1. Prepared for Potatoes New Zealand March 2014 INCREASING POTATO SALES & CONSUMPTION KEY FINDINGS

2. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 2 AGENDA Prepared for: Potatoes NZ 1RESEARCH BRIEF 2METHODOLOGY 3EXECUTIVE SUMMARY 4 WHAT IS IMPORTANT WHEN PREPARING FOOD? 5POTATO TRENDS 6 QUANTITY OF POTATOES CONSUMED 7 WHAT IS THE POTATO OCCASION? 8 SHOPPING & CHANNEL TRENDS 9HOW DO WE MARKET?

3. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 3 RESEARCH BRIEF Background Potatoes NZ is a body that represents the potato industry in NZ, representing growers through to retailers in the marketing of potatoes in the domestic market in NZ. Potatoes NZ completed a comprehensive consumer segmentation study with Nielsen in 2009. Research Objective Potatoes NZ want to increase the level of knowledge about the category and potato consumer behaviour to share with the industry and implement marketing and communication strategies to drive positive change for potatoes and increase potato sales/consumption. Information Requirements What is the size of the potato market in NZ? What quantity of potatoes are NZ’ers consuming? How has consumer purchasing of potatoes and attitudes towards potatoes changed? What is driving this change? Prepared for: Potatoes NZ

4. Copyright ©2012 The Nielsen Company. Confidential and proprietary. 4 Prepared for: Potatoes NZ Nielsen Homescan is a consumer panel of 2,500 household, representative of the population which scans all grocery items taken into the home For fresh food this includes random weight and bar-coded items purchased from any outlet Data to period is 52 weeks to 8 September 2013 compared to prior year. Majority of analysis has been completed in dollars. Sample size of N=1,000 online interviews to obtain a robust national mainstream measure. Predicted margin of error ±3.1% Sample sourced from the Survey Sampling International (SSI) panel which has over 50,000 NZ members. Fieldwork was completed in October 2013 Questions around attitudes and perception of food and behaviour and consumption of fresh potatoes were asked in the survey. COMBINING MULTIPLE QUANTITATIVE APPROACHES Combining both approaches allow us to segment households and shoppers to understand current purchase behaviour alongside attitudes and motivations for purchase to prioritise marketing focus and strategic direction on how to increase potato sales/consumption.

5. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 5 LIFESTAGE GROUP DEFINITION Consumer researchHomescan % Buyers Prepared for: Potatoes NZ 1. Young Households: Households with children < 5 2. Mixed Households: Households with children 5 to 15 3. Older Households: Households with children > 15 4. Older Couples: Older households without children / no children at home 5. Adult Couples / Singles: Young couples / single households without children 6. Others: Flatting / other household compositions 1. Young Families: Adults/shoppers any age, all kids < 11 years 2. Mixed Families: Adults/shopper any age, at least 1 child < 11 and at least 1 child 11-17 3. Older Families: Adults/shopper any age; all kids aged 11-17 4. Older Singles/Couples: All adults aged 45+, no children, hhld size 1 or 2 5. Adult Households: At least 1 adult aged 18- 44, no children

6. EXECUTIVE SUMMARY

7. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 7 Prepared for: Potatoes NZ HOW DO WE INCREASE POTATO SALES AND CONSUMPTION? Focus for growth is to maintain buyer engagement & encourage more frequent purchase: Re-align pricing relativity of larger pack sizes as are likely driver of less frequent purchase as shoppers seek value Create better value perception outside of pricing; versatility, complementary, ease Increase appeal and relevance of fresh potatoes for category consumers: Create more excitement through relevant occasions for young shoppers (target shoppers < 35 years) Bring together strong perceptions of fresh and natural to modernise flavour and taste Address barriers to consumption: Young singles and couples – difficult preparation and extravagance Mixed households need to be convinced of the convenience from eating potato dishes Health and weight management – continue to convert (3% increased consumption from knowing of health benefits)

8. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 8 Prepared for: Potatoes NZ HOW DO WE INCREASE POTATO SALES AND CONSUMPTION? Use marketing & communications mix to: Deliver messages to families around value & convenience to compete with rice and pasta Encourage usage as versatile ingredient in ethnic foods and less traditional meals, target <35yrs Increase knowledge of health benefits Teach shoppers how to use fresh potatoes to make chips/wedges, ingredients in pies/stews, to increase family appeal Activate: in-store and outside the retailer: More accessibility to relevant messages in-store such as cooking instructions and meal ideas to encourage all segments Easy pre-prepared cut/seasoned potato offer located in the produce section to complement frozen offer - target households with children

9. WHAT IS IMPORTANT WHEN PREPARING FOOD?

10. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 10 HOW IMPORTANT IS FRESH FOOD? Food sector accounts for one third of NZ’ers retail spending $25B spent last year on food* Groceries are purchased on average every three days Fresh Food is important Included in 69% of all shopping occasions accounts for 1 of every $4 spent (26.4%) Fresh fruit & vegetables are in ¾ of all fresh food baskets Purchased every 6 days Account for 39% of fresh food $ sales Source: Retailers Association includes supermarket & grocery stores, specialised food & Food & beverage services Source: Nielsen Homesan. 9 in ten want meals to be tasty & value for money Healthy, fresh, suitable for all & ease are important to consumers Question 8: Here are a few things some people have said is important to them when describing what they expect when preparing food for a meal. How strongly do you agree or disagree with the following statements… Base: All Respondents : n=1000

11. Copyright ©2012 The Nielsen Company. Confidential and proprietary. 11 Question 9: Again, thinking of the same statements, please indicate which of these food items you would associate with each of the statements here. (Correspondence mapping analysis) Base: All Respondents : n=1000 It has to be filling It needs to be energising A treat for everyone / myself Will be convenient to eat A family favourite A meal for everyone Traditional cuisine Comforting food It's healthy Made of natural ingredients Tasty / flavourful A modern food A good source of vitamins / nutrients Easy to prepare / cook Good value for money An extravagant dish Made of fresh ingredients Complementary to other food dishes Natural / unprocessed food or dish A food item from which I can use to make various dishes Fresh potatoes Rice Pasta Starchy vegetables Natural Convenient PROMOTE CONVENIENCE, SUITABILITY FOR MEALS & VALUE FOR MONEY TO CONVERT FROM RICE & PASTA. Tasty Traditional Broad potato appeal but seniors more likely to buy root veg. Target communications around freshness, ease of cooking towards young couples. Value & convenience stronger for rice & pasta. Families more likely to buy rice, pasta & frozen potatoes.

12. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 12 MEAL ATTRIBUTES Fresh potatoes deliver strongly around fresh & natural & ahead on key meal attributes compared to substitutes Broad potato appeal but seniors more likely to buy root vegetables ~ traditional meals? Target communications around freshness & ease to prepare towards young couples Value & convenience stronger for rice & pasta Families more likely to buy pasta, rice & frozen potato products Look at promoting convenience & suitability for most meals with VFM to convert consumption from rice & pasta

13. POTATO TRENDS

14. Copyright ©2012 The Nielsen Company. Confidential and proprietary. 14 FOCUS FOR GROWTH IS TO MAINTAIN BUYER ENGAGEMENT & ENCOURAGE MORE FREQUENT PURCHASE. Source: Nielsen Homescan NZ | MAT to 26.Jan.2014 vs. YA Number of households buying is slightly less, down by 0.8 Buyers spending per trip is slightly more, up by 2.8% Frequency of purchase reduced by 2% 94.5% $4.4911.5 times 75% NZ hhlds buy fresh potatoes every two weeks. 94% hhlds prepare fresh potatoes at least once a week for their meals

15. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 15 ENGAGE SHOPPERS UNDER 35YRS FOR $ GROWTH Source: Nielsen Homescan Core buyer is 1-2 person household without children, +55yrs Barcode more important to families Older singles & couples more likely to buy loose potatoes Shoppers <35yrs less engaged with potatoes this year Losing buyers from young & mixed families All family groups spending less than year ago Older singles & couples shop most often but have lowest spend per trip. Families have a higher spend per trip likely driven by barcoded formats. WHO BUYS POTATOES?

16. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 16 57% of category spend goes to potatoes % of Category Spend Key reasons for higher consumption of fresh potato substitutes: Source: Nielsen Homescan. Data to MAT 08 Sep 2013 % Rice: Easy to use Suits / Complements meals Traditional / staple food Pasta: Versatile / used in a variety of ways Easy to use Preferred by the family Starchy veg: Taste good Healthy Like it 6 IN EVERY TEN DOLLARS IS SPENT ON POTATOES….. Ease of preparation and versatility are the main reasons for consuming fresh potatoes BUT MORE THAN 4 IN EVERY TEN DOLLARS IS ON SUBSTITUTES! Potatoes & Substitutes

17. POTATO CONSUMPTION

18. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 18 WHAT QUANTITY OF FRESH POTATOES DO NZ’ERS CONSUME? Take home Consumption = Quantity purchased less wastage Annual consumption per capita (total popn.) Kilograms purchased retail 97M Estimated wastage kilograms185,660 NB. Calculation uses estimated retail sales (actual sales from supermarkets combined with non supermarket estimate based on Nielsen Homescan non supermarket share) and calculation on wastage from consumer research about last purchase (5% of people wasted potatoes, on last purchase & 3% normally waste potatoes with less than 25% of purchase the norm wastage qty) 22.89kg Only 3% of shoppers regularly waste potatoes with majority throwing out less than 25% of purchase qty. Half a kilogram of potatoes is used in most meals 4 in ten is eating recommended serving size of potatoes 37% are having larger quantities than recommended Older couples are eating in smaller proportions than last year

19. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 19 Q29: Consumption of Fresh Potatoes (%) MORE OCCASIONS, VALUE AND COOKING IDEAS HAVE DRIVEN INCREASED CONSUMPTION IN THE LAST YEAR 1 in 4 of those who have increased consumption in the last year have done so after knowing of the health benefits from consuming fresh potatoes Question 29: Now, compared to the same time last year, would you say that your consumption of fresh potatoes has… Question 30: Why has your consumption of fresh potatoes increased in the last year? Q29 Base : All Respondents (Answering Base) n=999 | Q30 Base: Respondents who consume more potatoes than last year n=112 I prepare more meals with fresh potatoes now than I used to53 Cheaper than other similar types of food37 More recipe ideas33 Knowledge about health benefits25 Q30: Reasons for increased consumption(%)

20. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 20 Q29: Consumption of Fresh Potatoes (%) COMMUNICATING HEALTH BENEFITS, VALUE FOR MONEY & EASE OF PREPARATION WILL ADDRESS BARRIERS TO PURCHASE. Q31: Reasons for Decreased Consumption: Question 29: Now, compared to the same time last year, would you say that your consumption of fresh potatoes has… Question 31: Why has your consumption of fresh potatoes decreased in the last year? Q29 Base : All Respondents (Answering Base) n=999 | Q31 Base: Respondents who consume less potatoes than last year n=172 I don't prepare as much meals or dishes using fresh potatoes now than I used to44 Not part of my diet19 I buy potatoes that are of a smaller size now than before14 Too expensive to buy11 Takes too long to prepare9

21. WHAT IS THE POTATO OCCASION?

22. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 22 WHAT IS THE POTATO OCCASION? Family meals are the most frequent occasion for consuming fresh potatoes Complement other foods, served as a side, considered filling Mashed, roasted, boiled potatoes are the most common methods of preparing potatoes Mashed potatoes consumed during family meals & quick & simple occasions Boiled potatoes are made for healthy meal occasions BUT Fresh potatoes are not servicing all family potato needs Only 7% prepare chips/wedges with fresh potatoes most often Made as a treat/snack for kids Families are 37% more important to frozen potato category compared to fresh potato How do we cater to young families? Addressing convenience in preparation Retail fresh and ready cut Support with the right cooking instructions in- store

23. SHOPPING & CHANNEL TRENDS

24. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 24 63% F&V specialists 33% 4% Supermarket Shop at both Outlets Shop Exclusively Nationwide Fresh Potatoes : Supermarket vs. Fruit and Vege Specialists Source: Nielsen Homescan Data to MAT 08 Sep 2013 CONVENIENCE LIKELY DRIVER OF CHANNEL CHOICE Fresh Potato: % Value Share across Channel …BUT VALUE KEY FOR FAMILIES WITH OLDER CHILDREN & SENIORS

25. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 25 SHOPPING TRENDS Fresh Potato: % Value Share Loose vs. Bar-coded 6 from every $10 spent on potatoes is barcoded format Shoppers tend to buy on auto-pilot Only 1 in ten claim to buy on promotion Top 3 shopper in-store information needs are information on cooking instructions, potato variety & country of origin 6 in ten shoppers are aware of white, red & Agria varieties

26. HOW DO WE MARKET?

27. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 27 Q32: Encouragement to Eat More Fresh Potatoes LOWER COST AND MEAL IDEAS WILL HELP ENCOURAGE HIGHER CONSUMPTION 1 in 5 are also looking to know more about the health benefits of potato consumption as well as wanting better quality (i.e. storage) potatoes Question 32: What would encourage you to eat more fresh potatoes? Q32 Base: All Respondents: n=1000 BUT CONSUMERS TEND TO STICK TO WHAT THEY KNOW…

28. Copyright ©2012 The Nielsen Company. Confidential and proprietary. 28 BETTER VALUE AND MEAL IDEAS WILL HELP ENCOURAGE HIGHER CONSUMPTION Source: Nielsen Homescan NZ | MAT to 26.Jan.2014 vs. YA Cheaper 1 in 5 are also looking to know more about the health benefits of potato consumption as well as wanting better quality (i.e. storage) potatoes Q32: Top 4 Reasons - Encouragement to Eat More Fresh Potatoes Cheaper 36% Ideas/ different recipes 34% Health benefits 19% Last longer 18%

29. Copyright ©2013 The Nielsen Company. Confidential and proprietary. 29 HOW DO WE MARKET? Encourage young shopper in promoting taste/flavour without jeopardising seniors traditionalist view Modernise potato perception & usage - ease of preparation, versatility & cooking tips Make things easy for families with preprepared fresh cut/peeled/seasoned offer Encourage consumption through recipes 6 in ten shoppers often try out a new recipe 3 in ten try out new potato recipes each month Change in meal mix and cooking enjoyment are key drivers Create online awareness of potatoes.co.nz via high traffic sites such as social media/search engine as awareness is low Communications via NZ Herald have the potential to reach 1 in 3 hhlds