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The challenge from ingredients to replace

DairyRobert Pettit

Trade and Strategy Group

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Presentation reviews four major variables:

1. Protein technology research and development

2. Customer perceptions and behaviour

3. Government legislative and regulatory measures and

4. Sustainability influences

The focus in on trends in the ASEAN nations.

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Protein Ingredient Market Volumes:

Global (2006, 2009 and 2014) tonnes

Protein Ingredient Market Volumes:Global (2006, 2009 and 2014) %

Source: Frost & Sullivan

Overview: total protein

ingredient market

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1. Protein technology R&D:

product lifecycle stage

Milk Protein Isolate

Wheat Derivative Protein

AgeingMatureGrowthDevelopment

Whey Protein Conc

entrate

Whey Proteins Isolate Casein

Soy Protein Isolate

Milk Protein Concentrate

Whey Proteins HydrolysateSoy Protein Concentrate

Rice Protein

Pea ProteinPotato Protein

Wheat Derivative Protein

AgeingMatureGrowthDevelopment

Whey Pro

teinsConcentrates

Whey Proteins IsolateMilk Protein Isolate

Soy Flour and Grits

CaseinSoy Protein Isolate

Milk Protein Concentrate

Whey Proteins HydrolysateSoy Protein Concentrate

Canola Protein

Pea Protein

Rice Protein

Potato Protein

2010

2016

Source: Frost & Sullivan

Canola Protein

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Consumer acceptance

2010 2012 2014

Nutritional profile

DriversDrivers

2010 2012 2014

Marketing spend

Technological developments

for greater functionality

Plant ProteinDairy ProteinSource: Frost & Sullivan

Total protein ingredient

market: impact of drivers

High Medium Low

Impact:

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2010 2012 2014

High Medium Low

Impact:

2010 2012 2014

Anti-nutritional

components and

allergens

Cultural differences

- global

RestraintsRestraints

Threat of

substitution

Plant ProteinDairy ProteinSource: Frost & Sullivan

Total protein ingredient market:

impact of restraints

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Soy

Protein

Concentr

ate

Soy

Protein

Isolate

Pea

Protein

Rice

Protein

Potato

Protein

Canola

Protein

Whey Protein

Concentrate

Whey Protein

Isolate

Caseinate/Casein

Milk Protein

Concentrate

Low substitutionMedium substitutionHigh substitution

Source: Frost & Sullivan

Total protein ingredient market:

substitution trend (2016)

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2. Customer perceptions and behaviour - ASEAN

Both consumer and ingredient end-user can be influenced by

comparable factors such as:

Relative pricing

Degree of consumer acceptance and

Functional attributes and tradition

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Customer perceptions andbehaviour - ASEAN continued

Both consumer and ingredient end-user can also be

influenced by factors such as:

Lactose intolerance

Concerns over allergens and

Marketing (brand) spending

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Future opportunity and challengeindicators in ASEAN include:

Population increases

Expanding middle income group

Sourcing of ingredients

Demand for healthy and nutritious products

Price sensitivity

Health food scares

Food price inflation/cost of living

Environmental

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3. Influences on Governmentregulatory measures in ASEAN

General tightening of infant formula follow on (IFFO) regulations and

Extension to include growing up milk powders (GUMPs) in marketing,

advertising and promotion restrictions

milk is not a natural part

of Asian diet

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4. Sustainability

Sustainability is not

The main issue is

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The broader commercial and policy context of

Growing global demand for proteins

Food security

Energy security

Climate variability

Trade Health

Food price volatility

Private sector standards

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In conclusion the dairy industry can:

Draw on strengths for example:

Nutritional and flavour profiles and

Long history of consumer use and preference

while effectively utilising opportunities in:

Health and wellness and

Specific market segments

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Three messages:

Growth

Compete

Integral

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Thank-you

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Background

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Protein Technology R&D:

Product Innovation Matrix

Impact of Technology

Technology Readily Available New Technology Concepts

ARCHITECTURAL INNOVATION

NICHE INNOVATION REVOLUTIONARY INNOVATION

INCREMENTAL INNOVATION

Milk Protein IsolateMilk Protein Concentrate

Whey Protein Isolate

Soy Protein Isolate

Soy Protein Concentrate

Whey Protein Hydrolysate

Whey Protein Concentrate

Soy Flour & Grits

Textured Soy Proteins

Casein

Potato Protein

Pea Protein

Wheat Protein

Canola Protein

Rice Protein

Dairy Proteins

Plant Proteins

Source: Frost & Sullivan

Exis

tingMarkets

NewMarketOpportunities

MarketOpportunity

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Food and drink companies are:

Likely to be receptive to industry developed sustainability indicators

and

Provided they meet their needs of demonstrating sustainability ofsupply