The Story so far 1990 company founded 1992 ‘diabetic’ chocolate bars 1993 dairy free dark chocolate bars No Added Sugar replaces ‘diabetic’ 2003 Range expands to include mints, easter eggs, boxed chocolates 2005 Re Branding as ‘freefrom’ 2006 BRC & supply UK multiples 2009 Development of ‘alternative to milk chocolate’ 2010 Launch of O/L and Choices brand of ‘alternative to milk chocolate’ Choices Caramel wins Highly Commended at Quality Awards 2011Expansion of range to include buttons Choices Caramel wins Highly Commended at Freefrom Awards

The scope of freefrom. AllergensY Sugar Free/No Added SugarY Dietary ProductsN

The availability of ingredients & raw materials within the chocolate confectionery category. Milk alternativesY Gluten FreeY Wheat FreeY Egg FreeY Nuts Free?

The incidence of allergies & intolerances Milk1.5% Coeliac1% Wheat< 1% Nuts<1% Eggs<1% Soya<1%

Other Opportunities Diets30% Lifestyle (vegan etc)10% Genetic Disposition30% (Lactose Intolerance)

Research in IrelandAn Bord Bia (Irish Food Board) Base: Ever purchased Bakery/Confectionery Satisfaction levels with current offering: Overall satisfaction:7.8 Information:7.7 Value for Money6.4 Availability of product7.0

Research in Ireland (An Bord Bia – The Irish Food Board) Base Ever Bought Bakery/Confectionery Dairy/Sugar Free/ Gluten etcNo Added Sugar Must East75%25% Healthy Eating25%75% Purchase FrequencyOften75% Not Often75% Special Fixture in Store75% Conventional Fixture75%

Research in IrelandAn Bord Bia (Irish Food Board) Base: Ever bought bakery/confectionery Ever TriedSugar Free/No Added68% Gluten/Wheat29% Freefrom Products ever purchased Bread39% Breakfast Cereals31% Rice Cakes29% Sweet Biscuits20% Chocolate19%

Research in IrelandAn Bord Bia (Irish Food Board) Suggested improvementsBase Ever Bought Cheaper Price23% Wider Selection 9% Availability 8%

Research in IrelandAn Bord Bia (Irish Food Board) Ideal Free From Product Clear Ingredient Labelling50% Low Price49% Great Taste51%

The scale of the market for freefrom in the chocolate category Dairy Free1.5% Gluten/Wheat Free1.0% Sugar Free/No Added Sugara variant on conventional chocolate

A Parallel UniverseSoya/Rice Milk % of Liquid Milk sales2.5% - 3.0% Growth Rate25% p.a. Have Tried60% Don’t Like the Taste30% Wouldn’t try it again19% Regular Users 7%

The scope of the market for freefom+/- 3% of pop Market DriversQuality/TasteImproving PriceToo High AvailabilityImproving AwarenessLimited to ‘must haves’

The Freefrom Universe Consumers Retailers Mainstream Retailers Specialist Suppliers Commercial Suppliers Artisan

The UK Multiples AsdaFreefrom AisleFreefrom Own LabelFreefrom Branded MorrisonsFreefrom AisleFreefrom Own LabelFreefrom Branded Sainsbury’sFreefrom AisleFreefrom Own LabelFreefrom Branded TescoFreefrom AisleFreefrom Own LabelFreefrom Branded

What’s the size of the cake? Grocery spend on 3%£2 bn Key Categories 3%£200 m Bakery£ 8.5 3%£255 m Confectionery £ 6.8 3%£200 m [Note fragmentation of categories outside of dairy/bakery i.e not all or most of the category requires a freefrom alternative]

Limiting Factors MultiplesStore Space Turnover per sq ft v conventional Product Quality & Range Prices Food Safety Issues

ConvenienceStock losses due to weak t/o of freefrom volumes Primary focus on Big Brands Convenience supplies existing products Multiples/Specialists develop new products Multiples have taken the lead in the development of freefrom.

Will freefrom become mainstream? Only if it can deliverTaste Quality Range Price Food Safety Equal or better to conventional option. Is this possible?

Back to the Future? 1970’sFresh Milk sold at ambient temperature in shops Funny thing called ‘yoghurt’ finds traction Growth limited by Range, Quality, Price Growth limited by cost/availability of chilled space Early brand leaders dominant

NoughtiesMassive chilled display aisles Enormous range of chilled dairy products Consumer speak includes ‘l casei immunitas’, ‘plant sterols’ etc. Category dominated by international brands

PrognosisFreefrom will grow at a fast rate Growth will be facilitated by multiples Growth will be driven by quality/taste/range Price will be a key factor

Own Label or Branded? Primary consideration is consumer need & behaviour Freefrom consumers need appropriate products to eat Freefrom Consumers shop local & national retailers Freefrom Consumers buy O/L and branded O/L works for larger volumes & everyday purchases Branded works for smaller volumes & gift e.g. easter eggs, boxed chocolates and independent retailers/smaller outlets

Celtic Chocolates We like making life a little better for people with food allergies/intolerances and special needs We like working with our colleagues in the retail and distribution sector We like the feedback to date to our freefrom range We plan to expand our range even further. We dreaming of a ‘white’ Christmas !

Thank You! Joe Callery Managing Director Celtic Chocolates Limited Summerhill Co Meath Ireland