EastAgri Annual Meeting BEST FOOD: HOW TO PRODUCE BOTH QUALITY AND QUANTITY IN EUROPE AND CENTRAL ASIA

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1 1 EastAgri Annual Meeting BEST FOOD: HOW TO PRODUCE BOTH QUALITY AND QUANTITY IN EUROPE AND CENTRAL ASIA Belgrade, Serbia June 2014

2 EXPANSION INTO NEW MARKETS THROUGH QUALITY ENHANCEMENT: WHAT DOES IT TAKE? 19 TH JUNE 2014, FAO/ERBD EASTAGRI ANNUAL MEETING DIANA COWLAND SENIOR HEALTH AND WELLNESS ANALYST

3 INTRODUCTION About Euromonitor International Global provider of Strategic Market Intelligence 12 Regional offices analysts in 80 countries Cross-country comparable data and analysis Consumer focused industries, countries and consumers 5-10 year forecasts with matching trend analysis All retail channels covered Subscription services, reports and consulting London Chicago Singapore Shanghai Dubai Vilnius Cape Town Santiago Tokyo Sydney Bangalore Sao Paulo 3

4 WHAT CAN BE LEARNT FROM ORGANIC? FOCUS ON THE EASTAGRI REGION CONCLUSION

5 US$ 32.3Bn GLOBAL RETAIL SALES IN % GLOBAL GROWTH IN 2013 US$ 7.5Bn EXPECTED NEW SALES OVER

6 Retail Sales (US$ billion) % Y-on-Y Growth (constant) FAO/ERBD EASTAGRI ANNUAL MEETING Potential For Organic Remains Good Despite Economic Slowdown Global Organic Packaged Food and Beverage Retail Sales, Organic Packaged Food Organic Beverages % Y-on-Y Growth Organic Packaged Food % Y-on-Y Growth Organic Beverages

7 Retail Sales (US$ billion) FAO/ERBD EASTAGRI ANNUAL MEETING Organic Retail Sales Set to Reach US$39.8Bn in 2018: Lead By North America and Western Europe 7 18 Organic Retail Sales by Region, North America Western Europe Asia Pacific Australasia Latin America Eastern Europe Middle East and Africa

8 % y-on-y growth (constant) FAO/ERBD EASTAGRI ANNUAL MEETING Case-Study: Organic Baby Food Out-Performs Conventional Baby Food 8 Global Prepared Baby Food: Organic vs Non- Organic Y-on-Y Value Growth Organic Baby Food Offers Organic Consumer Group 8 Safety 6 4 Functional Organic Prepared Baby Food Prepared Baby Food Convenience Lower Unit Price

9 FAO/ERBD EASTAGRI ANNUAL MEETING Need for Uniform Legislation and Consumer Education 9 Key Findings From Survey Consumers tend to think of organic as meaning the same thing as natural Only half of shopper believe natural and organic products are produced by stringent regulations Need for more stringent legislation

10 WHAT CAN BE LEARNT FROM ORGANIC? FOCUS ON THE EASTAGRI REGION CONCLUSION

11 Retail Sales (US$ million) FAO/ERBD EASTAGRI ANNUAL MEETING Russia Leads in 2013 But Turkey Set to Gain No.1 Spot in Performance of Organic Packaged Food and Drink in Key Countries in the Europe and Central Asia Region, Turkey Russia Poland Hungary Ukraine Bulgaria Note: Countries listed in this slide are those covered by Health and Wellness Research

12 FAO/ERBD EASTAGRI ANNUAL MEETING Regulation Only Recently Being Enforced In Eastern Europe 12 Russia Absence of organic standards Domestic farmers and manufacturers set to obtain EU certification drive up price of organic food Majority is imported specialist retailers Bulgaria Manufacturers used to take advantage of the relaxed regulation by labelling their products as Organic or Bio New regulation compliant with EU legislation Ukraine Law for Ukraine on Production and Trade of Organic Produce approved on September Law to come into force in 2014 In % arable land dedicated to organic farming

13 FAO/ERBD EASTAGRI ANNUAL MEETING Green Features Important to Russian and Turkish Consumers 13

14 FAO/ERBD EASTAGRI ANNUAL MEETING 60% of Russian Willing to Pay More For Environmentally/Ethically Conscious Products 14 China India Brazil Germany Russia France US UK More than double A lot more Somewhat more (50% more) A little more No extra Japan 0% 20% 40% 60% 80% 100%

15 FAO/ERBD EASTAGRI ANNUAL MEETING Russian Consumers Most Willing To Pay For Natural Products: In Comparison Germans Looking For Fair Trade 15 Natural Sustainably Produced Free range Organic Locally sourced Fair trade Russia Germany Supports Local Communities None of the Above % Respondents

16 FAO/ERBD EASTAGRI ANNUAL MEETING Traceability and Transparency in The Food Chain 16 Emerging markets Quality control checks Food safety enforcement Certification Full Traceability of Ingredients Emerging markets Challenges Developed markets Increase Consumer Confidence Supply chain inter-connection Contagion effect from suppliers to manufacturers

17 Retail Sales (US$ Billion) FAO/ERBD EASTAGRI ANNUAL MEETING Opportunities to Capitalise on EU & USDA Trade Agreement 17 June 2012 Billion Dollar Organic Markets

18 WHAT CAN BE LEARNT FROM ORGANIC? FOCUS ON THE EASTAGRI REGION CONCLUSION

19 FAO/ERBD EASTAGRI ANNUAL MEETING Influences On Consumers Green Purchasing Decisions & Willingness To Pay Consumer Market Conditions 19 Understanding of green terms Economic Conditions Health Availability Trust in green labels Price Regional/ cultural beliefs Legislation

20 THANK YOU FOR LISTENING Diana Cowland Senior Analyst Health and Wellness

21 FAO/ERBD EASTAGRI ANNUAL MEETING Organic Beverage Category Breakdown 21 Organic Hot Drinks Organic Coffee Organic Fresh Coffee Organic Instant Coffee Organic Tea Organic Black Tea Organic Fruit/Herbal Tea Organic Green Tea Organic Other Hot Drinks Organic Soft Drinks Organic Non-Cola Carbonates Organic Concentrates Organic Liquid Concentrates Organic Powder Concentrates Organic Fruit/Vegetable Juice Organic 100% Juice Organic Juice Drinks (up to 24% Juice) Organic Nectars (25-99% Juice) Organic Chocolate-based Flavoured Powder Drinks Organic Plant-based and Malt-based Hot Drinks

22 FAO/ERBD EASTAGRI ANNUAL MEETING Organic Packaged Food Category Breakdown 22 Organic Baby Food Organic Confectionery Organic Cream Organic Milk Formula Organic Chocolate Confectionery Organic Flavoured Milk Drinks Organic Dried Baby Food Organic Sugar Confectionery Organic Fromage Frais and Quark Organic Prepared Baby Food Organic Sugarised Sugar Confectionery Organic Milk Organic Other Baby Food Organic Sugarised Boiled Sweets Organic Reduced Fat Milk Organic Bakery Products Organic Biscuits Organic Sugarised Pastilles, Gums, Jellies and Chews Organic Sugarised Toffees, Caramels and Nougat Organic Standard Milk Organic Powder Milk Organic Bread Organic Sugar-free Sugar Confectionery Organic Sour Milk Products Organic Breakfast Cereals Organic Dairy Organic Non-Dairy Milk Alternatives Organic Cakes Organic Canned/Preserved Food Excluding Ready Meals, Soup and Pasta Organic Chilled Processed Meats, Fish/Seafood and Lunch Kit Organic Chilled and Shelf Stable Desserts Organic Soy-based Chilled and Shelf Stable Desserts Organic Dairy-based Chilled and Shelf Stable Desserts Organic Cheese Organic Condensed/Evaporated Milk Organic Soy Drinks Organic Soy Milk Organic Other Non-Dairy Milk Alternatives

23 FAO/ERBD EASTAGRI ANNUAL MEETING Organic Packaged Food Category Breakdown II 23 Organic Yoghurt Organic Pasta Organic Nuts Organic Soy-Based Yoghurt Organic Ready Meals Organic Sweet and Savoury Snacks Excl Nuts and Fruit Snacks Organic Dairy-based Yoghurt Organic Dessert Mixes Organic Frozen Processed Food Excluding Ready Meals, Pizza, Soup and Noodles Organic Ice Cream Organic Noodles Organic Oils and Fats Organic Butter Organic Olive Oil Organic Regular Spreadable Oils and Fats Organic Vegetable and Seed Oil Organic Rice Organic Sauces, Dressings and Condiments Organic Snack Bars Organic Fruit Bars Organic Granola/Muesli Bars Organic Other Snack Bars Organic Soup Organic Spreads Organic Spreads excl Honey Organic Sweet and Savoury Snacks Organic Fruit Snacks