Fonterra Co-operative Group Limited · NZX:FCG

Fonterra Co-operative — Investor Day (December 2017)

81 slides from Fonterra Co-operative's investor day presentation, December 2017

Slide 1: Fonterra Investor Day
Fonterra Investor Day DECEMBER 2017
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements and projections. There can be no certainty of outcome in relation to the matters to which the forward-looking statements and projections relate. These forward-looking statements and projections involve known and unknown risks, uncer
Slide 4: Investor Day purpose
Investor Day purpose “Improve understanding of Fonterra’s ambition and growth strategy” •1 We have an aspirational ambition and a strategy to achieve it – $35 billion revenue from 30 billion LME by 2025 – Demand-led strategy – Optimising New Zealand milk with support from global milk pools •2 Role o
Slide 5: FY18 Investor Day – Agenda
FY18 Investor Day – Agenda Session Presenter Objectives Time Welcome Simon Till • Overview of the day 8:30-8:45 Business Update Theo Spierings • Regular quarterly update 8:45-9:30 Paul Washer • Video and Q&A Simon Till Ambition & Strategy Theo Spierings • Demand-led strategy supporting growth of C&F
Slide 6: Fonterra – key investment attributes
Fonterra – key investment attributes Strong industry fundamentals Co-operative with secure global access to quality milk Scale and world-class ingredients business Focused high-value consumer and foodservice businesses A strategy that’s delivering diversified and increased returns Financial strength
Slide 7: Business Update
Business Update OUR POTENTIAL DECEMBER 2017
Slide 8: Fonterra Ambition and Strategy
Fonterra Ambition and Strategy Theo Spierings CEO Page 8 © Fonterra Co-operative Group Ltd.
Slide 9: To achieve our ambition we will need to deliver beyond V3
To achieve our ambition we will need to deliver beyond V3 Three strategic horizons Value Creation of sustainable SUSTAINABLE CO-OP value for all stakeholders Investment in technology INNOVATIVE CO-OP and people for the future STRONG V3 CO-OP Demand-led optimisation of New Zealand milk, supported by
Slide 10: Ambition
Ambition Makea differencein the lives of 2 billion people by 2025 With our purpose, story and values at the heart, our‘thisis Fonterra framework’ brings together our people, identity and strategy commitments to guide us ‘to be the world’s most trustedsource of dairy nutrition’. 200000 OF GROW AT HIG
Slide 11: Clear financial goals
Clear financial goals 2025 Ambition Key Drivers • Revenue growth in Consumer and Foodservice Revenue $1.2 / LME • Sales shift to Advanced Ingredients Gross Margin 20%+ • Driven by mix shift to Consumer and Foodservice • Uplift from $1b base level (2015) Normalised EBIT 50-100% uplift • Grow contribu
Slide 12: Delivering on our V3 strategy
Delivering on our V3 strategy Value Creation of sustainable SUSTAINABLE CO-OP value for all stakeholders Investment in technology INNOVATIVE CO-OP and people for the future STRONG V3 CO-OP Demand-led optimisation of New Zealand milk, supported by milk pools NOW 3 years 5 years 10+ years Competitive
Slide 13: Our strategic choices are anchored by our beliefs and assessed through commercial filters
Our strategic choices are anchored by our beliefs and assessed through commercial filters Beliefs Filters Strategic Economic Cost leadership Dairy industry is demand-led Relevance Value-add Volume and Value now New Zealand milk can Long-term value protection sustainably grow at Sustainability 1.5% p
Slide 14: More volume to higher value
More volume to higher value 1 billion LMEs shifted to Consumer, Foodservice and Advanced Ingredients 1 Optimise DIRA Consumer • GDT NZ milk 7% 3% – Volumes aligned with 2 Build and grow GDT beyond our current 2% lower production consumer positions Foodservice 12% 5% • Ingredients 3 27% 20% – Lower N
Slide 15: Unconstrained demand will surpass Fonterra's New Zealand supply
Unconstrained demand will surpass Fonterra’s New Zealand supply NZMP GCFS Protein Fat 3,000 Fat Protein 3,000 7,200 7,000 Volume (mLME) Volume (mLME) 2,000 2,000 6,800 1,000 1,000 6,600 0 6,400 0 SMP¹ Cheese excl. Butter FFMP MPC WPC AMF Caseins Mozz Butter SMP UHT Cream Cream Cheese Cheese excl. Mo
Slide 16: Consumer and Foodservice ambition will require organic and inorganic growth
Consumer and Foodservice ambition will require organic and inorganic growth LME (billion) 10.0 5.5 Today Acceleration Organic Inorganic Partnerships 2025 Target Page 16 © Fonterra Co-operative Group Ltd.
Slide 17: Capturing projected demand will require additional non-New Zealand milk
Capturing projected demand will require additional non-New Zealand milk We estimate ~22.5b LME of this supply will originate from New Zealand Fonterra Milk Sources LME (billion) 12.5 Fonterra 3.2 2025 estimated Non-NZ unconstrained demand of Milk 35b LME Fonterra 22.5 19.2 NZ Milk2 2017 2025 Estimat
Slide 18: Demand-led optimisation of New Zealand milk, supported by global milk pools
Demand-led optimisation of New Zealand milk, supported by global milk pools • Prioritise New Zealand Fonterra Milk Sources milk to the highest value • Future demand exceeds New Zealand-sourced ~7 ~35 supply ~2 ~27 • Capturing additional ~3 LME (billion) 22.4 demand requires offshore milk sources • O
Slide 19: Milk pool strategic rationale
Milk pool strategic rationale Primary investment Complementing our New Zealand milk pool • Enable growth of ingredients business to support customer demand (All) • Secure access for our New Zealand milk exports (China) • De-risk supply for ingredients customers (Australia and Europe) • Optimise our
Slide 20: We will also accelerate growth through innovation
We will also accelerate growth through innovation Value SUSTAINABLE CO-OP DISRUPTIVE INNOVATIVE CO-OP BUSINESS MODELS NEW INNOVATION EXPONENTIAL TECHNOLOGIES DIGITAL TRANSFORMATION PARTNERSHIPS STRONG V3 CO-OP NOW 3 years 5 years 10+ years Competitive advantage of Cost Leadership through Scale Effic
Slide 21: We are embracing tomorrow's innovation in what we do today
We are embracing tomorrow’s innovation in what we do today AGTECH ENERGY AND FOOD SAFETY AND ROBOTICS DIGITAL CONSUMERS OF HYPER- CLEAN TECH TRACEABILITY LIVING THE FUTURE PERSONALISATION IOT DIGITAL ENERGY AND PRECISION MANUFACTURING NEW GAMIFICATION WATER BLOCKCHAIN FARMING RETAIL EFFICIENCY SUSTA
Slide 22: And are on our way to becoming a Sustainable Co-op
And are on our way to becoming a Sustainable Co-op Value MAKING A DIFFERENCE SUSTAINABLE CO-OP IN THE LIVES OF • Malnutrition 2 BILLION PEOPLE • Obesity / Diet • Water / Environment INNOVATIVE CO-OP • Climate and Energy • Productivity STRONG V3 CO-OP NOW 3 years 5 years 10+ years Competitive advanta
Slide 23: The Co-op has positively shifted its reputation and changed the minds of 1.5m New Zealanders
The Co-op has positively shifted its reputation and changed the minds of 1.5m New Zealanders April 2016 June 2016 December 2016 March 2017 July 2017 FY18 Objective: Top 3 for Reputation Building Collective Pride Innovation Innovation and and Global Global Reach Reach Innovative Innovative Farmers Fa
Slide 24: Fonterra presents a strong investment opportunity
Fonterra presents a strong investment opportunity • Demand-led optimisation of New Zealand milk, supported by global milk pools • Existing position provides foundation for growth strategy – Lowest cost production and vertically integrated milk pools – Strong foundation in global-scale ingredients bu
Slide 25: Innovative Co-op
Innovative Co-op Judith Swales COO Velocity and Innovation Page 25 © Fonterra Co-operative Group Ltd.
Slide 26: Substantial magnitude of change
Substantial magnitude of change Urbanisation, Healthy Health and Technology rising middle Glocalisation aging, Wellness class millennials Page 26 © Fonterra Co-operative Group Ltd.
Slide 27: Building the foundations for our future success
Building the foundations for our future success Growth Value Creation of sustainable SUSTAINABLE CO-OP value for all stakeholders Investment in technology INNOVATIVE CO-OP and people for the future STRONG V3 CO-OP Demand-led optimisation of New Zealand milk, supported by milk pools NOW 3 years 5 yea
Slide 28: Velocity and Innovation: creating future Fonterra
Velocity and Innovation: creating future Fonterra AMBITION OUR 2025 Make a GROW AT HIGHER VALUE MARKET LEADERSHIP TRUST difference in No.1 or 2 the lives of 2 billion people by 30Billion LITRES $35 NO.1 Consumer business TOP 3 WORLD 2025 5-6 Milk BILLION INGREDIENTS In our REPUTATION In our CLASS Po
Slide 29: Our innovation journey is well underway
Our innovation journey is well underway Value SUSTAINABLE CO-OP DISRUPTIVE INNOVATIVE CO-OP BUSINESS MODELS NEW INNOVATION EXPONENTIAL TECHNOLOGIES DIGITAL TRANSFORMATION PARTNERSHIPS STRONG V3 CO-OP NOW 3 years 5 years 10+ years Competitive advantage of Cost Leadership through Scale Efficiency Page
Slide 30: We are embracing tomorrow's innovation in what we do today
We are embracing tomorrow’s innovation in what we do today AGTECH ENERGY AND FOOD SAFETY AND ROBOTICS DIGITAL CONSUMERS OF HYPER- CLEAN TECH TRACEABILITY LIVING THE FUTURE PERSONALISATION IOT DIGITAL ENERGY AND PRECISION MANUFACTURING NEW GAMIFICATION WATER BLOCKCHAIN FARMING RETAIL EFFICIENCY SUSTA
Slide 31: Velocity and Innovation integral in delivering FY18 strategic priorities
Velocity and Innovation integral in delivering FY18 strategic priorities 1 Optimise • Protect market share of New Zealand milk NZ milk • Deliver sustainable value creation in NZMP 2 Build and grow • Deliver Everyday Nutrition focused growth path beyond our current consumer positions • Target positio
Slide 36: Behaviour: our next generation competitive advantage
Behaviour: our next generation competitive advantage Page 36 © Fonterra Co-operative Group Ltd.
Slide 37: We're building a strong R&D network
We’re building a strong R&D network CHINA MALAYSIA SRI LANKA INDONESIA BRAZIL CHILE AUSTRALIA NEW ZEALAND Page 37 © Fonterra Co-operative Group Ltd.
Slide 38: R&D focused on four platforms
R&D focused on four platforms Dairy Beverage Dairy Nutrition Dairy Food Dairy Farming Solutions Delivery Solutions Systems Improving: Delivering specific Designing food solutions Delivering ‘More of the • Affordability nutritional benefits with which provide superior Right Milk’ through science • Co
Slide 40: We're building an ecosystem of partners
We’re building an ecosystem of partners Growth SUSTAINABLE CO-OP INNOVATIVE CO-OP STRONG V3 CO-OP NOW 3 years 5 years 10+ years Page 40 © Fonterra Co-operative Group Ltd.
Slide 41: Global Consumer and Foodservice (GCFS) Business Overview
Global Consumer and Foodservice(GCFS) Business Overview Lukas Paravicini COO Global Consumer and Foodservice Page 41 © Fonterra Co-operative Group Ltd.
Slide 42: Our ambition for Global Consumer and Foodservice
Our ambition for Global Consumer and Foodservice Ambition: To be a relevant dairy player with Fonterra’s Consumer and Foodservice brands, delivering annually +400m LMEs with an upskilled team 2025 Page 42 © Fonterra Co-operative Group Ltd.
Slide 43: Global Consumer and Foodservice brands
Global Consumer and Foodservice brands Combination of strategic growth, seeding and cash markets Greater China Asia Latin America Page 43 © Fonterra Co-operative Group Ltd.
Slide 44: Our brands are getting global recognition
Our brands are getting global recognition 48 Awards in 18 months 6 11 8 7 CANNES LIONS SPIKES ASIA AWARDS TANGRAMS AWARDS LONDON INTERNATIONAL & 1 AMES AWARDS 2 10 2 2 CLIO AWARDS AXIS AWARDS NZDM AWARDS BEST AWARDS
Slide 45: GCFS is a highly attractive business today
GCFS is a highly attractive business today Greater China • Volume (LMEs): 1.3b • Norm1. EBIT: $209m Asia • GM%: 25-30% • Volume (LMEs): 1.7b • Norm1. EBIT: $201m • GM%: 25-30% Latin America Oceania • Volume (LMEs): 0.7b • Volume (LMEs): 1.7b • Norm1. EBIT: $103m • Norm1. EBIT: $101m • GM%: 30-35% •
Slide 46: Growth will be delivered organically and through partnerships
Growth will be delivered organically and through partnerships LME (billion) 10.0 5.5 Today Organic Acceleration Partnerships Inorganic 2025 Target Page 46 © Fonterra Co-operative Group Ltd.
Slide 47: Achieving our ambition
Achieving our ambition 3 HOW 2 WHAT Five Must Win Battles Accelerate, Diversify 1. Innovation Foodservice 2. Revenue Growth Culinary @ Home Management Healthy Living 3. Perfect Store Affordable Nutrition 4. Cost Leadership 5. Digital 1 ENABLERS PEOPLE PARTNERSHIPS INNOVATIVE CO-OP Page 47 © Fonterra
Slide 48: > $1b innovation pipeline
> $1b innovation pipeline Winning with Taste Portfolio Optimisation Shaping the Future 1 2 3 to Delight Consumers and Rationalisation Consumer-led Pipeline 60:40 Sensory Win on ALL key Formulation Simplification Set up Innovative Approach products Agile process balancing three • Ideation + crowdsour
Slide 49: Global Revenue Growth Management – focussing on systematic value pricing
Global Revenue Growth Management – focussing on systematic value pricing Fonterra Global RGM Programme Overall objectives and philosophy PACK-PRICE CHANNEL STRATEGY SET: EFFECTIVE SEE: Situational GET : Assessment RGM plan Execution PROMOTIONS TRADE INVESTMENT MANAGEMENT Enablers Organisation and ca
Slide 50: Creating the Perfect Store
Creating the Perfect Store 5. 1. Brand Strategies RGM¹ Insights Tracking, Perfect Reporting & Store Shopper Insights Channel Strategies Lift & Shift Principles Priorities: • MCL Compliance Establish a set of shopper • Promotional Compliance based in store standards that support profitable share grow
Slide 51: Significant conversion cost potential
Significant conversion cost potential World Class End to End Supply Chain The Right Service at the Right Cost Integrated Factory Management Current Leadership Focus Conversion Cost • Making losses visible, continuously measuring and undertaking focussed intervention Absolute Material Loss • Leaders
Slide 52: Four key areas of growth beyond today's trajectory
Four key areas of growth beyond today’s trajectory 1. China Accelerate 2. Global Foodservice 3. Affordable Nutrition 4. Partnerships Page 52 © Fonterra Co-operative Group Ltd.
Slide 54: China at a glance
China at a glance Economy Government/regulatory Consumer trends • World’s second largest economy • Stable governance and • Demographic changes: and top receiver of foreign leadership under President Xi continued urbanisation and direct investment Jinping and the Communist Party population aging, rel
Slide 55: Chinese dairy demand is growing faster than local supply
Chinese dairy demand is growing faster than local supply China equilibrium model 60.0 Consumption 52.8 Net Imports Production LME (billion litres) 40.0 35.1 20.0 17.7 9.7 8.9 0.8 0.0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Source: Fonterra GDI / Combined Forecast Model Page
Slide 56: China is world's largest e-commerce market
China is world’s largest e-commerce market, with growth in fresh and packaged food still to come China’s e-commerce market equals total of top 6 2017 Online penetration rate by category in China from the rest of the world E-commerce Value Penetration 100 (E-commerce market size as % Percent of digit
Slide 57: We have a right to win with our unique integrated business model
We have a right to win with our unique integrated business model • No other multinational dairy company in China has the same mix of businesses Consumer Foodservice Brands • Gives us a unique strategic advantage – integrated supply chains are important Milk Pools and to Chinese consumers and offer v
Slide 58: China opportunity
China opportunity Fonterra well positioned in every segment LME b 2013 FY17 Fonterra Milk Source (%)³ 1 Optimise Ingredients NZ milk 8b 8b 80 10 10 2 Build and grow beyond our current 3.5b 3.7b consumer positions 3 Consumer & Foodservice Deliver on Foodservice potential 28b 31b 90 10 4 Grow 0.4b 1.3
Slide 59: Consumer brands in Greater China
Consumer brands in Greater China • Three strong brands: Anchor, Anlene and Anmum Volume growth led by • Anchor is our leading import brand by market share Anchor penetration, • 2017 Double 11 sales up more than 67% y.o.y., surpassing e-commerce and RMB 100 million across all platforms portfolio expa
Slide 61: Foodservice in Greater China
Foodservice in Greater China • #1 in the market through the Anchor Food Professionals brand Accelerated volume • Key product categories: butter, UHT cream, mozzarella and growth through Route- cream cheese to-market transformation • Key focus channels: bakery, beverage and casual dining • Strong dis
Slide 62: Why Acceleration
Why Acceleration China is a “winner-take-all” market, requiring players to 1 rapidly scale with sustainable margins Chinese consumers are increasingly brand loyal, prefer to 2 trade up, and adapt to “new” quickly Focus on speed and agility to 3 As a result, “cards can re-shuffle quickly” in the mark
Slide 63: The journey to New Retail
The journey to New Retail “Platform pure play” “New Retail” Stage III (2015-) Crowded B2C Stage II (2010-2015) Stage I (Before 2010) Incubating B2C Disruptive C2C Brand.com Omni-channel journeys Small medium businesses B2C platforms taking off with B2C platforms highly enter C2C platforms featuring
Slide 64: Consumer: build scale with sustainable margin in key products and channels
Consumer: build scale with sustainable margin in key products and channels • Build scale through hero products: – Anchor import UHT portfolio (milk, skim, powder, ambient yoghurt) Key Products – Cross-border maternal – Culinary @ home – Fresh milk • Deliver integrated consumer experiences via: Key C
Slide 65: Foodservice: deepen reach to defend and strengthen market leadership
Foodservice: deepen reach to defend and strengthen market leadership • Optimise sales model with differentiated propositions for targeted customer segments Route-to- Market • Enhance distributor management playbook • Geographic expansion, with focus on improving coverage of third and fourth Dairy ti
Slide 67: Anchor Food Professionals is the high performance foodservice business of Fonterra
Anchor Food Professionals is the high performance foodservice business of Fonterra Cinemas and Theaters Bakeries >50% of food $ are spent out-of-home $1 in every $6 is dairy- intensive globally Airports Restaurants Cafes Hotels In 2021, global foodservice is predicted to be worth US$3 trillion Page
Slide 68: Global Foodservice channel-led strategy
Global Foodservice channel-led strategy 1. ASPIRATION 4. CATEGORY FOCUS We have clear growth 2. RIGHT TO PLAY 3. CHANNEL FOCUS Our innovation focuses on six hero products aspirations We are uniquely positioned to deliver on We focus on three specific types of food made for our customers’ most import
Slide 69: FY17 Channel Summary
FY17 Channel Summary Actual Volume (MT) ASIAN BAKERY VOLUME IS UP Beverage House & Asian DUE TO UHT WHIPPING CREAM Other¹ Bakery AND BULK BUTTER SALES 30% 38% ITALIAN KITCHEN VOLUME IS UP MOSTLY AS A RESULT OF BLOCK MOZZARELLA SALES WESTERN QSR GROWTH IS DUE TO IQF MOZZARELLA SALES BEVERAGE HOUSE IS
Slide 70: FY17 Category Summary
FY17 Category Summary Actual Volume (MT) 80,000 Volume (MT) 0 DBD (QSR) Bulk Butter Mozzarella Slice-on-slice Value-add Cream Cheese UHT Cream Cheese Butter Lowest Gross Margin (%) Highest 1. DBD = Dairy Beverage Desserts.NON HERO PRODUCTS ACCOUNT UHT CREAM IS THE MOST UHT CREAM SALES FOR A FURTHER
Slide 71: Deliver double-digit diversified growth
Deliver double-digit diversified growth ACCELERATING OUR MOMENTUM ANCHOR FOOD PROFESSIONALS 1 Winning in China 2 Diversified Growth 3 Must win battles 1. Develop Anchor Online 1. Accelerate Americas 1. Revenue Growth Management (RGM): Best-in-class RGM capabilities 2. Leverage China Farms (White Gol
Slide 73: Affordable Nutrition will focus on those below and just above the poverty line
Affordable Nutrition will focus on those below and just above the poverty line Annual income per capita ($PPP)¹ Gross national income per capita ($PPP)² Affluent Switzerland 63,660 > 46,500 1 United States 58,030 Middle Class 2&3 Australia 45,970 1,601 – 46,499 New Zealand 37,860 Bottom of 4 Indones
Slide 74: 1% of Affordable Nutrition spend is greater than current Fonterra sales in many markets
1% of Affordable Nutrition spend is greater than current Fonterra sales in many markets Current sales vs. 1% of BOP food spend² Current Sales 1% of BOP Food Spend² $ million¹ Ethiopia Brazil Indonesia China 9x 1.6x 12x 54x 1. Assuming 1NZD=0.7USD. 2. Assuming average food spend per capita per day of
Slide 75: What is Affordable Nutrition?
What is Affordable Nutrition? Create a scale & profitable business through making Annual income per household Definition trusted dairy-based nutrition accessible & affordable everyday to a nutritionally deficient BOP population TOP Key Pillars Ensure attractiveness of aspirational proposition and $3
Slide 76: Journey to date
Journey to date Aug-Sep 2017 Sep-Oct 2017 Oct 2017 Nov 2017 1st Gate/ Business model in December to move Assess multiple Business Immerse Co-creation options model Workshop to Home visit and Macro and micro Assess multiple Business case to development Ethnography develop observation – ecosystems – o
Slide 77: From Appeal to Affordability, Accessibility and Awareness
From Appeal to Affordability, Accessibility and Awareness Many commonalties exist Some differences Child is the centre of their Brands are much world bigger in Bangladesh; Ethiopia more Indulge/ Mental unbranded Milk nutrition Refinement Development A great appreciated faith in but forced to tomorro
Slide 78: Global Consumer and Foodservice Summary
Global Consumer and Foodservice Summary Lukas Paravicini COO Global Consumer and Foodservice Page 78 © Fonterra Co-operative Group Ltd.
Slide 79: Achieving our ambition
Achieving our ambition 3 HOW 2 WHAT Five Must Win Battles Accelerate, Diversify 1. Innovation Foodservice 2. Revenue Growth Culinary @ Home Management Healthy Living 3. Perfect Store Affordable Nutrition 4. Cost Leadership 5. Digital 1 ENABLERS PEOPLE PARTNERSHIPS INNOVATIVE CO-OP Page 79 © Fonterra
Slide 81: Fonterra – key investment attributes
Fonterra – key investment attributes Strong industry fundamentals Co-operative with secure global access to quality milk Scale and world-class ingredients business Focussed high-value consumer and foodservice businesses A strategy that’s delivering diversified and increased returns Financial strengt

Fonterra Co-operative Group — Investor Day (December 2017) on 6ix

Fonterra Co-operative — Investor Day (December 2017)

Slide 1: Fonterra Investor Day

Slide 2: Disclaimer

Slide 3: Welcome – Simon Till

Slide 4: Investor Day purpose

Slide 5: FY18 Investor Day – Agenda

Slide 6: Fonterra – key investment attributes

Slide 7: Business Update

Slide 8: Fonterra Ambition and Strategy

Slide 9: To achieve our ambition we will need to deliver beyond V3

Slide 10: Ambition

Slide 11: Clear financial goals

Slide 12: Delivering on our V3 strategy

Slide 13: Our strategic choices are anchored by our beliefs and assessed through commercial filters

Slide 14: More volume to higher value

Slide 15: Unconstrained demand will surpass Fonterra's New Zealand supply

Slide 16: Consumer and Foodservice ambition will require organic and inorganic growth

Slide 17: Capturing projected demand will require additional non-New Zealand milk

Slide 18: Demand-led optimisation of New Zealand milk, supported by global milk pools

Slide 19: Milk pool strategic rationale

Slide 20: We will also accelerate growth through innovation

Slide 21: We are embracing tomorrow's innovation in what we do today

Slide 22: And are on our way to becoming a Sustainable Co-op

Slide 23: The Co-op has positively shifted its reputation and changed the minds of 1.5m New Zealanders

Slide 24: Fonterra presents a strong investment opportunity

Slide 25: Innovative Co-op

Slide 26: Substantial magnitude of change

Slide 27: Building the foundations for our future success

Slide 28: Velocity and Innovation: creating future Fonterra

Slide 29: Our innovation journey is well underway

Slide 30: We are embracing tomorrow's innovation in what we do today

Slide 31: Velocity and Innovation integral in delivering FY18 strategic priorities

Slide 32: Page 32

Slide 33: Page 33

Slide 34: Page 34

Slide 35: Page 35

Slide 36: Behaviour: our next generation competitive advantage

Slide 37: We're building a strong R&D network

Slide 38: R&D focused on four platforms

Slide 39: Page 39

Slide 40: We're building an ecosystem of partners

Slide 41: Global Consumer and Foodservice (GCFS) Business Overview

Slide 42: Our ambition for Global Consumer and Foodservice

Slide 43: Global Consumer and Foodservice brands

Slide 44: Our brands are getting global recognition

Slide 45: GCFS is a highly attractive business today

Slide 46: Growth will be delivered organically and through partnerships

Slide 47: Achieving our ambition

Slide 48: > $1b innovation pipeline

Slide 49: Global Revenue Growth Management – focussing on systematic value pricing

Slide 50: Creating the Perfect Store

Slide 51: Significant conversion cost potential

Slide 52: Four key areas of growth beyond today's trajectory

Slide 53: Acceleration

Slide 54: China at a glance

Slide 55: Chinese dairy demand is growing faster than local supply

Slide 56: China is world's largest e-commerce market

Slide 57: We have a right to win with our unique integrated business model

Slide 58: China opportunity

Slide 59: Consumer brands in Greater China

Slide 60: Page 60

Slide 61: Foodservice in Greater China

Slide 62: Why Acceleration

Slide 63: The journey to New Retail

Slide 64: Consumer: build scale with sustainable margin in key products and channels

Slide 65: Foodservice: deepen reach to defend and strengthen market leadership

Slide 66: Foodservice

Slide 67: Anchor Food Professionals is the high performance foodservice business of Fonterra

Slide 68: Global Foodservice channel-led strategy

Slide 69: FY17 Channel Summary

Slide 70: FY17 Category Summary

Slide 71: Deliver double-digit diversified growth

Slide 72: Consumer

Slide 73: Affordable Nutrition will focus on those below and just above the poverty line

Slide 74: 1% of Affordable Nutrition spend is greater than current Fonterra sales in many markets

Slide 75: What is Affordable Nutrition?

Slide 76: Journey to date

Slide 77: From Appeal to Affordability, Accessibility and Awareness

Slide 78: Global Consumer and Foodservice Summary

Slide 79: Achieving our ambition