1. © Copyright 2003 Frost & Sullivan. All Rights Reserved. 4248 Probiotic and Prebiotic Dairy Foods A Strategic Review of the Australia and New Zealand Market April 2003 Ivan Fernandez Food and Beverage Group “The onus rests on dairy producers to increase their commitment to the probiotic and prebiotic segment on both R&D and marketing fronts. Only then can the Australian and New Zealand market approximate the level of activity and innovation that the more evolved functional food markets of Japan and Europe boast of today.”

2. © Copyright 2003 Frost & Sullivan. All Rights Reserved. Key Features of this Report On-the-ground coverage of Australia and New Zealand markets Proven methodology based on extensive primary research, supported by in-depth secondary research High strategic value of insights and recommendations presented Study of the key challenges and the significant drivers and restraints impacting this market Detailed product and consumer demand analysis Analyst insights on the competitive environment Specific strategic recommendations for corporate-level decision- making, marketing and R&D

3. © Copyright 2003 Frost & Sullivan. All Rights Reserved. Market Drivers Heightened consumer interest in probiotics Increased popularity of yoghurts Ageing population demographic, which drives demand for functional foods Stress-induced lifestyle diseases, which spur search for food-based drug substitutes Shift in self-medication approach

4. © Copyright 2003 Frost & Sullivan. All Rights Reserved. Market Restraints Poor consumer understanding of probiotic and prebiotic concepts Under-investment in marketing Inability to make specific health claims Limited stability of probiotics

5. © Copyright 2003 Frost & Sullivan. All Rights Reserved. Who Will Benefit? Existing Companies in the Market and Potential New Entrants Dairy Product Producers (Yoghurt, Fermented drink, Ice cream, Cheese etc) Suppliers of Probiotic Strains and Prebiotics And … Investment Community Industry Information Services Industry Associations Distributors and Retailers

6. © Copyright 2003 Frost & Sullivan. All Rights Reserved. Key Market Participants Dairy Manufacturers BioFarm Products Limited Bulla Dairy Foods Dairy Farmers Fonterra Co-operative Group Jalna Dairy Foods Pty Ltd Lemnos Foods Pty Ltd Mundella Foods Pty. Ltd National Foods Limited Nestle Australia New Zealand Mil k PB Foods Ltd Pauls Limited (Parmalat) Serra Natural Foods Yakult Australia Pty. Ltd. Probiotic and Prebiotic Ingredient Manufacturers Chr. Hansen Danisco Australia Pty. Ltd. DSM Food Specialties Australia Pty. Ltd. Mandurah Australia National Starch Rhodia Valio Ltd.

7. © Copyright 2003 Frost & Sullivan. All Rights Reserved.  Call +61 2 9252 9266  Fax +61 9252 8066  E-mail australia@frost.com  Visit www.frost.com For More Information