European Consumer Trends and The Seafood Opportunities

1
European Consumer Trends and The Seafood
Opportunities

• Johann C. Lindenberg
• Unilever Deutschland
• The Future of Fisheries
• Reykjavik, 4th March 2005

2
My Background Unilever
3
Unilever is one of the Top FMCG Companies

• Turnover 40 bln Euro (57 Foods)
• Number of employees 230 000
• Companies in more than 100 countries
• 400 Leading Brands
• Advertising and promotions 6 bln Euro
• Research and development 1 bln Euro
• High Standard of Corporate Principles

4
Unilever at a glance
Turnover 43 Mrd. Euro
Others
Savoury Dressings
Personal Care
People 234 000
Spreads Cooking Prod.
Latin America 30 000
Home Care
Europe 55 000
Health Wellness, Beverages
Icecream, Frozen Food
North America 20 000
Asia, Pacific 77 000
Africa, Middle East, Turkey 52 000
5
Every day, around the World, People reach for
Unilever Products
No matter who you are, or where in the world you
are, the chances are that our products are a
familiar part of your daily routine.

• We have a portfolio of brands that are popular
  across the globe - as well as regional products
  and local varieties of famous-name goods. This
  diversity comes from two of our key strengths
• Strong roots in local markets and first-
  hand knowledge of the local culture.
• World-class business expertise applied
  internationally to serve consumers
  everywhere.

6
Unilevers best known brands
7
One of the Major Global Food Companies with
significant interest in (Frozen) Fish
8
The Future of the European Fish and Seafood
Business will be shaped by

• Macro-Economic Trends
• Social and Demographic Trends
• General Consumer Behaviour Trends
• Specific Consumer Attitudes vis-a-vis Fish
  Consumption
• Availability at Accepted Price Levels
• Environmental (Sustainability) Consideration?
  Corporate Social Responsibility of the Fish
  Industries

9
Macro-Economic Trends

• Low growth rates of GNP, Income, Consumer
  Spending
• Share of Food Drink Spending Declining
• Smart Shopping Quality a Given, but ...
• Price Consciousness
• Stagnant Retail Trade
• Rise of Discounters
• Rise of Private Label
• Premium Brands under pressure
• Pressure on Profitibility Pressure on fish
  suppliers

Economic Growth and Prosperity improving only
moderately over next 10 years in Europe
?Economic Pressures to Persist
10
Weak Economic Developmentin Europe
Euro - Zone
Economic Growth
Labour Market
Unemployment rate in (in Mio.)
Change of real GDP (vs. Previous year in )
Private Consumption
Consumer Prices
Const. Prices change vs. Previous year in
Change of Consumer Price Index vs. Previous year
in
Source ifo Institut, 12/04
11
Decreasing Real Income in Germany
(average income of employees per month in )
Est.)
Quelle Statistisches Bundesamt, DIW, GLOBUS
Infografik Oa-9370 v. 02.08.2004
12
Private Savings in Germany
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
in of disposible income
Quelle Statistisches Bundesamt, Prognose
(DIW 05.01.2005)
13
Share of Food Drink Spending DecliningGermany
Consumer Spending in current prices
Food
15,7
18,3
Others
1991
2004
14
Smart Shopping
Conditions of Smart Shopping
Increasing consumer acceptance of discounters
Decreasing brand loyality
Constantly growing product diversity
New price aggressive sales channels
Value hierarchy and dynamics trends
Sales via Internet
Economic situation and future persectives
Cleverness as core consumption value
Special offers are common practice
Greater knowledge and experience with marketing
mechanisms
Why should I pay more - what for?
15
High Price Sensitivity of German Consumers
Quelle GfK-Trendsensor Konsum 2003 Anteile in
Kronberg 2005
16
The biggest consumer challenge in GermanyThe
lowest price levels in Europe
100 food brands price variance in
-16,4
Germany
Spain
Belgium
Italy
Greece
Austria
France
Netherlands
Portugal
Sweden
Great Britain
Ireland
Switzerland
Finland
Norway
Denmark
Average
-20
-10
10
20
30
40
Source AC Nielsen
17
GERMANY - Moderate Retail Growth - Continuing
Rise of Discounters
Number of Outlets ( Share)
Share of Turnover (in )
1997 1998 1999 2000 2001 2002
2003 2010
1997 1998 1999 2000 2001
2002 2003 2010
Anzahl
76.090
78.440
Mrd.
133,5
124,7
125,9
72.925
68.880
136,7
129,2
134,7
125,9
77.380
74.590
71.035
60.000
148
-2,2
-1,3
-1,7
-2,0
-2,6
-3,0
2,6
0,0
0,9
1,0
1,5
3,3
GfK LEH Prognose 2010
IRI Grundgesamtheiten, Stand jeweils zum
Jahresende
18
Shopper Typology - Germany Female -
Experimental Shopping
Easy, Efficient Shopping
Bon Vivants, Enjoyers Hedonists 42
Disciplined, Conservatives 53
19
Private Labels in Europe
Market Shares Key FMCG
20
Social and Demographic Trends

• Present Welfare Systems Unsustainable Cuts in
  State Schemes Privatisation of Social Security
  ? Insecurity ? Cautious Consumer-Spending
• Value Shopping trends to continue
• Polarisation
• Parts of society benefiting ? Top quality/luxury
  consumptionbut Time Poor ? Convenience
• Larger Parts of society under economic pressures
  from globalised competition
• More Working Women ? Convenience
• More Senior Citizens ? Convenience and Health

21
Demographic Trends in Germany
21
16
55
47
37
24
Source Stat. Bundesamt 8/03 mitll. Variante
22
General Consumer Behaviour Trends

• Much More Demanding Consumers
• top quality at low prices
• always available
• convenient but natural
• environmentally responsible
• Quality and Convenience ? Quality Assurance!
• Health Wellness the Key TrendDiet effects on
  health increasingly recognised (but only very
  slow behavioural change) ? Over-Weight, Obesity
  rising problem
• Vitality Demands

23
Unilever Focus Vitality

• Enhanced physical energy
• Enhanced mental energy
• Recharge

• Fit and active body
• Weight management
• Youthful appearance
• Beauty from within

Achieve more
Feel good daily
Look better
Be healthy for longer
Give children a good start

• Physical development
• Mental development.
• Resistance to desease
• Healthy weight

• Heart healthy
• Flexible and strong body
• No sensory deterioration
• Virility
• Immune health/
• natural defence

Be free from health problems

• No allergies/intolerance
• Digestive health
• Health for diabetes
• Cholesterol/blood pressure

24
Specific Consumer Attitudes vis-a-vis Fish
Products
25
Consumer Perception of Seafood

• Part of healthy and modern diet
• Fresh
• Natural
• Well balanced
• Varied
• Light
• Easy to digest
• Low in fat and calories
• Appetising

26
Consumers Considerations on Seafood

• Fish is an important part of healthy diet. Fish
  is so highly appreciated for its inherent
  nutritional values that it is consumed even when
  not really liked (10 of fish consumers in the UK
  and Italy)
• Fish is a considered safe and natural product
  Less food scare cases compared to meat.
• Consumers would serve and eat more fish if
• it was easier to prepare or cook and
• if only they could conveniently prepare a larger
  selection of simple fish recipes and dishes

27
Availability of Fish Products at Acceptable
Price Levels
28
Total Fish Seafood Catches All Categories
132
131
130
126
122
120
118
115
111
104
101
100
98
97
in Mio t
Source FAO Statistics
29
Total Fish Catch All CategoriesWild vs.
Aquaculture
Mio Tons
Source FAO statistics
30
Utilisation of worldwide Fish Catch1983 vs. 2002
Mio Tons
Source FAO Statistics
31
Groundfish Demand Development
Note kg/capita/a expressed in live weight
kg per capita/a
Total Fish Seafood
Groundfish
Source FAO
32
Groundfish Supply vs. Price DevelopmentPrices
Indexed (1988 1)
Prices for Fillet Blocks pbo based on Euro / kg,
DDP Europe
Price Index
m tonnes
Source 88 - 2002 FAO 03 - 05 PANELISTS /
OWN ESTIMATES,
33
Sustaining Improving Value Creation

• Re-Stimulate Groundfish Demand (USA - 3 kg p.c.
  over last 10 years ? 750.000t catch weight)
  through- enhanced marketing programmes- added
  value products / innovations
• Create Powerful Emotional Value for FISH FROM
  ICELAND- Build Credible Brand Personality- Live
  Up to Brand Characteristics and Communicate,
  Communicate, Communicate ... to Target Audience.

34
Environmental (Sustainability) Considerations

• Necessary to safeguard longer term future of the
  industry. But Short-term sacrifices necessary!
• Environmentally conscious consumers like to see
  nature protected.
• Icelandic Fishery Policies regarded as positive
  Model (Content Transparency)? MSC Programme
  vital

35
Problems of World Fisheries

• Management based on political and not on
  scientific decisions
• Insufficient evaluation of fish populations
• Ineffective controls
• Subsidy rates too high
• Fleet capacities too large
• By-Catch Rates too high

36
Status of our MSC Certifications
In progressNorweg. Saithe, Cod, Haddock
Cod SaitheHaddock
?
?
Alaska Pollock
Alaska Pollock
Hake
Hake
Hake
Hoki
In progress
37
Key Elements of a Sound Fishery Management

FisheryResearch
Legal Set ofRules
Quota System
Long-TermStrategies
ControlSystems

gt Sustainably Managed
38
Sustaining our Heritagefor a Viable Future