September 2006

Making the connection

Global consumer trends and the need for innovation

Deborah Perkins, Rabobank International

2

Contents

Section 1:

Section 2:

Section 3:

Global Demand Drivers

Chile’s Position in Global Market

Going Forward

3

Thought for food

Global Demand Drivers

4

Income and population growth are the key drivers behind increased food consumption

Rabobank analysis base on UN-Population department and IMF data

Population and Income growth for selected countries

France

Brazil

Mexico

China

India

Russia

Italy

Germany

U.S.

Chile

Japan

-1

-0.5

0

0.5

1

1.5

2

0 1 2 3 4 5 6 7 8 9

Economic growth 2005-10

Po

pu

lati

on

gro

wth

200

5-10

5

Consumers become more concerned about quality as they spend less of their income on food

Share of expenditure on food for selected countries

0

10

20

30

40

50

60

70

80

Nigeria

India (

e)

China (

e)

Indon

esia

Russia

Argen

tina

Thaila

ndBra

zilChile UK

Franc

e

Austra

liaJa

pan

German

y

Canad

a U.S.

%

Source: USDA

6

‘The sensory experience’1. Indulgent & premium2. New flavours3. Traditional

‘Consumer well being’1. Food plus2. Food minus3. Natural/organic4. Vegetarian

‘The time factor’1. Snacking & grazing2. ‘Heat & serve’3. Meal assembly

ConvenienceHealth

Pleasure

Source: Datamonitor

Three important aspects for consumers are convenience, health and pleasure

7

How important is price?

% who agree and disagree with the statement “When shopping I always look for the cheapest prices “

60

3423

38 34 35

55

34

-8

-48-59

-36 -41 -41

-21-33

-80

-60

-40

-20

0

20

40

60

80

Agree Disagree

Germany France UK Spain Italy Netherlands Poland Czech Rep

Source: Frontiers 98: Planning for Consumer Change in Europe

%

8

Millennium issues are becoming increasingly important in developed countries

9

Food safety is integral to food quality

…or retailers whose power makes food safety a compulsion and not a choice

Consumers are driving value chain…

Source: Rabobank International Source: Rabobank International

10

Cultivating growth

Chile’s Position in the Global Market

11

Chile has a larger share of world trade than production

1.50.5Pork

4223Apples

21513Avocados

2234Kiwifruit

1235Plums

1112Table Grapes

51Fresh Fruit

572Wine

14434Salmon

Rank World trade% World trade% World production

Source: FAO, USDA, Salmonchile

12

The negotiation of FTA’s have contributed to this success

UnitedStates

EuropeanUnion

MercosurCentralAmerica

EFTA

SouthKorea

MexicoCanada

Chile

13

Salmon exports have grown in line with the intoduction of best practice

Exports of Chilean Salmon, 1991 - 2005

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

US

D m

illio

n FO

B

Source: Salmonchile

14

The U.S. and EU remain important markets for Chilean fruit exports

Chilean fresh fruit exports, 1999 - 2005

0

100

200

300

400

500

600

700

800

900

'99/'00 '00/'01 '01/'02 '02/'03 '03/'04 '04/'05

MT

'000

Asia EU U.S

Source: Chilean Fresh Fruit Association

15

Distribution is key and suppliers have to deal with increasingly powerful customers in these markets

Top 10 retailers(food sales for 2005 $bn)

1. Wal-Mart Stores 1412. Carrefour 703. Tesco 514. Ahold 445. Kroger 42 6. Edeka 407. Lidl 408. Rewe 399. Aldi 36

10. Metro 35

Total: 538

Top 10 foodservice(total sales for 2005 $bn)

1. McDonald’s 542. Yum! Brands 303. Compass Group 234. Sodexho Alliance 155. Wendy’s 126. Burger King 117. Aramark 118. Subway 109. Accor 9

10. Starbucks 6

Total: 181

Source: Rabobank, 2006

16

Chile can learn from developments in the Australian wine industry

Chilean & Austrlian Wine Exports, 1991-2005

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

91/92

92/93

93/94

94/95

95/96

96/97

97/98

98/99

99/00

00/01

01/02

02/03

03/04

04/05

liter

s '0

00

Australia

Chile

Source: Vinas de Chile , ABS

17

Top hog producers in Chile are already very efficient

95%1082.924.12.2Chile

109

103

100

Slaughter weight

(kg lw)

65%2.923.52.3U.S.

41%3.221.62.2Argentina

33%2.818.02.0Brazil

Packer concentration

(CR4)

Feed conversion

(kg lw)

Pigs/sow

/year

Litters/year

Productivity indicators

Source: Rabobank, 2006

18

There are a number of opportunities which can be developed in the dairy sector

Milk Productivity, 2005

ArgentinaIndia

PolandNew Zealand

BrazilThe Netherlands

Australia

Chile Ireland

Uruguay

0

5

10

15

20

25

-1 0 1 2 3 4 5 6 7 8 9

Productivity MT/cow

Pro

du

ctio

n c

ost

s U

Sc/

kg

Source: USDA

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Next steps for success

Going Forward

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Going forward the Chilean Agribusiness sector must continue:

• Monitoring of consumer trends

• Ongoing investment in technical innovation

• Increasing focus on niche markets

• Cooperation to create national brands

• Expanding access to finance

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Rabobank International….

“The financial link in theglobal food chain”®