1. INTRODUCING FONTERRA
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UPDATED: 6 November 2013
CONTACT: Meryl Brassel
BUSINESS UNIT: Communications
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Confidential to Fonterra Co-operative Group

2. Fonterra is the world’s largest processor of dairy products
Taking New Zealand Milk to the World
Milk Collection
22 billion litres of milk a year
Pasture-based milk collection
Tankers
483 milk tankers in 13 depots and 1,400 tanker operators
Processing
33 sites in NZ
76 Plants
Largest milk dryers in the world
Warehousing
103 stores, 45 temperature controlled
Supporting road and rail networks to container pack locations, 7 sited on port
Sales
Global sales network
~30% of NZ milk via Global Dairy Trade (GDT)
~ 74,000 delivery orders p/a
Shipping
11 NZ ports
1800 voyages p/a
165,000 containers p/a
2.3 million metric tonnes of exports
Business Customers
Customers in more than 100 countries
Customers include GDT, Fonterra consumer division and external business customer sales
Grass to glass model 2

3. A future focus on emerging markets
MENA 2% 4%
10%
India2 7%
China
LATAM
ANZ 1%
Nth America
<1%
Europe
Outlook to 20201
ASEAN
2-3%
Demand Growth
Supply Growth
Demand Volume
Supply Volume
Dairy is gold standard nutrition, and strong global growth in dairy consumption is anticipated. This will be led by developing countries
Demand is forecast to outstrip supply in the key growth markets of China, India and MENA
Growth in domestic milk production in many cases will increase along with consumption, but imports will have a role to play in meeting demand
Dairy supply and demand growth is anticipated to be roughly balanced for Europe, LATAM and North America
1. Growth rates represent forecast compound annual growth rates. Current volumes are represented by the area of the circles displayed
2. Although strong growth in demand is expected in India, it is expected that the ability to supply into India will continue to be constrained by relatively high barriers to trade for dairy products
Source: Fonterra estimates

4. …and supplementing it with integrated milk pools in key markets
China
Chile
Australia
Brazil
. New Zealand milk supply forecast to grow by 2-3% a year. That’s great but global demand is increasing much faster than that. If we want to continue to capture the opportunities of this growth, we need to be able to increase our milk supply – at home and overseas.
Our global sourcing, complements and supplements New Zealand milk supplies.
Provides fresh milk closer to market.
Helps manage seasonal differences.
Works alongside local producers to grow supply.
Manages risk by diversifying supply.
Fonterra is a pioneer in some of the world’s most promising emerging dairy markets including China and South America.
Integrated milk pool now underway with major farms at Tangshan and Yutian to meet growing demand in China for safe, quality milk.
India – pilot project to develop large farm.

5. New Zealand Processing Sites
We have 31 processing sites in NZ.
1 site for Fonterra Tip Top
3 sites for FBNZ – Takanini, Paraparaumu and Christchurch
28 sites for Fonterra - 2 are secondary processors - 24 are primary processors - 2 are primary processors that solely feeding other primary processors (milk concentration plants)
- Eltham covers two sites
Over the length of New Zealand.
Very concentrated in the Waikato region, just South of Auckland.
Growing number of sites in the South Island.

6. …and flexibility around the world
DairiConcepts
50/50 JV with Dairy Farmers of America
9 sites
Cheese, powders, cheese concentrates, milk protein concentrates, functional dairy replacement systems, hard Italian cheese
Dairy Partners America
50/50 JV with Nestle
13 sites
Collection and processing fresh milk. Manufacture of dairy products, marketing and distribution of ingredient commodities and consumer goods
Saudi NZ
Milk Products
100% Fonterra
Processed cheese, sachet and canned milk powders, Feta
Malaysia
2 sites
Canned milk powder, fresh milk, UHT, cultured products, acidified milk products
Indonesia
New blending and packaging plant announced April 2012.
USA
Saudi Arabia
Sri Lanka
Venezuela
Malaysia
Indonesia
Colombia
Ecuador
Brazil
Australia
Argentina
Colombo
Milk powder in sachets, fresh milk, UHT, cultured products
New Zealand
Chile
Australia
11 sites
Fresh milk, powder, cheese, ice cream and yoghurt
Soprole
99.4% Fonterra
Consumer dairy producer – milk, UHT, yoghurt, spreads, desserts
Prolesur
JV with Soprole
Cheese, milk powder, butter, whey permeate powders
Extensive processing capacity around the world.
Middle East, Sri Lanka, Malaysia, Australia, USA and South America.
Helps us meet year-round demand and manage seasonal fluctuations.

7. Liquid Milks and Creams
Base nutrition
WHOLE MILK POWDER
Cheese
Anhydrous Milk Fat
Casein/ates
Lactose
Whey
Whey Powders
Butter
Skim Milk Powder
Our ingredients are used by many of the world’s leading food manufacturers.
Liquid Milks and Creams

8. Leading consumer brands
SOME OF OUR LEADING BRANDS
Australia / New Zealand
…………………………………………………………………………
Asia / Africa / Middle East
…………………………………………………………………………
Strong consumer brand positions in key regional markets.
Consumer brands currently generate around one third of revenue and 60% of profit.
Invest strongly in these brands with Advertising and Promotion (NZ$1,540 million in the five years from inclusive).
Shows some of our leading brands in the three main territories.
Many number 1 and 2 positions.
Soprole is number 1 in Chile.
Latin America
…………………………………………………………………………

9. Out of Home nutrition
Out-of-home solutions e.g. restaurants, hotels, cafés, airlines, work places, entertainment venues and institutions
NZ$1 billion segment for Fonterra, across 50 countries
Cheese, cream, butter, yoghurt, pastries and beverages
Specialities are culinary creams for chefs and low sodium sliced cheese
Foodservice market is the consumption of food and beverage outside the home – growing rapidly and counts for half of all food dollars spent.
Fonterra has a dedicated global sales channel to meet specialised demands quick service restaurants, fast food outlets, café , restaurants, hotels, bakeries and catering.
We provide foodservice operators around the world with a range of branded dairy products, as well as core dairy ingredients, including ready-to-serve creams, ready-to-serve beverages, butter, yoghurt, milk, cheese, ice cream, desserts and pre-proofed frozen pastry.

10. …with quality testing and trace back systems…
Highest quality milk and ingredients
World-best practice processes throughout our supply chain – control of product quality from farm to customer
World class quality assurance
Manufacturing sites certified to ISO9001:2000 standards
Laboratory product testing – ISO7025 accredited
World class quality systems are in place at Fonterra.
6.7 million tests per year

11. Contributing to New Zealand
Dairy provides 26% of New Zealand’s exports.
$1 rise in Fonterra payout makes every New Zealander $300 better off.
Dairy farmers spend about 50c in every dollar on local goods and services.
Of the $7.5 billion dairy farmers received in 2009, $3.6 billion was spent on domestically produced goods.
Late 2010, a report by the New Zealand Institute of Economic Research (NZIER)
$1 rise in Fonterra’s payout makes every New Zealander $300 better off.
Dairy farmers spend about 50c in every dollar on local goods and services.
Of the $7.5 billion dairy farmers received in 2009, $3.6 billion was spent on domestically produced goods.
Dairying in New Zealand employs 35,000 workers directly and 10,000 contractors.
Dairy provides 26% of New Zealand’s exports.
Source: NZIER, 2010.