The&Powerof&Shelf/Life& ExtensioninMeatpackaging& · Rabo Development holds non-controlling interests in 8 partner banks and provides ... 2FRESH,SUSTAINABLE&&&SAFE&–& Highcostsofmeatwaste&

Title Slide

The Power of Shelf-‐Life Extension in Meat packaging

Innovative packaging can open new growth opportunities

Food & Agri Research/ F&A supply chains November 2015

•  Among the world’s largest banks

•  14.9% Tier 1 Ratio

•  Nearly USD 1 trillion in assets

•  Over 1,300 offices in 40 countries

•  47,000 employees

•  Bankers with local knowledge

•  Specialists from “gate to plate”

•  F&A Research and Advisory Group

•  More than 80 F&A research analysts worldwide

Introduction to Rabobank Group

Global presence The world’s leading Food and Agriculture bank

Commit-‐ ment

Rabobank Group operates in 40 countries around the world with Rabobank and its subsidiaries

Argentina | Australia | Austria | Belgium | Brazil | Canada | Cayman Islands | Chile | China | Curaçao | Czech Republic | Denmark | Finland | France | Germany | Hungary | India | Indonesia | Ireland | Italy | Japan | Luxembourg | Malaysia | Mauritius | Mexico | New Zealand | Norway | Poland | Portugal | Romania | Russia | Singapore | South Korea | Spain | Sweden | Switzerland | The Netherlands | Turkey | United Kingdom | United States

40countries

Rabobank Foundation supports projects in 25 countries

Bolivia | Brasil | Cambodia | Colombia | Ecuador | Ethiopia | Ghana | India | Indonesia | Ivory Coast | Kenya | Laos | Mali | Mexico | Mozambique | Nicaragua | Peru | Philippines | Rwanda | Senegal | Sri Lanka | Tanzania | The Netherlands | Uganda | Vietnam

25countries

Rabo Development holds non-controlling interests in 8 partner banks and provides advice and support for various projects

Brazil | Cameroon | China | Ethiopia | Ghana | India | Ivory Coast | Kenya | Mozambique | Paraguay | Peru | Philippines | Rwanda | South Africa | Tanzania | Uganda | Vietnam | Zambia

18 countries

Rabobank Wholesale Rural & Retail has offices in 661 locations in 30 countries

30 countries

Argentina | Australia | Belgium | Brazil | Canada | Cayman Islands | Chile | China | Curaçao | France | Germany | India | Indonesia | Ireland | Italy | Japan | Luxembourg | Malaysia | Mauritius | Mexico | New Zealand | Poland | Russia | Singapore | Spain | St Maarten | The Netherlands | Turkey | United Kingdom | United States

Expertise

Size

Dedicated focus on F&A

Cooperative structure encourages long-‐term relationships

Over 115 years financing agriculture

2

Title including large graph

The mega trends in meat today Packaging technology the perfect fit

And RED MEAT in developing regions

FRESH, SUSTAIN-‐ABLE,

and SAFE

MORE consumers want MORE

LEAN, WHITE MEAT in developed markets

Packaging

1

2

3

4

3

0

20

40

60

80

100

120

140

160

180

200

North America Africa China

mln MT 2004 2014 2024F

1 MORE-‐ Meat consumption to grow fastest in Asia in next decade Both per capita and on a population basis

Beef, pig, poultry total consumption Beef, pig, poultry per capita consumption

Source:: OECD FAO, Rabobank

0

20

40

60

80

100

120 kg 2004 2014 2024f

4

2.2

2.3

2.3

2.4

2.4

2.5

2.5

2.6

2.6

2.7

2.7

2005 2006 2007 2008 2009 2010 2011 2012 2013

Avg household size US Avg EU 28

0%

20%

40%

0.25

0.45

0.65

2001

2003

2005

2007

2009

2011

2013

2015f

2017f

2019f

Italy Eastern Europe Western Europe Japan Japan % >65 (RHS) Italy % >65 (RHS) Eastern Europe % >65 (RHS) Western Europe % >65 (RHS) EU total, % >65 (RHS)

1 MORE -‐ smaller households, older people drive packaging growth

Source: US Census, eurostat, Rabobank 2014 Source: Euromonitor, eurostat, Census bureau’s, Rabobank, 2015

Shrinking households drive packaging consumption as portions decrease

Older people eat less, requiring smaller portion sizes, 2001-‐2019f

Avg unit size (kg)

5

Share over 65’s No. of persons

Two columns containing text

0

2

4

6

8

10

12

2 FRESH, SUSTAINABLE & SAFE -‐ The magnitude of global food waste

0

0.4

0.8

1.2

1.6

2

0

50

100

150

200

250

300 Carbon emissions (Gtonnes) Area of land (billion hectares) Blue water consumption (km3)

6


2 FRESH, SUSTAINABLE & SAFE – High costs of meat waste

0

5

10

15

20

25

30

35

0

10

20

30

40

50

60

70

Billions

(USD

)

Millions

(ton

nes)

Food Wastage Costs of production of food waste

0

20

40

60

80

100

120

140

Million to

nnes

Food wastage Carbon footprint of waste

7

Low volumes, but high costs (Europe) And high environmental impact (Europe)

5.6% 6.1%

4.2%

1.9%

0.7% 1.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

0

200

400

600

800

1000

1200

1400

bln units 2014 2019f

2 FRESH, SUSTAINABLE & SAFE -‐ Share of modern retail key driver

Source: Euromonitor, Rabobank 2015 Source: Euromonitor, Rabobank 2014

Catch-‐up growth packaging in beverages and dairy Retail sales growth 2.5 times the rate of developed countries

Developing

Asia Pacific, Eastern Europe, Latin America, ME & Africa

Developed

North America, Western Europe, Oceania

Developing

Asia Pacific, Eastern Europe, Latin America, ME & Africa

Developed

North America, Western Europe, Oceania

CAGR 2014-‐19F CAGR 2014-‐19F

8

3.3% 3.7%

1.4% 1.4% 1.3%

-‐0.1% -‐0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

0

500

1,000

1,500

2,000

2,500

3,000

USD billion 2014 2019f

3 WHITE-‐ Over last 10 years, we switch to poultry and fish

Source: Rabobank

Beef, pork,

seafood dairy p/c

Beef, pork p/c

Beef p/c

- Health & safety -  Convenience

- Dietary choices - Downtrading

-  Health & safety -  Convenience

- Dietary choices -  Downtrading

Dairy, poultry, Seafood, pork,

beef p/c -  Health & safety

- Uptrading

- Health & safety -  Dietary choices

Pork, poultry, seafood, dairy

p/c - Uptrading

Poultry, pork, dairy,

seafood p/c

-Uptrading

All this already on a per capita basis

9

1.0% 0.9%

2.0%

2.4%

1.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

0

50

100

150

200

250

CAGR 2014-‐2024f

mln MT 2004 2014 2024F

3 WHITE -‐ Shift to poultry and (shell)fish from beef and pork

Total volume changes -‐ Animal protein total consumption Per capita changes – Animal protein p/c consumption

Source: OECD/FAOSTAT, Rabobank

0.0%

-‐0.1%

1.0%

1.4%

0.8%

-‐0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

0

5

10

15

20

25

CAGR 2014-‐2024f

kg 2004 2014 2024f

•  Fish includes wildcatch with no growth at about 50% of total, aquaculture is at least 2 x the growth rate

10

4 RED -‐ World Pork map: pork and pork by-‐products trade flows

Source: Rabobank

11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2012 2015 2018 2021 2024 2027 2030 Hypers Superstores/Supermarkets Hard & Soft discount, limited Convenience stores Other Online

4 RED-‐ Channel changes -‐ Online retail will take a big chunk out of retail

Global Internet retailing grows at 10 times the speed of total retail

Marketshare of retail channels EU-‐7

Source: Rabobank, Euromonitor, IGD, 2015

0.5%

1.1% 1.3%

1.8%

2.6% 2.6%

4.7%

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

5%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Australasia

Western Europ

e North America

LaPn

America

Eastern Europe

Asia Pacific

Middle East and

Africa

Total food & beverages retailing

14.8%

11.6%

14.5%

10.9% 9.4%

18.9% 16.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

5

10

15

20

25

Australasia

Western Europ

e North America

LaPn

America

Eastern Europe

Asia Pacific

Middle East and

Africa

Internet retailing CAGR 2014-‐201

9f

USD bln CAGR

2014-‐2019f

USD bln

12


Shelf-‐life extension win/win: packaging, supply chain, consumer, natural resources

Shelf-‐life extension required to address global meat trends

Quality Packager

Improves packaging value

Increases process integration with meat supplier

Meat supplier

Less waste – sustainability

Reduces inventory risk

Lowers distribution cost

Sales premium

Possibility to extend market

Retailer

Cuts waste -‐ sustainability

Reduces inventory risk

Prepare for tighter regulation

Reduces labour cost (filling)

Sales premium

Consumer

Meat of higher quality (freshness)

Saves money

Buy from more places

Reduces need for conservatives

13

Chapter heading

-‐ Product positioning

-‐ Shorten the supply chain and share risks

-‐ Focus on sustainability & food safety

-‐ Create long term customer relationships

-‐ Expand or outsource supply geographically

-‐ Product innovation

Meat producer

Packager

Retailer

Consumer

Supplier strategies meat market

14

Text including images (big)

Meat packaging technologies

CURRENT

Unpacked or in-‐store packed Atmosphere Packaging

Case ready packed Modified Atmosphere Packaging (MAP)

Vacuum packaging (97-‐99 % of air removed)

GROWING

Case ready packed MAP Vacuum skin packaging CO-‐MAP

NEW

High Pressure Processing

Bulk MAP

Magnetic freezing

Smart labels

15

Text including images

Current packaging methods Unpacked or in-‐store packed

Atmosphere Packaging Air permeable over-‐wrap All types of meat

High drip loss, reduced juiciness 2-‐7 days total lifetime from packaging

Case ready packed Modified Atmosphere Packaging (MAP) 80 % O2 and 20% CO2 All types of meat Reduced firmness

6-‐10 days total lifetime Used mainly in UK and NL

Vacuum packaging (97-‐99 % of air removed) Up to 38-‐70 days total lifetime

Boneless meat only, mainly beef Moderate drip loss, off-‐flavour (oxidation due to residual air)

16


GROWING 1: Vacuum Skin Packaging Flexible film water pressured around the meat -‐ no residual air

Quality Little drip loss, taste better than CO-‐MAP Tenderisation slower, firmness higher Suitable for all kinds of meat and fish

Allowed in US, Europe, 10 day limit UK

Shelf-‐life 30-‐60 days total lifetime (beef)

up to 15 days total lifetime (pork)

Consumer acceptance Purple in shelves, but blooms to fresh red meat after air exposure

Regulation Similar to all food contact materials

17


GROWING 2: CO-‐MAP Low O2, High CO2 and 0,04 % CO

Quality Moderate drip loss Firmness and taste better than normal MAP or AP Suitable for all kinds of meat

Allowed in US, Norway, not Europe

Shelf-‐life Shelf-‐life 2-‐3 x MAP

Consumer acceptance Longer red meat colour, some persistent pinking

Regulatory acceptance 0,04% CO is Generally Recognized As Safe (GRAS) (US) Not allowed yet in EU due to perceived consumer barrier

Additional cost per package No additional cost -‐ similar to MAP

18


NEW 1: High Pressure Processing Pascalisation up to 6.000 bar

Quality Suitable for processed meat, deli-‐cuts and fish, fresh meat will discolour

Extends shelf-‐life with more even result than thermal processing

Shelf-‐life 5 x fresh life, when combined with VSP packaging

Consumer acceptance Nu hurdles foreseen

Regulation Allowed in US, Europe

Additional cost per package EUR 0.10-‐0.25 p/kg depending on volume

Source: Multivac

Sliced vacuum-‐packed cooked ham

19


Conclusion

• Progress continues to be made • While rate of change is slow… • Huge impact on the meat value chain

Questions?

20

Important notice

This document has been prepared exclusively for your benefit and does not carry any right of publication or disclosure other than to Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”). Neither this document nor any of its contents may be distributed, reproduced or used for any other purpose without the prior written consent of Rabobank. The information in this document reflects prevailing market conditions and our judgement as of this date, all of which may be subject to change. This document is based on public information. The information and opinions contained in this document have been compiled or derived from sources believed to be reliable, without independent verification. The information and opinions contained in this document are indicative and for discussion purposes only. No rights may be derived from any potential offers, transactions, commercial ideas et cetera contained in this document. This document does not constitute an offer or invitation. This document shall not form the basis of or cannot be relied upon in connection with any contract or commitment whatsoever. The information in this document is not intended and may not be understood as an advice (including without limitation an advice within the meaning of article 1:1 and article 4:23 of the Dutch Financial Supervision Act). This document is governed by Dutch law. The competent court in Amsterdam, The Netherlands has exclusive jurisdiction to settle any dispute which may arise out of or in connection with this document and/or any discussions or negotiations based on it.

This document has been published in line with Rabobank’s long-term commitment to international food and agribusiness. It is one of a series of publications undertaken by the global department of Food & Agribusiness Research and Advisory. © 2015 — All rights reserved

Documents

The&Powerof&Shelf/Life& ExtensioninMeatpackaging& · Rabo Development holds non-controlling interests in 8 partner banks and provides ... 2FRESH,SUSTAINABLE&&&SAFE&–& Highcostsofmeatwaste&