Investor's Guide to the New Zealand Meat Industry 2017 · THE INVESTOR’S GUIDE TO THE NEW ZEALAND MEAT INDUSTRY 2017 Part of the New Zealand Food & Beverage Information Project

THE INVESTOR’S GUIDE TO THE NEW ZEALAND MEAT INDUSTRY 2017 Part of the New Zealand Food & Beverage Information Project

FINAL REPORT; v1.02; June 2017

STEERING & GUIDANCE

This project would not have been possible without the strong guidance of ourSteering Committee. In particular, we would like to thank Andrew McCallumof MBIE for his tireless energy in keeping this project on track, while at thesame time pushing us forward.

Draft versions of parts of this document were distributed to key firms forcomment, addition or correction. This was done in the form of emails andphone calls. We thank those who helped us in this process for their time andeffort. We also thank those who provided their photos.

We are grateful for all of the input we have received, but the report is oursand any errors are our own.

Finally, we acknowledge the support of the Ministry of Business, Innovationand Employment (MBIE), New Zealand Trade and Enterprise (NZTE) and theMinistry of Primary Industries (MPI). It is their funding that has made thisreport possible.

CONSTRAINTS & INHERENT LIMITATIONS

This work was commissioned by the Ministry of Business, Innovation andEmployment (MBIE) and prepared by Coriolis. This work is based onsecondary market research, analysis of information available or provided toCoriolis by our client, and a range of interviews with industry participants andindustry experts. Coriolis have not independently verified this informationand make no representation or warranty, express or implied, that suchinformation is accurate or complete.

The report is dated June 2017 and Coriolis accepts no liability for, and has notundertaken work in respect of, any event subsequent to that date, which mayaffect the report.

Key global trade data analysed in all sections of the F&B Information projectare calculated and displayed in US$. This is done for a range of reasons:

- It is the currency most used in international trade- It allows for cross country comparisons (e.g. vs. Denmark)- It removes the impact of NZD exchange rate variability- It is more comprehensible to non-NZ audiences (e.g. foreign investors)- It is the currency in which the United Nations collects and tabulates

global trade data

Anyone should feel free to call the authors if any of the material cannot beunderstood or accessed. We always welcome opportunities to discuss ourresearch with our readers and users.

Projected market information, analyses and conclusions contained herein arebased (unless sourced otherwise) on the information described above and onCoriolis’ judgment, and should not be construed as definitive forecasts orguarantees of future performance or results. Neither Coriolis nor its officers,directors, shareholders, employees or agents accept any responsibility orliability with respect to this document.

Coriolis wishes to draw your attention to the following limitations of theCoriolis report “New Zealand Meat Industry 2017“ (the Coriolis Report)including any accompanying presentation, appendices and commentary (theCoriolis Commentary):

a. Coriolis has not been asked to independently verify or audit theinformation or material provided to it by, or on behalf of the Client, or any ofthe parties involved in the project;

b. the information contained in the Coriolis Report and any CoriolisCommentary has been compiled from information and material supplied bythird party sources and publicly available information which may (in part) beinaccurate or incomplete;

c. Coriolis makes no representation, warranty or guarantee, whether expressor implied, as to the quality, accuracy, reliability, currency or completeness ofthe information provided in the Coriolis Report and any Coriolis Commentary,or that reasonable care has been taken in compiling or preparing them;

d. the analysis contained in the Coriolis Report and any Coriolis Commentaryare subject to the key assumptions, further qualifications and limitationsincluded in the Coriolis Report and Coriolis Commentary, and are subject tosignificant uncertainties and contingencies, some of which, if not all, areoutside the control of Coriolis; and

e. any Coriolis Commentary accompanying the Coriolis Report is an integralpart of interpreting the Coriolis Report. Consideration of the Coriolis Reportwill be incomplete if it is reviewed in the absence of the Coriolis Commentaryand Coriolis conclusions may be misinterpreted if the Coriolis Report isreviewed in absence of the Coriolis Commentary.

Coriolis is not responsible or liable in any way for any loss or damageincurred by any person or entity relying on the information in, and theRecipient unconditionally and irrevocably releases Coriolis from liability forloss or damage of any kind whatsoever arising from, the Coriolis Report orCoriolis Commentary including without limitation judgments, opinions,hypothesis, views, forecasts or any other outputs therein and anyinterpretation, opinion or conclusion that the Recipient may form as a resultof examining the Coriolis Report or Coriolis Commentary.

The Coriolis Report and any Coriolis Commentary may not be relied upon bythe Recipient, and any use of, or reliance on that material is entirely at theirown risk. Coriolis shall have no liability for any loss or damage arising out ofany such use.

Unless otherwise noted, all photos used in this discussion document wereprovided by the New Zealand Story resource (www.nzstory.govt.nz),purchased by Coriolis from a range of stock photography providers asdocumented, or are low resolution, complete product/brand for illustrativepurposes used under fair dealing/fair use for both “research and study” and“review and criticism”. Our usage of them complies with New Zealand law ortheir various license agreements.

Cover image: Shutterstock (Rolf_52)

Where appropriate, this document is Copyright © 2017 Coriolis and MBIE.However, please feel welcome to use, refer to and cite this research.

+ Purpose

+ Situation summary

+ Drivers of success

+ Investment opportunities

+ SWOT

+ Supply chain

+ Global situation

+ Consumption

+ Production

+ Import demand

+ Key markets

+ Market growth

+ Yield/productivity

+ Production

+ Regional activity

+ Growth upside

+ Segmentation

+ Key products

+ Exports by product

+ Horizons for growth

+ Emerging export stars

+ New viable options

+ Mega-trends driving change

+ Innovation & new products

Market Overview

Context & Conclusions

New Zealand Production

Categories Growth & Innovation

01 02 03 04INTRO

TABLE OF CONTENTS

+ Enterprises

+ Employment

+ Production share

+ Turnover

+ Ownership

+ Foreign investors

+ Acquisitions

+ Investments

+ Firm Profiles

Firms Performance

05

Pages 3-9 Pages 10-25 Pages 26-34 Pages 35-46 Pages 47-62 Pages 63+

PURPOSE Why did the New Zealand government undertake this project?

4

The project presents a comprehensive, business-focused overview of the total New Zealand food and beverage industry.

The project pulls together the available information on the food and beverage industry into one place, in a form which is familiar and useful to business. The reports contain analysis and interpretation of trends and opportunities to materially assist with business strategy and government policy.

The information will be of vital use to businesses, investors, government, and research institutions as the industry expands and diversifies. This industry view will be very useful to government, enabling better dialogue and the opportunity to address issues collectively.

– As support for raising capital

– As a base of market intelligence to enable business to be much more targeted in their own market research

– Reviewing and informing offshore market development strategies, including export and investment

– Assisting in identifying areas of innovation and R&D for the future

– Identifying strategic partners and collaborators

– Enabling a company to benchmark performance with that of its competitors

– Monitoring industry activity

– Gaining a better understanding of their own industry sector

– Identifying internal capability needs or external inputs

While the government collects large amounts of industry data, little of this has an investor or industry-driven perspective.

This information will provide much greater insight into the industry, which is useful for a range of policy developments, from regulatory frameworks to investment in science and skills and facilitating access to international markets.

In particular, a single source of factual information will enable government agencies to better coordinate their efforts across the system and be more responsive to addressing industry issues.

All project resources are available online at:

www.foodandbeverage.govt.nz

What is the purpose of the project? What benefit will this bring to businesses? How will government use the reports?

SITUATION SUMMARY New Zealand is the global leader in lamb and deer meat exports and has a strong position in beef exports; other species are primarily focused on the domestic market, although in recent years chicken exports have been growing

5

LLAAMMBB

Both New Zealand and Australian lamb production has been flat for forty years. Falling domestic consumption at home has made more meat available for export. New Zealand & Australia together account for more than seventy percent of global lamb exports.

Top four New Zealand lamb meat processors account for 70% of NZ volume. The Australian industry is more fragmented. NZ lamb exporters primarily compete with each other and Australian firms.

The major lamb consuming countries are effectively the major lamb producing countries. In other words, the regions that grow lamb eat lamb (and those that don’t, don’t). However, most major lamb consuming countries are too poor to afford NZ lamb in quantity.

The key markets for New Zealand and Australian lamb are a handful of rich Western countries and the Gulf States. Supply is primarily counter-seasonal lamb for consumption around the time of traditional religious holidays (e.g. Christmas, Easter and the end of Ramadan). Lamb production flat-to-falling in these key markets and lamb consumption per capita falling due to an increasing price gap with other more efficient meats (e.g. chicken).

China is a rapidly emerging market for New Zealand’s lamb exports, but also a strongly growing producer.

China has gone from producing a fifth as much lamb as New Zealand 40 years ago to more than four times as much today. However China is currently a growing customer and is unlikely to be a threat in key markets within the medium term.

BBEEEEFF

NZ is a minor global producer of beef (~1%). NZ beef breeds (e.g. Angus) have declining numbers and are not generally finished on grain, as is preferred by key premium markets. In addition, a growing proportion of beef production is a secondary product of the dairy industry, not optimal for meat quality.

Grass-fed beef has achieved minimum consumer cut-through to date and sells at a discount to grain fed overall, despite healthy attributes. This low fat beef is however valued for patties in foodservice (e.g. supplying McDonalds).

Brazil and Australia are both major producers and exporters of beef into key NZ markets; in addition the USA is increasing beef exports driven by the weak USD, leading to increased imports of manufacturing beef.

DDEEEERR

NZ pioneered deer farming in the 1960’s. The industry has two income streams (venison and deer velvet). The number of animals is in decline and long term economic viability unclear without major sustained breeding program to improve relative animal productivity.

CCHHIICCKKEENN

NZ has a modern chicken industry with four processors (Tegel, Inghams, Brinks & Turks). NZ chickens have an excellent FCR1 due to lack of key poultry diseases. Bio-security prevents imports due to threat posed to iconic native birdlife (e.g. kiwi, kea, etc.). Exports have recently started growing strongly off a small base.

PPOORRKK

NZ pork production has been flat for 40+ years and growing consumption of bacon, ham & smallgoods(B,H&SG) is being filled by frozen imports. The domestic industry now predominantly supplies fresh pork and is currently uncompetitive in export markets without moves to improve productivity to global best practice.

1. FCR = feed conversion ratio (a measure of conversion of food input into meat output)

DRIVERS OF SUCCESS New Zealand’s success in meat has three key drivers

Source: photo credit (under license NZ Story, purchased or creative commons (freenzphotos.com)) 6

- Temperate climate similar to Italy or France

- Temperature extremes moderated by surrounding ocean

- Isolated location protected by natural barriers

Low production cost

IDEAL CLIMATE & SOILS EFFICIENT PEOPLE & SYSTEMS LOCATION & MARKETS

Trusted byconsumers

Significant share in key products

- Long history of continuous meat production

- Industry focused on export for over 100 years

- Large pool of skilled people

- Strong systems and support networks

- Implementing on-farm efficient systems and programs (e.g. New Zealand Farm Assurance Program)

- Excellent proximity to East & South-East Asian markets

- CER agreement with Australia

- NZ was the first developed country to sign free trade deal with China (2008)

INVESTMENT OPPORTUNITIES Potential areas for new and/or external investment primarily transforming ingredients rather than producing more ingredients

7

LLAAMMBB,, BBEEEEFF && DDEEEERR

The New Zealand meat industry continues to have significant excess capacity, particularly in lamb. The ongoing decline in New Zealand sheep numbers has generated significant excess primary processing capacity, especially for lambs. This, in turn, has often led to bidding wars among competing industry buyers as each strives to meet the volume required by their plant(s). Prices paid to farmers rise and processor margins are reduced resulting in lowered financial returns.

Over the years numerous firms have exited the industry. There is every indication that the problem of declining sheep numbers and its corollary, excess processing capacity, will continue.

Ownership of top 4 processors, who account for ~75% of both lamb and beef production, is locked up with limited opportunity for new outside capital to participate: Alliance is a farmer-owned cooperative; Silver Fern Farms is a farmer owned cooperative with a Chinese shareholder; ANZCO has two cornerstone Japanese shareholders (Itoham & Nissui); and AFFCO is owned by the Talley’s family following a decade long gradual takeover of a poorly performing listed firm.

That said, there is some opportunity for further consolidation among second tier beef & lamb

processors, particularly of smaller regional players each with one plant. Global experience shows single plant operators need to be above average size to achieve economies necessary for success.

CCHHIICCKKEENN

The New Zealand chicken industry performs well and has achieved reasonable sales and profit growth for the past two decades. In the past decade chicken exports have grown from almost nothing to over NZ$100m in 2016, primarily through success in the Australian market, mainly in the form of frozen pieces.

Market leader Tegel was recently listed on the New Zealand stock exchange (by Affinity PE). Number two producer, Ingham, floated on the ASX by private equity, Brinks (#3) was for sale in 2009 and acquisition by Tegel rejected by the New Zealand Commerce Commission; no other bidders emerged.

PPOORRKK && PPOORRKK PPRROODDUUCCTTSS

Domestic pork production has been flat for the last 40 years and the industry is sub-scale by global standards (e.g. Canada, USA, Denmark). International investors with global best practice

capabilities in pork farming could find opportunities.

Following a number of major acquisitions, bacon, ham and smallgoods (B,H&SG) producers are now reasonably consolidated. Hellers (#1) is 50% owned by Rangatira (PE), recently acquired #3 Hutton’s Kiwi (from Goodman Fielder). Premier Beehive (#2) was acquired by Brazil based global meat processing leader JBS (from Affinity PE).

MMEEAATT--BBAASSEEDD PPRROOCCEESSSSEEDD FFOOOODDSS

New Zealand exports significant quantities of manufacturing beef as a raw material ingredient for processors in other countries. There are opportunities to make more value-added products in New Zealand. Tegel has set a strong example of what is possible in terms of adding value to raw material ingredients.

There are significant further opportunities for growth across a range of sectors, including frozen meals, soups, canned meats & meals, jerky, pet food, formed hamburgers for chain fast-food. These are reviewed in more detail in the “Processed Food” report.

SWOT ANALYSIS The global meat industry is undergoing fundamental shifts and consolidation; New Zealand’s competitive position is changing as a result

STRENGTHS WEAKNESSES

- Natural environment favourable to pastoral agriculture

- Low cost, grass fed beef and sheep production systems

- Strong biosecurity rules and systems leading to low presence of key diseases

- High standards of food safety and animal welfare

- International recognition of high quality of New Zealand meat industry regulations

- 135+ years experience exporting meat long distances

- Strong position in global lamb trade in counter-seasonal window to Northern Hemisphere

- Successful dairy industry generating large numbers of surplus stock

- Preferential access into Europe for some products for historical reasons

- Substantial research funding improving taste, quality of eating experience

- NZ reputation for quality products and trusted supplier

- High tariff barriers into key markets limits access to Europe and parts of Asia

- Limited experience with branded and high value processed meats or meal solutions

- Limited in-market knowledge, few firms close to customer/consumer, especially in growth markets of Asia

- Lack of in-market co-ordination

- Inefficient use of meat plants (declining stock numbers) and inefficient procurement of stock (competitive, not coordinated)

- Labour shortages both on farm and in processing

- Animal welfare issues around dairy calves

- Domestic and imported grain prices higher than competitors, which restricts competitiveness of pork, poultry, and other feed-dependent production systems

OPPORTUNITIES ISSUES/THREATS/RISKS

- Further negotiation of high quality Free Trade Agreements with key markets (Iran, UK, EU)

- Scientific research showing superior health properties of free range, grass-fed animals

- Genomics research to optimise output quality, animal productivity, growth rates etc.

- High and growing levels of foodservice penetration across most key markets

- Religious-based food restrictions (e.g. Sikh, Muslim, Jewish, Hindu) also a risk

- Ability to extend shelf life of chilled product (extend season window)

- Increased demand for protein globally

- Move from frozen product to chilled; position/develop brands and case-ready, convenience foods products for retail and hospitality/foodservice

- Removal of EU/UK farm subsidies in the medium term

- Extension/expansion of livestock traceability and specific-animal identification

- Encourage innovative on-farm practices to minimise green house gases

- Continued conversion of beef and sheep land into dairy

- Market access reduced due to import restrictions (e.g. Indonesia)

- Continued decline in consumption of lamb in developed markets

- Religious-based food restrictions (e.g. Sikh, Muslim, Jewish, Hindu), also an opportunity

- Disease outbreak affecting stock numbers and or trade access

- ETS, climate change legislation affecting cost of business

- Increasing pork imports threatening the viability of New Zealand pork industry

- Southern South America (e.g. Argentina, Uruguay, S. Brazil) improving their pasture system and “catching-up” with New Zealand

- USA market entry policy changing as Trump administration embraces “America First”

- EU quota reallocation in Brexit negotiations (particularly lamb and mutton)

- Animal welfare and extension of “rights revolution” to animals

8

SUPPLY CHAIN The New Zealand meat industry supply chain is effectively segregated by species

1. There may be one or more layers of wholesaling, depending on product or market; some wholesale functions may be captive inside retailers or foodservice operators; Source: Coriolis

SIMPLIFIED MODEL OF NEW ZEALAND MEAT SUPPLY CHAIN1

Model; 2017

9

Sheep-Beef farming Meat processing

Meat wholesaler1

SeafreightAirfreight

Supermarkets

Butchers

Foodservice

Meat wholesaler1

Supermarkets

Butchers

Foodservice

Internationalmarkets

Domesticmarket

Distributorwholesaler1

Dairy farming

Other livestock farming nec.

Deer farming

Pig farming

Poultry meat farming

Poultry processing

Cured meat & smallgooods mnfg

Will include separate lines for each species

Case-ready meat processor

Case-ready meat processor

Global Market Overview

+ Global situation

+ Consumption

+ Production

+ Import demand

+ Key markets

+ Market growth 01

The global cross-border meat trade is large and growing; New Zealand has a strong position

CONSUMPTION- Global meat consumption is concentrated in the Americas, Europe

and China- Global per capita meat consumption (all forms) is showing relatively

low growth (~1%)

PRODUCTION- Global meat production is 322m tons of raw meat, and production

has been growing at a 3% CAGR over the last 50 years- Total global production has grown 4.5 times in the last fifty years- Meat production is spread across the globe with growth varying by

region- New Zealand produces almost half a percent of total world meat

supply (all species)- New Zealand – the size of Japan or Italy, but with the population of

Singapore – produces a significant meat surplus available for export (particularly beef and sheep); it is export focused and overweighted in trade

GLOBAL TRADE- Global cross-border meat trade volumes are growing (4% CAGR)

with moderate price gains (2% CAGR) across the cycle leading to export value growth (6% CAGR)

DEMAND: PRODUCT CATEGORIES- Total global cross-border meat trade large (US$140.9b); key species

are beef ($47.1b), pork ($31.9b), chicken ($24.4b) and sheep ($6.1); processed meats are also large ($20.8b)

- Frozen beef stands out for global growth over the past five years; a number of products (e.g. animal fats) are growing volume but not value

DEMAND: IMPORT MARKETS- Total global cross-border demand for meat was US$140.9b in 2015;

Europe (including inter-EU) is the single largest market, followed by Asia and North America

- Vietnam, China, the US and Singapore stand out for meat import market growth

- Markets vary in average meat import price – driven by quality and mix - with the USA, Japan, Canada and the UK standing out as a high value markets

SUPPLY: EXPORTERS- New Zealand, Australia, the US, Canada, Brazil, Germany, and the

Netherlands are the key exporters in the overall global meat trade- New Zealand maintains a 3-4% share of global meat exports and is a

more consistent supplier than other Southern Hemisphere grass fed operators (due to its more stable climate)

- New Zealand and Australia stand out for driving total value growth over the past five years relative to peer group

- Exporting countries vary in their average meat export price; New Zealand achieves leading prices on average (driven by quality and product mix)

11

Global meat consumption is concentrated in the Americas, Europe and China; global per capita meat consumption is showing relatively low growth (~1%)

-

5

10

15

20

25

30

35

40

45

50

1998

1999

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

* Includes non-cow; includes milk, cultured and cheese; excludes butter, infant foods and ingredient/processed; ** data is apparent consumption all forms; Source: UN FAO; Coriolis analysis

AVAILABLE MEAT SUPPLY BY REGION*Kilograms; millions; 2013

15Y GLOBAL MEAT CONSUMPTION PER CAPITA BY SPECIES**Kilograms/person; 1961-2011

Total = 318

E/SE AsiaAmericas EuropeAustralasia

SS Africa

S Asia

NA

/ME/C

A

86.2

Italy5.3

China89.4

Other Americas13.1

3.5 15.1 18.0 9.7

United Kingdom5.3

62.9

Germany7.2

122.6

France6.0

Other Europe25.1

Viet Nam5.4

Brazil20.0

NA

/ME/C

A18.0

Canada3.2

Indonesia3.8

Argentina4.7

Other S A

sia1.3

Mexico8.2

Other E/SE Asia17.3

Australia

2.9

SS Africa

15.1

Pacific0.1

Japan6.6

Russian Federation11.4

Turkey2.7

New

Zealand

0.5

India5.1

United States of America37.0

Pakistan3.3

Beef

Pork

Poultry

0%

1%

3%

15yCAGR1%

Other 2%

Sheep/Goat 0.5%

Offal 0%

12

15yCAGR

95

100

105

110

115

120

125

130

135

140

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

200

0

200

2

200

4

200

6

200

8

2010

2012

2014

Global meat production is currently 322m tons of raw product, growing at 3% (53y CAGR); total global production has grown 4.5 times in the last fifty years

Bovine cattle 65 20%

Water Buffalo 4 1%

Other 11 3%

Sheep 9 3%

Goat 6 2%Pork 115 36%

Other poultry 13 4%

Chicken 100 31%

GLOBAL MEAT PRODUCTION BY SPECIESTonnes; million; 2014

53 YEAR GLOBAL MEAT PRODUCTION BY SPECIESTonnes; million; 1961-2014

INDEXED MEAT YIELD BY KEY SPECIES1970=100; 1970-2014

GLOBAL YIELD BY SPECIESAnimals vs. kg/head; 2014

* CAGR = Compound Annual Growth Rate; Note: 2014 is latest data available for all countries globally in FAOSTAT as of February 2017; Source: UN FAO database; Coriolis analysis

Total = 322m tonnes

53yCAGR3%

Chicken

Buffalo

Goat

Sheep

Buffalo

Cattle

Pork GoatSheep

Other

1216

142

216

178

78

Proportional to total # of animals processed

KG/head

13

1983

1971

1984

1982

2014

1961

1981

1970

1987

Chicken

1986

200

7

1985

Other poultry

1962

19751974

1976

200

8

1972

1965

2013

1973

1979

1963

1980

2012

1977

1964

1978

Sheep

2010

1968

1998

200

01999

Bovine cattle

1996

Pork

1997

200

3

1967

Other

200

4

200

1

200

5

Goat

200

2

1991

1966

200

6

1992

Water Buffalo

1988

19901989

CAGR 53y

2011

19951994

200

9

1993

1969

119123

128116108

109

114

145

149

154141133

137139

75798071

3%

4%

5%

9710

110

5958488

92

159

255263

273

249232239

244

306

313318298281

285293

184187191179165

171174

218224

230

21019720

320

5

2%1%3%

2%

2%

EXCLUDES POULTRY

BeefPork

Meat production is spread across the globe, with growth varying by region; New Zealand produces almost half a percent of total world meat supply (all species)

14Note: 2014 is latest data available for all countries globally in FAOSTAT as of February 2017; Russia includes historical USSR; Source: UN FAO database; Coriolis analysis

GLOBAL MEAT PRODUCTION BY KEY COUNTRIES & REGIONSTonnes; million; 2014

GLOBAL MEAT PRODUCTION BY KEY REGIONSTonnes; million; 1964-2014

Total = 318

Americas EuropeAustralasia E/SE Asia

Other Europe23.0

62.7 14.4 112.313.36.8 11.097.4

Russia9.1

Poland4.2

Australia

4.9

Brazil26.1

Mexico6.2

Argentina5.2

New

Zealand

1.4

Turkey3.2

Other C/S America13.0

United States of America42.6

Canada4.4

Spain5.7

S Asia

11.0N

A/M

E/CA

14.4

China, mainland84.8

Germany8.4

United Kingdom3.7

SS Africa

13.3

Japan3.9

Other E/SE Asia15.7

Other Pacific

0.6

Indonesia3.4

France5.5

Viet Nam4.5

or 0.4

%

53yCAGR3%

1994

China

Australia

1984 2014

SS Africa

North America

2004

CAGR 50y

Other E/SE Asia

New Zealand

C/S America

NA/ME/CA

1974

S. Asia

Europe

1964

18.8

6.7

3.9

10.5

15.7

317.9

249.3

2%1%

84.8

4%

3%

1%

3%

4%

2%

4%

149.4

9.0

5.5

27.5

196.6

17.2

62.0

6%

80.4

114.0

39.7

20.2 24.5 28.0

8.611.4

16.7

35.943.4 46.9

1.2 1.5 1.40.8 1.0 1.2

4.1

8.2

10.5

13.3

1.7

2.4

14.4

6.5

7.8

11.0

2.5

3.1

4.4

9.2

31.7

49.3

58.9

24.6

38.2

50.5

54.54.3

5.7

6.7

53.8

62.7

3.4

New Zealand – the size of Japan with the population of Singapore – produces a significant meat surplus available for export (particularly beef and sheep)

Note: 2014 is latest data available for all countries globally in FAOSTAT as of February 2017; Source: UN FAO database; Coriolis analysis

RAW MEAT PRODUCTION PER PERSON (BEFORE TRADE): NEW ZEALAND VS. KEY COMPETITORS/PEER GROUPKilograms/person; 2014

15

JapanMexicoBrazil CanadaUSANew Zealand Australia Germany FranceArgentina

Meat, chicken

Spain

Meat, sheep

Meat, pig

Meat, cattle

Other poultry

299

108

204

126

4

132

31

1

17

2

13

0

17

0

23

49

47

85

31

109

139

31

36 13

22

122

15

122

62

102

14

120

1

77

3

10

10

15

6

5569

10

8

02 33

510

2 2

31

061

1

45

0

27

55

0

15

0

32

47 0

11

40

Surplus

4m people 127m people

Global cross-border meat trade volumes are growing (4% CAGR), with moderate price gains (2% CAGR) across the cycle, leading to export value growth (6% CAGR)

-

10.0

20.0

30.0

40.0

50.0

60.0

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

16Note: data is as reported sender FOB; Source: UN Comtrade database; Coriolis classification and analysis

GLOBAL EXPORT VOLUMEKG; b; 2005-2015

GLOBAL AVERAGE EXPORT PRICEUS$/kg; actual; 2005-2015

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

GLOBAL EXPORT VALUEUS$; b; 2005-2015

10yCAGR4%

10yCAGR2%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

10yCAGR6%

X =

The total global cross-border meat trade is large (US$140.9b); key species are beef ($47.1b), pork ($31.9b), chicken ($24.4b), prepared/processed meats ($20.8b) and sheep meat ($6.1b)

Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis

TOTAL GLOBAL MEAT EXPORT VALUE BY CATEGORY & MAJOR PRODUCTSUS$; b; FOB; 2015

17

Total = $140.9

Pork BeefPoultry Fats Prep/proc

Sheep

Other

Chicken, whole frozen$3.7

Pork, frozen nes$10.0

Chicken, frozen$11.6

Other poultry$5.5

Sheep, frozen offal$0.2

Other sheep$0.0

Beef, chilled boneless$14.8

$47.1

Turkey, cuts chilled$1.4

Beef, frozen bone-in$1.5

$2.9$6.1 $7.8 $20.8

Other processed$2.5

$24.4 $31.9

Sheep, frozen bone-in$2.2

Beef, chilled bone-in$4.4

Sheep, frozen boneless$0.8

Beef, frozen offal$2.2

Other beef$0.7

Animal fats$7.8

Beef, chilled carcass$1.9

Beef, chilled offal$0.8

Sheep, frozen carcass$0.3

Other species

$2.9

Sheep, chilled bone-in$1.0

Sheep, chilled boneless$0.5

Pork, chilled carcass$2.0

Pork, offal frozen$2.9

Beef, frozen boneless$20.9

Sheep, chilled carcass$1.0

Turkey, cuts frozen$1.0

Gelatin$1.7

Pork, chilled cuts$3.6Poultry, cuts fresh

$0.2

Chicken, whole chilled$1.0

Swine, hams$1.1

Swine, prepared nes$2.2

Sausages$4.4

Pork, smoked$2.3

Prep/pres chicken meat$6.5

Pork, chilled nes$8.9

Prep/pres beef offal$2.4

Other pork$2.3

Bubble size is proportional to trade value in 2015; a bubble this size is US$3b

Frozen beef stands out for global growth over the past five years; a number of products (e.g. animal fats) are growing volume but not value


5Y GROWTH MATRIX: 5Y VOLUME VS. 5Y CAGR VALUE VS. VALUE 2015 BY PRODUCT T; b; % of US$; US$b; FOB; 2010 vs. 2015

18

1.00 1.40

10%

-0.20 0.00 0.50

15%

-5%

0%

5%

Gelatin

Other sheep

Sheep, frozen offal

$3

Sheep, frozen carcass

Prep/pres beef offal Prep/pres chicken meat

Sausages

Other processed

Other species

Swine, prepared nes

Animal fats

Swine, hams

Sheep, frozen boneless

Pork, chilled carcass

Pork, chilled cuts

Pork, chilled nesPork, offal frozen

Beef, chilled boneless

Other porkPork, smoked

Chicken, whole chilled

Poultry, cuts fresh

Chicken, frozenChicken, whole frozen

Other poultry

Pork, frozen nes

Turkey, cuts chilled

Turkey, cuts frozen

Other beef

Sheep, chilled carcass

Beef, chilled offal

Sheep, frozen bone-in

Sheep, chilled bone-in

Sheep, chilled boneless

Beef, frozen boneless

Beef, chilled carcass

Beef, chilled bone-in

Beef, frozen offal

Beef, frozen bone-in

5Y Change in volume (t) traded; 10-15

5Y CAGR value US$;

10-15

Total global cross-border demand for meat (US$140.9b) is focused in Europe (including inter-EU), Asia and North America; key Middle East markets are also important


TOTAL GLOBAL MEAT IMPORT VALUE BY RECEIVING COUNTRY/REGIONUS$; b; FOB; 2015

19

Total = $140.9

Australasia EuropeAmericas E/SE AsiaS Asia

NA

/ME/C

A

SS Africa

South Korea$3.7

Chile$1.2

$11.4$63.3 $3.1 $37.7$0.3$23.7

Hong Kong SAR$5.7

USA$10.4

China$7.2

$1.4

Other E Asia$1.5

Japan$11.1

France$6.4

Egypt$1.4

United Arab Emirates$1.8

Belarus$0.1

United Kingdom$9.3

Turkey$0.2

Russia$3.2

Saudi Arabia$2.6

Mexico$4.3

Other Pacific

$0.4

Canada$3.4

Australia$0

.7

Italy$5.5

SS Africa

$3.1

Venezuela$1.1

Malaysia$0.9

Singapore$1.2

Germany$8.9

Vietnam$4.2

Other SE Asia$1.3

Philippines$0.9

Cuba$0.3

Other S A

sia$0

.3

Other Americas$2.5

Other Europe$23.4

Netherlands$6.2

Brazil$0.4

India$0

.0

New

Zealand

$0.2

Other NA/ME/CA$5.6

Bubble size is proportional to trade value in 2015; a bubble this size is US$3b

Vietnam, China, the US and Singapore stand out as growth markets for meat imports


5Y GROWTH MATRIX: 5Y VOLUME VS. 5Y CAGR VALUE VS. VALUE 2015 BY RECEIVING COUNTRY/REGIONT; b; % of US$; US$b; FOB; 2010 vs. 2015

20

1.20.2 1.4

25%

0.80.6

20%

0.4 1.0 1.5

0%

-0.2-0.3

5%

10%

0.0

15%

27%

-5%

Philippines

Other SE Asia

China

$3

Other E Asia

Japan

South Korea

Hong Kong SAR

Other Americas

Germany

Brazil

Cuba

Italy

Netherlands

United Kingdom

France

Other Pacific

USA

Australia

New Zealand

Venezuela Chile

Canada

Mexico

India

Other NA/ME/CA

Egypt

Malaysia

Vietnam

Other S Asia

SingaporeUnited Arab Emirates

Russia

Turkey

Other Europe

Belarus

Saudi Arabia

SS Africa

5Y Change in volume (t) imported; 10-15

5Y CAGR value

US$; 10-15

Markets vary in average meat import price – driven by quality and mix – with the USA, Japan, Canada and the UK standing out as a high value markets

Note: The area under chart is proportional to import value (volume x $/kg); Source: UN Comtrade data; Coriolis analysis and classifications

TOTAL GLOBAL MEAT IMPORT VOLUME VS. AVERAGE IMPORT PRICE BY KEY MARKETKG; millions; US$/kg; actual; 2015

21

Other E A

siaC

hile

Hong K

ong SAR

Cuba

Canada

UK

Australia

Venezuela

Japan

Egypt

UA

E

South Korea

Brazil

Malaysia

Other Europe

Germ

any

Mexico

Other A

mericas

Russia

Turkey

Italy

India

Other S A

sia

NZ

Netherlands

Vietnam

Belarus

Other SE A

siaO

ther Pacific

SS Africa

Other N

A/M

E/CA

France

Singapore

China

Saudi Arabia

Philippines

USA

$2.04

$3.24

$1.97

$2.87

$1.86

$3.23

$2.40

$2.49 $2.32

$1.17

$1.19

$1.09

$1.76$1.81

$1.72

$1.44

$1.48

$3.07

$3.32

$2.72 $2.49

$3.88

$4.57

$2.95

$3.92

$3.93

$3.50

$2.54

$2.17

$2.38

$2.13

$2.16

$2.11

$2.46

$2.48

$2.38

$2.59

Proportional to import volume in 2015

Average import

value per kilogramUS$/kg

2015

Weighted average $2.53

On the supply side, New Zealand, Australia, the US, Canada, Brazil, Germany, and the Netherlands are the key exporters in the overall global meat trade


TOTAL GLOBAL MEAT EXPORT VALUE BY SOURCE COUNTRY/REGIONUS$; b; FOB; 2015

22

TToottaall == $$114400..99

EuropeAmericasAustralasia

NA

/ME/C

A

E/SE Asia

S Asia

SS Africa

Other Americas$2.1

France$4.6

$64.3$15.2

Hong Kong SAR$2.2

$45.3

Belgium$4.9

$0.9

Denmark$4.2

Germany$10.7

Russia$0.3

Chile$1.1

$10.0$0

.6

Belarus$0.8

$4.7

Mexico$1.6

India$4.4

China$3.0

Canada$5.2

Uruguay$1.7

Brazil$14.7

NA

/ME/C

A$0

.9

Other S Asia$0.3

Thailand$3.0

Turkey$0.6

Other E Asia$0.4

SS Africa

$0.6

New Zealand$5.0

Other Europe$27.6

Other SE Asia$1.5

Netherlands$10.5

USA$17.1

Argentina$1.7

Australia$10.2

New Zealand maintains a 3-4% share of global meat exports and is a more consistent supplier than other Southern Hemisphere grass fed operators (due to its more stable climate)

Note: Top 10 excluding Belarus; 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis

GLOBAL EXPORT MARKET SHARE: SELECT PEER GROUP MEAT EXPORTERS% of value; US$; 2005-2015

23

20102006

10Y Change

2009

Brazil

Australia

2007

Argentina

2008 2011 2015

Canada

USA

Chile

New Zealand

2005 20132012 2014

Uruguay

12.3%

-1.8%

10.5%

9.6%

11.6%11.6%

12.1%

3.7% 3.6% 3.6%3.4%

3.9%4.1%

4.6%

5.5%

3.7%3.8%

12.7%

0.1%-1.1%

-0.1%

12.7%

2.7%

0.0%

-0.8%3.7%

12.5%

13.0%

0.4%

2.3%

10.4%

2.2%2.2%

10.5%10.6% 10.6%10.7%

1.5%1.6%

1.2%1.4%

2.3%2.1%

1.7%1.8%

11.2%

3.2%3.1% 3.0%3.1%

3.7%

4.3%

3.2%3.4%

11.4%

10.3%10.6%

11.7%

3.2%2.9%

10.5%

3.5%

1.1%

6.6%

6.9%

5.2%

5.9%

0.6%0.7% 0.8%0.6%

6.7%

5.7%

9.5%

7.3%

5.4%

4.9%

5.3%5.3%

0.7%

1.1%1.1% 1.0%1.2%

1.0%1.3%

1.1%1.2%

0.7%0.7% 0.7%0.7%

1.2%1.1%

0.8%0.8%

Bubble size is proportional to meat product import value in 2015; a bubble this size is US$3b

New Zealand and Australia stand out for driving total value growth over the past five years relative to peer group


5Y GROWTH MATRIX: 5Y VOLUME VS. 5Y CAGR VALUE VS. VALUE 2015 BY SELECT EXPORTING PEER COUNTRIEST; b; % of US$; US$b; FOB; 2010 vs. 2015

24

0.5 0.6 0.80.70.20.1 0.40.3-6%

6%

4%

10%

8%

-2%

-4%

2%

0%

0.0-0.8 -0.3-1.0 -0.4-0.6 -0.5-0.7 -0.2-0.9 -0.1

New Zealand

$3

Australia

Brazil

Chile

Canada

USA

Uruguay

Argentina

5Y Change in volume (t) of meat imported; 10-15

5Y CAGR value US$;

10-15

Exporting countries vary in their average meat export price; New Zealand achieves leading prices on average (driven by quality and product mix)

Note: The area under chart is proportional to import value (volume x $/kg); Source: UN Comtrade data; Coriolis analysis and classifications

TOTAL GLOBAL MEAT EXPORT VOLUME VS. AVERAGE EXPORT PRICE BY COUNTRIES/REGIONKG; millions; US$/kg; actual; 2015

25

Belarus

SS Africa

Uruguay

Chile

Denm

ark

Other A

mericas

Australia

NA

/ME/C

A

Other Pacific

Canada

Other S A

sia

Thailand

Argentina

Turkey

USA

Hong K

ong SAR

Other Europe

Other E A

sia

India

Other SE A

sia

Russia

China

France

New

Zealand

Netherlands

Belgium

Germ

any

Brazil

$2.21

$3.21

$1.31

$2.27

$2.23

$4.35

$3.27

$1.72

$2.25

$3.71

$2.29

$2.61

$2.05

$4.0

2

$2.84 $2.67

$3.99

$3.94

$2.31

$2.31

$4.21

$2.36

$1.07

$1.26

$2.31

$3.08

$3.64

$2.46

Proportional to import volume in 2015

Average import

value per kilogramUS$/kg

2015

Weighted global average $2.53

New Zealand Production

+ Yield/productivity

+ Production

+ Regional activity

+ Growth upside

02

New Zealand can continue to increase meat production going forward

CHANGING INDUSTRY INPUTS The New Zealand meat industry is undergoing a long-term shift driven by high-level “mega” drivers

- As New Zealand lacks large amounts of grain/feed producing area, it uses grass-fed meat production systems in export-focused species- The amount of grass area available to the meat industry is falling and the industry is producing fewer animals, and has fewer farming enterprises

(consolidation), but more people employed

POTENTIAL FOR FURTHER PRODUCTIVITY IMPROVEMENTNew Zealand may continue to increase animal productivity

- New Zealand meat yield varies dramatically by species; yields per head are growing gradually across all key categories, except beef where the average yield is declining

- The New Zealand low input/low intensity system produces smaller animals than most competitors

CHANGING MEAT PRODUCTIONNew Zealand has increased total production

- New Zealand meat production has achieved stable long term growth through (1) more efficient producers (2) higher productivity and (3) higher yields; at the same time mix is changing in response to market demand

- Cattle, particularly dairy cows are replacing sheep across most regions; the South Island stands out for a particularly strong shift

- Looking at ten year growth drivers, the South Island stands out as increasing beef at the expense of sheep- The New Zealand low intensity model produces different results than key peers

27

The amount of grass area available to the meat industry is falling and the industry is producing fewer animals, and has fewer farming enterprises (consolidation), but more people employed

28

TOTAL EFFECTIVE HECTARES IN GRASSLANDS & CROPSHa; millions; % of ha; 1995-2015

TOTAL MEAT ANIMAL POINT-IN-TIME INVENTORYHead; million; 1995-2015

TOTAL NUMBER OF LIVESTOCK FARMING ENTERPRISESUnits (tax entities); thousands; 2000-2015

TOTAL NUMBER OF LIVESTOCK FARMING EMPLOYEESEmployees (PAYE); thousands; 2000-2015

Source: Statistics NZ; UN FAO AgStat database; MAF/MPI; Coriolis estimates and analysis

CAGR 95-15

Grassland

1998

1996

1995

Crops

200

8

200

9

1997

High Country

1999

200

3

2013

200

2

2011

200

4

200

5

2012

200

6

200

0

2010

2015

200

7

2014

200

1

2.7

-1.0%

2.6

1.6%

2.7 2.4

11.3 11.411.411.611.3 11.3

10.9 10.611.111.3 11.1

13.5 13.713.3

-2.2%

13.513.9

11.7 11.812.0

13.212.6

2.8

0.5 0.5

9.4

0.60.5 0.5 0.5

9.4 8.8 8.2

10.09.2

9.5

9.7

0.50.4 0.4 0.40.40.4 0.4 0.4 0.3 0.4 0.40.40.4 0.4 0.4

3.4 3.3 3.3

3.4

3.6

3.5

3.5

2.8

2.9

2.8

2.9

3.0 3.0 2.8

3.7

8.1

8.0

8.08.1

8.1

8.4

8.2

7.9

7.8

3.7

7.8

8.0

8.0

7.9

1999

200

4

1998

200

0

200

2

200

3

200

1

Dairy cattle

CAGR 95-15

Other poultry

Sheep

Chickens

1996

1997

Beef cattle

1995

200

5

200

9

Other livestock

200

8

2014

2011

2012

2010

200

7

2013

200

6

2015

4.3

2.0

1.9

2.0

58.61.8

1.9

4.2

3.7

4.3

2.1

48.8

2.3

1.7

5.2

1.8

46.8

1.5

5.1

1.5

58.1

4.6

58.4

47.4

2.11.8

4.9

1.6

3.7

4.2

70.9

62.1

71.471.374.4

71.9

58.9

69.8 69.0 67.667.170.1

66.968.0 66.3

59.4

3.5

1.7 1.81.71.8 1.6

4.1

59.0

-2.0%

1.1%

0.5%

58.3

2.3%

-1.9%

-2.5%

1.6

2.1

40

.1

4.7

2.02.12.42.2

4.6 4.14.6

2.3

1.6

4.15.2

39.3

1.51.61.7

4.8

39.9

4.9

1.6

2.2

29.8

32.4

4.4 4.4

29.1

30.8

4.4

32.6

31.1

4.4

31.3

2.32.2

4.5

38.5

2.3

4.5 4.6

1.9 1.9 2.0

34.1

1.5

13.1

43.5

5.3

13.813.514.6

12.5

5.9

3.8

5.6

14.8

15.8

3.7

5.2

46.2

1.7

15.214.5

5.2

45.7

5.1

14.4

14.1

12.0

39.6

6.5

3.9

12.012.0

6.5

1.4 1.3

6.7

12.7

15.317.1

5.94

1.5

13.5

6.2 6.4

12.713.0

13.0

39.6

2014

Dairy

200

4

200

5

200

3

Other livestock

200

2

Sheep & Beef

2015

200

1

Poultry

2010

2011

200

7

200

9

200

8

Beef

CAGR 95-15

200

0

200

6

2012

2013

Sheep

0.3

2.2

0.2

0.4 0.4

0.2

0.3 51.752.1 51.152.2

55.856.253.4

55.4

42.345.3

43.342.1

46.548.0

45.246.2

0.20.2

0.20.2

0.20.2

0.20.2

-4.4%

1.2%

-4.1%-5.7%0.20.2

-0.4%

-1.4%

2.1

12.513.0 11.912.213.412.212.6 12.612.3

11.3

4.84.8 8.58.45.2

12.011.8

5.35.4

12.7

17.918.1 15.617.218.419.819.8 19.119.815.9

12.8

15.9

12.712.7

15.415.815.8 15.316.0

5.25.34.4

5.0

6.46.56.2

6.67.1

4.1

2.83.0

2.22.73.0

3.94.03.1

3.5

6.5

6.28.0 6.56.1

8.08.39.08.17.9

12.5 8.79.2

6.67.38.812.412.4

12.012.2

2014

Dairy

200

4

200

5

200

3

Other livestock

200

2

Sheep & Beef

2015

200

1Poultry

2010

2011

200

7

200

9

200

8

Beef

CAGR 95-1520

00

200

6

2012

2013

Sheep0.6

1.3

0.6

0.5 0.5

0.40.646.845.6 46.847.4

42.641.8

46.547.6 48.248.8 49.850.1

45.546.6 46.846.10.40.4

0.40.40.40.4

0.40.4-4.8%

2.8%

0.0%-3.4%0.50.5

0.3%

4.3%

1.3

3.63.93.6

3.63.8

3.24.6 3.43.3

3.65.35.911.712.4

6.24.54.3

6.16.5 4.6

20.620.5 22.220.820.016.314.5

19.819.623.5

4.4

27.1

5.0

4.4

27.524.223.3 25.625.8

2.12.2

2.02.16.6

6.76.3

7.17.9

1.81.71.7

1.41.6

1.71.71.8 1.71.6

6.1

9.410.79.99.5

10.611.8

12.311.110.513.7

8.39.7 5.56.78.514.2

13.3

13.313.6

20yCAGR1.2%

20yCAGR1.2%

15yCAGR1.7%

15y CAGR1.2%

New Zealand meat yield varies dramatically by species; yields per head are growing gradually across all key categories, except beef where the average yield is declining

29Source: Statistics NZ; UN FAO AgStat database; MAF/MPI; Coriolis estimates and analysis

NEW ZEALAND MEAT YIELD BY KEY SPECIESKg./head; 2014

AVERAGE NZ MEAT YIELD PER ANIMAL BY KEY SPECIESKg./head; 1964-2014

Pork

Sheep

Poultry

Beef

2

71

145

19

Averagemeat/

animal;kg; 2014

Proportional to number of animals processed; head; 2014

1989

1998

CAGR 50y19931994

19921991

19961997

1990

1995

1999

2011

2012

200

920

10

Poultry

Beef

2013

2014

200

8

200

220

03

200

020

01

200

620

07

200

420

05

1982

1965

Pork

1981

1983

1968

19731974

1984

19781977

1967

Sheep

1979

19761975

1966

1980

1971

1986

1972

1987

1970

1988

1969

1985

1964

0.8%

0.6%

0.4%

0.8%

The New Zealand low input/low intensity system produces smaller animals than most competitors

30Source: Statistics NZ; UN FAO AgStat database; MAF/MPI; Coriolis estimates and analysis

AVERAGE BEEF MEAT YIELD/HEAD: SELECT COUNTRIESKg/head; 1964-2014

AVERAGE SHEEP MEAT YIELD/HEAD: SELECT COUNTRIESKg/head; 1964-2014

10

5

25

20

15

0

30

19991998

1989

200

0

1990

1993199419951996

1991

1997

1992

200

1

2013

2014

2011

2012

UK

China

Australia

South Africa

USA20

04

200

5

200

220

03

200

6

200

920

10

200

720

08

1975

1978

1964

1971

1982

1965

19861985

1980

19841983

1972

1979

1974

CAGR 50y

1969

1976

1970

1977

1981New Zealand

1968

1987

1966

1973

Spain

1988

1967

1.2%

0.5%

0.7%

2.1%

0.3%

0.0%

0.1%

0

150

350

50

100

300

250

200

1991

South Africa

1981

1979

1994

19921993

1990

19871988

19851986

1984

1982

1980

1989

1983

USA

200

920

1020

11

200

620

07

200

8

Brazil

Australia

Argentina

2012

2013

2014

1998199920

00

199519961997

200

320

04

200

5

UK

200

120

02

1967

1974

Spain

China

1966

19761975

1970

19721971

1973

1968

New Zealand

1969

19651964

19781977

CAGR 50y

0.9%

1.0%

0.6%

0.7%

1.2%

0.0%

-0.1%

1.0%

0.5%

New Zealand meat production has achieved stable long term growth through (1) more efficient producers (2) higher productivity and (3) higher yields; at the same time mix is changing in response to market demand

Source: Statistics NZ; UN FAO AgStat database; MAF/MPI; Coriolis estimates and analysis

TOTAL NEW ZEALAND MEAT PRODUCTION BY SPECIESTonnes; 000; 1964-2014

31

50y CAGR

200

2

1986

2011

200

0

1965

1966

1984

2012

200

1

1964

1985

200

6

200

9

200

5

1990

200

7

200

8

1989

Poultry198

8

2010

50y ABS

200

3

1991

Sheep

Beef

200

4

1987

1967

1974

1981

1978

2014

1973

1997

1979

1996

1977

Deer

1993

1995

1975

1982

1976

Pork

1972

1980

2013

1969

1999

1992

1968

1998

1971

1994

Other

1983

1970

1,191

1,3161,2691,200

1,219 1,184

1,119

1,215

1,278

1,265

1,292

1,068

973

1,0531,0

01

1,027

1,066

1,101

1,127

1,143

1,208

1,128

1,237

1,44

6

1,471

1,433

1,471

1,452

1,333

1,355

1,3741,303

1,327

1,328

1,302

1,351

1,324

1,204

1,210

1,352 1,310

1,433

1,350

1,256

1,284

979

0.0%2.0%

1.6%

0.0%

5.0%

6.6%

862

952

814

835 8

08

-2

+5

+175

+1

+21

+339

50yCAGR1.0%

Cattle, particularly dairy cows are replacing sheep across most regions; the South Island stands out for a particularly strong shift

32NOTE: Manawatu/Wanganui includes Wellington; Canterbury includes Chatham Is.; Source: Statistics NZ; UN FAO AgStat database; MAF/MPI; Coriolis estimates and analysis

TOTAL CATTLE BY REGIONHead; m; point-in-time inventory; 1994/2005/2015

Otago

Southland

21Y CAGR

Bay of Plenty/Gisborne/Hawkes Bay

Waikato

Auckland/Northland

Manawatu/Wanganui

21Y ABS

2015

Tasman/Marlborough/Westcoast

2005

Canterbury

1994

Taranaki

-0.1

-0.1

-0.1

+0.3

-0.2

+1.0

+0.1

+0.6 13.9%

8.1%

12.3%

9.5

10.0

8.9

-1.3%

-0.5%

-3.7%

2.2%

-1.7%

-1.7%

1.1

1.7

2.4

2.2

2.3

0.7

0.8

0.4

1.4

1.3

1.4

0.7

0.4

0.4

1.3

0.60.9

1.4

-0.3

1.2

1.4

0.7

0.4

0.7

1.1

1.0

0.3

0.4

TOTAL SHEEP BY REGIONHead; m; point-in-time inventory; 1994/2005/2015

Otago

Southland

21Y CAGR

Bay of Plenty/Gisborne/Hawkes Bay

WaikatoAuckland/Northland

Manawatu/Wanganui

21Y ABS

2015

Tasman/Marlborough/Westcoast

2005

Canterbury

1994

Taranaki

-2.2

-2.0

-0.5

-2.5

-2.7

-5.3

-0.8

-3.8 -7.9%

-4.9%

-9.1%

39.8

29.1

49.5

-4.6%

-9.3%-8.9%

-7.8%

-4.0%

-7.9%

7.6

4.6

2.6

1.6

3.6

0.5

1.0

1.68.8

6.9

9.7

9.9 1.1

0.8

1.3

6.04.1

7.0

-0.7

4.8

6.1

5.1

7.6

0.7

0.9

0.6

7.9

6.2

Looking at ten year growth drivers, again the South Island stands out

33NOTE: Manawatu/Wanganui includes Wellington; Canterbury includes Chatham Is.; Source: Source: Statistics NZ; UN FAO AgStat database; MAF/MPI; Coriolis estimates and analysis

GROWTH MATRIX: 10Y CHANGE IN CALVES BORN BY REGIONHead; m; 2005 vs. 2015

GROWTH MATRIX: 10Y CHANGE IN LAMBS BORN BY REGIONHead; m; 2005 vs. 2015

-2.0%

-1.5

-1.0%

-2.5 -2.0

0.0%

-4.0%

0.2

-4.5%

0.0-1.0

-3.0%

-0.5

Manawatu/Wanganui

Auckland/Northland

1.0

Waikato

Southland

Otago

BOP/Gisb/HB

Canterbury

Tas/Marl/WC

Taranaki

10y CAGR

10y ABS

Bubble size is proportional to calves born in 2015; a bubble

this size is 0.2m calves

0.5-0.5 0.0 0.8

15.0%

10.0%

20.0%

25.0%

0.0%

-2.0%

5.0%

Tas/Marl/WC

Auckland/Northland

0.2

Manawatu/Wanganui

Waikato

Otago Southland

Canterbury

BOP/Gisb/HBTaranaki

10y CAGR

Bubble size is proportional to lamb born in 2015; a

bubble this size is 1m lamb

The New Zealand low intensity model produces different results than key peers

Note: 2014 data latest available as of Feb 2017; Source: UN FAOStat; Coriolis analysis

GROWTH MATRIX OF MEAT PRODUCED: TONNES/KM2 VS. TONNES/CAPITA VS. TOTAL PRODUCTIONTonnes/km2; actual; tonnes/resident person; actual; tonnes; m; 2004 vs. 2014

34

20 30 8010 6050 70400

150

400

100

200

350

300

250

0

50 Italy 14

10

New Zealand 04

Netherlands 04

Belgium 14

UK 04

Spain 04

Japan 04

France 04

Denmark 04

Belgium 04

Ireland 04

Germany 04

New Zealand 14

Netherlands 14

Spain 14

Italy 04

UK 14

France 14

Denmark 14

Japan 14

Ireland 14

Germany 14

Tonnes/capita

Tonnes/square kilometre

Bubble size is proportional to total meat production; a bubble this size is 10m tonnes

New ZealandCategory Performance

+ Segmentation

+ Key products

+ Exports by product

03

New Zealand is the global leader in sheep meat exports, a major player in the world beef trade and emerging in venison and poultry meat

36

- New Zealand exports six categories of meat products

- New Zealand meat exports are predominantly beef (48%) and lamb (44%); all other products 8%

- Average export price varies, with deer venison and processed meats getting high prices

- New Zealand is the leading global exporter of sheep/lamb meat, strong in beef and deer/other and has growth opportunities elsewhere

- Beef and sheep meat are growing strongly in volume and value growth, though only achieving moderate price gains; poultry growing strongly

- New Zealand is the leading global exporter of sheep/lamb meat, strong in beef and deer/other and has growth opportunities elsewhere

- New Zealand generates beef exports of US$2.4b, with trade focused in North America, E. Asia, SE Asia and the Middle East; trade is predominantly boneless (frozen and chilled)

- New Zealand is the global leader in the lamb meat trade, with a strong position in East Asia, Europe and North America

- New Zealand pioneered deer farming and leads the world in venison production; an intriguing and innovative product effectively unknown in most markets

- New Zealand’s animal fat exports go predominantly to East and South-East Asia

- New Zealand’s poultry meat exports mostly go to Australia and the Pacific Islands; there appears to be widespread opportunities for growth worldwide

- New Zealand trails peer group countries in converting its abundant raw meat into prepared/processed, ready-to-heat or ready-to-eat meat products; however, the country is catching up fast

OVERVIEW BY CATEGORY

New Zealand exports six categories of meat products

* New Zealand exports minor amounts of other species (e.g. llama) folded into this total in the data (category is not elsewhere specified (nes) at source) 37

- Low cost producer; strong in manufacturing grade

- Strong into US market (itself a major exporter); rapidly growing into Asia

- Most animals purely grass-fed with natural positioning

- Growing intensive feeding operations (primarily Japanese investment to date)

- National herd shifting to dairy breeds with growth of that industry

- New Zealand pioneered deer farming

- Proven farming systems and genetics

- Largest global producer and exporter of farmed venison

- Growing well off a low base

- Wide range of innovative products

#3 to US#5 to China#6 Global

#1 Global LambExporter

#1 Global Venison Exporter

#1 to Australia

- Trusted supplier of high quality ingredients

- Specialised use across multiple products and sectors

- Growing very well off a low base

- Recently listed Tegeldriving growth

- Further growth possible in other bio-secure markets (e.g. Australia) and premium markets

#4 to East Asia#1 sheep fat

HIGH-LEVEL CATEGORIES

- Beef, frozen boneless- Beef, chilled boneless

- Sheep/lamb, frozen bone-in- Sheep, chilled bone-in

- Deer meat- Goat meat

- Prep/proc. chicken meat- Sausages

- Animal fats- Lard stearin, etc.

- Chicken, parts frozen- Chicken, whole frozen

EXAMPLE PRODUCTS UNDER THESE CATEGORIES

BEEF POULTRY PREP/PROCESSEDSHEEP/LAMB DEER & OTHER* ANIMAL FATS

- Dominant global lamb exporter

- New Zealand alone represents more than a third of global trade; NZ+AU represent 70%; future trans-Tasman consolidation likely

- Clear long term comparative advantage in lamb built on solid foundations: skills, genetics, supportive business ecosystem, climate

#1 to Australia

New Zealand meat exports are predominantly beef (48%) and lamb (44%); all other products 8%

38Source: UN Comtrade database (from NZ Customs data); Coriolis classifications and analysis

NEW ZEALAND EXPORT VALUE BY MEAT SEGMENTUS$; m; 2015

NEW ZEALAND EXPORT VALUE BY MEAT SEGMENT OVER TIMEUS$; m; 2005-2015

Beef$2,407 48%

Sheep$2,186 44%

Deer/other$146 3%

Animal fats$83 2%

Poultry$48 1%

Processed meat, $126

, 2%

Sheep

20152006

Poultry

Deer/other

2005

10Y CAGR

201320102009 2012

Processed meat

2011

Animal fats

Beef

2007 2008 2014

$1,411

$146

$76

$90

$65

$1,443$1,241$1,253

$137

$93

$110

$3,406

$3,836$3,882

$3,141

$3,363

$5,183

$4,997

$4,583$4,627

$4,468

5%

3%

$126

$135

$139

7%

$3,401

22%

-1%4%

$1,854

$48

$56

$1,985

$48

$45

$1,978

$126

$81

$1,578

$61

$91

$1,772

$6$2,299

$6

$2,186$2,548$6

$7

$2,417

$29

$41

$2,192

$12

$18

$156

$184

$1,725

$237

$171

$1,782

$168

$146

$1,195

$64

$167

$1,461

$166

$138$116

$112

$107

$136

$1,701

$2,407

$178

$177

$1,819

$83

$162

$2,174

10yCAGR4%

All other8%

Average export price varies, with deer venison and processed meats getting high prices; beef and sheep meat are driving volume growth, though only achieving moderate price gains; poultry growing strongly


NEW ZEALAND EXPORT VOLUME VS. AVG $/KG: BY SEGMENTKG; millions; US$/kg; actual; 2015

10Y VOLUME GROWTH VS. 10Y CAGR $/KG VS. $KG; US$/kg; US$; 2005-2015

Bubble size is proportional to export value in 2015; a

bubble this size is US$1b

Beef

Deer/other

Poultry

Sheep Animal fats

Processed meat

$4.94

$0.56

$4.79

$8.09

$5.57

$3.07

Proportional to NZ export volume in 2015

Average NZ export value per kilogramUS$/kg

2015

Weighted average $4.35

8%

3%

7%

2%

40

9%

5%

4%

0%50

1%

6%

0-10-20 302010

Sheep

Beef

$500

Processed meat

Deer/other

Animal fats

Poultry10Y CAGR of

average NZ export value per kilogram

US$/kg 05-15

10y growth in export volume; kg; m; 2005-2015

New Zealand is the leading global exporter of sheep/lamb meat, strong in beef and deer/other and has growth opportunities elsewhere


NEW ZEALAND SHARE OF WORLD EXPORT VALUE BY CATEGORYUS$; % of US$; 2015

NEW ZEALAND SHARE OF WORLD EXPORT VALUE BY CATEGORY% of US$; 2005-2015

Beef

Sheep

Processed meat

Poultry

Anim

al fats

Deer/other

0.2%1.1%

5.1%

36.0%

5.0%

0.6%

Proportional to total global export value in 2015

NZ share of total global

trade; % of $;

2015

2005 20072006

Sheep

Other

Processed meatPoultry

2008 20132012

Animal fats

2014 2015

Beef

20102009 2011

7.9%

0.5%0.5%

3.8%

8.3%

0.2%

4.1%4.2%

0.5%

36.0%

0.5% 0.6%0.6%

4.9%

11.6%

0.6%

6.2%

0.7%0.6%0.5%

4.2%

11.3%

0.7%

4.4%

0.2%

1.4%

6.0%

40.3%

1.4% 1.2%

36.1%

1.1%1.3%1.2%

40.7%

37.7%

1.5%

38.3%

4.8% 5.0%

1.6%

37.6%

5.6%

37.1%

1.4%

38.2%

0.1%

3.9%

35.8%

4.2%

0.1%

4.2%

0.2%0.2%0.1%

7.3%

41.5%

0.0%1.1%1.2%

6.3%6.2%

0.0%0.0%0.0%

5.1%

EXCLUDES PORK

New Zealand generates beef exports of US$2.4b, with trade focused in North America, E. Asia, SE Asia and the Middle East; trade is predominantly boneless (frozen and chilled)

41

GLOBAL EXPORT SHARE: BEEFUS$b; 2015

GLOBAL REGIONAL IMPORT VALUE VS. NZ SHAREUS$; % of US$; 2015

NZ EXPORTS BY TYPE: BEEFUS$m; 2005-2015

EXAMPLE PRODUCTS: SILVER FERN FARMS2017

Source: UN Comtrade database; photo credit (images courtesy Silver Fern Farms); Coriolis classifications and analysis

NA

/ME/C

A

AU

/Pac

North A

m.

SE Asia

Europe

S. Asia

SS Africa

E. Asia

C/S A

m.

0%

7%

0%1%

1%

17%

3% 2%

39%

NZShare

Import value

Americas Europe OthersAustralasia

USA$5.9

$5.7

Other Americas$3.0

$13.4

New Zealand$2.4

Other Europe$8.5

Australia$7.5

Netherlands$2.7

$18.1

Brazil$5.0

Spain$0.7

Argentina$1.0

Other$5.7

$9.9

Germany$1.6

Canada$1.7

Uruguay$1.5

2005

10Y ABS10Y CAGR

Other beef

Beef, frozen boneless

Beef, chilled boneless

2015

Beef, frozen bone-inBeef, frozen offal

2010

$2,407

+$96

-7%3% +$21

-$48

$1,411

+$904

+$24

$1,461

$109

$1,922

$133$69

$1,105

$193$135

$1,018

$231 6%

$43

2%

7%

$42$51$58$91 $79

New Zealand is the global leader in the lamb meat trade, with a strong position in East Asia, Europe and North America

42

GLOBAL EXPORT SHARE: SHEEP/LAMBUS$b; % of US$; 2015


NZ EXPORTS BY TYPE: SHEEP/LAMBUS$m; 2005-2015

EXAMPLE PRODUCTS: WAITROSE2017

Source: UN Comtrade database; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis

Australasia Americas Europe Others

$0.4$0.1$4.2 $1.4

Uruguay$0

.1

UK$0.5

New Zealand$2.2

Australia$2.0

Other Americas$0.0

Spain$0.2

Other Europe$0.6

Other$0.4

Argentina$0

.0

USA

$0.0

Netherlands$0.1

10Y ABS10Y CAGR

Sheep, frozen offal


Sheep, carcass

Sheep, chilled bone-in

2010

Sheep, frozen bone-in

2015


2005

$2,186

2%

0%

4%

+$40

+$246

-$10

+$14

$1,701

$1,985

+$120

+$756%

$104$395

$185

$920

$180

$75$53 $93

$419$275

$47

$29

$43

4%

6%

$1,166$931

$320

$310

$328

AU

/Pac

NA/ME/CA

C/S A

m.

SS Africa

North A

m.

S. Asia

SE Asia

EuropeE. Asia

31%

41%

1%

16%

56%

32%

22% 19%19%

NZShare

Import value

New Zealand pioneered deer farming and leads the world in venison production; an intriguing and innovative product effectively unknown in most markets

43

GLOBAL EXPORT SHARE: VENISON & ALL OTHER MEATSUS$b; % of US$; 2015


NZ EXPORTS BY TYPE: VENISON & OTHER MEATSUS$m; 2005-2015

EXAMPLE PRODUCTS: WAITROSE2017


Americas Europe OthersAustralasia

USA$0.0

$0.5

Other Americas$0.0

$1.4

New Zealand$0.1

Other Europe$0.7

Australia$0.2

Netherlands$0.5

$0.7

Brazil$0.4

Spain$0.1

Argentina$0.1

Other$0.5

$0.4Germany

$0.1Canada$0.1

Uruguay$0.0

2005 2010 2015

10Y CAGR

Deer/Other Species

10Y ABS

$145$155

-$16$162

-1%

$162

$145

$155

C/S A

m.

AU

/Pac

North A

m.

SE Asia

Europe

SS Africa

S. Asia

E. Asia

NA

/ME/C

A0

%

9%

0%

5%

1%

13%

4%

2%

15%

NZShare

Import value

DATA INCLUDES OTHER SPECIES INSEPARABLE AT SOURCE

New Zealand’s animal fat exports go predominantly to East and South-East Asia

44

NEW ZEALAND EXPORTS BY DESTINATION: ANIMAL FATSUS$m; 2015


NZ EXPORTS BY TYPE: ANIMAL FATSUS$m; 2005-2015

EXAMPLE PRODUCTS2017

Source: UN Comtrade database; Coriolis classifications and analysis

C/S A

m.

North A

m.

NA

/ME/C

A

E. Asia

S. Asia

SS Africa

Europe

AU

/Pac

SE Asia

0%

3%

0%

2%

0%

5%

0%

7%

0%

NZShare

Import value

E. Asia60%

SE Asia35%

Other5%

2005 2010 2015

10Y CAGR

Animal fats

10Y ABS

$83

$107

+$27

$56

4%

$56

$83

$107

New Zealand’s poultry meat exports mostly go to Australia and the Pacific Islands; there appears to be widespread opportunities for growth worldwide

45

NEW ZEALAND EXPORTS BY DESTINATION: POULTRYUS$m; 2015


NZ EXPORTS BY TYPE: POULTRYUS$m; 2005-2015

EXAMPLE PRODUCTS: TEGEL2017


Chicken, frozen pieces

2010

10Y ABS

2005

10Y CAGR

Other

2015

Chicken, whole frozen +$2

$48

+$3

$6

$18 +$38

$3

$1

$4

$3

$15

$41 29%

5%

17%

$1

$1

$3

E. Asia

NA

/ME/C

A

SS Africa

Europe

North A

m.

AU

/Pac

C/S A

m.

SE Asia

S. Asia

0%0%

0%

0%

0%

0%

0% 0%

35%

NZShare

Import value

AU/Pacific94%

Other6%

EXCLUDES PREP/PROC POULTRY (NEXT PAGE)

EXCLUDES PREP/PROC POULTRY (NEXT PAGE)

New Zealand trails peer group countries in converting its abundant raw meat into prepared/processed, ready-to-heat or ready-to-eat meat-based products; however, the country is catching up fast

1% 3% 3% 4%8% 8%

10% 10% 11% 11% 12%15% 16% 18% 19%

21% 22%

28%

Australia

New

Zealand

Uruguay

Mexico

Argentina

Canada

Netherlands

Spain

Brazil

USA

UK

Denm

ark

Poland

Belgium

France

Ireland

Germ

any

Italy

46

WORLD MARKET FOR PROCESSED MEATS: KEY IMPORTERSUS$b; 2015

SHARE OF MEAT EXPORTS WHICH ARE PREP/PROCESSED% of US$; 2015

NZ EXPORTS BY DESTINATION: PREP/PROC MEATS US$m; 2005-2015

EXAMPLE PRODUCTS: HELLERS2017


EuropeAmericas E/SE AsiaOtherAustralasia

Other Americas$0.7

Japan$2.6Mexico

$0.3

$0.2 $3.1 $4.1

Germany$1.6

$1.1

Canada$1.0

$12.2

S. Asia$0.1

United Kingdom$3.0

Other E/SE Asia$0.6

Other Europe$5.4

NA

/ME/C

A$0

.7

Australia$0

.1

SS Africa

$0.4

New

Zealand

$0.0

Other Pacific

$0.1

Hong Kong SAR$0.7

USA$1.1

France$1.1

Philippines$0.1

Netherlands$1.1

Singapore$0.2

Australia

Other Pacific

Japan

10Y ABS

Philippines

2005

Other

2010 2015

Other E/SE Asia

USA/Canada

10Y CAGR

8%

-6%

4%

20%

11%

-$6+$6

$64

$126

$110

+$5

+$31

+$19

+$3

+$4

$8

$6

$7

$5

$6$2

$13

$18

$38

$11

$38

$47

$14

$12

$6

4%

12%

$15

$1

$9

$31

$7

$4

New ZealandGrowth & Innovation

+ Horizons for growth

+ Emerging export stars

+ New viable options

+ Mega-trends driving change

+ Innovation & new products 04

New Zealand firms continue to develop a range of innovative new meat products

48

THREE HORIZONS OF GROWTH

- Beyond its mature core export products (Horizon 1), New Zealand has both a strong range of emerging export stars (Horizon 2) and continues to innovate and produce new, viable export options (Horizon 3)

HORIZON 2: EMERGING EXPORT STARS

- In Horizon 2, New Zealand is building a range of emerging export products

- Two meat products – chicken (in various forms) and sausages –emerge as “growth stars” from an evaluation of ten years of product-level trade growth

- Chicken meat and processed product exports are growing and the product plays to New Zealand strengths as a safe, reliable meat supplier (free of diseases)

- In a virtuous circle, the growth of New Zealand chicken exports has triggered reinvestment in new packaging and new product innovation

- New Zealand sausage exports are growing, though they currently go primarily to Australia, Japan and the Pacific Islands

HORIZON 3: NEW, VIABLE OPTIONS

- In Horizon 3, New Zealand is creating and nurturing a wide range of viable options for future export success

- Four broad global consumer mega-trends are driving growth and new product development in the food & beverage industry

- New Zealand meat products succeeding on-shelf in export markets are aligned with these trends

- These trends drive new product development, through (1) packaging, (2) product, (3) category and (4) channel innovation; success, however, often comes down to implementation and execution

- New Zealand meat firms are delivering on…

- Packaging-driven innovation

- Product-driven innovation

- Category and channel innovation

Beyond its mature core (Horizon 1) export products, New Zealand has both a strong range of emerging export stars (Horizon 2) and continues to innovate and produce new, viable export options (Horizon 3)

Source: McKinsey & Co.; Coriolis analysis

THREE HORIZONS OF GROWTH FRAMEWORK: NEW ZEALAND MEAT INDUSTRYModel; 2017

49

− Defend and extend profitability of core business

− Efficiency & cost control− Process innovation− Scale− Supply chain

− Profits, margins, costs

− Beef− Lamb

HORIZON 1Mature export categories & products

HORIZON 2Build emerging export products

HORIZON 3Create viable export options

Strategic Focus

Key success factors

Key metrics

Example products

− Expand and grow emerging businesses & products

− Customer acquisition− Speed & flexibility− Execution− Resources/funding

− Market share, growth

− Deer (Venison)− Sausages− Chicken meat

− Develop and discover new options for growth

− Risk taking− Market insight− Business model innovation− Culture & incentives

− Milestones

− Prepared/processed meats

FOCUS OF THIS SECTION

In Horizon 2, New Zealand is building a range of emerging export products



50

Strategic Focus

Key success factors

Key metrics

Example products







− Beef− Lamb







− Milestones


Bubble size is proportional to export value in 2015; a bubble this size is US$1b

Two meat products – chicken (in various forms) and sausages – emerge as “growth stars” from an evaluation of ten years of product-level trade growth

Note: Data on this page is product level trade codes, not segment level aggregates as presented earlier; Source: UN Comtrade database (from NZ Customs data); Coriolis classifications and analysis

NZ MEAT EXPORT GROWTH STAR MATRIX: 10Y VALUE GROWTH VS. 10Y CAGR $ VS. VALUE IN 2015US$; CAGR on US$; 2005-2015

51

150 200

20%

950-50

30%

-100 0 100

25%

50

-5%

15%

10%

5%

0%

-10%

Beef, chilled offal

Beef, frozen bone-in

Beef, frozen offalSheep, chilled bone-in

Other beef

Sheep, chilled carcass

Chicken, whole frozen

Other poultry

$100

Chicken, frozen

Beef, chilled bone-in

Beef, frozen bonelessBeef, chilled boneless

Other processed

Prep/pres chicken meat

Deer/other species

Prep/pres beef offal

Sausages

Gelatin Sheep, frozen bone-in



Animal fatsSheep, frozen offal

Sheep, frozen carcass

10y ABS growth in export value; US$; b; 2005-2015

10y CAGR growth in

export value;

US$; 2005-

2015

Chicken meat and processed product exports are growing and the product plays to New Zealand strengths as a safe, reliable meat supplier (free of diseases)

52Source: UN Comtrade database (from NZ Customs data); photo credit (courtesy Tegel or fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

CHICKEN EXPORT VALUE BY MARKETUS$; m; 2005-2015

EXAMPLE: NZ PRODUCTS IN-MARKETSelect; Mar 2017

EXAMPLE: IN-STORE DISPLAY IN HONG KONGSelect; 2016

2006

Japan

Other Pacific

2007

United Arab Emirates

Other

20152005 2011

Other Asia

2009 20122010

Australia

20142008 2013

$0

$0$28

$41

$47

$0

$0

$0

$6

$0$44

$6$6$7

$0

$17

$0

$11

$0

$48

$5

$32

$12

$23

$34

$29

$6 $5

$33

$5

$12

$5

$6

$9

$9

$1

$6

$15

$5

$0

$1

$1

$0

$0

$0$1

$2$0

$1

$0

$0

$0$0 $0

$0

$0

$0

$0

$0

CAGR22%

AUSTRALIA AUSTRALIA

UAE AUSTRALIA

UAE HONG KONG

In a virtuous circle, the growth of New Zealand chicken exports has triggered reinvestment in new packaging and new product innovation

Source: various articles; various Tegel reports; Coriolis estimates (*); photo credit (courtesy Tegel or fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLE: TEGEL EXPORT VALUE OF CHICKEN PRODUCTS NZ$m; exports Select; Feb 2017

53

− Staff 1,550

− Exports to Pacific Islands (started 2003), Hong Kong (started 2006) Australia (started 2009)

− Affinity Equity Acquire Tegel for $600m from PEP

22001111

− May 2016 listed on NZX/ASX

− 2,300 staff

− Launch new brand imagery and packaging

− Key export market Australia $74m (Aldi, Costco),

− The Pacific Islands, UAE, Hong Kong

− Expand in UAE foodservice channel (Country Hill)

− New product initiatives for retail, foodservice and QSR

22001122 22001144 22001155 2200116622001133 22001177

− Developing Philippines (QSR), Japan (QSR)

− Market access to Bahrain and South Africa

− Access to fresh chicken market in Australia

− Installed new breast deboner

− Invested in new breeder farm

− Strong growth projections

− R&D facility commissioned to drive product innovation

− Invested $20m in new production line in Henderson plant -350t/wk processed at new plant, 75% exported

− Added 300 people at site jobs to total 2,000

− Expanded cooked range for QSR, battered nuggets, “Takeouts” and “Cuisine”

− Launched “Pure New Zealand Premium Chicken in HK”

− New sausage plant upgraded in New Plymouth (old Top Hat Foods premise)

− Tegel #2 sausage supplier

− Start exporting to UAE (Spinney’s)

− Tegel win Supreme Exporter Award

− Launch new value added Free range chicken “Tegel” brand

~$20*m ~$50*m ~$70*m $88m $102m~$60*m N/A

New Zealand sausage exports are growing, though they currently go primarily to Australia, Japan and the Pacific Islands

54Source: UN Comtrade database (from NZ Customs data); photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis

NEW ZEALAND EXPORT VALUE BY MARKET: SAUSAGESUS$; m; 2005-2015

EXAMPLE NEW ZEALAND PRODUCTS AVAILABLE: HELLERSSelect; Feb 2017

United Arab Emirates

Japan

20072006

Other

2005

Other Pacific

201220112010 2013

Australia

201520142008 2009

Other Asia

$4.7

$5.0$5.2

$6.5

$4.2

$4.3

$8.3

$3.8

$5.6

$2.2

$0.6

$5.6

$4.3

$0.7

$5.9

$6.9

$4.7

$4.8

$6.8

$6.0

$0.4

$0.9

$0.1

$0.5

$0.1

$0.0

$0.3

$0.0

$6.6

$0.3

$0.0$0.1 $0.1$0.7 $0.6

$0.0

$0.5$0.0$0.1 $0.7$0.1

$0.0

$0.0

$0.0$0.0

$4.1

$0.1

$0.1

$0.3

$0.3

$0.5

$0.1

$0.0

$0.5

$0.2

$0.3

$0.5

$1.5

$0.2

CAGR30%

In Horizon 3, New Zealand is creating and nurturing a wide range of viable options for future export success



55

Strategic Focus

Key success factors

Key metrics

Example products







− Beef− Lamb







− Milestones


Four broad global consumer mega-trends are driving growth and new product development in the food & beverage industry

Source: Boston Consulting Group; Datamonitor; Coriolis research and analysis 56

HEALTH & WELLNESS AUTHENTIC & RESPONSIBLE EASY & CONVENIENT SENSORY & INDULGENT

− Mid-high income countries experiencing an aging population

− Spread of Western lifestyle and Western diseases of affluence (e.g. diabetes)

− Ongoing waves of media hype around fad diets and new "superfoods"

− Food presented and viewed as both the problem and the solution

− Dramatic global shift to city living; 1800=3%, 1900=14%, 2015=50%; developed nations 75%+; 400 cities 1m+

− Loss of attachment to the land and food production

− Ongoing "rights revolution" now spreading to animals

− Ongoing waves of food scares around contamination, additives

− Dramatic increase in female participation in the workforce globally

− Consumers working longer hours to maintain relative income

− Work hours no longer just "9 to 5"; food needs at all times (e.g. night shift)

− Rise in snacking and on-the-go meal occasions

− Growing income polarisation into “haves and have-nots”

− Strongly emerging trend to premium (and discount) at the expense of the mid-market

• Emerging middle class across developing world driving consumption growth

• Incredible power of food and beverages in many social settings

− May be addressing specific conditions (e.g. weight management; cholesterol)

− May target a specific family member (e.g. grandparent)

− May reflect wider "healthy living" worldview

− May target specific foods perceived as high risk, unethical or visible (e.g. coffee, eggs)

− May target specific farming systems (e.g. grass-fed/free-range)

− May target a specific family member (e.g. child)

− May represent a need for an immediate solution (e.g. hungry)

− May represent an easy solution to a future challenge (e.g. children's lunch)

− May range from "everyday luxury" to an occasional "treat”

− May be used to demonstrate social status, taste or style (e.g. wagyu beef)

I am concerned about my health and am trying to live a healthy lifestyle

I am mindful of where my food comes from and how it is produced

I am trying to achieve work-life balance and need quick-and-easy meal solutions

I like to indulge in rich and sumptuous living beyond the bare necessities

FOUR CONSUMER FOOD & BEVERAGE MEGA-TRENDS

100% lamb

New Zealand meat products succeeding on-shelf in export markets are aligned with these trends

Source: photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis 57

“Select group of farmers”

“Long established”

Cook from frozen

“Expertly matured”

Natural fermentation

“Aalt’s traditional recipes”

Crafted in New Zealand

Pre-sliced

“Traditional European”

Ready-to-eat

Grass-Fed

Heart foundation 2 ticks

100% made of New Zealand

Long shelf-life packaging

London Singapore

H&W

A&R

A&R

E&C

S&I

H&W

A&R

E&C

E&C

S&I

H&W

H&W

A&R

E&C

A&R

“Hand prepared”S&I

Aged S&I

Aged 21 daysS&I

Supreme tendernessS&I

Cooks in1 15-20 minutesE&C

Graded A++ by our Master Graders S&I

High in iron; 10% of RDAH&W

These trends drive new product development, through (1) packaging, (2) product, (3) category and (4) channel innovation; success, however, often comes down to implementation and execution

Source: Coriolis

CONSUMER FACING INNOVATION IN THE FOOD & BEVERAGE INDUSTRY FROM TREND TO EXECUTIONSimplified model; 2017

58

CONSUMER FOOD & BEVERAGE MEGA-TRENDS

1. PACKAGING INNOVATION

NEW PRODUCT DEVELOPMENT

2. PRODUCT INNOVATION 3. CATEGORY INNOVATION 4. CHANNEL INNOVATION

Usage (e.g. ready-to-cook)

Shelf-life (e.g. vacuum-skin)

Convenience (e.g. dried)

Appearance (e.g. foil pack)

Flavour

Specifications/Recipes

New/different ingredients

Source/origin

Production system

Manufacturing process

Line extension

Creation of new category

New temperature state

Foodservice offer

Non-foods retail offer

Vending

Internet/Home delivery

Own retail stores

IMPLEMENTATION & EXECUTION

HEALTH & WELLNESS AUTHENTIC & RESPONSIBLE EASY & CONVENIENT SENSORY & INDULGENT

New Zealand meat firms are delivering on packaging-driven innovation

Source: various articles or reports; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis

SELECT EXAMPLES OF PACKAGING INNOVATION: NEW ZEALAND MEAT FIRMS2017

59

COMMENTARY

- Traditionally New Zealand produced transport-friendly frozen meat products (e.g. frozen lamb primals)

- Driven by location and use of sea freight (for cost competitiveness reasons)

- Emergence of new packaging forms, materials and technologies is ongoing globally

- Creating opportunities for long distance exports from New Zealand to key markets

- Further innovation in longer shelf-life, in particular, would enable further penetration of New Zealand produced consumer-ready products into new markets

- New packaging is often linked with new processing technologies

INSIGHTS

- Skin packaging technology- Easier view of shape and quality of meat- Reduce need for trays, soakpads and

cellophane- Affco invested $1m in new equipment- Allows range increases in value added meat

cuts- Focus on consumers vs wholesalers

INSIGHTS

- Tegel new modern product packaging design

- Appealing to younger audience- Product description stands out

INSIGHTS

- Heller’s Angus Pure meatballs- Individually packed meatballs, non-stick

packaging, maintains shape of ball- Convenient packaging and presentation

1. PACKAGING INNOVATION

New Zealand meat firms are delivering on product-driven innovation

Source: various articles or reports; photo credit (various firms or fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis

SELECT EXAMPLES OF PRODUCT INNOVATION: NEW ZEALAND MEAT FIRMS2017

60

- Alliance Group, Headwaters New Zealand and MPI (PGP) program

- Producing a carcass lower in saturated fat, higher in polyunsaturated fat and packed with omega-3 oils

- Investing $25m over 7 years

- Targeting New Wealth with High Health -Tapping into increasing demand for premium and healthy foods adding value to exports

- Lamb range in line with health and wellness plus sensory and indulgent

INSIGHTS

- Tegel new free range products and ingredients claiming:

- Animal welfare launch “NZ raised Free Range”

- Premium – 100% chicken breast- Healthy – “No added hormones”- Superfood – quinoa crumbed

- Appeal to quality-conscious consumers

- “Meal Maker” range of ready to eat products in line with convenience mega-trend

- In-line with health and wellness mega-trend

INSIGHTS

- Silver Fern Farms New Zealand’s largest meat company

- “Flat iron aged steak” adding to the range of premium meats featuring “Eating Quality mark, grass-fed, aged

- Reinventing this traditionally lower grade of meat

- +40% of prime beef being sold chilled and +30% of lamb sales

INSIGHTS

2. PRODUCTINNOVATION

COMMENTARY

- Large brands are innovating in the drive to increase value added product lines

- Innovative products target a gap in the market (e.g. premium meat products, demand for convenient snacking)

- Innovation is supported in New Zealand by government supported programs (e.g. MPI’s PGP programs and NZ Food Innovation Network facilities)

- Innovation often enabled by availability of new technology or science

- Emergence of new packaging forms, materials and technologies (e.g. aseptic pouch) is ongoing globally

New Zealand meat firms are delivering on category and channel innovation

Source: various articles or reports; photo credit (various firms or fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis

SELECT EXAMPLES OF CATEGORY & CHANNEL INNOVATION: NEW ZEALAND MEAT FIRMS2017

61

Coastal Spring Lamb Atkins Ranch appealing to high value audience

Magill’s Butchery slow-cooked pulled beef range Silver Fern “Reserve” range

- Coastal Spring lamb founded by co-owners Richard and Suze Redmayne

- Produce a total of 90,000 lambs throughout the year from 12 farm suppliers for domestic and eight export markets

- Strength in provenance and traceability “Growers Story –“Our Families” “Our Farms”; able to track the meat back to the farm via the QR code

- Multiple awards in New Zealand Food Awards 2016

3&4. CATEGORY & CHANNEL INNOVATION

- Silver Fern Farms reserve range- differentiating a premium beef offer - only the finest cuts included in the program

- Featuring :- “Eating Quality System” stamp ( measures seven

scientific criteria to predict the eating quality) - 100% Made of New Zealand- Grass fed- Hormone free- No antibiotic feeding

- Atkins, owned by Progressive Meats, sources lamb from over 100 families; primary processing in NZ plant and shipped to USA for further processing

- Atkins Ranch promote ”Pasture raised Lamb”, “100% Grass Fed” hormone free, antibiotic free, traceable back to farm (FarmIQ); Non-GMO accreditation in USA (2016) withthird party verification

- Certified for GAP step 4 sheep program (2016); gives consumers confidence animals are raised in accordance with strict animal welfare standards

- Exports to Whole Foods Market (USA) plus Canada, markets with high animal welfare requirements

- Magill’s is a family owned “Premier Artisan Butchery” producing a range of Prime beef, lamb, pork and poultry based in the Waikato

- Company was looking for a way to add value to the sub-primal cuts. Developed slow-cooked pulled ready to eat beef (reheat in 3 minutes)

- ‘Haute cuisine’ presentation and packaging

- Slow-cooked pulled Hereford beef NZ Food Awards 2015 – Chilled Winner and Supreme Winner

- Extended range nationally and into wholesale, and foodservice

New Zealand beverage firms are supported with access to advice, research facilities and pilot plants across five locations

Source: www.foodinnovationnetwork.co.nz; Coriolis 62

NZFIN

LOCATION FOCUS CAPABILITIES

Processed/FMCG foods Space/equipment for hireExport registrations ~1000 kg/shift

- Extrusion & Milling/Blending- Liquids/Beverage - High pressure processing- Freeze drying- General processing- Multiple packaging styles- Product development kitchen

Dairy & Infant Formula~500 kg/hourVegetable

- Spray dryer- Evaporator- Other dairy equipment- Packing- Powder (vegetable)

All Food and Beverage Specialist expertise- business development - direct to other facilities

DairyFruit & vegetablesAll Food and Beverage

- Same equipment as Manukau (1/5th scale)- Same equipment as Waikato (1/20th scale) - Post harvest technologies- Meat and small goods pilot plant- Located at Massey University

Processed/FMCG FoodsSpace/equipment for hireExport registrations 20-200L batch size

- Mixing /Blending/Emulsifying- Extrusion- Freezing/Cooking/Baking- General Processing- Product Development Kitchen- Technical and Business development

expertise

New ZealandMeat Firms

+ Enterprises

+ Employment

+ Production share

+ Turnover

+ Ownership

+ Foreign investors

+ Acquisitions

+ Investments

+ Firm Profiles 05

New Zealand has a strong and robust meat processing industry that continues to attract investment

64

OVERVIEW

- The number of meat processing firms in New Zealand is growing and industry efficiency is improving, particularly in poultry

- New Zealand has a large and robust meat products industry with a wide range of participants of various sizes

KEY METRICS

- Employment in meat processing in New Zealand is consolidating in red meat (fewer sheep), while growing in poultry and cured meats; poultry stands out for maintaining or improving efficiency

- Meat processing employs over 30,000 people spread across the country

- While meat processing employment is spread across a large number of firms, the top three meat processors account for over 50% of industry employment and the top eleven for 85%

- New Zealand has a reasonably consolidated meat industry, with a range of strong firms competing; however there appear to be further consolidation opportunities, particularly in lamb and beef

- Lamb processing share continues to change across the industry

- Beef processing share continues to change across the industry

FIRMS

- Silver Fern Farms continues to be the largest meat firm in New Zealand by turnover

- The New Zealand meat industry has an almost even split of foreign and private ownership, while the largest two firms are farmer co-operatives

INVESTMENT

- The New Zealand meat industry has attracted international investment, primarily from China and Japan

- New foreign firms continue to invest in the New Zealand meat industry

- Almost $600m of acquisitions occurred over the last 18 months; overseas firms are looking to secure New Zealand beef and lamb and strengthen their global agrifood position

- Firms are continuing to invest in plant and equipment

- New Zealand meat firms are also investing in new and improved marketing

0

2,000

4,000

6,000

8,000

10,000

12,000

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

Cured meats & smallgoods

2007

10y ABS

Red meat processing

2005 2006

10y CAGR

20132009 201220112010 20142008 2015

Poultry processing

276

3.4%

270

+3

+66

-6

270264

291

270

258

318

270

-2.5%

0.5%

255

267

234

27

192

213

24 2124 24

174177

168186

189186183 183

24

63 6363 63 60 6360 60

18 1824 24

60 60

21

60

The number of meat processing firms in New Zealand is growing and industry efficiency is improving, particularly in poultry

65

NUMBER OF MEAT PROCESSING ENTERPRISESEnterprises; 2005-2015

AVERAGE TONNES/MEAT PROCESSING ENTERPRISET/entity; actual; 2000-2015

AVERAGE TONNES/MEAT PROCESSING EMPLOYEET/employee; actual; 2000-2015

Source: Statistics NZ business demographics database; Coriolis analysis

CAGR2.2%

Poultry

Red meat

35

40

45

50

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

Poultry

Red meat

New Zealand has a large and robust meat products industry with a wide range of participants of various sizes

66

MULTI SPECIES PROCESSORS PROCESSED – BABY FOOD/MEAT BASED MEALS/PIES

VALUE ADDED MEAT PRODUCTSMARKETERS AND EXPORTERS

PROCESSED – BEEF JERKY

PROCESSED – PET FOOD

DEFINED PROCESSED FOODSDEFINED MEAT

PORK BEEF

LAMB

SPECIES SPECIFIC PROCESSORS

POULTRY

Employment in meat processing in New Zealand is consolidating in red meat (fewer sheep), while growing in poultry and cured meats; poultry stands out for maintaining or improving efficiency

67

TOTAL EMPLOYMENT BY MEAT PROCESSING ENTERPRISESHeadcount; as of Feb; 2000-2015

AVERAGE EMPLOYEES/PROCESSOR Head/unit; 2000-2015

AVERAGE HEAD KILL/PROCESSOR EMPLOYEECows/head; 2000-2015

Source: Statistics NZ business demographics database; Coriolis estimates & analysis

Cured & SG

2007

10y ABS

Red meat proc.

2005 2006

10y CAGR

20132009 201220112010 20142008 2015

Poultry proc.

29,090

-0.7%

29,510

+300

-1,800

+100

29,750

31,640

29,460

30,860 31,06030,660

30,320

0.3%

1.7%

32,060

30,870

24,880

3,740

24,300 23,880

3,370 3,3903,610 3,410

26,070 26,72026,680

25,680

23,790 24,28026,020 25,540

3,380

1,400 1,6301,550 1,460 1,760 1,9401,640 1,690

3,760 3,8203,670 3,590

1,570 1,580

3,840

1,640

CAGR-0.4%

0

50

100

150

200

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

Poultry

Red meat

Cured & SG

0

5,000

10,000

15,000

20,000

25,000

30,000

0

200

400

600

800

1,000

1,200

1,400

1,60020

00

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

Poultry (R axis)

Red meat (L axis)

Bubble size is proportional to employment in 2015; a bubble this

size is 1,000 people

Meat processing employs over 30,000 people spread across the country

68Source: Statistics NZ business demographics database; Coriolis analysis

MEAT PROCESSING EMPLOYMENT BY REGIONHeadcount; as of Feb; 2016

10Y CHANGE IN MEAT PROCESSING EMPLOYMENT BY REGIONABS; CAGR; 2016 total; Headcount; as of Feb; 2006 vs. 2016

North Island South Island

12,68317,620

Southland4,050

Taranaki2,350

Mana/Wanga/Well4,400

Waikato3,650

BOP/Gisb/HB3,710

Canterbury5,200

Otago2,850

Auckland/Northland3,510

Other S/I.583

1,000-4%

500-1,000 -500 0

-3%

2%

3%

4%

1%

-2%

-1%

0%

-1,500

Otago

Waikato

Canterbury

1,000

Auck/North

Taranaki

Mana/Wanga/Well

Other S/I.

Southland

BOP/Gisb/HB

10Y ABS

10Y CAGR

While meat processing employment is spread across a large number of firms, the top three meat processors account for over 50% of industry employment and the top eleven for 85%

SFF 7,000 23%

AFFCO, 4,800 , 16%

Alliance, 4,700 , 15%

ANZCO, 3,000 , 10%

Progressive1,900 6%

Other red meat, 3,400 , 11%

Tegel 2,200 7%

Ingham 1,000 3%

Brinks 400 1%

Turks 220 1%

Hellers 600 2%Premier 300 1%

Other cured & proc.1,040 4%

69Source: SNZ business demographics (detailed industry for enterprise units); various firm websites; published articles; Coriolis analysis

NUMBER OF PEOPLE EMPLOYED: NZ MEAT MANUFACTURING BY KEY FIRM People; 2016

− Figures are at peak employment and include seasonal workers

− Talley’s is an estimate (from sum of individual site employee figures across meat operations)

− Progressive Meats is an estimate (from sum of individual site employee figures across meat operations)

COMMENTS/NOTES

TOTAL = 30,660

New Zealand has a reasonably consolidated meat industry, with a range of strong firms competing; however there appear to be further consolidation opportunities, particularly in lamb and beef

SFF21%

Alliance27%

AFFCO15%

ANZCO10%

Taylor Preston6%

Hawkes Bay Meat9%

Blue Sky3%

Wilson Hellaby2%

Crusader2%

Davmet1%

Lean Meats2%

Other2%

70Note: The NZ Meat Board allocates access to quota market on the basis of production history for the three prior seasons; the data here can therefore be seen as a moving average for the three previous years; Source: New Zealand Meat Board EU Sheepmeat and Goatmeat TRQ Allocation data; Coriolis estimates & analysis

NZ LAMB PRODUCTION SHARE% of production [see note]; 2016

NZ BEEF PRODUCTION SHARE% of production [see note]; 2016

NZ POULTRY PRODUCTION SHARE% of production; 2016

SFF30%

Alliance9%

AFFCO19%

ANZCO19%

Wilson Hellaby6%

Greenlea9%

UBP5%

Taylor Preston2%

Other1%

Tegel55%

Ingham38%

Brinks5%

Turks1%

Other1%

CORIOLIS ESTIMATES

Lamb processing share continues to change across the industry

Note: The NZ Meat Board allocates access to quota market on the basis of production history for the three prior seasons; the data here can therefore be seen as a moving average for the three previous years;Source: New Zealand Meat Board EU Sheepmeat and Goatmeat TRQ Allocation data; Coriolis analysis

NEW ZEALAND LAMB PRODUCTION MARKET SHARE% of production [see notes]; 2002-2016

71

2008

Alliance

20062003

Affco

Other

2005

Lean Meats

2007 20132004 2014

Wilson Hellaby

2012

15y ABS

Blue Sky

SFF

2001 2011

Taylor Preston

ANZCO

2010

Crusader

2009

Hawkes Bay Meat

2015

Davmet

20162002

1%

100%

0%

23%

0%

23%

1%

100%

1%

1%

23%

3%

100%

16%

3%

16%

3%

0%

1%1% 1%1%1%

3%

21%

3%

22%

0%

100%

16%

3%

100%

3%

100%

3%1%

100%

2%

22%

2% -4%2%

23%

4%6%

100%

20%

5%

100%

4%2%

+9%

-1%

+2%

+1%+1%+1%-3%

+1%

-18%

2%

+1%

+0%

+6%

+4%

34%

3%

100%

2%

26%

100%

2%2%

23%

2%

100%

2%

25%

2%

100%

28%

6%11%

31%32%

6%

100%

6%6%

100%

2%

29%

100%

11%7%

11%

5%1%

5% 5%6%

6%

11%

12% 13%

6%6% 6%

1%1%

1%

13%

11%

3%

27%

9%

3%

28%

3%

3% 3%

11%

11%

8%6%6%

8% 8%8%

11%

12%

9% 9%9%

4%

10%

4%

4%

9%9%6% 7%5%4%

8%

4% 4%7%

15%

12%

5%4%4%

5% 5%5%

12% 12%14%

4%4%

4%5% 5%5%

13%

3%

2% 2%2%

0%

2%

1%0%

2%2%

2%

26%26%

2%2%

0%

2% 2% 2%1%

1%1%

1%

1%

1%1%

1%1%

1%1%

1%

1%

1%

1%1%

1%1%2%

30%30%

1%

30%

2%2% 2%1% 3%

29% 29%

3%

29%

1% 3% 3%2% 2%

27%27%

2%

26%

1%

1% 1% 2%2%

27%28%

2%

27%

2%2%

2%

Beef processing share continues to change across the industry

Note: The NZ Meat Board allocates access to quota market on the basis of production history for the three prior seasons; the data here can therefore be seen as a moving average for the three previous years; Source: New Zealand Meat Board US Beef TRQ Allocation data; Coriolis analysis

NEW ZEALAND BEEF PRODUCTION MARKET SHARE% of production [see notes]; 2002-2016

72

Affco

20102006 20132008

Greenlea

2001 20122007

15y ABS

2009 2016

ANZCO

2002

Taylor Preston

UBP

2003 20112005

SFF

2015

Wilson Hellaby

Other

2004 2014

Alliance

7%

100%

5%5%

5%

100%

5%

100%

5%3%

5%

6%

100%

6%

100%100%

+3%

2%

+3%

+5%

2%

+0%

3%5%

-5%2%-1%

1%1% 1% 1% 1%1%

+1%

1%

+3%

-9%

1%100%

8%

100%100%

7%8%8%

100%

7% 8% 8%

100%100%

6% 5% 6%

100%

6%7%

100%100%100%

6%

5%

9%9%9% 9% 9%9%9%8%

6%6%5%

6%

7%6%

6%

18%18%18% 17% 19%17%17%18%

17%17%18%

17%

19%19%

19%

31%27%26%

30% 30%30%30%27%

6%6%7%

33%28%

30%31%

4%4%4%

4%

5%

4%4%

4%

29%29%

30%

27%

4%4%3%

7%7%6%

7% 8%7%7%6%

2%2%2%

6% 6%5%5%

5%5%4% 5% 5%5%5%

4%

9%9%8%9%

4%4%5%

20%20%20% 19% 20%20%20%20%

16%14%

19%

16% 18%18%17%

3%3%2% 3% 2%3%3%2%

3%

19%19%

3%2%

2%3%

Silver Fern Farms continues to be the largest meat firm in New Zealand by turnover

$2,147

$1,450

$1,362

$1,200

$600

$582

$400

$385

$378

$280

$240

$240

SFF

ANZCO

Alliance

AFFCO

Progressive + subsidiaries

Tegel

Wilson Hellaby

Inghams

Greenlea

Taylor Preston

Hellers

Brinks

✝

* Pro rata of 15 month revenue in annual report; ✝estimate range of $500-700m. Source: various company annual reports; NZCO; Coriolis estimates and analysis

ANNUAL TURNOVER BY KEY FIRMS: NEW ZEALAND MEAT INDUSTRYNZ$; m; FY2016 or as available

73

Actual from AR or firm

FY16 estimate from available data

INCLUDES CORIOLIS ESTIMATES

The New Zealand meat industry has a wide range of owners; the largest two firms are farmer co-operatives

Private55%

Foreign25%

Public 3%

Farmer Co-Op17%

Source: New Zealand Companies Office; various annual reports; Coriolis estimates and analysis

ESTIMATED PROPORTIONAL SHARE OF TOTAL INDUSTRY TURNOVER BY OWNERSHIP% of turnover/sales; 2016

Partially foreign -owned

Fully foreign-owned

73

The New Zealand meat industry has attracted international investment, primarily from China and Japan

1. via Shanghai Maling Aquarius 75

Shenxzen Mingsheng Duling

South Island meat processing company

Heilongjiang Binxi Cattle Industry Co (CN) – Processing services

Lean Meats Oamaru plant remaining shares

Japan’s #2 BH&SG company (revenue US$6b)

Increases share to 65% of major NZ meat company

Listed Chinese SOE1 food group (revenue US$11b)

50% of NZ’s #1 meat processing company

Large Chinese commercial holding company

New foreign firms continue to invest in the New Zealand meat industry

76

2011 and earlier 2012-2014 2015+

Over $300m of acquisitions occurred over the last 18 months; overseas firms are looking to secure New Zealand beef and lamb to strengthen their global agrifood position

* Also reported as NZ$267m; Source: Coriolis 77

- 50% partnership in NZ’s leading red meat processor; securesupply of New Zealand red meat; increasing NZ agricultural investments; Dec 2016

- Increase share from 48% to 65%; Jun 2015

- Acquire Invercargill based meat processing company; supply of New Zealand meat for export markets

- Feb 2017

- Lean Meats sold remaining shares to Binxi (25% acquired in 2014); 98% product exported; secure supply and processing of New Zealand meat for export to Binxi Foods retail stores and McDonalds (CN); Dec 2015

$40m

$261m*

$13m

N/A

+$314m

Firms are continuing to invest in plant and equipment

78Source: Annual reports, articles, interviews

INCREASING SCALE & EFFICIENCYEXTENDING VALUE ADDED CATEGORIES

Tegel $24m - Upgraded and invested in equipment and plant(e.g. breast deboner)

Alliance $15m - Invested in robotic primal/middle cutters (reduce costs, increase efficiencies)

Alliance N/A - Advanced world class deer processing facility at Lorneville plant, operational in 2018

Alliance $2m

$0.5m

- Commissioned X-ray machine for lean meat measurements (2 plants)

- Built new petfood facility, offal collection upgrade

SFF $7m - Invested in new venison processing and cold chain in Pareora plant

Ingh N/A - Increased automation at plant and building a second hatchery and breeder facility

Tegel $3.5m - Relaunched brand and developed new products

AFFCO $1m - Developed new retail ready skin packaging technology, support move into value added retailing

SFF N/A - Developed numerous value added products to export to China; discussing new value added plant

SECURING SUPPLY

$6-8m - Announced upgrade to Oamaru Meats (formerly Lean Meats) facility over the next two years

New Zealand meat firms are also investing in new and improved marketing

Source: various articles or reports; photo credit (Atkins, Alliance, Tegel or fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis 79

New Brands or Rebranding New Packaging Advertising & Promotion

New Zealand Meat Firm Profiles

Note: Firms are listed in alphabetical order; some firms appear in multiple sector reports; inclusion of profile in this report does not necessarily mean the firm’s metrics are included in the sector’s analysis

05

81* Estimate; Source: various companies annual financial statements (NZ Companies Office or company website); various press releases and news articles; Coriolis analysis

A VERKERK LTD

Terry PiersonChief Executive Officer

DESCRIPTION: Producers of European continental smallgoods and meat products; supplies supermarket, foodservice and convenience channels

KEY PRODUCTS: Salami, continental sausages, gourmet meats, bacon, ham, protein snacks

OWNERSHIP: NZ; Private (Sundstrum, Mills, Verkerk)

COMPANY NUMBER: 125112

ADDRESS: 94 Vagues Road, Papanui, Christchurch

PHONE: +64 3 375 0560

WEBSITE: www.verkerks.co.nz

YEAR FORMED: 1957

STAFF EMPLOYED: 120

REVENUE: $70-80m* (FY14)

COMPANY HIGHLIGHTS: Currently launching new range of protein snacks

ALLIANCE GROUP

David SurveyorChief Executive Officer

DESCRIPTION: 100% NZ farmer owned and supplied meat processor and exporter of lamb, beef and venison to 65 countries; 5,000 farmer shareholders and 8 processing sites; world’s largest processor and exporter of sheep meat; “Pure South” premium brand

KEY PRODUCTS: Lamb, sheep, beef and venison meat cuts, by-products and co-products; 1,600 products

OWNERSHIP: NZ; Co-operative (5,000 farmers)


ADDRESS: 51 Don Street, Invercargill

PHONE: +64 3 214 2700

WEBSITE: www.alliance.co.nz; www.puresouth.com

YEAR FORMED: 1948

STAFF EMPLOYED: 4,700

REVENUE: $1,362m (FY16)

COMPANY HIGHLIGHTS: New strategy to maximise operational efficiency and capture more value from market in‘15; $15m investment in robotic primal/middle cutters online ‘16; new “Pure South” product lines for China, India ‘16; cobranding with GrandFarm; invested $500,000+ to upgrade offal collection in ‘17; $10.6 million processing upgrade at Dannevirke in ‘17

ANZCO FOODS

Peter ConleyChief Executive Officer

DESCRIPTION: Vertically integrated farming and manufacturing facilities; leading exporter of beef and sheep meat over 11 sites; 3 retail stores, ‘Westmeat’ and innovation centre; exports to over 80 countries; 8 offshore offices

KEY PRODUCTS: Beef, lamb, sheep meat, healthcare solutions, offal and co-products, prepared and gourmet foods

OWNERSHIP: Japan; Public (Itoham 65%, Nippon Suisan Kaisha 17%); NZ; Private (Harrison 10%, JANZ 8%)


ADDRESS: 1 Sir William Pickering Drive, Harewood, Christchurch

PHONE: +64 3 358 2200

WEBSITE: www.anzcofoods.com; www.westmeat.co.nz

YEAR FORMED: 1984/1995


REVENUE: $1,450m (CY16)

COMPANY HIGHLIGHTS: Acquired Itoham’s half stake in Five Star Beef feedlot to take full control in ’14; increased foreign owership to 82% approved in ‘15; plans to expand to meet growing Asian demand; continued investment into value added products, e.g. range of Angel Bay, Aria Farm, Nourish, Butcher’s Hook etc. in ‘16

BINXI FOODS NZ LTD

Richard ThorpChief Operating Officer/Director

DESCRIPTION: NZ subsidiary of Chinese vertically integrated beef business, feedlots, meat processing plants, fertiliser production and 100 retail stores; processing through Oamaru Meats Limited (OML), formerly Lean Meats; source from over 500 farms; exports to 50 countries

KEY PRODUCTS: Beef, lamb, veal, skins, pelts

OWNERSHIP: China; Private (Heilongjiang BinxiCattle Industry Co. Ltd)


ADDRESS: 7 Redcastle Road, Oamaru North,Oamaru

PHONE: +64 3 433 0078

WEBSITE: www.bxfoods.co.nz

YEAR FORMED: 2014

STAFF EMPLOYED: 200

REVENUE: $80m

COMPANY HIGHLIGHTS: Acquired 100% of Lean Meats Oamaru in ‘15; looking to invest $6-8m from ‘16-’18; acquired land next to Oamaru Meats for head office and staff accommodation, $580,000 in ‘17


BLUE SKY MEATS

Todd GraveChief Executive Officer

DESCRIPTION: Processor of lamb, veal, goat based in Invercargill; “Horizon” and ‘Star” international brands; sheep processing plant in Morton Mains near Invercargill, capacity of 1.3m sheep/year; cattle processing plant in Gore, 35,000 cattle/year; Horizon Meats marketing subsidiary

KEY PRODUCTS: Lamb, beef, venison, veal, goat

OWNERSHIP: NZ; Public Unlisted (Lowe, Richardson, Zheng, Binxi Foods, others)


ADDRESS: 729 Woodlands-Morton Mains Road, Invercargill

PHONE: +64 3 231 3421

WEBSITE: www.bluesky.co.nz

YEAR FORMED: 1986

STAFF EMPLOYED: 350

REVENUE: $124m (FY16)

COMPANY HIGHLIGHTS: Acquired Clover Meats, sales of~$12m, for $3m Dec ’14, renamed to Blue Sky Meats (Gore), adding beef and venison processing capabilities; built chilled meat facility at Morton Mains plant in ‘15; NZ Binxi (Oamaru) Foods, subsidiary of Heilongjiang Binxi Cattle Industry Co withdrew $25.3m, 100% takeover bid in Mar ‘17

CABERNET FOODS

Lyndon EvertonManaging Director

DESCRIPTION: Meat wholesalers, processor, marketer; processes 120,000 sheep, 10,000 cattle, 30,000 pigs and others to distributors, processors and retailers throughout NZ annually; meat processing plants in Gladstone (Kintyre Meats), Wellington (TPL), Hastings (PML), Waikato

KEY PRODUCTS: Carcass and boxed meat; sheep, beef, pork, other under “Pirongia”, “Coldstream” “Hereford Prime”brands

OWNERSHIP: NZ; Private (Everton, Richards)


ADDRESS: 530 Gladstone Road,Carterton

PHONE: +64 6 372 7882

WEBSITE: www.cabernet.co.nz

YEAR FORMED: 2002

STAFF EMPLOYED: 55

REVENUE: $15-20m (FY16)

COMPANY HIGHLIGHTS:

COASTAL LAMB TRADING

Richard RedmayneManaging Director

DESCRIPTION: Producer/marketers of lamb; 20 family farm suppliers in NI; retail and food service; exports to Hong Kong, Macau, China, Vietnam, Singapore, Thailand, Dubai, Belgium, Rarotonga; 30,000 lambs for domestic, 60,000 for export; Ovation toll processing for export, AFFCO domestic

KEY PRODUCTS: Lamb; Coastal Spring Lamb and Coastal Lamb

OWNERSHIP: NZ; Private (Redmayne)


ADDRESS: Tunnel Hill, Beach Road, Turakina,Wanganui

PHONE: +64 27 483 3660

WEBSITE: www.coastalspringlamb.co.nz; www.coastallamb.com

YEAR FORMED: 2010

STAFF EMPLOYED: 2


COMPANY HIGHLIGHTS: Started exporting in ‘15,60,000 lambs; won Supreme Winner award andtwo other category wins at NZ Food Awards in ’16;cobranding working relationship with Heller’s,starting with Coastal Lamb Hotpot sausages

COLONIAL BACON & HAM CO

Robert CorbettManaging Director

DESCRIPTION: Bacon and ham manufacturer; retail and foodservice

KEY PRODUCTS: Bacon, ham

OWNERSHIP: NZ; Private (Corbett)


ADDRESS: 109 Cavendish Drive, Manukau,Auckland

PHONE: +64 9 278 3420

WEBSITE: www.colonialbacon.co.nz

YEAR FORMED: 1998

STAFF EMPLOYED: 30

REVENUE: $15-20m*

COMPANY HIGHLIGHTS:


CRUSADER MEATS NEW ZEALAND LTD

John RamseyManaging Director

DESCRIPTION: Processor and exporter of lamb, sheep, venison and goat; LANZ Supreme, LANZ Finest, King Country Meats brand; exports to Europe, UK, USA, Canada, Japan, Mexico, Pacific Rim

KEY PRODUCTS: Lamb, mutton, venison, goat, pelts, wool

OWNERSHIP: NZ; Private (Ramsey)


ADDRESS: 979 State Highway 30, Benneydale, Te Kuiti

PHONE: +64 7 878 7077

WEBSITE: www.crusadermeats.co.nz

YEAR FORMED: 1967

STAFF EMPLOYED: 170

REVENUE: $90-$100m* (FY14)

COMPANY HIGHLIGHTS:

DAVMET NEW ZEALAND LTD

Ian McGarvieManaging Director

DESCRIPTION: Lamb broker and wholesaler; export chilled and frozen lamb cuts; Hawke’s Bay Natural Lamb brand; toll processed by Progressive Meats

KEY PRODUCTS: Chilled lamb cuts, frozen lamb cuts

OWNERSHIP: NZ; Private (Francis, McGarvie)


ADDRESS: 74 Station Street, Napier

PHONE: +64 6 835 8288

WEBSITE: www.davmet.co.nz

YEAR FORMED: 1989

STAFF EMPLOYED: 8


COMPANY HIGHLIGHTS:

FIRST LIGHT FOODS

Gerard HickeyManaging Director

DESCRIPTION: Producers and marketers of venison and grass fed wagyu beef; sales team in NZ, USA & UK; 200 farmer suppliers; out sources processing to third party operators

KEY PRODUCTS: Wagyu beef, venison

OWNERSHIP: NZ; Private (Hickey 64%, Ross 25%, Evans 11%)


ADDRESS: 211 Market St, South Hastings

PHONE: +64 6 878 2712

WEBSITE: www.firstlight.farm

YEAR FORMED: 2004

STAFF EMPLOYED: 30


COMPANY HIGHLIGHTS: Recent company rebrand; NZ FMCG product launch in ’16; First Light Wagyu and LIC partnership as part of a PGP program to increase quality of dairy beef in ’17

FIVE STAR PORK (NZ) LTD

Kevin MonksActing General Manager

DESCRIPTION: Supplier of fresh pork to food service across upper North Island; specialist pork only cutting room

KEY PRODUCTS: Whole and split carcasses, primal and custom cuts

OWNERSHIP: NZ; Private (37 pig farmer suppliers)


ADDRESS: 3 Andromeda Crescent, East Tamaki,Auckland

PHONE: +64 9 253 9001

WEBSITE: www.fivestarpork.co.nz

YEAR FORMED: 1999

STAFF EMPLOYED: 21

REVENUE: N/A

COMPANY HIGHLIGHTS:


FRESH PORK NEW ZEALAND

Lynden GlassChief Executive

DESCRIPTION: Nationwide specialist in NZ pork processing and marketing, one third of NZ pig production; vertically integrated with operations in Timaru, Burnham, Christchurch, Levin and Auckland

KEY PRODUCTS: Pork carcass to consumer ready packs; “Freshpork” wholesale, “Freedom Farms”, “Bees Knees”,“Perfect Pork” consumer brands

OWNERSHIP: NZ; Private (Glass)


ADDRESS: Unit A2, 92 Russley Road,Christchurch

PHONE: +64 348 8525

WEBSITE: www.freshpork.co.nz; www.perfectpork.co.nz

YEAR FORMED: 1985

STAFF EMPLOYED: 160


COMPANY HIGHLIGHTS: State of the art packaging technology in place, re-investment in processing facilities at Timaru and Levin plants in ‘17

GREENLEA GROUP

Tony EganManaging Director

DESCRIPTION: Meat processor based in the Waikato, two plants in Morrinsville & Hamilton;farm operations; exports 90% to 40 countries, primarily USA, Korea, Indonesia, Canada, Malaysia, Taiwan; 100% grass fed and antibiotic and hormone free

KEY PRODUCTS: Beef, veal, offal, plasma, serum

OWNERSHIP: NZ; Private (Egan)


ADDRESS: Greenlea Lane, Hamilton,Waikato

PHONE: +64 7 957 8125

WEBSITE: www.greenlea.co.nz

YEAR FORMED: 1992

STAFF EMPLOYED: 450

REVENUE: $378m (‘16)

COMPANY HIGHLIGHTS: Investment in Morrinsville, $10m & Hamilton plants in ‘14, added new 900m2 coolstore to support expansion plans; expanded into high value blood serum in ‘14; strong rise in bull beef to USA and China in ‘15, process 55,000 bulls a year; invested $1m in new value added processing in ‘16, stronger retail ready focus

HELLERS LTD

John McWhirterChief Executive Officer

DESCRIPTION: Bacon, ham and smallgoods manufacturer; 600t/week manufacturing; Santa Rosa Poultry operation; ready meals via “My Main Course” brand plus sauces and marinades via new acquisition of “Flavour House”; exporting sausages to Australia

KEY PRODUCTS:: Bacon, ham, smallgoods (Hellers); poultry: meats, deli and retail ready (Santa Rosa); sauces, marinades, jams, vinegars (Flavour House)

OWNERSHIP: NZ; PE (Rangatira Ltd 62%); NZ; Private (Heller, Harris)


ADDRESS: 67 Main North Road, Kaiapoi, Canterbury

PHONE: +64 3 375 5017

WEBSITE: www.hellers.co.nz; www.santarosa.co.nz;www.rangatira.co.nz

YEAR FORMED: 1988

STAFF EMPLOYED: 600+


COMPANY HIGHLIGHTS: Acquired Goodman Fielder’s meat business, Kiwibacon, Brooks, Hutton, Sizzlers & Milano, in ‘14; acquired Santa Rosa Poultry brands in Jun ‘15; launched ‘My Main Course’ range of ready made meals in late ’16; launch vegetarian product in ‘16; acquired GramartFoods ‘Flavour House’ after 5 year relationship in Jan ’17, 12 staff

INGHAMS ENTERPRISES NZ

Adrian RevellManaging Director NZ

DESCRIPTION: Fully owned subsidiary of Inghams Australia, #2 chicken processor in NZ; vertically integrated with ‘Mega’ primary plant & 2 further processing plants; distribution hubs in North & South Island; 37 broiler farms, 14 breeding farms separate dairy and horse feed businesses

KEY PRODUCTS: Chicken meat (whole, cuts, deli, ready meals; fresh and frozen), Waitoa Free Range chicken, high end dairy nutrition & horse feed

OWNERSHIP: AU; Public (ASX:ING) (TPG Private Equity (USA; PE), others)


ADDRESS: 624 Waihekau Road, Ngarua Waitoa

PHONE: +64 7 884 6549

WEBSITE: www.inghams.co.nz

YEAR FORMED: 1990



COMPANY HIGHLIGHTS: Profit of $25m in ‘16;transition to Ross 308 chicken stock in NZ; TPG $1.2b IPO on ASX in Nov ‘16; increased automation at Te Aroha facility in ‘16; increasing capacity over ’17/’18 with second hatchery, new breeder facilities


INTEGRATED FOODS LIMITED

Gary AlexanderManaging Director

DESCRIPTION: Vertically integrated lambprocessor; Integrated Foods manages 16,000ha of farmland; Fresh Meats NZ is processing division; process 200,000 lambs; Integrated Foods Marketing does sales and export; Lamb Club brand; Mangatu Blocks agribusiness division

KEY PRODUCTS: Lamb

OWNERSHIP: NZ; Maori Corp (Mangatu)


ADDRESS: 266 Chiders Road,Gisborne

PHONE: +64 6 869 0952

WEBSITE: www.mangatu.co.nz; www.freshmeatsnz.co.nz; www.lambclub.co.nz

YEAR FORMED: 1989

STAFF EMPLOYED: 130

REVENUE: $25-30m*

COMPANY HIGHLIGHTS:

LEONARDS SUPERIOR SMALLGOODS

Doug Leonard Managing Director

DESCRIPTION: Bacon, ham and smallgoodsmanufacturer

KEY PRODUCTS: Christmas hams, ham, bacon, cooked meats, sausages

OWNERSHIP: NZ; Private (Leonard, Kornman)


ADDRESS: 22 Harris Road, East Tamaki, Auckland

PHONE: +64 9 274 1254

WEBSITE: www.leonards.co.nz

YEAR FORMED: 1989

STAFF EMPLOYED: 60

REVENUE: ~$15m

COMPANY HIGHLIGHTS:

PREMIER BEEHIVE NZ LTD

Dene McKayGeneral Manager

DESCRIPTION: Vertically integrated bacon, ham and smallgoods company; Freedom Farms exclusive licencee; importer of Primo smallgoods; manufactures over 12,000t of pork products, worth over $100m annually

KEY PRODUCTS: Bacon, ham, shaved and sliced meats, smallgoods

OWNERSHIP: Brazil; Private (JBS Foods) via Premier Beehive Holdco (AU)


ADDRESS: 36 Moreton Road, Carterton,Wairarapa

PHONE: +64 6 379 6701

WEBSITE: www.premierbeehive.co.nz

YEAR FORMED: 1991

STAFF EMPLOYED: 300


COMPANY HIGHLIGHTS: JBS (Brazil) acquired Primo Smallgoods (AU) for $1.45b in ‘15, ultimate parent of Premier Beehive in NZ; total assets in NZ$75m; plans to launch into Asia and new categories in ‘16

PRIME RANGE MEATS LTD

Paul HamiltonGeneral Manager

DESCRIPTION: Meat processors based in Southland; primarily exporting to China through distribution contacts of new Chinese owners; some private processing and local food service and wholesale supply for Foodstuffs South Island

KEY PRODUCTS: Lamb, sheep, prime beef, manufactured beef, bobby calves

OWNERSHIP: China; Private (Shenzhen MingShengDuLing Commercial and Trading Co via Cuilam Industry 75%); NZ; Private (Forde, Tulloch)


ADDRESS: 1 Sussex Street, Gladstone,Invercargill

PHONE: +64 3 215 9079

WEBSITE: www.primerange.co.nz; www.cuilam.com

YEAR FORMED: 1992

STAFF EMPLOYED: 160

REVENUE: $30-40m*

COMPANY HIGHLIGHTS: Chinese majority owner, Lianhua Trading sold to Chinese owned company, Cuilam Industry for $13.4m in ’17


PROGRESSIVE MEATS

Craig Hickson Owner and Managing Director

DESCRIPTION: Processors, marketers of lamb, venison; 6 locations in the NI; Progressive Meats (100%); Hawkes Bay Meat (50%) with 100% subsidiaries Ovation NZ, Te Kuiti Meats, Lamb Packers Fielding; Venison Packers (50%); Pasture Petfoods NZ, Progressive Leathers, Atkins Ranch

KEY PRODUCTS: Lamb cuts, co-products, ingredients, mechanically deboned meat (MDM), petfood ingredients; further processing in USA

OWNERSHIP: NZ; Private (Hickson)


ADDRESS: 118 Kelfield Place, Hasting

PHONE: +64 6 873 9090

WEBSITE: www.progressivemeats.co.nz; www.ovation.co.nz; www.tkmeats.co.nz

YEAR FORMED: 1981


REVENUE: ~$500-$700m

COMPANY HIGHLIGHTS: Leans Meats Limited sold remaining shares in Lean Meats Oamaru plant to Binxi Foods Oamaru in Dec ’15, Leans Meats Limited renamed to Atkins Ranch, relaunched in USA, toll processed by Progressive; Atkins Ranch certified GAP step 4 sheep programme, around traceability and animal welfare in Oct ’16; beef plant in Wales, lamb further processing facility in San Francisco

SILVER FERN FARMS LIMITED

Dean HamiltonChief Executive Officer

DESCRIPTION: Leading processor, marketer and exporter of lamb, beef, venison; produces 30% of all NZ lamb, beef and venison; 16,000 farmer suppliers; 16 processing sites

KEY PRODUCTS: Meat (lamb, beef, venison, mutton), co-products

OWNERSHIP: NZ; Private (Silver Fern Co-operative (6,200 shareholders) 50%, Shanghai Maling Aquarius Co (China; Public) 50%)


ADDRESS: 283 Princes Street, Dunedin

PHONE: +64 3 477 3980

WEBSITE: www.silverfernfarms.com

YEAR FORMED: 1948

STAFF EMPLOYED: 7,000 (peak)

REVENUE: $2,147m (FY16)

COMPANY HIGHLIGHTS: 50% partnership with Shanghai Maling (Bright, China) for $267m cash, finalised Dec ‘16; ended JV with NZ Merino in ’16; launched Silver Fern Farms branded retail range in Germany Mar ‘16; processed and sold 15m stock units in ’16; invested $7m in venison processing and cold chain expansion at Pareora plant in ‘16; closed Islington, Mossburn, Wairoa plants in ‘16

TALLEY’S GROUP

Michael & Peter TalleyJoint Managing Directors

DESCRIPTION: Family owned food business; four main divisions: seafood (Talley’s, Amaltal), meat (AFFCO, 9 plants, SPM), frozen vegetables (Logan Farm, Talley’s) and dairy (75% Open Country Dairy, 3 plants, Crème de la Crème brand); total of 18 processing facilities

KEY PRODUCTS: Meat cuts, frozen vegetables, frozen seafood, marinated mussels, seafood by products, ice cream, dairy ingredients

OWNERSHIP: NZ; Private (Talley)

COMPANY NUMBER: 168346/3342490

ADDRESS: 1 Ward Street, Motueka

PHONE: +64 3 528 2800

WEBSITE: www.talleys.co.nz; www.affco.co.nz;www.opencountry.co.nz


STAFF EMPLOYED: 2,760-4,600 seas (OCD 310)

REVENUE: $2,000 - 2,500m* (OCD $819m (FY16))

COMPANY HIGHLIGHTS: Open Country Dairy revenue of $819m (FY16); ~$260m invested at OCD FY15; acquired 3 coal mines from Solid Energy as investor with Bathurst Resources in order to diversify in ’16; first kale crop in ‘16; shift into retail ready and value added cut packs using new skin pack technology in ‘17 * See further detail in associated Seafood report

SOURCE AND SUPPLY FOOD CO(formerly HOBSON’S CHOICE)

William Curd General Manager

DESCRIPTION: Bacon, ham and smallgoodsmanufacturer; retail and food service; Hobson’s Choice, Grandpa’s Meat and Bacon Co brands

KEY PRODUCTS: Hams, bacon, sausages, specialty meats

OWNERSHIP: NZ; Private (Curd)


ADDRESS: 5 Autumn Place, Penrose,Auckland

PHONE: +64 9 570 1912

WEBSITE: www.hobsonschoice.co.nz; www.grandpasbacon.co.nz

YEAR FORMED: 1980

STAFF EMPLOYED: 66

REVENUE: $15-20m (‘16)

COMPANY HIGHLIGHTS:


TAYLOR PRESTON

Simon GatenbyChief Executive Officer

DESCRIPTION: Meat processors processing 1.5m animals annually; based in Wellington; exporting to 60 countries under brands Taylor Preston, Natural Farm NZ, Natural Farm Angus, Natural Farm Hereford; subsidiary Taylored Foods value added products domestic; JV NZ Direct into France

KEY PRODUCTS: Sheep and beef meat cuts, offal

OWNERSHIP: NZ; Private (Taylor 80%, Preston 16%)


ADDRESS: 131 Centennial Highway, Ngauranga Gorge, Johnsonville, Wellington

PHONE: +64 4 472 7987

WEBSITE: www.taylorpreston.co.nz

YEAR FORMED: 1991

STAFF EMPLOYED: 850 (peak)


COMPANY HIGHLIGHTS: Natural Farm Brand chilled lamb the preferred brand (imported) for Metro France; multi million investment in beef boning room winter 2016; establishment of further processing department under the brand TayloredFoods (cooking, slicing, dicing etc.); French JV company NZ Direct offering online home delivery service for chilled NZ lamb and beef in France

TEGEL FOODS

Phil HandChief Executive Officer

DESCRIPTION: Leading fully integrated poultry processor in New Zealand; 3 feed mills, 39 breeder farms, 3 hatcheries, 3 processing plants manufacturing 1,200 product lines; processing 58mbroilers annually; exports to 17 countries; AU, Pacific Islands, UAE, HK, 18% of revenue

KEY PRODUCTS: Free range and barn raised chicken (fresh, frozen, smoked, processed), turkey; Tegel, Rangitikei, Top Hat brands

OWNERSHIP: NZ; Public (NZX,ASX:TGH) (Affinity Equity Partners (Singapore; PE) 45%)


ADDRESS: 100 Carlton Gore Road, Newmarket, Auckland

PHONE: +64 9 977 9000

WEBSITE: www.tegel.co.nz

YEAR FORMED: 1961

STAFF EMPLOYED: 2,200+


COMPANY HIGHLIGHTS: Listed on NZX and ASX May ‘16; 29 new products incl. expansion of free range launched in ’16; record revenue forecast in FY17 $625m; EBITDA $74.9m in FY16; facilities in Taranaki being built ‘16; capex investment of $28m in ‘17; brand refresh with new brand imagery, packaging and products $3.5m in ‘17; expanding export markets in ’17; all cage free, hormone free

TURK’S POULTRY FARM LTD

Ron TurkManaging Director

DESCRIPTION: Vertically integrated poultry processor of corn fed chicken at 5 locations; process 25,000 birds a day; sold mainly in North Island, exports to Japan and other countries; part of egg co-operative; part owner of Le Poulet Fabuleux free range chicken farm

KEY PRODUCTS: Chicken, turkey, eggs, smallgoods

OWNERSHIP: NZ; Private (Turk)


ADDRESS: 8 Purcell Street West, Foxton

PHONE: +64 6 363 0013

WEBSITE:. www.turkspoultry.com

YEAR FORMED: 1966

STAFF EMPLOYED: 220

REVENUE: $85m* (FY14)

COMPANY HIGHLIGHTS: Established Le PouletFabuleux, producing 30,000 chickens a week in 7 new free range sheds near Foxton, 4 staff Jan ‘16; 30 new jobs created at Turks Poultry; aiming to increase free range chicken, currently 65% in ‘16; phasing out egg production over next few years from ‘16

UBP LIMITED

Roger StewartManaging Director

DESCRIPTION: Beef processors

KEY PRODUCTS: Beef, beef jerky (Mountain Beef)

OWNERSHIP: NZ; Private (Lin)


ADDRESS: 18 Waitete Road, Te Kuiti

PHONE: +64 7 878 8926

WEBSITE: www.ubp.co.nz

YEAR FORMED: 1995

STAFF EMPLOYED: 240


COMPANY HIGHLIGHTS: Received China approval for meat exports in Dec ‘16


VAN DEN BRINK POULTRY

Karl van den BrinkManaging Director

DESCRIPTION: Vertically integrated poultry processor in New Zealand; third largest; four processing sites; cage free, halal

KEY PRODUCTS: Chicken products primarily for domestic retail and foodservice; Brinks, Best Bird, Good-to-Go brands

OWNERSHIP: NZ; Private (van den Brink, Foster)


ADDRESS: 652 Great South Road, Manukau, Auckland

PHONE: +64 9 262 0903

WEBSITE: www.brinks.co.nz

YEAR FORMED: 1954

STAFF EMPLOYED: ~400

REVENUE: $220m* (FY14)

COMPANY HIGHLIGHTS:

WILSON HELLABY

Fred HellabyManaging Director

DESCRIPTION: Processing and further manufacturing of meat products at two plants, AMP in Auckland, RMP in Hamilton; rendering business (PVL); significant presence in domestic meat market & selected chilled export markets; Hellaby, Grasslands, Saleyards Rd brands

KEY PRODUCTS: Prime beef, lamb, pork and goat; frozen, chilled, cured (smoked, cured, marinated), offal, hides, blood

OWNERSHIP: NZ; Private (Syminton, Hellaby)


ADDRESS: 851 Great South Road, Mt Wellington, Auckland

PHONE: +64 9 276 3800

WEBSITE: www.wilsonhellaby.co.nz


STAFF EMPLOYED: 500


COMPANY HIGHLIGHTS: Redeveloped RMP into modern pig processing facility; AMP now fully halal; AMP China listing approved in ’16; weekly requirements 3,000 steers, 10,000+ lambs, 2,500 pigs, 800 goats

Appendices

+ Industry bodies

+ Trade codes

+ Glossary of terms

06

INDUSTRY ORGANISATIONSAs a major meat producer, New Zealand has a strong range of meat related industry organisations

Source: Coriolis from various websites, annual reports and other sources 90

- Represent meat processors

- Membership fees (Operating Revenue $3.9m; FY16)

- www.mia.co.nz

- Manage export quotas

- Meat Board Act 2004 management of quota and farmer reserves of $81m (FY16); Income $4.6m (FY16)

- www.nzmeatboard.org

- Represent pig farmers

- Pork Levy on slaughtered pigs

- Revenue $2.3m (FY15)

- www.nzpork.co.nz

- Represent poultry meat producers

- Poultry levy based on /head processed

- www.pianz.org.nz

- Represent deer industry

- Levy Venison, Levy Velvet, Animal Health Board Levy

- Commodity Levies (Farmed Deer Products) Order 2001

- www.deernz.org

- Represent sheep and beef farmers

- Commodity Levies (Meat) Order 2010 $27.4m (FY15)

- Other income $11.1m

- www.beeflambnz.co.nz- www.meatnz.co.nz

TRADE CODES

HHSS CCooddee

SShhoorrtt DDeessccrriippttiioonn LLoonnggeerr ooffffiicciiaall ddeessccrriippttiioonn

20110 Beef, chilled carcass Fresh or chilled bovine carcasses and half carcass

20120 Beef, chilled bone-in Fresh or chilled unboned bovine meat (excl. carcasses)

20130 Beef, chilled boneless Fresh or chilled boneless bovine meat

20210 Beef, frozen carcass Frozen bovine carcasses and half carcasses

20220 Beef, frozen bone-in Frozen unboned bovine meat (excl. carcasses)

20230 Beef, frozen boneless Frozen boneless bovine meat

20311 Pork, chilled carcass Fresh or chilled swine carcasses and half carcasses

20312 Pork, chilled cuts Fresh or chilled unboned hams, shoulders and cuts thereof

20319 Pork, chilled nes Fresh or chilled swine meat, nes (unboned)

20321 Pork, frozen carcass Frozen swine carcasses and half carcasses

20322 Pork, frozen cuts Frozen unboned hams, shoulders and cuts thereof

20329 Pork, frozen nes Frozen swine meat, nes

20410 Sheep, chilled carcass Fresh or chilled lamb carcasses and half carcasses

20421 Sheep, chilled carcass Fresh or chilled sheep carcasses and half carcasses

20422 Sheep, chilled bone-in Fresh or chilled unboned meat of sheep

20423 Sheep, chilled boneless Fresh or chilled boneless meat of sheep

20430 Lamb, frozen carcass Frozen lamb carcasses and half carcasses

20441 Sheep, frozen carcass Frozen sheep carcasses and half carcasses (excluding carcasses and half carcasses of lamb)

20442 Sheep, frozen bone-in Frozen unboned meat of sheep (including lamb) – excluding carcasses and half carcasses

20443 Sheep, frozen boneless Frozen boned meat of sheep

20450 Goat, chilled or frozen Fresh, chilled or frozen goat meat

20500 Horse Meat of horses/asses/mules/hinnies, fresh/chilled/frozen

20610 Beef, chilled offal Fresh or chilled edible bovine offal

20621 Beef, frozen tongues Frozen bovine tongues

20622 Beef, frozen livers Frozen bovine livers

20629 Beef, frozen offal Frozen edible bovine offal (excl. tongues and livers)

20630 Pork, offal chilled Fresh or chilled edible swine offal

20641 Pork, frozen livers Frozen swine livers

20649 Pork, offal frozen Frozen edible swine offal (excl. livers)

20680 Sheep, chilled offal Sheep, goat, ass, mule, hinnie offal, fresh or chilled

20690 Sheep, frozen offal Sheep, goat, ass, mule, hinnie edible offal, frozen

Source: United Nations trade codes; Coriolis definitions in conjunction with project steering group

GLOBAL HARMONISED SYSTEM (HS) TRADE CODES DEFINED AS MEATHS2002

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HHSS CCooddee

SShhoorrtt DDeessccrriippttiioonn LLoonnggeerr ooffffiicciiaall ddeessccrriippttiioonn

20711 Chicken, whole chilled Fowls, domestic, not cut (FROZEN)

20712 Chicken, whole frozen Meat of fowls of species Gallus domesticus, not cut in pieces, frozen

20713 Chicken, cuts chilled Fowls, cuts & offal, fresh

20714 Chicken, frozen Fowls, cuts & offal, frozen

20724 Turkey, whole chilled Turkeys, not cut, fresh

20725 Turkey, whole frozen Turkeys, not cut, frozen

20726 Turkey, cuts chilled Turkey cuts & offal fresh

20727 Turkey, cuts frozen Turkey cuts & offal frozen

20732 Ducks, whole chilled Ducks, geese, not cut fresh

20733 Ducks, whole frozen Ducks, geese, not cut frozen

20734 Goose/duck liver chilled Fatty livers of geese or ducks, fresh or chilled

20735 Poultry, cuts fresh Poultry cuts&offal, fresh

20736 Poultry, cuts frozen Poultry cuts&offal, frozen

20810 Rabbit Rabbit or hare meat, offal, fresh, chilled or frozen

20890 Deer, fresh & frozen Meat and edible offal nes fresh, chilled or frozen (includes deer meat)

20900 Fat, pig & poultry Pig and poultry fat, fresh, chilled, frozen, sa

21011 Pork, bone-in hams Unboned swine hams, shoulders and cuts thereof,

21012 Pork bellies Bellies and cuts thereof of swine, salted, dried or smoked streaky cuts thereof

21019 Pork, smoked Meat of swine, salted... or smoked, nes

21020 Beef, salted/smoked Meat of bovine animals, salted... or smoked

21092 Dolphin & whale, smoked Meat & edible meat offal of whales/dolphins/porpoises (order Cetacea)/manatees & dugongs (order Sirenia), salted/in brine/dried/smoked, incl. edible flours/meals

21099 Deer, salted/dried Meat & edible meat offal, nes., salted/in brine/dried/smoked, incl. edible flours/meals

150200 Animal fats Fats of bovine animals, sheep or goats, raw

150300 Lard stearin, etc. Lard stearin, lardoil, oleostearin, oleo-oil

160100 Sausages Sausages and similar products; food preparation

160210 Baby food? Homogenized preparations of meat and meat offal

160220 Pate & prepared livers Livers of any animal prepared or preserved

160231 Processed turkey Preparations of turkey meat

160232 Canned chicken Fowls meat and meat offal of poultry

160239 Canned chicken Preparations of poultry (excl. turkey)

160241 Swine, hams Swine hams & cuts thereof, prepared or preserved

160242 Swine, shoulder cuts Swine shoulders & cuts thereof, prepared or preserved

160249 Swine, prepared nes Swine meat or offal nes, prepared,preserved, not liver

160250 Canned beef Bovine meat, offal nes, not livers, prepared/preserved

160290 Canned sheep Meat, meat offal and blood, prepared or preserved, nes

350300 Gelatin Gelatin and derivatives; isinglass; glues of animal origin

GLOSSARY OF TERMS

92

A$/AUD Australian dollar n/a Not available/not applicable

ABS Absolute change NA/ME/CA North Africa / Middle East / Central Asia

ANZSIC AU/NZ Standard Industry Classification N. America North America (USA, Canada)

AU Australia Nec/nes Not elsewhere classified/not elsewhere specified

Australasia Australia and New Zealand N/C Not calculable

b Billion N.H Northern Hemisphere

CAGR Compound Annual Growth Rate NZ New Zealand

CN China NZ$/NZD New Zealand dollar

C/S America Central & South America (Latin America) R&D Research and Development

CRI Crown Research Institute S Asia South Asia (Indian Subcontinent)

CY Calendar year (ending Dec 21) SE Asia South East Asia

E Asia East Asia S.H Southern Hemisphere

EBITDA Earnings before interest, tax, depreciation and amortization SS Africa Sub-Saharan Africa

FAO Food and Agriculture Organisation of the United Nations T/O Turnover

FOB Free on Board UHT Ultra-high temperature

FY Financial year (of firm in question) US/USA United States of America

GBP British pounds US$/USD United States dollar

HK Hong Kong UK United Kingdom

IQF Individually quick frozen YE Year ending

JV Joint venture YTD Year to date

m Million

AUSTRALIACoriolis Australia Pty Ltd

PO Box 5831St Georges Terrace

Perth, WA 6831Australia

+61 8 9468 4691

NEW ZEALANDCoriolis (New Zealand) Limited

PO Box 90-509Victoria Street West

Auckland, 1142New Zealand

+64 9 623 1848

www.coriolisresearch.com

Coriolis is the leading Australasian management consulting firm specialising in the wider food value chain. We work on projects in agriculture, food and beverages, consumer packaged goods, retailing & foodservice. In other words, things you put in your mouth and places that sell them.

WHERE WE WORK

We focus on the Asia Pacific region, but look at problems with a global point-of-view. We have strong understanding of, and experience in, markets and systems in Australia, China, Japan, Malaysia, New Zealand, Singapore, South Korea, Thailand, the United Kingdom and the U.S.

WHAT WE DO

We help our clients assemble the facts needed to guide their big decisions. We develop practical, fact-based insights grounded in the real world that guide our clients decisions and actions. We make practical recommendations. We work with clients to make change happen. We assume leadership positions to implement change as necessary.

HOW WE DO IT

All of our team have worked across one-or-more parts of the wider food value chain, from farm-to-plate. As a result, our work is grounded in the real world. Our style is practical and down-to-earth. We try to put ourselves in our clients’ shoes and focus on actions. We listen hard, but we are suspicious of the consensus. We provide an external, objective perspective.

WHO WE WORK WITH

We only work with a select group of clients we trust. We build long term relationships with our clients and more than 80% of our work comes from existing clients. Our clients trust our experience, advice and integrity.

Coriolis advises clients on growth strategy, mergers and acquisitions, operational improvement and organisational change. Typical assignments for clients include…

FIRM STRATEGY & OPERATIONS

We help clients develop their own strategy for growing sales and profits. We have a strong bias towards growth driven by new products, new channels and new markets.

MARKET ENTRY

We help clients identify which countries are the most attractive –from a consumer, competition and channel point-of-view. Following this we assist in market entry planning & growth.

VALUE CREATION

We help clients create value through revenue growth and cost reduction.

TARGET IDENTIFICATION

We help clients identify high potential acquisition targets by profiling industries, screening companies and devising a plan to approach targets.

DUE DILIGENCE

We help organisations make better decisions by performing consumer and market-focused due diligence and assessing performance improvement opportunities.

EXPERT WITNESS

We provide expert witness support to clients in legal cases and insurance claims. We assist with applications under competition/fair trade laws and regulations.

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Documents

Investor's Guide to the New Zealand Meat Industry 2017 · THE INVESTOR’S GUIDE TO THE NEW ZEALAND MEAT INDUSTRY 2017 Part of the New Zealand Food & Beverage Information Project