in-progress review draft - agric.wa.gov.au market... · market success - vegetable juice very...

TARGET MARKET OPPORTUNITIES IN ASIA FOR FRESH CARROTS Part of Asia Market Success, April 2016

IN-PROGRESS REVIEW DRAFT Pre-release copy of significant commercial value to industry Document contains incomplete & in-progress research for comment For named reviewer/firm only; do not duplicate or distribute

RECIPIENT

FIRM

IINNHHEERREENNTT LLIIMMIITTAATTIIOONNSS This work was commissioned by the Department of Agriculture and Food Western Australia (DAFWA), with funding through the State Government’s Royalties for Regions program and prepared by Coriolis. This work is based on secondary market research, analysis of information available or provided to Coriolis by our client, and a range of interviews with industry participants and industry experts. Coriolis have not independently verified this information and make no representation or warranty, express or implied, that such information is accurate or complete. Projected market information, analyses and conclusions contained herein are based (unless sourced otherwise) on the information described above and on Coriolis’ judgement, and should not be construed as definitive forecasts or guarantees of future performance or results. Neither Coriolis nor its officers, directors, shareholders, employees or agents accept any responsibility or liability to readers or recipients of this report other than DAFWA or people other than DAFWA who rely upon it (described below as Recipients) with respect to this document. Coriolis wishes to draw Recipients’ attention to the following limitations of the Coriolis document “Target Market Opportunities in Asia for the Western Australian Premium Products” (the Coriolis Document) including any accompanying presentation, appendices and commentary (the Coriolis Commentary): a. Coriolis has not been asked to independently verify or audit the information or material provided to it by or on behalf of the Client or any of the parties involved in the project; b. the information contained in the Coriolis Document or any Coriolis Commentary has been compiled from information and material supplied by third party sources and publicly available information which may (in part) be inaccurate or incomplete; c. Coriolis makes no representation, warranty or guarantee to Recipients, whether express or implied, as to the quality, accuracy, reliability, currency or completeness of the information provided in the Coriolis Document and any Coriolis Commentary or that reasonable care has been taken in compiling or preparing them; d. the analysis contained in the Coriolis Document and any Coriolis Commentary are subject to the key assumptions, further

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2

FFIINNAALL vv110000;; AApprriill 22001166

SCREENING OVERVIEW In Phase One of the Target Market Opportunities in Asia for WA Premium Products Report (TMO Report), extensive import/export trade data was fed through a multi-stage screening process to “hone-in” on potential opportunities for Western Australia; stakeholder interviews also fed into this process

3

STRUCTURE OF MULTI-STAGE SCREENING PROCESS USED IN THIS PROJECT Model; 2016

INDIVIDUAL FIRM ROLE & RESPONSIBILITY STAGE I STAGE II STAGE III STAGE IV

PLATFORM PRODUCT POSITIONING TARGET MARKET

FIT WITH WA

WA INDUSTRY-GOOD RESEARCH

9 PLATFORMS

679 TRADE CODES

47 QUAL/QUANT

SCREENS

Project does not attempt to address firm-level operational or executional activities: -  R&D

-  Product development

-  Sourcing & supply chain

-  Production & operations

-  Marketing & branding

-  Sales & sales structure

-  Capital structure

-  Negotiation

-  Distributor appointment

20 OPPORTUNITIES

YOU ARE

HERE

4 This project is focused on “market demand” from the following twenty-four Asian/Middle Eastern markets

Note: Complete list for analysis purposes, some countries excluded from list if no/limited trade data available (e.g. Iran)

24 COUNTRIES DEFINED AS HIGH POTENTIAL TARGET MARKETS FOR WESTERN AUSTRALIA Target markets; 2015

MIDDLE EAST

Bahrain Egypt Israel

Jordan Kuwait

Lebanon Oman Qatar

Saudi Arabia UAE

24 defined target markets for this project

4

SOUTH ASIA

India Pakistan Sri Lanka

Western Australia

SE ASIA

China

Hong Kong Japan

South Korea Taiwan

Indonesia Malaysia

Philippines Singapore Thailand Vietnam

PRODUCT PROFILE

HS Code 070610 (includes small amount of turnips)

Product Fresh carrots (taproot of Daucus carota subsp. Sativus)

Out-of-scope Frozen carrots, mixed vegetable products (fresh or frozen), soups, juices, baby foods, supplements, etc. as all are covered under other screened trade codes

Origin Iran/Afghanistan in pre-historic times

Example ingredients

Carrots

Forms/usage -  Ingredient in many dishes

-  Juicing

-  Snack

Drivers of consumer/market success

-  Vegetable juice very popular throughout Asia

-  Food safety fears in China have increased demand for imported produce

-  Healthy vegetable

-  Common ingredient in many cuisines

WHAT IS THE PRODUCT? Fresh carrots emerged in Phase I as one of twenty “high growth, high potential” opportunities for Western Australia; fresh carrots are root crops that are cooked and consumed fresh

5 Source: photo credit (Dollar Photo); Coriolis analysis

PRODUCT OVERVIEW Example; 2015

DOCUMENT STRUCTURE

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

6

Western Australia is well-positioned to expand carrot exports to Asia

7

-  Asian carrot imports are expanding, with import value growth being driven by rising tonnage and increasing average FOB prices

-  Asian & Middle Eastern carrot import supply is effectively two countries: China and Australia

-  Australia and China have been the main exporters creating value growth over the past decade

-  China leads in absolute volume growth while other Asia countries lead in growth (in aggregate)

-  Average FOB price to target markets vary by supplier, with Australia achieving an average of $0.65/kg, a 43% premium over China

-  Carrots go to a wide number of the target markets and regions, with no single country predominating; China is not a major importer

-  Growth in carrot imports is broad based and coming from across multiple markets

-  However, some markets are growing faster than others, with Vietnam, Indonesia, Saudi and Hong Kong standing out for rate of growth and UAE and Japan standing out for volume growth

-  Average carrot import prices vary by market, with the Middle East and SE Asia paying more in general than East Asia; Vietnam and the UAE stand out as large markets paying premium prices

-  Carrot consumption and aggregate carrot imports appear partially driven by income per capita; a number of markets appear to have long-run penetration upside

-  While China is strong across a wide range of markets, Australia has real strength in some markets, particularly the Middle East

-  Western Australia has clear opportunities for carrot export share growth across a range of markets, particularly in SE Asia and the Middle East

-  Data supports new high value, premium carrot opportunities being initially launched in (1) Singapore, (2) Saudi Arabia and (3) Hong Kong

-  As a “Straw Man” for discussion, we identify an export market roll-out plan

Asian carrot imports are expanding, with import value growth being driven by rising tonnage and increasing average FOB (free-on-board) prices

0

100

200

300

400

500

600

700

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

8 * Compound Annual Growth Rate; Source: UN Comtrade database; Coriolis analysis and classifications

VOLUME T; 000; 2004-2014

$-

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

AVERAGE PRICE PER KILOGRAM US$; 2004-2014

$-

$50

$100

$150

$200

$250

$300

$350

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

VALUE US$m; 2004-2014

CAGR* 6%

CAGR 6%

CAGR 12%

TOTAL IMPORTS TO ASIA/MIDDLE EAST TARGET REGION (24 COUNTRIES)

Asian & Middle Eastern carrot import supply is effectively two countries: China and Australia

9 NA/ME/CA = North Africa/Middle East/Central Asia; Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications

EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2014

Australasia

NA

/ME/C

A

Other

Inter-Asia

New Zealand $3

Australia $51

$254 $7

NA/ME/CA $6

Inter-Asia $9

Other $7

$6 $54

China $245

TOTAL = US$320m

Australia and China have been the main exporters creating value growth over the past decade

10 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications

EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2004-2014

New Zealand

2014 2005

NA/ME/CA

Inter-Asia

2004

10y ABS

2012 2009 2008 2011

China

2010

Other

Australia

2006 2007 2013

$23

$228

$125 $114

$95

$28 $30

$26

$180

$136 $152

$193

$208

$165

$136

$174

$328 $320 $320

$253

$294 +$28

-$1

$245 $249 $257 +$181

$101

+$6

+$3 +$3

$4

$6

$4

$3

$5

$6

$2

$4

$9

$2 $4

$5

$3

$6

$4

$7

$3 $3

$3

$13

$3 $15

$2 $4

$8

$8 $3

$5

$47

$4

$3

$49

$4

$9

$32

$64

$5

$37

$6

$5

$6 $6

$5

$4

$4

$51

$3

$3

$52

$7

$3

$50

CAGR 12%

Bubble scale: US$m; 2014 A bubble this size=

China leads in absolute volume growth while other inter-Asia countries (in-aggregate) lead in rate of growth; Australia is achieving 7% growth (5y CAGR) and added +$14m in exports in the last five years


FIVE YEAR EXPORT GROWTH MATRIX: CHANGE IN VALUE VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; 2009 vs. 2014

$70 $80 $60

5%

0%

10%

20%

15%

25%

$90 $100

-5%

-10% $10 $0 $-10 $20 $50 $40 $30

New Zealand

Australia

$50m

China

Inter-Asia

Other

NA/ME/CA

5y absolute change in value

5y CAGR

Average FOB price to target Asian markets vary by supplier, with Australia achieving an average of $0.65/kg, a 43% premium over China


AVERAGE EXPORT VALUE COST CURVE BY SUPPLIER US$/kg; t; FOB; 2014

New

Zealand

Other Inter-A

sia

NA

/ME/C

A

Other

China

Australia

$0.4

4

$0.4

6

$0.55

$0.59

$0.65

$0.53

Volume imported by defined target market

Average FOB

value

+43%

Carrots go to a wide number of the target markets and regions, with no single country predominating; China is not a major importer


IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2014

NA/ME/CA East Asia Indian Sub SE Asia

China $0

$0 $155 $89

Other $4

Other $0

$76

Israel $1

Egypt $0

Singapore $15 India

$0

Saudi Arabia $14

Bahrain $4

United Arab Emirates $45

Kuwait $5

Qatar $4

South Korea $38

Japan $29

Hong Kong SAR $12

Taiwan $9

Vietnam $44

Thailand $35

Malaysia $42

Indonesia $20

Philippines $0

TOTAL = US$320m

Growth in carrot imports is broad based and coming from across multiple markets


IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2004-2014

2010

Other ME

2007

Philippines

2006 2008

United Arab Emirates

Israel

Qatar

2004

Vietnam

South Korea

2009

Thailand

2005

India

Taiwan

Indonesia

2012

Singapore

2014

China

2013

Other Ind. Sub

Saudi Arabia Egypt

Bahrain

2011

Kuwait

Japan

Malaysia

Hong Kong SAR

$34 $18

$26

$12

$328

$20

$253

$22

$193

$42

$15

$208

$44

$294

$320

$15

$5

$26

$320

$11 $10

$0 $5 $10

$12 $8

$0

$38

$0 $0

$7 $5 $12 $6 $5 $7 $4 $5 $5 $5

$12

$6 $10

$9

$5

$12

$52

$101

$43 $43

$18

$0

$29

$136

$20

$165

$17

$39

$29

$174

$0 $0

$36

$0

$45

$0

$44 $31 $30

$0

$22

$34

$0

$29

$12

$11

$7

$9

$10

$0

$1

$14

$0

$7

$4 $4

$4

$4

$5

$6

$6

$3

$4

$0

$1

$3

$1

$1

$4

$6

$14

$9

$7

$0 $0

$0

$0

$0

$0

$0

$0

$5

$0

$2

$4

$45

$1

$2

$5

$3

$2

$3

$43

$15

$17

$7

$12

$18

$33

$38

$24

$27

$5

$4

$1

$4 $4

$2

$3 $4

$2

$3

$4

$1

$1

$4

$4

$2

$3

$4

$3

$3

$4

$34 $42

$27

$33

$35

$0

$0

$0

$0

$24

$47

$42

$43

$41

$8

$16

$20

$12

$16

$0

$16

$22

$8 $9

$27

$3

$4

$13 $20

$7

$1

$1

$1

$0

$1

$3

$4

$0

$3

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$4

$0

$5 $5

$0

$0

$0

$0

$0

$0

$16

$18

$16

$15

$25

$34

$36

$26

$31

$17

$7

$8

$0

$8

$8

$14

$16

$10

$11

CAGR 12%


However, some markets are growing faster than others, with Vietnam, Indonesia, Saudi and Hong Kong standing out for rate of growth and UAE and Japan standing out for volume growth


FIVE YEAR IMPORT GROWTH MATRIX: CHANGE IN VOLUME VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; t; 2009 vs. 2014

10,000 30,000 35,000 -10,000 5,000 20,000 0 15,000 -5,000 25,000

0%

25%

-5%

20%

10%

5%

15%

30%

-10%

-15%

$50m

Egypt

Kuwait

Jordan

South Korea

Taiwan

Lebanon

Malaysia

Hong Kong SAR

Bahrain

China

Japan

Indonesia

Israel

Singapore

India

Vietnam

UAE

Thailand

Pakistan

Philippines

Qatar

Oman

Saudi Arabia

5y absolute change in volume

5y CAGR

Average carrot import prices vary by market, with the Middle East and SE Asia paying more in general than East Asia; Vietnam and the UAE stand out as large markets paying premium prices


AVERAGE IMPORT VALUE COST CURVE BY MARKET/REGION US$/kg; t; FOB; 2014

Egypt

UA

E

Singapore

Taiw

an

Vietnam

China

Qatar

Om

an Bahrain

India

South Korea

Philippines

Japan

Lebanon

Hong K

ong SAR

Jordan

Saudi Arabia

Malaysia

Thailand

Israel

Indonesia

Kuw

ait

$0.39

$0.38

$0.37

$0.4

1

$0.4

1

$0.4

1 $0.36

$0.36

$0.57

$0.55

$0.54

$0.70

$0

.73

$0.64

$0.59

$0.4

7

$0.4

5

$0.4

2

$0.54

$0.51

$0.4

8

This is driven predominantly by supplier mix (i.e.

percent from China)

Volume imported

Average import

value

Carrot consumption and aggregate carrot imports appear partially driven by income per capita; a number of markets appear to have long-run penetration upside

17 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Wikipedia (GDP/capita); Coriolis analysis and classifications

MARKET SIZE DRIVERS: GDP PER CAPITA VS. IMPORTS PER CAPITA VS. MARKET SIZE Kg; US$; t; 2014

$50,000 0.0

8.0

$40,000

9.0

7.0

$60,000 $30,000 $10,000 $0

5.0

4.0

3.0

6.0

1.0

$20,000

2.0 Kuwait

Lebanon Oman

Malaysia

Taiwan

Israel Indonesia

Hong Kong SAR

South Korea

Jordan Japan

Pakistan

Thailand


Vietnam

India

100,000

Singapore

Egypt

Qatar

China

Philippines

Bahrain

Saudi Arabia

GDP per capita

Imports per capita

Bubble scale: tonnes; 2014 A bubble this size=

While China is strong across a wide range of markets, Australia has real strength in some markets, particularly the Middle East


IMPORT VALUE MARKET SHARE BY MARKET BY KEY SUPPLIER US$m; FOB; 2014

South Korea

Qatar

Vietnam

Philippines

Hong K

ong SAR

Japan

Malaysia

Saudi Arabia

Singapore

Om

an

Thailand

Bahrain

Indonesia

Jordan

Kuw

ait

Pakistan Lebanon


India Egypt

China

Taiw

an

Israel

3%

39%

95%

4%

6%

95% 100%

6%

31% 13%

20%

2%

93% 100%

5%

9%

33%

89%

95%

94%

5%

83%

3%

7%

94%

3%

83%

3%

9%

3%

35% 32%

3%

15%

100%

56%

50%

87%

49%

34%

60%

31%

14%

10%

82%

100%

17%

37%

1%

58%

2%

Total value of imports

Australia

Other

China

Western Australia has clear opportunities for carrot export share growth across a range of markets, particularly in SE Asia and the Middle East


AUSTRALIAN IMPORT VALUE MARKET SHARE VS. MARKET VALUE US$m; FOB; 2014

Thailand

South Korea

Hong K

ong SAR

Indonesia

Om

an

Bahrain

Singapore

Saudi Arabia

Malaysia

Egypt

Lebanon

Taiw

an Pakistan

Jordan

India

Japan

Philippines

Israel


China

Vietnam

Kuw

ait

Qatar

0%

0

%

0%

0

%

3%

39% 15%

0%

32%

49%

56%

60%

87%

35%

0%

1%

2% 0%

14%

3% 0

%

Total value of imports

Australian market share


Data supports new high value, premium carrot opportunities being initially launched in (1) Singapore, (2) Saudi Arabia and (3) Hong Kong


WHERE TO FOCUS FOR NEW HIGH VALUE, PREMIUM PRODUCTS: AU SHARE VS. AVERAGE VALUE VS. MARKET SIZE % of value; US$; US$m; 2014

60% 40%

$0.80

30% 10% 50% 20%

$0.10

$0.00

$0.40

$0.30

$0.60

$0.20

80% 0% 70%

$0.50

$0.70

90%

India Lebanon

Singapore UAE Oman

Saudi Arabia

Malaysia

$20

China Kuwait

Bahrain Qatar

Vietnam

Egypt Israel

Jordan Pakistan

Taiwan Philippines

South Korea

Thailand

Indonesia

Japan Hong Kong SAR

AU share of total import value

VALUE Average

FOB $/kg 2014

1

2

3

As a “Straw Man” for discussion, we identify a export market roll-out plan

21

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR CARROT OPPORTUNITY Model; 2016

1 Export market launch in Singapore

2 Export market launch in Saudi Arabia

3 Export market launch in Hong Kong

0 Product development and testing

Potential in-market partners identified later in this document

-  High income, sophisticated market and consumers

-  Manageable sized test bed -  WA already has a very strong

market position -  WA is market leader and

should, therefore, lead

DOCUMENT STRUCTURE





22

Western Australia is well-positioned to expand carrot exports to Asia

23

IS THE MARKET DEVELOPED & COMPETITIVE?

-  The flow of carrots from the farm through to the consumer is relatively straight forward and simple

-  Carrot prices are competitive in Asia

-  Asian markets have a much less developed carrot range and offer than western countries

-  “Leading indicator” Western markets strongly suggest depth of range in Asian carrot markets will increase going forward

-  (Almost) all retailers offer one or two loose bulk SKU; beyond this range increases (and therefore sales increases) come from increasing the number of prepack SKU

WHAT IS WA CAPABLE OF DELIVERING?

-  A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey

-  Western Australian carrot producers need to continue to move forward and improve through new products

-  Multiple potential positions exist to develop a premium carrot offer for Asia

-  Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian carrot offer

-  There are a wide range of potential product positions or claims available for a premium carrot product from Western Australia targeting Asia

-  As a “Straw Man” for discussion, we identify an opportunity for a high value, premium carrot product with select characteristics for launch into key export markets

HOW IS THE MARKET STRUCTURED? The flow of carrots from the farm through to the consumer is relatively straight forward and simple

24 Source: Coriolis

SIMPLIFIED MODEL OF SUPPLY CHAIN: CARROTS Model; 2016

Retailers

Foodservice & Institutional

Exports

Wholesalers

Distributor(s) (multi-layered in large markets)

Domestic Packer/Processor

Agent/Broker/ Distributor

Packer/Processor Sales/Marketing

In-Market Farmer

Logistics Providers

(Airfreight, Seafreight, Trucking)

WA Carrot Packer/Processor

Other Australian Packer/Processor

WA Farmer

USA Packer/Processor

New Zealand Packer/Processor

Regional Packer/Processor

Chinese Packer/Processor

Other Packer/Processor

This stage branches and adds multiple layers in large markets

WHO IS THE COMPETITION? PRICING Carrot prices are competitive in Asia

$0.61

$2.59

$0.52

$1.02 $1.13 $1.17

$3.07

$2.57 $2.57

$6.39

$1.38 $1.38

$0.82

$1.31

$3.78

$6.88

$8.03

Loose bulk (CN

)

Sun City (W

A)

Loose bulk (CN

)

Loose bulk (AU

)

T&

F 1kg pk (AU

)

T&

F 500

g pk (AU

)

Grim

mw

ay (US)

Loose bulk (AU

)

Store Brand (AU

)

Grim

mw

ay (US)

Sumich (W

A)

Pasar (AU

)

Coles Juicing

Coles

Coles O

rganic

Coles C

arrots Shredded

Coles C

arrot Sticks

25 Source: Coriolis from store checks

SHELF PRICE PER KG ACROSS SELECT SE ASIAN MARKETS AND AUSTRALIA: CARROTS US$/kg; Jan 2016

SELECT SE ASIAN RETAILERS AUSTRALIA

AU AU AU AU AU

Malaysia Thailand Singapore

WHAT IS ON THE SHELF? RANGE IN MARKET Asian markets have a much less developed carrot range and offer than western countries

26 Source: Coriolis from store checks; photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLE: ACTUAL PREPACK CARROT RANGE ON SHELF Jan 2016

New York: GDP/Capita US$53,067 Singapore: GDP/Capita US$83,100

IS THE MARKET DEVELOPED & COMPETITIVE? RANGE “Leading indicator” Western markets strongly suggest depth of range in Asian carrot markets will increase going forward

18

16

11 10 10

8

5

3 3 2 2

Safeway (CA)

Wegmans (NY)

Woolworths (AU)

Sainsbury (UK)

Tesco (UK)

Coles (AU)

Tesco (MY)

Park'N Shop (HK)

Cold Storage (SG)

Fairprice (SG)

Tesco (TH)


NUMBER OF LINES ON SHELF: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Jan 2016

SE Asia Anglo-American

Average 3 sku/store

Average 12.2 sku/store

4x

IS THE MARKET DEVELOPED & COMPETITIVE? SEGMENTATION (Almost) all retailers offer one or two loose bulk SKU; beyond this range increases (and therefore sales increases) come from increasing the number of prepack SKU

2 1

2 1 1

2 2 1 1

16

15

9

9 9 6

3

3 2

1

Safeway (CA)

Wegmans (NY)

Woolworths (AU)

Sainsbury (UK)

Tesco (UK)

Coles (AU)

Tesco (MY)

Park'N Shop (HK)

Cold Storage (SG)

Tesco (TH)

Prepack

Loose


NUMBER OF LINES ON SHELF BY PACK FORM: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Jan 2016

IS THE MARKET DEVELOPED & COMPETITIVE? PRODUCT ATTRIBUTES A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey

26%

22%

9%

7%

6%

5%

5%

3%

1%

Baby/mini/petite

Organic

Precut/shredded

Named variety

Sticks/batons

Dutch/stem On

Bulk/family/juicing

Rainbow/colours

With dip


PERCENT OF OBSERVED PRODUCTS ON SHELF MAKING THE CLAIM ON PACK % of SKU; N=86; Jan 2016

-  This provide very clear instruction on what product attributes are succeeding the most across markets

-  Western Australian carrot producers looking to grow value and share should focus in these areas

-  Baby carrots stand out, with ~1/4 observed product SKU being “baby/mini/petite”

-  Survey universe is all products in all listed retailers (across multiple countries)

TAKEAWAYS

WHAT IS WA CAPABLE OF DELIVERING? STRATEGIC DIRECTION Western Australian carrot producers need to continue to move forward and improve through new products

30

SUGGESTED STRATEGIC DIRECTION: WESTERN AUSTRALIAN CARROTS Model; 2016

Loose, bulk carrots

Everyday prepack carrots

Baby/Mini/Petite carrots

Organic carrots

Named gourmet varieties

Multi-colour mixed carrots

Precut

Chinese suppliers are here

WA suppliers are here in Asia

High growth, high potential opportunities

are here

USA & UK suppliers are here

WHAT IS WA CAPABLE OF DELIVERING? CLAIMS Multiple potential positions exist to develop a premium carrot offer for Asia

31 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)

IDENTIFIED POTENTIAL PREMIUM POSITIONS Model; 2016

Organic With dip Lunchbox packs Heart healthy

Identified source region Gourmet varieties Baby/mini/petite High in beta carotene

Specialty variety Multi-colour Shredded Aids digestion

Track & trace Kid friendly characters Alkaline elements

High in potassium

Promotes dental health

High in carotenoids

High in fibre

Precut

Triple washed

Prewashed

HEALTH PROVENANCE INDULGENCE CONVENIENCE

WHAT IS WA CAPABLE OF DELIVERING? GLOBAL PEERS Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian carrot offer

32 Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLES OF PREMIUM PRODUCTS FROM OTHER MARKETS Select; 2016

Organic Cleaned & cut Certified organic/USDA British

Vegetarian Microwave in bag Washed Chanternay

No artificial chemicals Triple washed Ready-to-eat Perfect for roasting

No artificial fertilisers “Food You Feel Good About” Cut & peeled

% sales to charity Heart healthy Rainbow

Sustainable farming “Healthy by Choice”

Specially selected farmers

Enjoy as a snack

Since 1984

1 of 5 a day

Flag

WHAT IS A POTENTIAL WA OFFER? There are a wide range of potential product positions or claims available for a premium carrot product from Western Australia targeting Asia

33 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)

HYPOTHETICAL EXAMPLE OF PREMIUM PRODUCT FROM WA Model; 2016

High in beta carotene & carotenoids

High in potassium

From Western Australia

Organic Australian

Flag

Multi-colour

Baby/mini/petite

Plain carrot

Triple washed for your safety

Includes “named” variety (e.g. Chanternay)

HEALTH

PROVENANCE

INDULGENCE

CONVENIENCE

WHAT IS THE IDENTIFIED OPPORTUNITY? As a “Straw Man” for discussion, we identify an opportunity for a high value, premium carrot product with select characteristics for export market launch

34 Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR CARROT OPPORTUNITY Model; 2016

CURRENT WA POSITIONING IN ASIA

IDENTIFIED HIGH GROWTH, HIGH VALUE OPPORTUNITY FOR WA

High in beta carotene & carotenoids

High in potassium

From Western Australia

Organic

Australian Flag

Multi-colour

Baby/mini/petite

Triple washed for your safety

Includes named variety From

Australia Prepack

POTENTIAL FUTURE PRODUCT LINE EXTENSION

THOUGHT STARTER “STRAW MAN” MODEL FOR DISCUSSION

DOCUMENT STRUCTURE





35

FOCUS MARKET – 1 – SINGAPORE Singapore has a robust and well-developed food retailing and foodservice sector

$5.6

$3.9

$6.3

$1.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases

36 Source: Coriolis from a wide range of sources

TURNOVER & PURCHASES US$b; 2014

ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014

Foodservice Retail

$1.9 $3.9

Online $0.1

Traditional grocery $0.3

Supermarket $2.2

Convenience $0.4

Wet markets, etc. $0.7

Foodservice $1.9

Department stores $0.3

Petrol stations $0.1

Foodservice

Retail 6,500 restaurants,

hawker stalls, hotels, vending machines,

institutions (schools, hospitals, airline caterers,

prisons, etc.)

3.0%

5.0%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; S$; 2013v2014

FOCUS MARKET – 1 – SINGAPORE Four potential in-market partners are identified for Western Australian firms in Singapore

Firm NTUC Fairprice Cold Storage Sheng Siong Prime Supermarkets

Ownership National Trade Union Council (Singapore)

Dairy Farm International (Hong Kong)

Listed; Singapore Private; Singapore

Website www.fairprice.com.sg www.ntuc.org.sg

www.coldstorage.com.sg www.dairyfarmgroup.com

www.shengsiong.com.sg www.allforyou.sg

www.primesupermarket.com

Annual sales US$1.83b US$1.55b US$0.55b US$0.2b

Store formats Supermarket Hypermarket Convenience (Cheers; 139) Online

Supermarket (Cold Storage, Marketplace) Hypermarket Convenience (7-Eleven; 502) Online

Supermarkets Online

Supermarkets

# of stores 285 848 38 19

Store fascia


POTENTIAL IN-MARKET PARTNERS – SINGAPORE 2015 or as available

FOCUS MARKET – 2 – SAUDI ARABIA Saudi Arabia has a robust and well-developed food retailing and foodservice sector

$41.5 $29.1

$13.7 $4.1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases




Foodservice Retail

$4.1

Other modern $4.5

Supermarkets $11.9

Traditional/bakalas $12.6

$29.1

Foodservice $4.1

Foodservice

Retail

11.0%

6.4%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; HK$; 2013v2014

FOCUS MARKET – 2 – SAUDI ARABIA Seven potential in-market retail partners are identified for Western Australian firms in Saudi Arabia


POTENTIAL IN-MARKET PARTNERS – SAUDI ARABIA 2015 or as available

Firm Panda Supermarket Al-Othaim Farm Supermarket Al Raya Supermarket Tamimi Markets Bin Darwood Carrefour KSA

Ownership Azizia Panda United/SAVOLA Group

Othaim Holding Saudi Marketing Co./ Aswad Group

Levant Capital and The Rohatyn Group

Tamimi Group JV Al-Olayan Group & Majid Al-Futtaim

Website www.panda.com.sa www.othaimmarkets.com www.othaimholding.com

www.farm.com.sa www.aswadgroup.com

www.alraya.com.sa www.tamimimarkets.com www.al-tamimi.com

www.bindawood.com www.carrefourksa.com

Annual sales (Food/FMCG)

US$3.2b US$1b US$0.6b US$0.5b N/A N/A N/A

Food store formats

Hypermarkets 52 Supermarkets 102 Convenience 210

Hypermarkets 8 Supermarkets 92 Wholesale Outlets 10 Convenience 20

Supermarkets 56 Small supermarkets 17

Supermarkets 47 Supermarkets 23 Hypermarkets 5 Supermarkets 15

Hypermarkets 16

# of stores 364 130 73 47 23 20 16

Store fascia

FOCUS MARKET – 3 – HONG KONG Hong Kong has a robust and well-developed food retailing and foodservice sector

$11.5

$8.0

$12.8

$3.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases




Retail Foodservice

$3.9 $8.0

Foodservice $3.9

CRA $0.3 CRE

$0.2

Wellcome $1.2

AEON $0.6

Drug stores $0.6

Wet markets, etc. $3.0

ParknShop $1.5

Other retail $0.6

Foodservice

Retail 14,000+ restaurants 1,000+ bars & clubs

1,050+ hotels Vending machines

Institutions (1,088 schools, 42 hospitals, 3 main airline

caterers, prisons, etc.)

6.7%

3.5%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; HK$; 2013v2014

FOCUS MARKET – 3 – HONG KONG Seven potential in-market partners are identified for Western Australian firms in Hong Kong

Firm Wellcome Park’N Shop CR Vanguard Dah Chong Hong 759 Stores AEON Stores Convenience Retail Asia

Ownership Dairy Farm International/Jardine Matheson

A.S. Watson/ Hutchison Whampoa

CRE/China Resources (SOE; China)

Dah Chong Hong/ CITIC Pacific/CITIC (SOE; China)

Private; Hong Kong (Lam Wai Chun)

AEON (Japan) Fung Group

Website www.wellcome.com.hk www.parknshop.com www.crvanguard.com.hk www.crc.com.cn

www.dch.com.hk

www.759store.com www.aeonstores.com.hk www.aeon.info

www.circlek.hk/en www.cr-asia.com

Annual sales (in HK)

$2.2b+ $2.8b ~$0.8b (food/FMCG) N/A N/A $0.8b $0.4b

Food store formats

Supermarkets 318 Convenience 921 Health & Beauty 369 Restaurants 676

Supermarkets 260+ Convenience

Supermarkets Convenience

Supermarkets Grocery 247+ Dept. stores (w/food) 8 Supermarkets 5

Convenience 600+ Bakery

# of stores Wellcome 280+ Marketplace 31 7-Eleven 900+ Olivers the Delicatessen ThreeSixty

ParknShop 175 PnS Superstore 50+ PnS Taste 10 PnS Fusion 14

CR Vanguard 100+ VanGo 79

DCH Food Mart 80+ DCH Food Mart Deluxe

759 Stores 247+ AEON 13 Circle K Saint Honore Cake

Store fascia


POTENTIAL IN-MARKET PARTNERS – HONG KONG 2015 or as available

DOCUMENT STRUCTURE





42

IDENTIFIED WA COMPANIES

CASTRO FARMS

CENTER WEST EXPORTS

IVANKOVICH FARMS

ADDRESS: 6265 Forrest Hwy, Myalup, WA 6220 ADDRESS: LOT 55 Croot Place, Woodridge, WA 6041 ADDRESS: Old Coast Rd, Myalup, WA 6220

PHONE: 08 9720 1228 PHONE: 08 9577 2066 PHONE: 08 9720 1389

WEBSITE: www.castrofarms.com.au WEBSITE: www.centerwest.com,au WEBSITE: www.ivankovichfarms.com.au

43 Sources: Coriolis from a wide range of sources

PATANE PRODUCE

SUMICH GROUP

ADDRESS: 27 Pead Road, Myalup, WA 6620 ADDRESS: Mandogalup Rd, Mandogalup, WA 6167

PHONE: 08 9720 2235 PHONE: 08 9437 2066

WEBSITE: www.pataneproduce.com WEBSITE: www.sumich.com

AUSTRALIA Coriolis Australia Pty Ltd

PO Box 5831 St Georges Terrace

Perth, WA 6831 Australia

+61 8 9468 4691

NEW ZEALAND Coriolis (New Zealand) Limited

PO Box 90-509 Victoria Street West

Auckland, 1142 New Zealand

+64 9 623 1848

www.coriolisresearch.com

Coriolis is the leading Australasian management consulting firm specialising in the wider food value chain. We work on projects in agriculture, food and beverages, consumer packaged goods, retailing & foodservice. In other words, things you put in your mouth and places that sell them. WHERE WE WORK We focus on the Asia Pacific region, but look at problems with a global point-of-view. We have strong understanding of, and experience in, markets and systems in Australia, China, Japan, Malaysia, New Zealand, Singapore, South Korea, Thailand, the United Kingdom and the U.S. We regularly conduct international market evaluations and benchmarking. WHAT WE DO We help our clients assemble the facts needed to guide their big decisions. We develop practical, fact-based insights grounded in the real world that guide our clients decisions and actions. We make practical recommendations. We work with clients to make change happen. We assume leadership positions to implement change as necessary. HOW WE DO IT All of our team have worked across one-or-more parts of the wider food value chain, from farm-to-plate. As a result, our recommendations are grounded in the real world. Our style is practical and down-to-earth. We try to put ourselves in our clients’ shoes and focus on actions. We listen hard, but we are suspicious of the consensus. We provide an external, objective perspective. We are happy to link our fees to results. WHO WE WORK WITH We only work with a select group of clients we trust. We build long term relationships with our clients and more than 80% of our work comes from existing clients. Our clients trust our experience, advice and integrity.

Coriolis advises clients on growth strategy, mergers and acquisitions, operational improvement and organisational change. Typical assignments for clients include… FIRM STRATEGY & OPERATIONS We help clients develop their own strategy for growing sales and profits. We have a strong bias towards growth driven by new products, new channels and new markets. MARKET ENTRY We help clients identify which countries are the most attractive – from a consumer, a competition and a channel point-of-view. Following this we assist in developing a plan for market entry and growth. VALUE CREATION We help clients create value through revenue growth and cost reduction. TARGET IDENTIFICATION We help clients identify high potential acquisition targets by profiling industries, screening companies and devising a plan to approach targets. DUE DILIGENCE We help organisations make better decisions by performing consumer and market-focused due diligence and assessing performance improvement opportunities. EXPERT WITNESS We provide expert witness support to clients in legal cases and insurance claims. We assist with applications under competition/fair trade laws and regulations.

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