US Oils & Fats Trade – Focus on Palm POTS - Kuala Lumpur, Malaysia - October 16, 2012

Brent Campbell Business Development Manager – AAK USA

Areas of Focus

US Consumption Trends

Current Issues & Opportunities

Usage & Labeling of Interesterified Fats

Edible Product Applications for Palm Oil – -Bakery

– -Frying

– -Confectionary

– -Dairy

Q&A

US Oil Consumption History

0

5

10

15

20

25

30

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Peanut

Sunflower Seed

Olive

Cottonseed

Palm Kernel

Coconut

Palm

Rapeseed

Soybean

bill

ion

lbs

US Domestic Consumption of Edible Oils

Palm oil has become an increasingly important part of the US oil market

Usage of Edible Oils by Product Type

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Other (Confectionary Fats, etc)

Margarine Oil

Salad or Cooking Oils

Baking or Frying Fats

Domestic Shipments of Edible Fats & Oils (millions pounds)

US Palm Oil Imports

1036

994

980

1021

1111

900

950

1000

1050

1100

1150

2008/09 2009/10 2010/11 2011/12 2012/13

Thousand Metric Tons

Current Challenges & Opportunities

Trans Fatty Acid removal/reformulation -

Saturated Fatty Acid reduction -

Sustainable Oil Solutions -

Weak Cocoa Prices -

Global Economy -

= Opportunity

= Challenge

5-Year Cocoa Price History (USD/MT)

Usage & Labeling of Interesterified Fats

IE oils are very prevalent in the US, but nearly impossible to quantify due to the lack of a labeling requirement

The US FDA has stated that it is not necessary to declare “Interesterified” on the ingredient label unless the product contains a hydrogenated component, in which case producers have the option to declare the hydrogenated component individually, or to label it all as “interesterified”

“Modified” is not an acceptable descriptor in the US

Palm Oil Product Applications

Edible Applications for Palm Oil in the United States

Bakery – Zero-Trans Shortenings & Flakes, Margarines

•-Biscuits, Sweet Breads, Pizza (frozen), Refrigerated Dough, Pies

Frying – Zero-Trans Frying Oil

•-Donuts, Snack Cakes, Fried Desserts

Confectionary – Coating Fats (Cocoa Butter Equivalents & Substitutes)

– Filling Fats

Dairy – Whipped Toppings

– Non-Dairy Creamer

Bakery

In most cases, dough fats are partially crystallized when added to the dough. Therefore the demands on crystallization properties & the crystal structure of bakery fats are very specific.

Four methods of delivery

Solid cubes with a homogeneous crystal structure

Flakes

Liquid deliveries, which need to be crystallized before use

Pumpable shortenings, basically a slurry of crystals and liquid fractions.

Zero-Trans Shortenings

Wide range of plasticized shortenings utilized

All-purpose shortenings commonly made from 100% RBD palm

Variations include blends of:

– -RBD palm/canola

– -Hard palm/soy or canola

– -IE blends of numerous oils with palm hard stock (PKS, PKO, Super Stearin)

Pies, Cookies, Cakes, Biscuits

Shortening Flakes

Flaked fat that improves baking performance and offers superior handling characteristics

Typically made from PHSBO or fractionated palm

– -Palm blends are often IE

– -PHF, POLN most popular fracs

– -PKO popular from functional perspective, but recent price volatility has caused some demand destruction

Frying Oils

US food processors have transitioned away from PHSBO as a frying oil

Liquid veg oils are now preferred

Pam oil/olein has become the most used source oil today due to economy of scale and the need to reduce or eliminate trans from hydrogenated soybean/cottonseed oils

Coating Fats

Cocoa Butter Alternatives

Cocoa Butter Alternatives

CBAs

Cocoa Butter Equivalents Cocoa Butter Improvers

CBEs/CBIs

Cocoa Butter Replacers CBRs

Cocoa Butter Substitutes CBSs

Fractionated Non-lauric Non-trans

Hydrogenated/ unhydrogenated

Lauric Non-trans

Hydrogenated/ unhydrogenated

Non-lauric High trans/low trans

Trans Fatty Acid Levels of these groups

Typical CBE = < 1% Typical CBR = 50% – 70% Typical CBS = < 1%

Ice Cream Coating Fats

The fat content of ice cream coatings is higher than most coatings for bars or bakery products. The total fat content could be around 50-65% fat.

With that amount of fat the requirements will be critical.

It must,

Set quick -but not too quick

Be soft -but firm

Melt rapidly -but be solid before eating

The requirements are indeed contradictory, but they can be met by using a quick-solidifying vegetable fat with a low melting point.

CNO, PKO, POLN, and blends of these oils

20

Example of Innovative, Low-Saturated Product

Filling Fats

23

Requirements of a filling

Processing – Crystallisation

speed?

– Tempering?

– Rework?

Stability

Storage temperature?

Shelf life?

Recipe

Nuts?

Soft toffee?

Chocolate covered?

Sensory

Hard or soft?

Cool-melting?

Flavour release?

Mousse structure?

Health/image/labelling

Vegetable fat?

Reduced amount of SAFA?

The choice of filling fat affects many properties

Best Oils: PMF, Palm Kernel, Palm Oil

Dairy Fat Replacement

Whipped cream toppings

Coffee creamers

Cheese analogs

Ice cream

Optimal fat for Whipping Cream and Non-Dairy Coffee Creamer: PKO & CNO

Optimal fat for cheese analogs: PO, PK, Canola

Optimal fat for ice cream: Palm & PKO

25

Questions?