1. Food Bites Processed Cheese Annual Market Quantification June 2011

2. Setting the Scene – Category Definitions 2 ProductDefinition Processed Slices Generally processed cheese is made from a base of plain natural cheese which is heated to pasteurisation temperatures. This prevents further ripening of the cheese and thus extends shelf life. Generally they are mild in flavour and smooth in texture. This category is limited to processed cheese slices, and excludes any packs of sliced cheddar or gouda variants. Cheese Spreads Cheese spread is produced via a similar method to processed cheeses in general except that during the pasteurisation process the addition of water is permitted. This results in the cheese achieving a spreading quality at room temperature. The addition of water may require the use of water retaining agents such as gums, gelatine and algin. Cheese spread is generally packaged in glass jars. Processed Portions Processed portions are small individually wrapped segments of processed cheese. Bulk Processed The cheese is sold in shrink-wrapped large blocks and has the same preparation process as slices.

3. 2010 Category Shares 3

4. Annual Volume Growth (Tons) 4

5. Slices drive processed cheese growth 5 In 2010, the overall processed cheese market experienced a 12.3% volume growth. Again, processed slices dominated the total market value with a 71.1% share. Processed portions was the smallest category. The majority of processed cheese was consumed in the retail and foodservices direct sectors (58.2% and 19.0% respectively). This is congruent with the production of sandwiches and hamburgers, the primary usage application for processed slices. Processed portions and processed slices witnessed higher year on year volume growth rates (24.8% and 16.7% respectively) than that of the overall processed cheese market, thus highlighting that these sub-categories are outperforming their counterparts. Compared to the growth achieved for processed portions and slices, it appears that cheese spreads and bulk processed cheese may be waning in popularity. It is hypothesised that there may be a level of transition from spreads and bulk processed cheese to the slices and portions, with the convenience offered by the latter. Alternatively there may be supply issues from the manufacturer side that hampered growth in the base year.

6. Food Bites Processed Cheese For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za