Japan market research - beauty, taste and innovation our new imperatives

Prepared by: Jeff Lippold

Head of Strategy, Havas Worldwide Tokyo

October 16, 2014

Japan What are some things we need to understand about the market.

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TRENDS AND FADS

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2013 2014

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SUSTAINABILITY

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Macadamias win the Almond vs Macadamia battle. 1,911,710 votes to 1,874,434

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1) Continue to build on our premium image by highlighting superior beauty & health benefits.

2) Introduce relevancy to new areas desired and

a key part of the lifestyle of our targets.

3) Continue to reach out and innovate with our customers, who love the taste but need some

new ideas that match with their lifestyle.

HOW WE CAN REMAIN THE KING

Market Research Results: Consumption Trends, Drivers and New Opportunities

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Survey completed in 2013

To better understand macadamia nuts image and penetration of macadamia and other nut qualities amongst Japanese consumers, we conducted an online survey:

Methodology Online

Candidate Filters

1. Males/females aged 20 to 59 (heavier female skew of approx 65%) 2. Those who had consumed almonds, walnuts, cashews, hazelnuts, macadamias or peanuts in any format in the past 6 months 3. Those who know macadamia nuts

Target Region Kanto (Tokyo, Kanagawa, Saitama and Chiba prefectures - total population of 32 million)

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Macadamia consumption frequency on the rise

300% increase in the 2-3x weekly consumption 220% increase in weekly and 2-3x/monthly consumption.

Frequency of Consumption 2013

Frequency of Consumption 2008

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...and they are more everyday

Regular Consumption (2-3 times/month or more) of Macadamias has increased across all demographic - indicating a larger percentage of people integrating Macadamias into their life.

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Chocolates, snacks, sweets still preferred form

Frequency of consumption: After peanuts and almonds, Macadamias next most popular nut.

Type of nuts eaten in last 6 months

Almonds Macadamias Hazelnuts Walnuts Cashews Peanuts

Total 86.5 61.9 36.1 61.3 59.4 84.4

Overall product forms Forms preferred by frequent macadamia eaters

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Format variations appear to be a driver

The most striking observation is that the variety of consumption methods has increased substantially. Though chocolate is still the most common form in which Japanese consume Macadamias, eating kernels, and other product extensions into cakes and breads has also increased substantially.

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Another driver: Top ranked premium image

Question: What do you think of Macadamia nuts in comparison to other nuts?(%)

Far and away “premium” and “taste” drive value for Macadamias

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Macadamias have strengthened their “King of Nuts” Image in Japan with a strong affinity to premium. Focusing on the beauty and skin benefits

have also created more to the Macadamia story.

Premium and Beauty powering momentum

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The beauty story is our biggest opportunity

Degree of interest in the quality of Macadamia features

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Making the benefits more clear

Chart: To what degree do you agree with this statement about Macadamias?

Great taste and premium widely understood, but opportunity to add value with other elements such as health and anti-aging to add value.

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The casual --> frequent conversion opportunity

Macadamias Almonds Walnuts Peanuts

Increasing competitive “casual” consumption (never eat -> sometimes, sometimes -> Frequently) is an opportunity.

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Australia is important to storytelling

Source is not a key driver for consumption/purchase of nuts - not just Macadamia.

Q7. Origin is important factor in purchsase (% response)

Almonds Hazelnuts Walnuts Cashews Macadamias Peanuts

% response 3.5% 3.9% 4.2% 3.9% 2.6% 5.9%

What is important, however is the context in which the source is communicated. We can see this from the levels of interest in product feature statements - when we link Australia to a quality it possesses we get much higher levels of interest.

Degree of Interest in quality of Macadamia Features

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So what we have to continue with

Continue to drive a premium image supported through:

A strong link between macadamias and beauty and health

New, innovative ways to consume Macadamias - with a strong

local context to increase frequency

Integrating the Australian story in a unique and engaging way to

drive awareness for the Australian product and the category as a

whole.

Thank you!