T H E M A C A D A M I A R E V I E WQuarterly news from the Australian Macadamia Industry

ISSUE 1 - November 2012

Welcome to the inaugural issue of The Macadamia Review, the quarterly news update of the Australian Macadamia Industry. With so many exciting things happening we want to share them with you and hope you will learn more about our product, discover new ways to include macadamias in your product development strategy and !nd out more about the marketing activities we are initiating to support you.

Tell us what you think! We welcome any feedback you may have on this news update. Simply email your comments to lynne.ziehlke@macadamias.org. Thanks for reading our !rst issue!

The 2012 crop continues to show signs of recovery and based on factory receivals at the end of July, the Australian Macadamia Handlers Association (AMHA), estimates that the forecast kernel supply will be 10,500 tonnes. This is a signi!cant improvement on 2011 which !nished at 7,800 tonnes. The AMHA say that quality is signi!cantly improved this season with unsound kernel levels the lowest for many years.

Three major factors have contributed to this. Firstly, growing conditions have been more favourable. Secondly, improved on-farm management has resulted in better consignment quality. Finally, most processors have invested heavily in recent years in improved handling and sorting equipment.

From the market, demand for Australian kernel has remained strong, particularly in the domestic snack and Japanese ingredient markets with new demand coming from emerging Asian markets.

To !nd out more about the Australian plans to meet future demand, read on...

C rop Forecast Update

I n t h i s i s s u e

Australian industry updateCrop Forecast Update ..................................1

Meeting Growing Demand ......................2

Feature productMacadamias. A jewel in the Connoisseur Crown .............................4

InnovationBrookfarm Porrij: Enhancing the humble oat ..............................................6

Austria hails the Queen of Nuts ..............6

Meiji: The magic red box ............................7

Marketing & PromotionNew campaign in Taiwan ..........................7

Social Media Footprint grows .................8

Our journey in Japan ...................................8

6TH INTERNATIONAL MACADAMIA SYMPOSIUMFrom 18 – 20 September 2012 the most in"uential players in the global macadamia industry met in Brisbane, Australia. Themed the “The Nut Rush – Prospecting for Gold” the symposium saw the world’s leading authorities sharing a broad range of perspectives and knowledge on how to increase productivity, manage environmental issues and on what’s happening with global demand. The event also hosted a meeting of the International Macadamia Task Force which collates quarterly statistics on global sales and inventory and provides a forum for discussion on issues such as health research. To !nd out more visit australian-macadamias.org

2 | T H E M A C A D A M I A R E V I E W A u s t r a l i a n I n d u s t r y U p d a t e

Floods, dust storms and heavy rain - Mother Nature has dealt some harsh blows to Australian macadamia crops over the past three years. Despite these unusual climatic conditions, the Australian industry is !rmly committed to increasing production and meeting the growing global demand for macadamias.

There are strong positive signs ahead including new investment in planting and production facilities, proactive measures to extract more from existing capacity, a multi-million dollar breeding program and implementation of new loss reduction strategies. Furthermore, the results of this multi-faceted approach will be more quanti!able than ever thanks to our improved data capture and reporting mechanisms.

P R O D U C T I O N E X P E C TAT I O N SAccording to the Australian Macadamia Society’s most recent census, there is considerable extra production coming from newer trees. Conservative estimates put the yield of macadamia trees at 2.5kg kernel per tree once they reach full production, or are over 10 years old. Currently there are 800,000 trees under 5 years old and 1.6 million trees aged between 5 and 10 years. Assuming that trees under 5 years are currently non-producing this equates to 2,000 tonnes of kernel. For trees in the 5 to 10 year age bracket, assuming these have a latent potential of 0.7kg kernel per tree, this equates to 1,100 tonnes of kernel.

So within the next 5 to 10 years, there is an incremental upside of around 3,100 tonnes of kernel in the pipeline -about a 30% increase on current production(2012 crop forecast is 10,500MT kernel).

N E W I N V E S T M E N T S I G N A L S CO N F I D E N C E & S U P P O R T S G R O W T H E X P E C TAT I O N S Investment in the Australian macadamia industry is strong across several sectors.There is a waiting list to secure new trees and nurseries are at full production with almost 400,000 trees already contracted and to be planted over the next few years. Most will go to the Bundaberg and Far North Queensland regions where, being warmer, they will come into production more quickly with !rst crop harvests forecast for years 3-4 rather than over 5. The combined potential of these plantings equates to 720 tonnes of kernel by 2015 and 1,000 by 2020. There has also been investment in processing with a state-of-the-art production facility recently built in Bundaberg with capacity to process 3,000 tonnes kernel.

M e e t i n g G r o w i n g D e m a n d A PROAC TIVE, MULTI-FACE TED APPROACH TO PRODUC TION GROW TH

Tree Age # Trees Yield per tree (kg, kernel)

Current production

Yield per tree (kg, kernel)

5 year production

Yield per tree (kg, kernel)

10 year production

<5 yrs 807,931 0 - 1.8 1,454,276 2.5 2,019,828

5 to 10 yrs 1,642,158 1.8 2,955,884 2.5 4,105,395 2.5 4,105,395

>10 yrs 2,790,564 2.5 6,976,410 2.5 6,976,410 2.5 6,976,410

9,932,294 12,536,081 13,101,633

Source: The Australian Macadamia Society Tree Census

M A K I N G T H E M O S T O F E X I S T I N G C A PAC I T YMuch can be achieved right now which is why the industry has made it a priority to investigate increasing productivity from existing orchards. A review of yields in 2011 revealed that the best Australian growers achieve over 2 tonnes of kernel per hectare, yet the average yield is only 0.8 tonnes per hectare. The di#erence between the best growers and the average grower is largely farm management practices and the timing of key decisions around canopy management strategies, soil health and the implementation of crop protection measures.

In response, the industry has established the ‘2 Tonne Task Force’ – known as the 2T Task Force. It’s role is to articulate the speci!c agronomic practices used by these best farmers and promote adoption of these practices across the industry. This is being achieved through a range of initiatives including an innovative technology transfer system, Macsmart, which showcases hands-on ‘how to’ interviews with the best growers via online videos.

The 2T Task Force’s short term target is to lift overall average yield by 10% moving from 0.8 tonnes kernel per hectare to 0.88. This equates to an incremental 1,300 tonnes of kernel from existing productive orchards. Outcomes will be measured by the industry benchmarking survey, ensuring nothing is left to chance.

R E D U C I N G LO S S P O S T $ H A R V E S T The Australian macadamia industry is focused on improving post-harvest procedures to reduce loss in this area of production. Up to 10% production is lost through a combination of less-than-ideal harvest intervals and on-farm sorting. By making a relatively small change to these practices, this loss can be minimised and !nancial return to growers improved. There are exciting developments in harvesting too, with a new type of harvester promising 30% higher !rst-pass e%ciency.

The combination of changes in practice and new technology could conceivably deliver increased production of up to 10% across the industry equating to an annual increase of 1,000 tonnes of kernel.

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M U LT I $ M I L L I O N D O L L A R B R E E D I N G P R O G R A M promises improved future yieldsThe multimillion dollar breeding program is progress-ing well, with new varieties due to launch in 2017/2018. These new varieties are expected to deliver 30% improved yields and improved productivity through a reduction in inputs such as pest management.

RELIABLE MARKET INTELLIGENCEIn 2008, Australian processors established a data collection group, the Australian Macadamia Handlers Association (AMHA). From 2011, key sales volume data has been published through the Australian Macadamia Society and the AMHA also contributes to crop forecasts and crop updates throughout the year with a focus on kernel availability. This is delivering more accurate information and enabling customers to make better decisions.

P R O F I TA B I L I T Y & S TA B I L I T Y the key to long term production growth

Pro!tability will drive new investment and the long-term production growth required to meet increasing global demand and provide stability. A number of practical planning tools have been developed to assist growers to determine the right mix of strategies to maximise pro!tability and make the right decisions for their businesses. In addition the industry has committed to a focused marketing strategy, aimed at providing stable pricing to our supply chain at a level that encourages growers to continue planting more trees.

The bottom line is there’s plenty of good news coming out of the Australian Macadamia industry, setting the scene for strong and consistent supply over the short and the longer term. It’s an exciting time for the industry and we look forward to sharing our progress with you.

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Nestlé, Unilever and Bulla dominated the Australian market in 2011 with 30%, 26% and 25% value share respectively. Premium segments were the winners over the summer season with the super-premium segment growing by 10% capturing 33% of the total category growth.

A key driver behind this growth is the continuing trend towards ‘premiumisation’ which sees consumers attracted to products that satisfy their need to take time out and enjoy a small indulgence. Capitalising on this growth in 2011 was Nestlé, with Connoisseur achieving a staggering 34.1% growth in value. Nestlé purchased the brand in 2009 and recently announced the sale of its ice cream division, Nestlé Peters, to a private equity !rm.

Connoisseur originated in 1998 when Australian entrepreneur and passionate ‘Ice Creamist’, Graham Laitt, created Australia’s !rst premium o#ering.

Graham Laitt’s three guiding principles:

Connoisseur Marketing Manager, Alicia Munday, says that since purchasing the brand in 2009, dedication to these principles is still evident in every container today. And this is where macadamias enter the picture.

Australian grown macadamias are regarded globally as the world’s !nest nut. Consumers love their luxurious, creamy "avour and unique soft crunch, making them an ideal enhancement for a creamy premium ice cream.

Connoisseur’s Caramel Honey Macadamia variant capitalizes on this natural !t and according to Alicia Munday, it’s one of the range’s biggest sellers.

M A C A D A M I A S A J e w e l i n t h e C O N N O I S S E U R C r o w n

Australia’s love a#air with ice cream has reached new heights, with recent !gures revealing Australians now consume more than 10 litres per person per annum. Over the 2011-2012 summer season, the category tipped a record AUD$1 billion and 229 million litres – quite a feat, especially considering that it was an unusually cool and wet period.

Source: Aztec Ice-Cream Category Report to 01/01/2012.

F e a t u r e P r o d u c t

“It’s become an important core product and one of the most loved variants”, says Munday. A quick glance at the Connoisseur Facebook page supports this, with consumer comments such as “Caramel, honey and macadamia is just divine” and “Macadamia and honey is yum yum yum”.

Munday also points out that the origin of the macadamias used in Connoisseur is important to consumers. “People love that the macadamias come from Queensland, Australia”, she says.

Caramel Honey Macadamia has become a star of the Connoisseur range. Reveals Munday “The Caramel Honey and Macadamia product is not only an important core product, we also use it to promote the entire range.”

In 2011 Connoisseur Caramel Honey Macadamia was depicted in a unique and dramatic print advertising campaign that captivated consumers across Australia. Internationally acclaimed photographer, Nadav Kander, was commissioned to shoot the product’s premium ingredients as a modern art installation. Made speci!cally to please an adult palate

The image depicts a tilting tower of honey, caramel and macadamia nuts teetering on a table’s edge. The composition represents the attention to detail behind each recipe in the Connoisseur range.

As Alicia Munday explains, “We wanted to bring the artistry of Connoisseur ice cream to life by celebrating the skill and care we take in selecting each of the ingredients.”

“It was a real coup for us to secure Nadav Kander, whose impressive work includes portraits of people such as Barack Obama, Brad Pitt, and Usain Bolt. We are delight-ed to add Australia’s !nest gourmet ice cream to his list of subjects.”

Connoisseur Caramel Honey Macadamia - photographed by Nadav Kander

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B R O O K FA R M P O R R I J : E n h a n c i n g t h e h u m b l e o a tNorthern Rivers producer Brookfarm has built a reputation as Australia’s leading producer of gourmet macadamia based products with its range of cereals, snacks and oils made from macadamia nuts grown on their farm in Byron Bay.

Austr ia hai ls the Q U E E N O F N U T SAustrian food company, Wiberg GMBH, best known for its premium quality herbs and spices, has recently added macadamia nut oil to its product range.

The oil is being marketed under the Wiberg Exquisite brand, which is part of the company’s foodservice suite targeting high-end food and beverage establishments. Packaged in smart, black 250mL bottles, the macadamia nut oil is 100% cold pressed with a sweet, mild "avour that works well with !sh, salad dressings, soups, poultry, pasta, cream cheese and desserts. It’s also ideal for baking or frying, with a high smoke point of 210°C.

Marcel Thiele, from Wiberg’s ‘Team Inspiration’ product development division, says this is the !rst macadamia product they have launched. However macadamias have been on their radar for some time.“We have taken notice of the Queen of Nuts for a long time, because it is such a !ne nut”, says explains Thiele.

“We are always looking for high quality raw materials with an extraordinary taste.”“In Austria and Germany there is very strong demand for products that stand for extravagant cuisine. Because macadamia nuts are seen as precious, the macadamia nut oil is considered an extravagant product.”

Currently available in Austria and Germany, Wiberg GMBH is planning to launch its new ‘royal oil’ in other European countries in the near future.

I n n o v a t i o n

Following the success of Brookfarm’s Macadamia Muesli, they launched the Brookfarm Porrij range for winter 2012 Containing organic super-grains, almonds and of course, macadamias, Brookfarm has taken humble porridge to a new level. The range includes a gluten free variant which, unlike many gluten free foods, doesn’t compromise on taste.

This deliciously wholesome product is a perfect example of how macadamias can take a product from standard to special, and customers seem to agree. There has been strong support with very good ranging so far and a number of premier hotels have added it to their breakfast dining room o#ering.

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N E W C A M PA I G N puts macadamias in the Taiwanese spotlight2012 marks the start of an exciting campaign to grow the visibility and demand for Australian macadamias in Taiwan. We’re !rmly committed to raising the pro!le of macadamias in this market and want to show Taiwanese consumers how versatile our product is.

A signi!cant television, online and social media spend is the backbone of our strategy to drive consumer demand and pave the way for movement of greater stock volumes.

The campaign kicked o# in mid July and achieved almost 10,000 likes on Facebook by the end of August. A schedule of TV in-program editorial placements and other events will run through September, October and November.

WE’VE SET A BOLD TARGET TO REACH 2 MILLION CONSUMERS BY THE END OF THE YEAR AND LOOK FORWARD TO SHARING OUR PROGRESS IN FUTURE ISSUES.

M E I J I M agic Red BoxIconic Japanese food brand Meiji has a popular range of macadamia and almond chocolate products. The product is known as the ‘Magical Red Box’ and promises to make consumers feel ‘healed and happy’.

Beyond this, and clearly setting Meiji apart, is a schedule of ‘limited version’ product releases throughout the year, designed to keep the range fresh and Japanese consumers interested. Sold only for a limited period of time, these ‘limited versions’ are based on the core product, but with variations such as larger pack formats, white chocolate, soft and fast-melting chocolate, block-style chocolate and even ice cream chocolate bars.

Meiji showcases the versatility of macadamias, using them in both confectionary and ice-cream products.

The brand’s product development strategy allows it to target a variety of market segments while continually creating news and excitement among its core customer base.

M a r k e t i n g & P r o m o t i o n

S O C I A L M E D I A F O O T P R I N T G R O W S

A J A PA N E S E J O U R N E Y

Our Australian social media strategy has gained considerable traction since it launched in February. Now active on Facebook, Twitter & YouTube, we’ve been encouraged by the level of tra%c and interaction.

BY THE END OF AUGUST WE HAD CLOCKED ALMOST 5,000 ‘LIKES’ ON FACEBOOK, with the weekly reach peaking at 78,000 during Easter and averaging 28,000 in May.

ON YOUTUBE WE LAUNCHED A NEW RANGE OF VIDEOS entitled How To…With Macadamias. The !rst, How to make macadamia butter was released in June and the second How to roast macadamias in September. We’ve also featured television news coverage and in-program mentions as they happened.

TWITTER REACH HAS EXCEEDED 120,000 and generated 266,000 impressions.

All channels have provided us with valuable insights on the demographics and sociographics of macadamia fans and increased our advocates for the brand, including key in"uencers such as bloggers, chefs and journalists.

Social media has given macadamia enthusiasts a real voice – and we’re feeling the love! It’s fantastic to see comments such as ‘We need a love button, not just a like button’, ‘I love macadamias’ and ‘OK, I admit it, I’m addicted to the little nut’. As one consumer succinctly put it, ‘They are the best’. We couldn’t have said it better ourselves.

To see us in action visit:

facebook.com/AustralianMacadamias

@AusMacadamias

youtube.com/AustMacadamias

To !nd out more or if you have any questions about this news update, please contact Lynne Ziehlke, Market Development Manager, The Australian Macadamia Society on +61 2 6622 4933 or lynne.ziehlke@macadamias.org or visit our new website at australian-macadamias.org

The Australian macadamia industry has invested in marketing and promotion in the Japanese market for many years but in 2009 we took an innovative, new approach using a combination of traditional media, new media and bloggers – and coupled it with a new message; macadamias are good for health and beauty. With followers of Australian macadamias increasing daily, the strategy paid o#.

The campaign began through TV talk shows and by reaching out to bloggers and through TV talk shows. We rapidly eached more than 200,000 consumers and all but eliminated a previously held perception that the high fat content of macadamias was bad for skin and health. We then moved to deepen the association with beauty harnessing the power of over 100 in"uential bloggers and working with Nikkei and Fytte health magazines to introduce the concept of macadamias and beauty.

And it worked.

Online buzz about macadamias grew by 65% and visits to the website tripled.Next we integrated macadamias and lifestyle and began focusing on Australian origin, this time using A list celebrity bloggers, lifestyle magazines and our own email magazine. Tra%c to the website increased by 78% and the email newsletter achieved a staggering 34% open rate, more than 6 times the industry average.

In 2012 we are continuing to reinforce our message that macadamias and good for health and beauty and they originate from the pristine environment of Australia. We’re spreading the message via social media including Twitter and Facebook, and we’re collaborating with a premium fashion and beauty network of 1200 bloggers to continue the momentum achieved to date.

8 | T H E M A C A D A M I A R E V I E W M a r k e t i n g & P r o m o t i o n