Unwrap Fresh Marketing Ideas White Paper from June 2003 Naarden Meeting

Overview: The NatureWorks™ brand is capturing shoppers’ attention and loyalty as they seek to provide natural, wholesome and convenient meal solutions to their families. Consumers prefer fresh foods packaged in 100 percent natural-based packaging because it offers all of the convenience of traditional plastic without the environmental compromise. The following document provides a summary of brand discussions at a recent meeting in Naarden, The Netherlands. The purpose of the meeting was to look at how to best understand and sell this brand concept in Europe.

Table of Contents

Food Retail Marketing Market facts 3 Retail opportunity 4 New retail model 5 European targets 6 Market Research Consumer testing 7 Likelihood to pay more 8 Kassel findings 9 Key Messages Retailer 10 Disposable and specialty 11 Case Studies Iper 12 Bed Bath & Beyond 13

Wild Oats 14

Sustainability Cargill Dow’s position 15 Product criteria 16 “Green” marketing 17 Life Cycle Analysis (LCA) LCA primer 19 LCA for PLA 20 Maize Source Issues discussion 23 Brand Awareness Public Relations 25 Advertising 25 Trade fairs 26

Direct marketing 26 Point of sale 27

Miscellaneous discussion points Maize use 28 Plastic or non-plastic? 28 Price 29

2

Food Retail Marketing In the grocery retail environment, stores and chains must continue to innovate if they are to succeed. By reviewing the size of the retail market, as well as the spending that goes into the specific sections of the retail market – produce, deli and bakery – we see a clear opportunity for NatureWorks PLA. Size of the market The food retail opportunity in Europe is estimated to be 174 b Euro

($198 b). • Produce ~ 102.36 b Euro ($116 b). • Delicatessen ~ 30 b Euro ($34 b). • Bakery ~ 42.35 b Euro ($48 b).

Opportunity for packaging Annual market expenditure for packaging is 2.5%. Why target these areas This is where the profit for the retailer is, at the edge of the store.

• Where they try to present the quality image that differentiates their own brand.

• Innovative retailers use this area to set themselves apart.

• Early adopters of NatureWorks PLA are experiencing strong success in these aisles.

• Major brands tend to be found in the center aisles. o Limited basis for differentiation there.

Characteristics Fresh food departments tend to have similar traits.

• Higher gross profits. • Destination departments focusing on ‘quality.’ • Point of store brand differentiation. • Consistent product assortment. • Where best-trained staff is typically found.

• Tremendous point for promotion opportunities. • Can often “own” the whole department.

3

Opportunity is Ripe The old system really doesn’t apply any more. Retailers’

marketing strategy is how to make more profit and differentiate to create customer value and loyalty.

Retailers must find opportunities to either increase revenue or cut costs.

• Cutting cost is not sustainable over time, so the more innovative retailers are looking to get more customers in the door and attract new buyers.

• Margin is fundamentally higher at the edge of the stores (produce, bakery, deli).

o NatureWorks PLA creates impact at the point of sale by using packaging to add value to the food sale.

o Consumers have a new reason to buy the product.

4

Creating a New Retail Model With the NatureWorks brand, retailers can capture value in new

and multiple ways.

The brand helps attract more customers through department differentiation. It helps drive customer trial and is often a ‘gateway’ into other store departments.

A New Way to Think NatureWorks creates point of sale impact by making ‘plastic’ packaging – until now a commodity – a meaningful aspect of a fresh food purchase. It essentially makes the food inside seem ‘new and improved.’

The brand will positively impact sales by improving customer perception of the fresh food products packaged in them.

NatureWorks PLA offers a new, emotional item to sell: • Fresh foods in natural-based packaging. • Deliver the wholesomeness of “farm grown” packaging. • Offer something fun and intriguing. • Is compostable.

5

European Targets

Albert Heijn Auchan Barilla Bonduella Carrefour Conad Coop Cornu Delhaize Finiper Guillen Hartman Marks & Spencer Migros Spar SuperQuinns Unes Waitrose

These key retailers were chosen because they are spending time on marketing, building differentiated store brands, and consumer minded. These retailers tend to set the trends that others will follow. They are predisposed to co-branding. Targeting the NatureWorks brand to such innovators will create short-term success stories, build broader market visibility, and ultimately drive long-term sales.

6

Market Research Studies have shown that the NatureWorks brand is highly sought after by consumers. They are intrigued by it, want it, and are willing to pay more for it. All of the research supports the conclusion that the market is ripe for natural-based packaging. Name testing The NatureWorks brand name was tested in France, Germany, Italy, Japan, Spain, United Kingdom and the United States. It was

ranked against 20 possible names and was selected as the most appropriate name. This demonstrates that the name has strong global appeal. The NatureWorks name was also recently tested against the name Ingeo (Cargill Dow’s fiber brand) and was overwhelmingly selected as the preferred name for food packaging. The simple, yet powerful, message that “nature works” is something that consumers can immediately understand and embrace.

Consumer research Testing has been conducted in the United States and European-

specific testing is in its final stages. Initial indications are that the European results are in line with and similar to the consumer findings from the U.S. (details below).

An analysis technique was used where respondents stated their interest in a new delicatessen concept on a scale of 1 to 10. The concept tested read as follows: Use new packaging material for bakery, produce, and delicatessen items. This new packaging, called NatureWorks PLA, is made 100% from maize, the food contained in this package is fresh and safe for my family, and the packaging can be composted. Other concepts rated included:

• Offering freshly packed spices. • Putting nutritional information on containers. • Only selling organic meats and vegetables.

Note: this was not a comparative ranking among the concepts.

7

Concept findings Consumer response to the brand concept is very strong.

• Nearly 80% of consumers find the concept desirable. • A substantial segment (41%) finds the concept very

desirable. o This segment was similar to those ranking fresh

packaged spices very high. o This segment was larger than those interested in

only organic meats and vegetables (29%). Likelihood to pay more Of those ranking the concept highly desirable:

• 74% said they would pay 5 cents more per package of food. • 60% said they would pay 10 cents more per package of

food. • 52% said they would pay 20 cents more per package of

food.

This means that retailers have a significant opportunity to capture addition value in their fresh food departments.

Just as a frame of reference:

• Of those who ranked the herb concept very high, only 39% were willing to pay more.

• Of those who ranked the organic concept very high, 57% would pay 30 cents more per item.

City-by-city results Testing was also segmented on a city-by-city basis. The

results are fairly consistent across locations. • Reinforcing the broad appeal of the concept

Sharing this information with retailers is a good sales tool to start retailer discussions. Similar data will be available in Europe soon.

8

Kassel Findings The Kassel project was a limited-scale test market to determine if consumers would recognize, buy, and sort

compostable items. It included a variety of compostable packaging and went beyond food applications. Conducted in Kassel, Germany, the test proved strong consumer interest in compostable plastics exists. It also demonstrated the feasibility of municipal composting as an effective waste reduction and removal strategy. Key findings of the trial further support the market opportunities for NatureWorks PLA in Europe. Though the post-trial survey findings are not specific to NatureWorks PLA, they do highlight considerable consumer interest in compostable plastics. Highlights include:

• 91% of respondents said more needs to be done to prevent packaging waste.

• 89% said that they would buy products in compostable

packages again.

• 83% of respondents said they think sorting packaging material makes sense.

• 60% said they were ready to pay higher prices for

environmentally friendly products.

• 93% of respondents ranked compostable plastics from starch as the most environmentally friendly packaging material.

• 82% of respondents said it was a good idea to replace

conventional plastics with biodegradable ones.

• 78% of respondents agreed with the statement that, “In the future, all fruit and vegetable packaging should be made from renewable resources.”

• 74% of respondents said they have no concerns if maize

and potatoes are also grown for plastic packaging.

• 83% said they have no fear the compostable packaging could decompose during transport or use.

• 78% think compostable packaging is just as suited for

organic products as conventional food.

9

Retailer Messages NatureWorks PLA packaging offers unique opportunity for differentiation at retail

- Topline growth potential vs. low cost to serve strategy (i.e. Wal-Mart or Aldi) Consumer desirability for natural and compostable packaging confirmed and quantified

- Share US national / regional & EU country specific (avail as of 9/11) conjoint analysis Retail impact measured

- Case studies independently confirm consumer appeal, sales increases and additional margin potential - News media very interested in reporting and covering local launches

Supply channel in place and ready to serve; also possible to work with preferred packaging suppliers

- Easiest with existing packaging suppliers if retailer emphasizes preference and priority - Need to create a step change in demand to realize economics…chicken and egg Unique opportunity to be an early adapter of: deli/bakery/produce packaging, consumer disposable products

- Leverage competitor / key customer or supplier where possible - What is involved in implementing such a packaging change and promotional campaign?

- CD is willing to subsidize switching costs in exchange for co-branding, making launch a priority and accelerating implementation

Would a relatively cost neutral switch to a differentiated packaging proven to deliver increased category sales/brand visibility be of interest?

-Yes - immediately move into planning specifics -No - happy to work at the place that is comfortable for retailer…please define what that is and prioritize accordingly

10

Disposables and Specialty Targets Messages NatureWorks PLA service ware (or packaging) offers unique opportunity for differentiation

- Demonstrates end user core mission and values which will strengthen consumer loyalty to product and brand (emotive)

Consumer desirability for natural and compostable packaging confirmed and quantified

- Share US national / regional conjoint analysis NatureWorks impact measured

- Case studies independently confirm consumer appeal, sales increases and additional margin potential

- News media very interested in reporting and covering local launches - Summarize Wild Oats, Iper, PCF, and soon to be disposables launches (EU, US) Similar concepts already commercial in key target markets (drinking cups / cutlery / plates & bowls or other packaging) or soon to be - Opportunity to be an early adapter yet low risk since already demonstrated in a similar way - Show broad range of commercially globally available drinking cups/ cutlery/ bowls,

especially WM, FabriKal, Biocorp, Ilip articles - Recap commercial use of such articles, McDonalds EU, NBB, Coke, Odwalla, Penn State, National Parks starting

Channel to market is fully developed and there is also flexibility in supplier preference

- Easiest with existing suppliers if end user emphasizes preference and priority - Need to create a step change in demand to realize economics…chicken and egg Unique opportunity to be an early adapter of: drinking cups, service ware or specialty packaging

- Leverage competitor / key customer or supplier where possible - What is involved in implementing such a packaging change and promotional campaign?

- CD is willing to subsidize switching costs in exchange for co-branding, making launch a priority and accelerating implementation

Would a relatively cost neutral switch to a differentiated packaging proven to deliver increased category sales/brand visibility be of interest?

-Yes - immediately move into planning specifics - No - happy to work at the place that is comfortable for target…please define what that is and prioritize accordingly

11

Case Studies IPER IPER supermarket started selling food packaged in NatureWorks PLA in one store. It was so successful and so popular with consumers that the retailer expanded the line to all 21 stores in Italy. IPER has been using NatureWorks PLA for fresh food containers for more than 1.5 years. The natural-based packaging was first used for packaging with fresh food, then ready-to-go foods. Now, NatureWorks PLA is being used in bread bags – the store is replacing polypropylene bags with a paper featuring and window made with NatureWorks PLA. IPER is considering other film and rigids applications. The retailer first started using NatureWorks PLA to be consistent with its corporate environmental position and in-store promotional strategy. They believe use of the brand and packaging creates a consistency and synergy with their message and products. The result is a powerful marketing tool that is helping drive sales and build the company’s own brand image. IPER uses an employee and consumer education campaign to raise awareness of the new packaging. Banners and leaflets are used at the point of sale to explain story of NatureWorks PLA packaging. The retailer also holds promotional events featuring actors dressed as ears of maize. This “mascot” serves as a greeter in the delicatessen, drawing instant attention to the packaging change. The fun approach is also proving successful in helping drive customer trials in the department.

12

Ingeo™ Fibers Though not a grocery retail example, the Ingeo fiber case study effectively demonstrates that there is strong consumer interest in the concept of making everyday items from maize not petroleum. The Cargill Dow brand team supported the introduction with the goal of driving consumer traffic in support of PCFC product introductions at Bed Bath & Beyond, as well as Younkers stores. In this product launch, a bedding retailer drove awareness of the brand and through promotion of natural based fibers in their product. .

• Sales went up substantially • High recognition/high value introduction.

o Up to 2-3x previous basic product pricing. • The brand owners translated the concept into the marketplace and saw value .

Substantial publicity success and value:

• 110 national/consumer articles. • 40 million impressions. • 2 New York primetime TV interviews (key focus for retailers). • 3 Des Moines & Omaha TV feature stories. • 9 radio station interviews. • $1.5 million in PR coverage for print alone.

13

Wild Oats Markets Wild Oats holds a strong position in natural foods and products. It is a high-end retailer. The company decided to roll out NatureWorks PLA at their Nature’s Markets (11 stores) in Portland, Oregon, the United States.

• Pushed in delicatessen section with ‘grab-and-go’ foods. o As the consumer walks into the store, they see a large display.

• Counter has point of purchase display ‘maize to plastic.’ o Quickly tells what they are buying, why it is different, why it is important.

• Did point-of-sale selling and employee education . • Stickers and labels identify new containers. • Introduction achieved very broad national exposure (CNN, Associated Press, Reuters),

as well as significant local coverage. • Closing the loop.

o Wild Oats took a total marketing approach and solved issue of composting with store return. Image value created interesting effect – major competitors has seen this

and is now calling to say, “I need this.”

Wilkinson is manufacturer of thermoformed containers in use at this store. Project has been good exposure for Wilkinson as the supplier. It is generating lots of interest and questions. Cargill Dow is looking for a similar big event in Europe with a large retailer.

14

Sustainability

Cargill Dow’s NatureWorks PLA is sold as a resin pellet. It is a polymer designed to perform as well or better than petrochemical-based traditional polymers, and to fit into existing polymer conversion systems with a minimum of adjustments. The difference is not in how NatureWorks PLA looks, but in how it is made. Though you can’t tell by looking, NatureWorks PLA offers an exiting difference in how it is made. It is made from annually renewable resources by environmentally friendly processes.

Cargill Dow’s commitment to sustainability is grounded in its business philosophy. The company is held accountable to this simple and straightforward mission. The philosophy has two main components:

• Meeting needs today with a polymer that works as well or better in existing conversion systems and market applications

• Ensuring that future generations will be able to derive benefits of plastics from abundant annually renewable resources and with fewer environmental problems.

The triple bottom line guides how Cargill Dow will go forward and measure its success.

• Economic success is required to be successful on a global scale.

• Life-cycle analysis is used to guide environmental sustainability.

• Success must also lead to success for farmers and our communities.

15

Cargill Dow’s commitment to sustainability and business philosophy are directly reflected in the design criteria applied to NatureWorks PLA. In short, we believe that pursuit of sustainability dictates that a new polymer product must be:

• Measurably better for the environment • Less economically, environmentally

and socially costly due to a safer, more environmentally friendly processes and materials

• Easy fit, with clear advantages, in all kinds of waste streams

The pursuit of sustainability teaches that we should take a hard look at the entire system of manufacturing NatureWorks PLA.

16

One thing we learned is that even with all the advantages of using dextrose instead of petroleum as a feedstock, there might be even more exciting opportunities in annually renewable resources. Cargill Dow is actively researching how we might use ‘biomass’ – the stalks and other agricultural ‘waste’ and a feedstock for lactic acid production. Biomass potentially offers lower cost, beneficial use of a material previously treated as waste, and a new opportunity fore economic development in rural areas. Lignin, a component of agricultural biomass that cannot be converted to PLA, offers the potential of providing the energy needed to run the fermentation processes. In all, biomass may offer a real “triple bottom line” improvement to the manufacturing of PLA. Cargill Dow is eager to work with business partners and their customers to explain and help establish sustainable business activities.

Green marketplace The numbers and research show there is a sizable market interested in sustainability and consumer willingness to pay more for sustainable products and processes.

A common mistake is misreading the fact that many people are willing to pay very little and some are willing to pay nothing to be more sustainable. As a result, there is a temptation to think that a retailer needs to move price to sell to 90% of customers. The concept of “price down, market gets huge” doesn’t get to the issue of revenue or the ability to sustain long-term sales.

However, if a company multiplies the number of people times what they are willing to pay for a perceived benefit of being more sustainable, it becomes the most profitable way to sell. This has been proven with the sale of green energy. People are willing to pay more if there is perceived value and quality.

Green marketplace strategy Thinking through all of the ideas will quickly show whether or not

selling the concept of “sustainability” makes sense for a customer. Questions to be asked include:

• How many people – willingness to pay? • Is the target volume or revenue? • How does that change over time? • Is a smaller piece of market willing to spend more? • Does the cumulative value generates revenue vs. volume?

Five Cs to selling green:

• Cost. • Clarity (understand clearly what they are buying). • Confidence (trustworthy). • Credibility. • Content (bang for their buck – measurable, significant

benefits).

17

Future-focused solution Cargill Dow is not seeking to ‘attack’ petroleum-based plastics, but rather to create a market leadership position in more sustainable plastics.

These products will exist alongside for many years. • Don’t want customers to feel uncomfortable about use of

other plastics, but want them to have options. • We are expanding the menu and giving consumers an

opportunity to ‘do something’ about environmental side of packaging.

• Sharing in the growth of the global packaging market. Key sustainability takeaways for customer discussions:

• The product works as well, with value-added set of traits. • Cargill Dow has adopted the concept of sustainability as a

core element of its business philosophy: Central business tool; Source of significant brand and market value; The right thing to do; and Meet world needs today, without compromise to

worlds needs in the future. • Triple bottom line essentially accounts for People-Planet-

Profit. • Manufacturing and selling a sustainable product (such as

PLA) saves money, helps the environment, reduces burden on society.

18

Life Cycle Assessment (LCA) LCA Primer LCA a tool to measure the environmental component of the triple

bottom line. It is a technique for assessing the environmental impacts associated with a product, covering all stages in a product’s life. • Evaluates all inputs used to make, use and dispose of the

product. o Cargill Dow looks cradle-to-pellet to determine the

LCA of the resin. • Can look at pellet-to-grave on specific customer projects to

round out the lifecycle analysis.

Phases of a Life Cycle Assessment*Life cycle assessment framework

Goal andscope

definition Applications:

- Production process improvement

Inventory Interpretation - Product developmentanalysis

- Strategic planning: - Public policy making

Impact - Marketingassessment

*ISO 14040

Benefits of LCA By conducting a LCA on PLA, Cargill Dow is able to quantify and

support its market claims, benchmark PLA against traditional polymers, as well as guide the continued improvement of its the manufacturing process.

This allows the company to make informed decisions based on quantifiable environmental and economic data – all of which ties back to the triple bottom line.

19

PLA Production Route The LCA for PLA production accounts for the following factors:

Seed corn Carbon dioxide

Fertilizers Corn growing, Irrigation water harvesting & drying

Fuels Herbicides

Electricity Insecticides

Raw materials from the earth Transport of corn to Diesel

Corn Wet MillCarbon dioxide Air emissions

Solar energy Water emissions

Natural gas Dextrose Sulfur dioxide Electricity production Enzymes Water

Solid waste

Electricity Lactic acid Waste water

Natural gas production treatment plant

Operating supplies

Electricity

Lactide and PLAproduction Natural gas

Operating supplies

System boundary

PLA

20

LCA findings Even in its relative infancy verses traditional petroleum-based resins, PLA shows a significantly better environmental profile in terms of the energy used to manufacture it and greenhouse gas emissions for the process. Chart 1: Fossil Energy Use (FEU) * From cradle to pellet [MJ/kg polymer] PLA versus traditional polymers (APME)

142

120 117

92 93 87 81 79 77 77

54

7

0

20

40

60

80

100

120

140

160

Nylon 66 Nylon 6 PC HIPS Cel lophane GPPS LDPE PET SSP PP PET AM PLA 1 PLA Bio/ WP

Chart 2: Greenhouse Gases* Cradle to pellets [kg CO2 eq./kg polymer] PLA versus Traditional polymers (APME)

7.68.1

5.3

2.9

6.4

2.72.1

3.3

2.0

3.2

1.8

-1.7-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Nylon 66 Nylon 6 PC HIPS Cel lophane* GPPS LDPE PET SSP PP PET AM PLA PLA B/ WP

* Chart Notes: PLA(1) = today’s process

PLA Bio/WP = projection based on use of biomass feedstock, wind power for electricity

21

Key Discussion Points: LCA is not a primary consumer selling point. Rather, it is a measurement that shows Cargill Dow holds itself accountable.

• It allows customers to be sure that the marketing statements are accurate.

• It helps the company measure track and improve its manufacturing process to stay true to the principles of sustainability.

• LCA profiles show that PLA has a distinct measurable advantage of traditional petroleum materials.

Cargill Dow is willing to work with customers (and even customers’ customers) to develop an extensive LCA in support of specific end products made from PLA.

22

Maize Source Production facts To make PLA, Cargill Dow requires and purchases commercially

available sources of dextrose from the existing marketplace. Today, this dextrose comes from maize purchased from farmers who live in a growing area that surrounds Blair, Nebraska, USA. The maize is processed at a wet mill in Blair to produce dextrose, the fermentable sugar used as the raw material for PLA production. Cargill Dow does not need or require genetically modified maize to create its polymer. Testing has shown that there are no traces of maize DNA in the resulting polymer.

Marketplace facts Some of maize that goes into the process may have started as

genetically modified seed - on a national basis, accounts for about 20% – 30% of maize grown in the U.S. It is practically impossible to track the molecule from kernel to PLA product, but money can be tracked. Some environmental organizations take the position that money should not go to support GM crops, even if these crops are used to make new materials that substitute for petrochemical-based products.

Source offsets Cargill Dow has created and option called “Source Offsets” to

address these concerns in cases where the potential of GM feedstock is a go/no go issue: • PLA gives a significant opportunity for environmental benefits

in packaging. • Company believes in customer choice – we want to satisfy

those demands as best possible and consistent with the principles of sustainability.

• Cargill Dow will contract with Cargill Incorporated who will provide origination services to procure, and have delivered to the mill, maize that is certified to be a conventional variety.

• Cargill Dow will pay farmers a premium based on market prices (will be included in price of Source Offsets).

o Contract requires specific farming practices such as buffer strips, cleaning of equipment, proof of seed purchase, etc.

o Third-party verification and testing will also be included.

• For additional details, contact Cargill Dow.

Sustainability mindset Cargill Dow’s focus is on the greater issue of sustainability. • Includes an evaluation of best practices in agriculture.

o For both non-GM and GM sources.

23

Key take-aways when discussing with customers: NatureWorks PLA provides strong environment and sustainability benefits today.

With continued successful market development, even more benefits are available through lower costs and new feedstock.

There is no genetic material in PLA.

Source offset option is available to customers who so desire.

Cargill Dow will go speak with customers to discuss the issue and try to find a solution.

24

Brand Awareness Public Relations and Publicity Active program is generating significant awareness and credibility

throughout Europe (reaching food retailer and brand owner). • Using variety of tools including editor contact, interviews,

news releases and case studies. • Are seeing a good rotation of editor coverage. • Point-in-time opportunities such as launches and new

developments are ideal times to get our message – and your customer’s message - to the right outlets.

• By working with Cargill Dow as new opportunities emerge, we can get the message out to support your customers and sales.

aid advertising Ads demonstrate “natural in natural” concept.

Target audience is senior executives, decision makers, in grocery

arget audience is connecting image, message and positioning ll

Ads currently in three magazines in Europe; considering adding

ds are currently appearing in the following European markets:

P

segment. T• Show strong publisher ratings in terms of attention and reca

more magazines to schedule. A• Benelux • France • Germany• Italy • Spain• UK

25

rade fairs Considering using a pavilion concept (similar to how trade

sored

ng marketing and message exposure.

ing. made from.

• e promotional activity to help bring/drive

• ers.

irect marketing Considering a campaign to support European activity.

A recent United States campaign featured a three-part mailing

owners (CEOs, VPs of

• om CEO, Randy Howard.

Cargill Dow is looking for help in establishing a direct marketing

concept. United States program.

s.

irect outreach program may need to be conducted on a country-

Tcommissions display) featuring partners at Cargill Dow sponstand. • Stro• Create a “one stop” destination. • Shows depth and breadth of offer• Makes it easy for retailers to get items

NatureWorks PLA. Cargill Dow can drivcustomers to partners. Direct leads for custom

D

targeting retailers and brand owners. • Targeted top 50 retailers/brand

purchasing and marketing). Personal message in letter fr

• Is proving very successful in United States.

outreach effort in Europe: • Might require a new• Could include elements of the • Could be tailored to meet market needs and expectation

Dspecific and/or a market-specific basis in Europe.

26

In-store support for retailers Point of sale collateral, signage and presentations available to help

educate the consumer.

27

Miscellaneous Discussions and Comments Amount of maize used Today, 10 billion bushels of maize are grown in the United States

that is not for human consumption, mostly animal feed. About ten percent (1 billion) is surplus every year. Cargill Dow use is less than one tenth of one percent of that maize.

Call it a plastic? (In UK) it is being called a plastic – interested in going away from

this. In the UK, PLA could be changed to have its own classification and tax classification. The word plastic is a “no.” It needs to get to be called a “natural.”

Cargill Dow is working on issues management related to being a non-plastic on a country-by-country basis in Europe.

• Could be value in being a non-plastic Price discussion Following are a few of the highlights and Q&A exchanges that

illustrate how to position. • It will cost more; it’s not 2x more. • Depending on the package it’s 2-5 cents more. • Retailers can be cost neutral on the part.

o May choose to pass it on. o Retailer needs to figure this out – not being asked to

double cost of products. • Opportunity for retailers to turn commodity into something

of value. o Yes, it will cost more – but look what you can get

for it. • Those who have moved forward with the concept are

seeing a significantly higher return than they expected. o It is a ‘hot’ seller.

• Offers grocery retailers new options. o A ‘fun’ concept. o Allows them to sell ‘new and improved’ natural

foods. o Gives something to talk about other than price. o Engages customers. o Starts a customer dialogue about how the retailer is

focused on meeting consumer needs and desires.

28

(Price discussion continued) Q: People are interested in the concept, but I don’t believe they will really pay for it? A: The research shows that consumers value the concept and will pay more for it. The IPER example also shows that European consumers are willing to pay more for it. Especially when supported by clever marketing. The brand concept is a tool for the supermarket to promote what they are selling – high quality, high value food products. But if the store simply positions it as paying more for packaging, it probably won’t work. This example shows that the brand concept and the packaging will drive traffic and help them stand apart from their competition. Retailers can break even on the higher cost of packaging, because it gives them tools to attract and influence consumers. It won’t work in every case, but for some retailers, this might be worth the effort, test it out and see what consumer response is. There is something different enough. Part of IPER’s promotion is to educate its consumers that this is a better deal. Education is the key to supporting pricing. Consumers understand and will pay for fresh food in fresh packaging. In Iper’s case, they do not use compostability as a selling point. They use the concept of bio-plastic since Italy does not have a composting infrastructure. Q: Consumers have little choice, if they don’t want to pay for it here, they can go to another place. A: This brand is about how the store decides to market their products. We are giving them tools. They can choose whether or not to use them to draw people into the store. They can decide whether to use the packaging as the singular draw, or if they want to use it to make their image better (re: environmental). It is really about whether or not they are willing to invest in a brand that will drive higher sales and bolster their own brand with shoppers. It is important to note that with different retailing chains there is a different motivation with each retailer. Marketing and purchasing have different interests. Marketers are more interested in bringing up the image. Purchasers want the fresh food section to get more turnover. These are different motivations, but NatureWorks PLA can satisfy both of their needs and desires. In reality, consumers don’t think about the packaging unless there is a negative consequence. However, if the packaging can be brought to their attention in a positive light it can be a powerful and positive way to influence their emotion about the purchase.

29

30

# # # Ingeo, the Ingeo logo, NatureWorks and the NatureWorks logo are trademarks of Cargill Dow LLC