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Confidential to Fonterra Co-operative Group

NZ DAIRY ON THE

WORLD STAGE

Theo Spierings, CEO Fonterra

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Confidential to Fonterra Co-operative Group

1. International Farm Comparison Network (IFCN), Economist Intelligence Unit (EIU), Euromonitor, Fonterra analysis . Measured as total global imports.

2. Euromonitor.

20b L 66b L 406b L

25bn L (2% CAGR)

New Zealand Globally Traded Dairy Market¹ Formal Dairy Market²

91bn L (5.5% CAGR)

465bn L (2.3% CAGR) 2014 Baseline

2020 Projection

• Significant participant in

tradable market • Global export/import market

• Informs Milk Price

• Reflects total dairy demand

GLOBAL DAIRY MARKET

Our strategy in a demand-led market

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Confidential to Fonterra Co-operative Group

Note: Trade expressed in terms of tonnes of Liquid Milk Equivalent (milk standardized to 4.2% fat and 3.5% protein).

0

5

10

15

20

25

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

201

22

01

32

01

42

01

5

LM

E (

billi

on

)

Net Exports - Powders Net Exports - Other Net Imports - Powders Net Imports - Other

NZ EU27 US Australia Russia China Asia ME & Africa

China – imports at

more normal levels

in 2015 (higher in

2013/14 due to

supply shock). Plus

product mix changes

Asia and Middle

East – imports

growing steadily

EU – more than

2.6bn litres

additional milk

since 2013

Russia –

embargo

increasing

volume of EU

exports to

Asia

GLOBAL DAIRY MARKET

Globally traded market impacting prices

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Confidential to Fonterra Co-operative Group

GLOBAL DAIRY MARKET

What do we believe?

DEMAND DRIVEN NZ GROWTH 2-3% MILK IN OTHER MARKETS

© Fonterra Co-operative Group Ltd. Page 5

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Confidential to Fonterra Co-operative Group

Deliver on Foodservice potential

Selectively invest in milk pools

Grow our Anlene™ business

Develop leading positions in

paed & maternal nutrition

Optimise NZ milk

1

Align our business and organisation

Build and grow beyond our current

consumer positions

3

2

4

5

6

7

• Optimising NZ milk

– Optionality at peak

– Efficiency and innovation

– Value add / speciality

ingredients

• Increasing volume through

value-add consumer and

foodservice

– Moved additional 300m

LME into consumer and

foodservice in nine months

DIRA

GDT

Ingredient

Sales

Foodservice

Consumer

STRATEGY DELIVERING

Adding value

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Confidential to Fonterra Co-operative Group

STRATEGIC RATIONALE

• Enable our development of higher

margin consumer brands and

foodservice opportunities (Chile,

China, Australia)

• Secure access for our NZ milk

exports (China, Sri Lanka)

• De-risk supply for ingredients

customers (Australia, Europe)

• Optimise our ingredients

manufacturing footprint (Europe)

VOLUME

Complimenting NZ milk

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Confidential to Fonterra Co-operative Group

VALUE

Through global brands

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Confidential to Fonterra Co-operative Group

Recurring

One-time

$410m

$430m

Milk Price

EBIT

Balance sheet

Cash flow

VELOCITY

Owner’s mindset, cash focus

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Confidential to Fonterra Co-operative Group

VELOCITY

WHAT’S NEXT?

DISRUPT Tell our Story

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Confidential to Fonterra Co-operative Group

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Confidential to Fonterra Co-operative Group

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Confidential to Fonterra Co-operative Group

AT HOME

- Stay on strategy

- Efficiency And Innovation

- Social Responsibility

- Tell our Story

IN MARKET

- Defend marketshare

- Tell our NZ story

- Volume to Value at Velocity

- Disrupt

HOW DO WE SUCCEED?

Stay the course

Page 14

Confidential to Fonterra Co-operative Group

ENDS / appendix

Stronger Co-op

From our

Co-operative

30,000 strong A promise we keep from our

farms to your home

Our Ambition

Making a difference in the lives of 2 billion people

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Confidential to Fonterra Co-operative Group

ENDS

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Confidential to Fonterra Co-operative Group