THE U.S. MARKET FOR DIABETIC & PRE-DIABETIC CONSUMER PRODUCTS “EXPLORING DIETARY FOOD & DRINKS OPPORTUNITIES” SYMPOSIUM, CARDIFF, 22 APRIL 2015

John Zindar, European-American Business Organization, Inc.

Market Overview

Number One Market: Russia

Market Opportunity - U.S.A.

Percentage of U.S. Adults Age 20 to 74 Classified as Overweight and Obese

More than 35% of U.S. Adults are Obese and more than 50% are Overweight

Prevalence of Self-Reported Obesity Among U.S. Adults - 2013

Source: Center for Disease Control

20% of U.S. Children are Obese

Source: Center for Disease Control

Diabetes in the United States

Source: Center for Disease Control, 2014

=>15–30% of people with pre-diabetes will develop type 2 diabetes within 5 years

Diabetes in the United States

Government Response

Michelle Obama – Let’s Move

¨  http://www.wsj.com/video/food-nutrition-labels-set-for-an-overhaul/AF1CE834-4C5E-410E-B2CF-FA1002771452.html?mod=wsj_video_email

The Government Can’t Tell You What to Eat

Proposed Changes in Nutrition Label

U.S. Food Pyramids

1992: Food Guide Pyramid 2005: MyPyramid Food Guidance System

2011: MyPlate

¨  Plate shape to help grab consumers’ attention with a new visual cue icon that serves as a reminder for healthy eating, not intended to provide specific messages

Industry Response

Fast Food Industry and Healthy Nutrition

Retail Value of Diabetic Foods in the Unites States, 2012-2017, in million U.S. Dollars

Source: Statista

Competitive Overview

Diabetic Focused Brands

¨  Glucerna ¨  Extend ¨  Level Life

Level Life

Glucerna

Extend

Weight-Loss Brands

¨  Many brands market themselves as weight-loss, hunger control and blood sugar control brands ¤ ZonePerfect ¤  In Balance Health Corp ¤ Atkins

¨  Target pre-diabetic people and people who want to lose weight - overlap

Organic, Health Food Brands

¨  Amy’s Kitchen ¨  Kashi

¨  Nature’s Path

⇒  Wide product portfolio ⇒  Target people with diabetes and other

special dietary needs

Healthier Nutrition Trend

¨  Government initiatives ¤ At the beginning of 2015 the Obama administration

proposed a set of rules aimed at providing healthier food options at schools and day care centers (WSJ)

¨  Consumer awareness ¤ “55% of U.S. consumers are trying to limit sugar intake,

through making health-conscious food choices” (Datamonitor)

Healthy Snacks - Examples

Trends and Product Innovation

Marketing and New Ingredients

¨  Glycemic Index is too scientific for U.S. consumer ¨  Instead: “Helps maintain stable blood sugar.”

¨  Resistant starch: HiMaize, CarbSteady (Glucerna)

Market Segments

Age-adjusted Prevalence of Obesity and Diagnosed Diabetes Among U.S. Adults Aged 18 Years or Older

No Data <4.5% 4.5%–5.9% 6.0%–7.4% 7.5%–8.9% >9.0%

Source: Center for Disease Control

Diabetes and Race/Ethnic Background

Source: Center for Disease Control, 2012

Total Population of Ethnic Group 3.7 million 41 million 55 million 16 million 200 million

American Indian and Alaska Native Population as Percentage of Total Population by County, 2010

Source: U.S. Census Bureau, 2010 Census

Hispanic Population by State, 2010

Source: U.S. Census Bureau, 2010 Census

Sale Channels

Retail Channels

¨  Grocery Stores ¨  Specialized Grocery Stores – Health and Organic ¨  Pharmacies ¨  Online

Focus on Specialty Diets Segment

Regulatory Framework

Regulatory Bodies

¨  FDA ¤  Product Registration ¤  Food Labeling Guide

¨  Custom and Border Protection Agency (CBP)

¨  United States Department of Agriculture (USDA) ¤ Health certificates for products contain meat, egg, milk,

poultry, or other animal origin products;

•  Be Realistic, Flexible & Prepared to Invest

•  Deal with Compliance Up-front

•  Focus on Limited Test Markets & Points of Sale

•  Product Offering Considerations

•  Marketing Considerations

•  Pricing Considerations

•  In-Market Partners

•  Distribution & Sales – e-Commerce

•  Associations & Trade Shows

•  M&A, VC, Licensing

Strategic Recommendations

About EABO and the EEN

About the European-American Business Organization, Inc. ¨  Full  service  consul-ng  firm  specializing  in  European  and  U.S.  business  expansion  ¨  Advise  firms  on  the  challenges  and  considera-ons  of  doing  business  abroad:  

¤  Regulatory  &  compliance  issues  ¤  Marke-ng    &  compe--ve  analyses  ¤  Iden-fying  &  qualifying  new  clients  &  strategic  partners  ¤  Cross-­‐border  tax,  legal  &  immigra-on  issues  ¤  Trade  &  ins-tu-onal  mission  management  ¤  Public  &  private  financing  search  ¤  Government    rela-ons

¨  Member  of:    ¤  Enterprise Europe Network (EEN) ¤  US-EU Match Consortium ¤  Transatlantic Business Dialogue    

EEN Network

European-American Business Organization, Inc. 405 Lexington Avenue, 37th Fl., The Chrysler Building New York, NY 10174 www.eabo.biz

BIC Innovation Pencoed Technology Centre, Bridgend, South Wales, CF35 5HZ

www.bic-innovation.com

Contact Information

John M. Zindar, Partner zindar@eabo.biz 405 Lexington Avenue The Chrysler Building, 37th Floor New York, NY 10174 Phone: 212-972-3035 www.eabo.biz

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