How innovation in Dutch dairy has built a global business

Roelof Joosten, CEO FrieslandCampina

Agenda:

• Brief introduction FrieslandCampina

• The dairy heritage of the Netherlands and its USP’s

• Driving innovation in processes, products and our supply chain

• Climate neutral growth and sustainable energy innovations

• Concluding

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Who we are: a global player in dairy ‘From grass to glass’

3nd largest dairy cooperative in the world

● 6th processor of milk globally ● 19,000 member farmers and 22,000 employees ● Annual sales EUR 11.3bn (2014) ● Factories in 32 countries ● Sales in 100 countries ● 14,000 dairy farms: 10 bn kg

milk (NL, Germany, Belgium)

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FrieslandCampina brands

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Worldwide

North and South America

United States of America Brasil

361 revenue *

163 employees

6 locations

Europe

Netherlands Germany Belgium Greece Hungary Romania Russia France Spain Italy Austria United Kingdom

6,768 revenue *

13,371 employees

71 locations

Africa and the Middle East

Nigeria Ghana Ivory Coast United Arab Emirates Saudi Arabia Egypt

1,241 revenue *

1,060 employees

6 locations

Asia and Oceania

Indonesia Malaysia Singapore Thailand Myanmar Vietnam Philippines China Hong Kong India Japan New Zealand

2,978 revenue *

7,574 employees

33 locations

Figures 2014 * in millions of euros

19,000 ambitious member farmers are the owners of FrieslandCampina

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Approx. 150 years cooperative

history

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Generation 2 generation

Family owned Average 87 cows

Meadow grazing

A typical Dutch Farm

Average farm: 670.000 kg milk per year

Who we are..

• Capital invested EUR 3 mln • Annual milk sales EUR 300K • Net income annually: 30K

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Key characteristics of sector, cooperative and farming have changed

To: nourishing millions of consumers around the world Voedselveiligheid From: producing safe milk

Auditing

Milking

Food safety

Efficiency

Animal wellness

Milking

Animal Wellfare

Food safety

Efficiency

Animal wellness

Auditing

Nourishment

Biodiversity

Transparency

CO2 Neutral

Sustainability

Meadow grazing

Agenda:

• Brief introduction FrieslandCampina

• The dairy heritage of the Netherlands and its USP’s

• Driving innovation in processes, products and our supply chain

• Climate neutral growth and sustainable energy innovations

• Concluding

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USP’s Dutch dairy: mild climate, rivers delta, ideal soil and grassland plus knowledge base

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A century of craftmanship & salesmanship conquered foreign dairy markets

• June 2013: celebration 100th anniversary of CCF factory in Leeuwarden:

Sietze Hepkema

A remarkable transition from - for humans -

useless grass to a highly nutritious product

Feed stock NL: approx. 50% grass; 30% maize; 20% concentrates (“krachtvoer”) from recycled residue from food industry (soy crushing; breweries, potato industry, sugar beet leaf, citrus juice producers, etc.)

Proteins

Minerals

Vitamins

Milk fat

Bio-actives

Agenda:

• Brief introduction FrieslandCampina

• The dairy heritage of the Netherlands and its USP’s

• Driving innovation in processes, products and our supply chain

• Climate neutral growth and sustainable energy innovations

• Concluding

Innovation Centre at campus Wageningen

Value creation by innovation

Innovation at FrieslandCampina

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● 320 R&D employees

● 450 workstations

● Pilot plant (2,500 m2)

● Laboratories and taste testings

● Experience centre, innovation kitchen and bakery

● State-of-the-art and sustainable building: BREEAM certified

● FrieslandCampina Development centre in Singapore (50 employees)

● Healthy, nutritious, well-balanced and tasty food, making best use of the nutritional benefits of milk

● The efforts are focused on the growth categories dairy-based beverages, infant nutrition and branded cheese

● Focus areas for research are growth & development (of children), daily nutrition, health & wellness and functionality (structure)

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Innovation responding to customer needs

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“Fractionating” 100% pure milk components through Prism technology

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>70%

€ 1.8 billion in the Netherlands

in € x million

We keep on investing in processing capacity, innovation and quality

2009

2010

2011

2012

2013

2014

2015

€ 2.5 billion total

600

261

236

376

423

559

656

Energy: BEAST of an evaporator - Step changes in water removal

Innovative evaporator delivers 60% energy

reduction compared to industry benchmark

and approaches reverse osmosis efficiency

• Project started with a clear driver from

sustainability perspective

• Integrated approach knowledge and

equipment suppliers

• Up and running since 2013, roll-out

to other factories ongoing

Water: ‘Closing the water loop’ will become a reality

• Example project:

Reuse of RO-permeate with appropriate

preservation technologies applied

• Phase 1:

Started up in 2014: results in >300.000

m3/year water savings

• Phase 2 will double this amount; following

steps will enable us to close the loop

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Chocomel vers Chocomel with fresh milk

Milner Koe & Geit and Milner Lente Graskaas

Optimel New flavours yoghurt Greek style

Optimel Puur 100% natural yoghurt drink

Friso infant nutrition Now also available in Indonesia

Peak Value pack

Dutch Lady Essential nutrients for children

Dutch Lady Introduction portion packs yoghurt Dutch Lady Vietnam

Black & White Sachets

NoyNoy Noulac

What about product innovations?

Landliebe Hungary Introduction in Hungary

Mona (ice)pudding

Nezhniy New packaging Campina Nezhniy Russia

DubbelFrisss Free Free from artificial sweeteners and added sugars

Frisian Flag Frisian Flag Disney series in Indonesia

Recent introductions:

LATTIZ,

Barista quality milk foam

for cappuccino in coffee chains,

restaurants, etc.

Recent introductons:

Optimel PUUR; Landliebe lactose-free

• No added sugar, • No sweeteners,

• Zero % fat • Low calories

Lactose-free dairy

(natural milk sugars)

Make it veggie with Valess!

Valess is made from milk and algae extract and is 100% vegetarian. All Valess Schnitzels have great taste, a firm bite and juicy mouthfeel. Because of this, McDonald’s has chosen Valess as their unique veggie patty. At McDonald’s Austria, the 6 most popular ‘chicken’ products can now be ordered as veggie.

“Burgers without meat” extra consumer choice option

April 30, 2015

FrieslandCampina and Elopak are setting the standard with new bio-based milk carton

FrieslandCampina plans to introduce a new bio-based beverage carton over the next 1.5 years, starting with fresh milk and buttermilk from Campina in June 2015. For the production of the cap and the coating certified organic waste material is purchased.

The paper in the carton was already renewable and this innovation makes it the most sustainable beverage carton ever.

The CO2 footprint of this bio-based milk carton is 20% lower than the current carton. This is a novelty on the Dutch market. The introduction of this bio-based carton fits perfectly within the movement to a circular economy, where the raw material of the carton is completely renewable (certified organic residue).

And more…

348 181

141 140

USA China Japan UK

168

Growth % over 2 yrs

11% 64% 10% 9%

429 487

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Overall e-commerce sales

(Unit: bn USD / growth in last 2 years period)

We have also surfed the wave of digital commerce innovations in China

Agenda:

• Brief introduction FrieslandCampina

• The dairy heritage of the Netherlands and its USP’s

• Driving innovation in processes, products and our supply chain

• Climate neutral growth and sustainable energy innovations

• Concluding

Climate-neutral growth is our commitment…

1.400 kTons CO2 equiv.

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Renewable energy

Mineral efficiency

Green transportation Biogas as truck fuel

Digesters

We keep on pushing the green innovation agenda

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FrieslandCampina aims for chain innovations to realize circular manure valorisation

Interest: Reduction of GHG emission and phosphate disposal by:

1. Farm scale mono-digestors and local digest refinery producing biogas, organic-, P-, N- and K- fertilizers

2. Large scale (>100.000 ton annually) mono-digestors and digest refinery producing biogas, organic-, P-, N- and K- fertilizers

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FrieslandCampina aims for chain innovations to realize circular manure valorisation

Interest: Reduction of GHG emission and phosphate disposal by:

1. Farm scale mono-digestors and local digest refinery producing biogas, organic-, P-, N- and K- fertilizers

2. Large scale (>100.000 ton annually) mono-digestors and digest refinery producing biogas, organic-, P-, N- and K- fertilizers

1. Technologies for manure pretreatment and/or improved biomass conversion 2. Technologies for the production of value added biobased products from manure 3. Integration of innovative technologies into an efficient process chain

Agenda:

• Brief introduction FrieslandCampina

• The dairy heritage of the Netherlands and its USP’s

• Driving innovation in processes, products and our supply chain

• Climate neutral growth and sustainable energy innovations

• Concluding

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Our purpose ‘Nourishing by Nature’ and our commitments: wrapping it all up…

Limiting the growing pressure on natural resources, raw materials & biodiversity.

Securing long-term customer & societal value in our supply chain from ‘grass to glass’

Milk, by nature, contains essential nutrients to stay healthy: proteins, vitamins & minerals

“Better nutrition for the world, a good living for our farmers – now and for generations to come…”

Trusted, tasty, safe, affordable and high-quality dairy nutrition

Climate-neutral growth, CSR well secured in chain. Closing loops, circular economy

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