1. © 2011 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel Free From Foods FDIN seminar, 22 nd September 2011

2. mintel.com Every day at Mintel… mintel.com 2

3. Contact details The presentation will be uploaded to the FDIN site, but if you really need something sooner: Email: djago@mintel.com 3

4. mintel.com Today’s presentation Brief market perspective Some topline points on the consumer Look at two main segments: Wheat-/gluten-free Lactose-free/-reduced Focus on new product development Leading categories, growth areas The UK versus other markets Positioning of Free From foods Some thoughts for the future 4

5. mintel.com Why is “free from” important? Up to 45% of the UK population now have a food allergy or intolerance (Allergy UK report, October 2009) Women, children and the ethnic population are most affected According to the British Nutrition Foundation (BNF) and Allergy UK, 1-2% of adults suffer from an allergy, compared to 5-8% of children Estimated 1% of the population have coeliac disease But a further 10% follow a gluten-free diet as a lifestyle choice, according to Coeliac UK BNF estimates that 5% of the British white population are lactose- intolerant, with higher incidence among the ethnic population One in ten consumers will avoid certain foods just ‘to be on the safe side’, according to Mintel’s consumer research… 5

6. mintel.com It’s a growing market Gluten-free, dairy-free and other free-from foods, estimated UK retail sales value 6 Source: Mintel, based on Symphony IRI Group InfoScan 32% growth 2009-2011

7. mintel.com A market dominated by two main segments Gluten-free, dairy-free and other free-from foods, estimated UK retail sales value 7 Source: Mintel £m

8. mintel.com A handful of leading brands Estimated value of UK brands in the gluten-free, dairy-free and other free- from foods sector, 2010 8 Source: Mintel

9. mintel.com Consumer: High levels of avoidance for dairy/lactose and wheat/gluten Types of food/ingredients avoided, July 2011 9 Source: Toluna/Mintel

10. mintel.com Consumer motivation: more than a “need to” basis Food sensitivity and dietary limitations in households, July 2011 10 Source: Toluna/Mintel

11. mintel.com Consumer attitudes to “free from” foods Attitudes towards specialist dietary food, July 2011 11 Source: Toluna/Mintel

12. mintel.com Gluten-/wheat-free foods Traditionally the largest market segment Estimated retail value of £135 million in 2011, with 10% growth year on year Factors for growth: Increased distribution Entry of new brands and high levels of new product activity Private label range expansion And the “Djokovic factor”…! 12

13. mintel.com In NPD, UK leads in gluten-free… European new product introductions of gluten-free bakery, pasta and breakfast cereals, January 2009 to June 2011 13

14. mintel.com NPD in gluten-free foods is generally strong in Europe European new product introductions of gluten-free bakery, pasta and breakfast cereals Growth in all segments except pasta 14

15. mintel.com NPD in gluten-free foods is more sporadic in the UK UK new product introductions of gluten-free bakery, pasta and breakfast cereals Significant growth in cereals, cakes and baking mixes 15

16. mintel.com Private label takes an important share of gluten-free NPD UK new product introductions of gluten-free bakery, pasta and breakfast cereals Note c. 30% share of gluten-free NPD taken by private label, versus 50% in total categories 16

17. mintel.com Gluten-free bread: focus on quality, freshness Warburtons Gluten- and Wheat-Free range Genius Gluten-Free Fresh Bread 10% of consumers ate/bought specialist free-from bread in 2010; on a par with functional/enriched bread (11%) 17

18. mintel.com Gluten-free cereals: polarisation of positioning Focus on natural/organicFocus on the familiar Kallo Foods’ Free To Enjoy Honey Nut Flakes Doves Farm Organic Gluten-Free Cocoa Rice 18

19. mintel.com Gluten-free home-baking: covering all the angles Everyday favouritesSpeciality bread mixes Isabel's Naturally Free From Cheese Bread Mix Mrs Crimble's Home Bake range including this Pancake Mix 19

20. mintel.com Wider potential in gluten-free meal solutions? Frozen convenience foodsSauces Seitz gluten-free pasta sauces, Germany Bofrost Free pizza and pasta range, Germany 20

21. mintel.com Dairy-/lactose-free foods Estimated £143 million retail sales in 2011, overtaking the gluten- /wheat-free segment 8% growth in the last year, but nearly 40% growth since 2009 Soy-based products a key driver: Initially sought by lactose-intolerant consumers, now appeal to a broader market as part of a healthy balanced diet Command increasing shelf space in multiple retailers Soy milk is now consumed by as many adults as organic milk (3%), and a higher number than enriched or functional milk (1%) Soy dominates in dairy-free, but the choice of alternatives is ever expanding: rice, oats, coconut, almonds, hazelnuts, hemp and more… 21

22. mintel.com UK only a small player in lactose-free NPD European new product introductions of lactose-free and lactose-reduced foods, January 2009 to June 2011 22

23. mintel.com NPD in lactose-free recovers in Europe European new product introductions of lactose-free and lactose-reduced foods Dairy category accounts for 40% of total 23

24. mintel.com NPD in lactose-free in the UK appears to grow, but limited activity UK new product introductions of lactose-free and lactose-reduced foods Dairy accounts for more than half of all NPD 24

25. mintel.com Private label NPD in lactose-free is low… UK new product introductions of lactose-free and lactose-reduced foods Private label activity is low, and shrinking 25

26. mintel.com Lactose-free dairy – not just soy Purity, healthFirmly health positioned Braham & Murray’s Good Hemp dairy-free alternative, a natural source of omega-3 Oatly Healthy Oat Dairy-Free Alternative to Cream, UK 26

27. mintel.com Positioning of lactose-free dairy products Soy, organic, BFYEasily digestible Arla’s Lactofree yogurtsProvamel Bio organic soy yogurts 27

28. mintel.com Recent activity noted in cheese segment Dairy-basedSoy-basedDairy-based Lactofree semi-hard cheese, UK Life Free From Parmazano, UK Milram Burlander cheese slices, Germany 28

29. mintel.com Strong development in German desserts market Specialist supplierRetailer Mainstream supplier Lupinesse “ice cream”, dairy-free and entirely plant-based Bofrost Free lactose- free frozen tart Coppenrath & Wiese Cafeteria frozen desserts 29

30. mintel.com Strengths Weaknesses Conclusions and points for the future Free from foods can capitalise on healthy eating trends Free from fits with rise in “natural” healthy eating, and greater transparency over ingredients and formulation Growing interest from mainstream brands that invest in the market Limited consumer resistance to new brands and private label – good news for evolution of the category Recessionary impact affects a third of consumers Negative taste perceptions persist in some segments High pricing is an obstacle to trial for consumers buying in to the “healthy lifestyle” “Field support” works for the dedicated core market, but lack of promotional activity restricts wider potential Separate fixtures similarly a potential weakness 30

31. mintel.com Where next? Future potential depends largely on the ability to tap into the “healthy lifestyle” mindset Which is controversial, for some Free from foods, like all other foods in the mainstream, need to adopt additional values: Health attributes Environmental benefits Convenience As well as taste and texture 31

32. © 2011 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel Tel Email Twitter@mintelnews mintel.com 0207-606-4533 djago@mintel.com David Jago Director of Innovation & Insight