MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET EWA HUDSON GLOBAL HEAD OF HEATH AND WELLNESS RESEARCH

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1 MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET EWA HUDSON GLOBAL HEAD OF HEATH AND WELLNESS RESEARCH FOOD MATTERS LIVE NOVEMBER 2016

2 GLOBAL DIGESTIVE HEALTH FOCUS: UK FUTURE OF DIGESTIVE HEALTH

3 Digestion - the 3 rd largest health trend within the 476 bn HW industry 3 Global Retail Sales ( billion) 2016 General Wellbeing 248 bn Weight Management 67 bn Digestive Health 44 bn Energy Boosting 24 bn Free From 21 bn Oral/Respiratory Health 13 bn Endurance 13 bn Bone and Joint Health 10 bn Cardiovascular Health 5 bn Vision Health 4 bn Brain Health and Memory 3 bn Immune Support 2.5 bn Urinary Tract Health 0.5 bn Beauty from Within 0.1 bn

4 Digestive health food and drinks equally important across key regions 4

5 billion, fixed 2016 exchange rates MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 Probiotics and fibre key in digestion-positioned packaged food Global digestive health by categories Others FF Bottled Water Milk Juice High Fibre Noodles FF Bread High Fibre Pasta FF Milk Formula High Fibre Sweet Biscuits NH Rice Sour Milk Drinks High Fibre Breakfast Cereals Probiotic Yoghurt High Fibre Bread

6 Digestive health fragmented, an opportunity to establish or re-establish brand s health credentials 6 Digestive health by leading brands, World billion Yakult (Yakult Honsha Co) Activia (Danone, Groupe) Chobani (Chobani LLC) Cheerios (General Mills Inc) Quaker Oatmeal (PepsiCo Inc) Mengniu (China Mengniu Dairy Co) Yili (Inner Mongolia Yili Industrial Group Co) Nature's Own (Flowers Foods Inc) Lieken Urkorn (Agrofert as) Bimbo (Grupo Bimbo ) Quaker (PepsiCo Inc) Oroweat (Grupo Bimbo ) Nido (Nestlé SA) New Yakult (Yakult Honsha Co) Bio Danone (Danone, Groupe) Almarai (Almarai Co) Barilla (Barilla Holding SpA) Kellogg's Mini Wheats (Kellogg Co Joie (Yakult Honsha Co) Stonyfield Farm (Danone, Groupe)

7 Be aligned with yourself, in sync, find your balance 7

8 billion MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 Western Europe - the setback of probiotic claims in food to bring market opportunities for supplements 8 4 Western Europe Retail Sales of Probiotics by Type Consumption gap between probiotic yoghurt and supplements narrowing Probiotic supplements to outpace sour milk drinks 0 Probiotic Supplements Probiotic Yoghurt Sour Milk Products

4 billion US$ retail value of probiotics supplements in the world 2015 11% Retail value

9 4 billion US$ retail value of probiotics supplements in the world % Retail value up from % Retail value growth expected in % Expected growth from 2016 to 2021

10 Probiotic supplements to outpace all others throughout year

11 million MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE billion worth of digestive remedies sales highlights the need for improved preventative approach 11 3,500 Digestive Remedies by Regions ,000 2,500 2,000 1,500 1, North America Asia Pacific Western Europe Latin America Eastern Europe IBS Treatments Motion Sickness Remedies Paediatric Digestive Remedies Diarrhoeal Remedies Laxatives Indigestion and Heartburn Remedies

12 Egypt Romania Hungary Russia Ukraine Slovakia Bulgaria Germany Mexico United Kingdom Finland Poland Czech Republic Portugal Spain Chile Belgium Japan Denmark Italy France Austria Argentina Brazil Netherlands Switzerland USA Canada Sweden Greece Thailand Norway South Korea South Africa Ireland Philippines Hong Kong, China Australia Colombia Indonesia Taiwan New Zealand Venezuela Morocco Israel India China Vietnam Malaysia Turkey Singapore Saudi Arabia MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 Diseases of digestive system cause 49 deaths per 100 k people in the UK Death by Diseases of the Digestive System (per 100,000 inhabitants) 2015

13 GLOBAL DIGESTIVE HEALTH FOCUS: UK FUTURE OF DIGESTIVE HEALTH

14 Weetabix the largest digestive health brand in the UK 14 Leading digestive health brands in the UK (% share), 2015 Weetabix (Bright Food (Group) Co) Oatso Simple (PepsiCo Inc) Warburtons (Warburtons Ltd) Kingsmill (Associated British Foods Plc) Hovis (Premier Foods Plc) Shreddies (Cereal Partners Worldwide SA) 10g of fibre per 100g Kellogg's All Bran (Kellogg Co) Alpen (Bright Food (Group) Co Ltd) Dorset Cereals (Associated British Foods Plc) Others

15 Not just fibre&wholegrain, but also locally produced and in a responsible way with less fertilizer 15

million MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 Post Brexit digestive health?

16 million MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 Post Brexit digestive health? EU key but China the land of opportunity Digestive health 2016 India China US EU UK Digestive health 2021 India China US EU UK EU data excludes UK

17 GLOBAL DIGESTIVE HEALTH FOCUS: UK FUTURE OF DIGESTIVE HEALTH

18 Food and mental disorders on the rise, as well as allergies, skin conditions, arthritis, autism, gut the second brain 18

19 Food and mood, gut and brain axis 19

million MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 At 21 billion globally, the free from movement grows from strength

20 million MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 At 21 billion globally, the free from movement grows from strength to strength; improving digestion at its heart Free from 2016 India China US EU UK Free from 2021 India China US EU UK EU data excludes UK

21 Aspartame Artificial Enzymes MSG rbst Steroids MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 Consumers look beyond traditional digestive approach 21 Pesticides Local Sourcing Safety Artificial Ingredient s Artificials HFCS GMOs Southampton Study

22 Clean label a new entrant in digestive health? 22 Euromonitor Clean Label Types All Natural No Artificial Additives No Artificial Colours No Artificial Preservatives No Artificial Flavours No Artificial Sweeteners GMO Free

23 billion MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016 UK the second largest in the global 107 billion clean label movement Top 10 clean label markets % Growth

sugar, no additives Nothing artificial, no added refined sugar No artificial preservatives, no added MSG, free from artificial colours 100% pure & raw Water, lime cucumber, BC and that s it No

24 Which claim is most important from the consumer perspective? 24 No artificial colours, flavours and preservatives No artificial colours or flavours Zero added preservatives Made with real fruit, no artificial colours, preservatives or sweeteners No added sugar, no additives Nothing artificial, no added refined sugar No artificial preservatives, no added MSG, free from artificial colours 100% pure & raw Water, lime cucumber, BC and that s it No artificial colours or preservatives Add taste, nothing else No artificial colours, flavours or preservatives No added MSG Vegetarian, vegan and coeliac friendly Gluten and lactose free 100% natural ingredients, skin & collagen Cold pressed (never heat) 100% natural ingredients yes! Say no to Added sugar Added sweeteners Added preservatives Added water

25 UK s 13.3 billion clean label driven by concerns around artificial colours 25 Clean label by leading categories, UK ,000 10,000 15,000 20,000 25,000 30,000 million No Artificial Colours No Artificial Flavours No Artificial Preservatives All Natural No Monosodium Glutamate No Artificial Sweeteners GMO Free No Artificial Additives BPA Free

26 Turkey, China and Indonesia to drive the global growth 26

27 THANK YOU FOR LISTENING Q&A Ewa Hudson Global Head of Health and Wellness, Nutrition and Ethical Labels

28 Ethical labels research 28 PEOPLE Clean Label: All Natural No Artificial Additives No Artificial Colours No Artificial Flavours No Artificial Preservatives No Artificial Sweeteners No Monosodium Glutamate GMO Free BPA Free Origin: Locally Sourced Prominent Halal Kosher Religious Labels: Charity/Sponsorship ENVIRONMENT/ SUSTAINABILITY Sustainable Trade and Farming: Fairtrade UTZ Certified Other Responsible Forestry: Rainforest Alliance FSC Other Sustainable Palm Oil System RSPO/ISPO/MSPO Other Recycling Label: Widely recycled Can be recycled Terracycle From Sustainable/Renewable Sources Other Carbon Footprint/No Air Miles Food ANIMAL WELFARE Free Range Marine Sustainability Bird/Insects Friendly Grass fed/pasture raised Vegetarian/Vegan

29 Ethical labels methodology 29 BRAND SALES (RETAIL VALUE) OF PACKAGED FOOD, SOFT DRINKS AND HOT DRINKS EXCLUDED: PRIVATE LABEL, OTHERS CHECK PACKAGING FOR 38 ETHICAL LABELS Allocation of brands to categories based on recorded label Scan of CSR reports of leading players for commitments that directly affect our forecasts 2015: SUM OF BRANDS WITH AT LEAST ONE ETHICAL LABEL FORECAST MODEL: 2015 VALUE OF ETHICAL LABELS + PK, SD, HD BASE LINE + CSR COMMITMENTS Use of packaged food, soft drinks and hot drinks growth as a base line for forecast growth Application of commitments from CSR reports to overwrite the base line growth

30 Clean label defined by packaging claims 30 Lacking a formal definition, Passport: Ethical Label bases its definition in the various claims found on product packaging that stress a shift away from complex artificial ingredients, toward familiar, natural alternatives. GMO free/non-gmo: GMO (genetically modified) foods involve introducing foreign genetic material into an organism artificially, usually to increase yield, increase resistance to disease, extend shelf life or improve food properties (texture, flavour, nutrient value). This category quantifies sales of products under our coverage with a GMO-Free/Non-GMO claim. All Natural/100% Natural: These terms refer to the natural properties of the product. Both All Natural and 100% Natural are to be recognised as the same ethical label. This includes references to 'all natural anything'. Artificial Additives: This category aggregates sales of products with a claim "no artificial additives and free from artificial additives on product packaging. Artificial Flavourings: This category aggregates sales of products with a claim "no artificial flavours/flavourings and free from artificial flavours/flavourings on product packaging. Artificial Colours: This includes all products with a claim "no/free from artificial colours". Several artificial colours have been banned by food standards authorities after being linked to an increased number of cases of attention deficit hyperactivity disorder (ADHD) and are thus avoided by certain consumers. Artificial Sweeteners: This category captures aggregated sales of all products with the claim "no/free from artificial sweeteners on product packaging. Artificial Preservatives: This includes all products with a claim "no/free from artificial preservatives and products with a claim "no/free from parabens". Parabens are a form of artificial preservative and when present in food usually come in the form of E numbers. BPA Free: All products with a claim referring to "BPA free". BPA (bisphenol A) is an industrial chemical that is used to make certain plastics and resins. BPA is often used in containers that store food and beverages, such as water bottles.

CLEAN LABEL: INSTILLING CONSUMER CONFIDENCE IN GLOBAL FOOD AND BEVERAGES

CLEAN LABEL: INSTILLING CONSUMER CONFIDENCE IN GLOBAL FOOD AND BEVERAGES ALAN ROWNAN FOOD MATTERS LIVE, LONDON 2016 ABOUT EUROMONITOR INTERNATIONAL About Euromonitor International 2 Euromonitor International