Iran

Morocco

Singapore

Colombia

Saudi Arabia

NET Other

NZ

USA

$10,249

$4,722

$10,226

$4,991

New Zealand USA

DAIRY EXPORT VALUE: NZ VS. USA US$m; 2011-2012

FOCUS – NZ VS. USA The United States is growing dairy exports in a range of traditional New Zealand markets as New Zealand reorients to China

45 Source: UN Comtrade database; Coriolis analysis

2011 2012 2011 2012

-$23

+$269

TOP 15 US DAIRY EXPORT MARKETS BY 1Y VALUE GROWTH VS. NZ US$m; 2012 vs. 2011

Lactose primarily for infant formula

iFAB 2013

iFAB 2013

10 YEAR NEW ZEALAND DAIRY EXPORT BY CATEGORY/SUPER-CATEGORY (HS4/6 LEVEL) US$m; 2002-2012

DAIRY – EXPORTS BY TYPE New Zealand dairy exports have achieved strong overall growth in the past decade

47 Source: UN Comtrade database; Coriolis analysis

Fluid milk & cream 15% +$126m

Skim Milk Powder (SMP)

11% +$808m

Whole Milk Powder (WMP)

20% +$3,543m

Whey & natural milk cons.

45% +$586m

Butter & fats 13% +$1,118m

All cheeses 8% +$626m

All lactose 11% +$32m Caseins 4% +$244m

Other 6% +$177m

TOTAL 13% +$7,259m

CAGR Absolute

10 Year

10y CAGR 13%

$40 $39 $55 $55 $53 $72 $104 $89 $127 $167 $165 $445 $462 $472 $477 $657 $949 $880 $829 $1,023 $1,274 $1,253 $700 $931 $1,120 $1,277

$1,395

$2,041 $2,513

$1,859

$3,066

$4,222 $4,243

$15 $20

$119 $299

$322

$455

$507

$353

$419

$557 $601

$487 $550

$636 $661

$699

$880

$1,213

$950

$1,545

$1,968 $1,606

$545 $561

$688 $758

$803

$963

$1,135

$856

$1,023

$1,078 $1,171

$18 $17

$22

$35 $34

$70

$53

$40

$33

$40 $50

$473 $483

$467

$463 $484

$621

$696

$528

$476

$613 $717

$243 $278

$296 $213

$192

$295

$345

$233

$282

$330 $420

$2,966 $3,341

$3,875 $4,239

$4,639

$6,345

$7,445

$5,735

$7,995

$10,249 $10,226

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

iFAB 2013

EXPORT VALUE OF TOP 22 DAIRY PRODUCTS (HS6 LEVEL) EXPORTS IN 2012 US$m; 2012

EXPORT DOLLARS Whole and skim milk powder continue to be New Zealand’s two largest dairy exports; however there is a strong group of other emerging dairy products

48 Source: UN Comtrade database; Coriolis analysis

$4,243 $1,253

$916 $799

$680 $513

$407 $310

$185 $129

$97 $88 $87 $86 $74 $50 $30 $9 $8 $5 $4 $2

Whole Milk PowderSkim Milk Powder

ButterCheese, cheddar, etc.

Other milk fats and oilsNatural milk constituent nes

CaseinCaseinates/other derivatives

Fresh cheeseButtermilk powder, other fermented

Grated or powdered cheeseProcessed cheese

Whey & modified wheyUHT milk, other whole fluid

High fat fluid milkLactose 99%

Sweetened WMPDairy spreads

YogurtLow fat fluid milk

Sweetened condensedBlue-veined cheese

iFAB 2013

ANNUAL CHANGE IN EXPORT VALUE OF TOP 22 DAIRY EXPORTS US$m; 2012 vs. 2011

EXPORT DOLLAR GROWTH In 2012, casein and cheese grew export value, while butter and other fats were down

49 Source: UN Comtrade database; Coriolis analysis

$97 $94

$26 $24

$20 $20 $19

$10 $7 $5 $4 $3 $2 $2 $0

-$5 -$6

-$8 -$18

-$20 -$141

-$216

CaseinCheese, cheddar, etc.

Fresh cheeseNatural milk constituent nes

Bulk Infant Formula; other sweet WMPWMP

Whey & modified wheyLactose 99%

Caseinates/other derivativesYogurt

Sweetened condensedButtermilk powder, other fermented

UHT milk, other whole fluidLow fat fluid milk

Blue-veined cheeseDairy spreads

High fat fluid milkProcessed cheese

Grated or powdered cheeseSMP

Other milk fats and oilsButter

Net -$81m

iFAB 2013

ANNUAL PERCENT GROWTH IN TOP 22 DAIRY EXPORTS US$m; 2012 vs. 2011

PERCENT GROWTH In 2012, sweetened condensed milk, bulk infant formula and yogurt grew at the fastest rate

50 Source: UN Comtrade database; Coriolis analysis

209% 201%

52% 31%

28% 25%

16% 13%

9% 5% 3% 2% 2% 0%

-2% -7% -8%

-16% -17% -19%

-34%

Sweetened condensedBulk IF; other sweet WMP

YogurtLow fat fluid milk

CaseinWhey & modified whey

Lactose 99%Fresh cheese

Cheese, cheddar, etc.Blue-veined cheese

Natural milk constituent nesUHT milk, other whole fluid

Buttermilk powder, other fermentedCaseinates/other derivatives

WMPSMP

High fat fluid milkProcessed cheese

Grated or powdered cheeseOther milk fats and oils

ButterDairy spreads

3,344%

iFAB 2013

VALUE PER KILOGRAM OF TOP 22 DAIRY EXPORTS US$m; 2012

$/KG In 2012 blue vein cheese, bulk/base infant formula, sweetened condensed milk and caseins lead in terms of export dollars per kilo

51 Source: UN Comtrade database; Coriolis analysis

$13.82 $10.60

$10.29 $9.73

$8.03 $6.00

$5.73 $4.80

$4.04 $3.85

$3.68 $3.61

$3.32 $3.31 $3.23 $3.17 $3.09

$3.00 $2.41

$2.27 $1.28

$0.89

Blue-veined cheeseBulk IF; other sweet WMP

Sweetened condensedCaseinates/other derivatives

CaseinWhey & modified whey

Natural milk constituent nesYogurt

Processed cheeseGrated or powdered cheese

Fresh cheeseCheese, cheddar, etc.

ButterWMP

Other milk fats and oilsSMP

Dairy spreadsButtermilk powder, other fermented

Lactose 99%High fat fluid milkLow fat fluid milk

UHT milk, other whole fluid

Wt. Average $3.47

iFAB 2013

ANNUAL CHANGE IN VALUE PER KILOGRAM OF TOP 22 DAIRY EXPORTS US$m; 2012 vs. 2011

$/KG CHANGE In 2012 sweetened condensed milk and bulk/base infant formula achieved good price increases, while fats and casein were down strongly

52 Source: UN Comtrade database; Coriolis analysis

837% 375%

111% 44% 43% 40%

13% 7% 2%

-9% -21%

-27% -29% -34%

-42% -43% -47% -48%

-88% -96% -98%

-165%

Sweetened condensedBulk IF; other sweet WMP

YogurtLactose 99%

Caseinates/other derivativesWhey & modified whey

Blue-veined cheeseLow fat fluid milk

UHT milk, other whole fluidGrated or powdered cheese

Fresh cheeseHigh fat fluid milk

SMPProcessed cheese

WMPButtermilk powder, other fermented

Natural milk constituent nesCheese, cheddar, etc.

Dairy spreadsButter

CaseinOther milk fats and oils

iFAB 2013

iFAB 2013

Representing

Funding

Website/notes

DairyNZ

Farmers

- Levy and other funding - Govt co-funded research program (e.g.

Primary Growth Partnership $170m)

www.dairynz.co.nz Merger of Dairy InSight and Dexcel

Processors & exporters

- Membership Fees

www.dcanz.com

Farmers & sharemilkers

- Membership Fees www.fedfarm.org.nz/industry/dairy

NZ Large Herd Association

Large farmers

- Conference fees www.largeherds.co.nz

KEY DAIRY INDUSTRY ORGANISATIONS 2013

DAIRY – INDUSTRY ORGANISATIONS As a major dairy producer, New Zealand has a strong range of dairy industry organisations

54 Source: Coriolis analysis

iFAB 2013

Focus & activities

Riddett Institute

- www.riddet.massey.ac.nz - Hosted by Massey University in partnership with University of Otago, The University of Auckland, Plant and Food

Research, AgResearch - National Centre of Research Excellence (CORE) - Research in food industry in particular the dairy industry

- www.fonterraresearch.com - Fonterra Research Centre - Dairy centre and pilot plant in Palmerton North

AgResearch - Foods & Bio-based Products; food composition and function, The role of foods in human health and wellbeing

- Industry good activity - Research farms, feed, farm systems, animal sciences

KEY DAIRY RESEARCH BODIES IN NEW ZEALAND 2013

DAIRY – INDUSTRY SCIENTIFIC RESEARCH New Zealand has strength in dairy research across a range of research institutes

55 Source: Coriolis analysis

iFAB 2013 METHODOLOGY & DATA SOURCES

This report uses a range of information sources, both qualitative and quantitative.

The numbers in this report come from multiple sources. While we believe the data are directionally correct, we recognise the limitations in what information is available. In many cases different data sources disagree (e.g. Statistics New Zealand vs. FAO vs. UN Comtrade). Many data sources themselves incorporate estimates of industry experts (e.g. FAO AgStat). As one example, in many cases, the value and/or volume recorded as exported by one country does not match the amount recorded as being received as imports by the counterparty [for understood reasons]. In addition, in some places, we have made our own clearly noted estimates.

All trade data analysed in all sections of the F&B Information project are calculated and displayed in US$. This is done for a range of reasons:

1. It is the currency most used in international trade

2. It allows for cross country comparisons (e.g. vs. Denmark)

3. It removes the impact of NZD exchange rate variability

4. It is more comprehensible to non-NZ audiences (e.g. foreign investors)

5. It is the currency in which the United Nations collects and tabulates global trade data

The opinions expressed in this report represent those of the industry participants interviewed and the authors. These do not necessarily represent those of Coriolis Limited or the New Zealand Government.

Coriolis has not been asked to independently verify or audit the information or material provided to it by or on behalf of the Client or any of the data sources used in the project. The information contained in the report and any commentary has been compiled from information and material supplied by third party sources and publicly available information which may (in part) be inaccurate or incomplete. Coriolis makes no representation, warranty or guarantee, whether express or implied, as to the quality, accuracy, reliability, currency or completeness of the information provided in the report.

If you have any questions about the methodology, sources or accuracy of any part of this report, please contact project lead Tim Morris at Coriolis, on +64 9 623 1848

56

Data was from a variety of sources, and has a number of identified limitations

iFAB 2013

GLOBAL HARMONISED SYSTEM (HS) TRADE CODES DEFINED AS DAIRY HS2002

TRADE CODES Project defines the following trade codes as dairy

57 Source: United Nations codes; Coriolis definitions in conjunction with project steering group

HS Code Short Description Longer official description

040110 Low fat fluid milk Milk not concentrated nor sweetened < 1% fat

040120 UHT milk, other whole fluid Milk not concentrated nor sweetened 1-6% fat

040130 High fat fluid milk Milk and cream not concentrated nor sweetened < 6% fat

040210 SMP (skim milk powder) Milk in powder/granules/other solid form, fat content by wt. not >1.5%

040221 WMP (whole milk powder) Milk in powder/granules/other solid form, unsweetened, fat content by wt. >1.5%

040229 Bulk IF (infant formula); other sweet WMP Milk in powder/granules/other solid form, sweetened, fat content by wt. >1.5%

040291 Unsweetened condensed Milk & cream, concentrated (excl. in powder), unsweetened

040299 Sweetened condensed Milk & cream, concentrated (excl. in powder), sweetened

040310 Yogurt Yogurt

040390 Buttermilk powder, other fermented Buttermilk/curdled milk & cream/kephir & other ferm./acidified milk & cream, whether or not concentrated/sweetened/flavoured/cont. fruit/nuts/cocoa

040410 Whey & modified whey Whey & modified whey, whether or not concentrated/sweetened

040490 Natural milk constituent nes Milk prods. of nat. milk constituents, whether or not sweetened, n.e.s.

040510 Butter Butter

040520 Dairy spreads Dairy spreads

040590 Other milk fats and oils Fats & oils derived from milk, other than butter & dairy spreads

040610 Fresh cheese Fresh (unripened/uncured) cheese, incl. whey cheese, & curd

040620 Grated or powdered cheese Grated/powdered cheese, of all kinds

040630 Processed cheese Processed cheese, not grated/powdered

040640 Blue-veined cheese Blue-veined cheese

040690 Cheese, cheddar, etc. Cheese (excl. of 0406.10-0406.40)

170211 Lactose 99% Lactose & lactose syrup, cont. by wt. 99%/more lactose, expressed as anhydrous lactose, calc. on the dry matter

170219 Lactose, other Lactose & lactose syrup, cont. by wt. >95% but <99% lactose, expressed as anhydrous lactose, calc. on the dry matter

350110 Casein Casein

350190 Caseinates /other derivatives Caseinates & other casein derivatives.; casein glues

iFAB 2013 GLOSSARY OF TERMS

58

This report uses the following acronyms and abbreviations

A$/AUD Australian dollar N/C Not calculable

ABS Absolute change N.H Northern Hemisphere

ANZSIC AU/NZ Standard Industry Classification NZ New Zealand

AU Australia NZ$/NZD New Zealand dollar

Australasia Australia and New Zealand R&D Research and Development

b Billion S Asia South Asia (Indian Subcontinent)

CAGR Compound Annual Growth Rate SE Asia South East Asia

C/S America Central & South America (Latin America) S.H Southern Hemisphere

CRI Crown Research Institute SS Africa Sub-Saharan Africa

CY Calendar year (ending Dec 21) T/O Turnover

E Asia East Asia US/USA United States of America

EBITDA Earnings before interest, tax, depreciation and amortization

US$/USD United States dollar

FAO Food and Agriculture Organisation of the UN UK United Kingdom

FY Financial year (of firm in question) US United States of America

£/GBP British pounds YE Year ending

JV Joint venture YTD Year to date

m Million Sources

n/a Not available/not applicable AR Annual report

NA/ME/CA North Africa / Middle East / Central Asia Ce Coriolis estimate

N. America North America (USA, Canada) Ci Coriolis interview

Nec/nes Not elsewhere classified/not elsewhere specified

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