FROZEN FOOD INSIGHTS

July 2011
CONFIDENTIAL AND PROPRIETARY 2011 Zpryme Research & Consulting, LLC 1 Any duplication, reproduction, or usage of this document or any portion thereof without the written consent of the firm is prohibited.

 2011 Zpryme Research & Consulting, LLC

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CONFIDENTIAL AND PROPRIETARY 2011 Zpryme Research & Consulting, LLC Any duplication, reproduction, or usage of this document or any portion thereof without the written consent of the firm is prohibited.

Table of contents

Whats Inside

2011 Zpryme Research & Consulting, LLC

Frozen Food Market Summary

Frozen Food Market Snapshot - 1 World, Asia, and North America Frozen Food Market - 2

World, Asia, and North America Frozen Pizza Market - 3

World, Asia, and North America Frozen Potato Market - 4 World, Asia, and North America Frozen Ready Meals Market - 5 World, Asia, and North America Frozen Food Growth Rates - 6 UK Frozen Food Trends - 7 North American Frozen Food Trends - 8

North American Frozen Food Outlook - 9

Frozen Food Market Summary

Frozen Food Market Snapshot

Market Insights:

o Economics, healthy choices and convenience will drive product growth across all frozen product categories in the near term.
2011 Zpryme Research & Consulting, LLC

o North America sales of frozen pizza will continue to make up almost 50% of the global market. o Driven by an emerging middle class, Asia Pacific (especially in India and China) frozen potato and ready meal sales will see significant growth in 2011 and 2012. o Frozen food products will see strong competition from fast food restaurants and from supermarkets offering fresh ready to eat meals and products. o Forward-looking: beauty/lifestyle frozen foods that boast anti-aging agents or increase energy will increasingly become more popular again as global consumer purchasing sentiment grows positive for 2012.

World, Asia, and North America Frozen Food Market 2005 2010

In 2010, the global frozen food market reached $194 billion, while the Asia Pacific and North America market values were $16.5 and $42.9 billion, respectively.
$250.0 2011 Zpryme Research & Consulting, LLC

Global, Asia, and North America Frozen Food Market 2005 2010 (in U.S. billions)
$194.1

$200.0
$174.7 $151.8 $157.3

$187.1

$188.2

$150.0

$100.0

$50.0
$11.6

$34.7

$36.5

$38.4 $12.9 $14.9

$40.0 $15.6

$41.2

$42.9

$12.0

$16.5

$0.0

2005

2006

2007 Asia Pacific

2008 North America World

2009

2010 Source: Zpryme

World, Asia, and North America Frozen Pizza Market 2005 - 2010

In 2010, the global frozen pizza market reached $13.0 billion, while the Asia Pacific and North America market values were $0.3 and $6.2 billion, respectively.
$14.0 2011 Zpryme Research & Consulting, LLC

Global, Asia, and North America Frozen Pizza Market 2005 2010 (in U.S. billions)
$12.1 $12.3 $11.2 $9.9 $10.3

$13.0

$12.0

$10.0

$8.0
$5.9

$6.2

$6.0
$4.8 $4.9

$5.2

$5.5

$4.0

$2.0
$0.3 $0.3 $0.3 $0.3 $0.3 $0.3

$0.0

2005

2006

2007 Asia Pacific

2008 North America World

2009

2010 Source: Zpryme

World, Asia, and North America Frozen Potato Market 2005 - 2010

In 2010, the global frozen potato market reached $7.2 billion, while the Asia Pacific and North America market values were $0.5 and $1.9 billion, respectively.
Global, Asia, and North America Frozen Potato Market 2005 2010 (in U.S. billions)
$8.0 2011 Zpryme Research & Consulting, LLC
$7.2

$7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0

$5.9

$6.8

$7.0

$7.2

$6.2

$1.5

$1.6

$1.7

$1.7

$1.8

$1.9

$0.4

$0.4

$0.4

$0.5

$0.5

$0.5

2005

2006

2007 Asia Pacific

2008 North America World

2009

2010 Source: Zpryme

World, Asia, and North America Frozen Ready Meals Market 2005 - 2010

In 2010, the global frozen pizza market reached $26.0 billion, while the Asia Pacific and North America market values were $1.2 and $12.8 billion, respectively.
Global, Asia, and North America Frozen Ready Meals Market 2005 2010 (in U.S. billions)
$30.0 2011 Zpryme Research & Consulting, LLC
$26.0

$26.0
$24.8

$25.0
$22.5 $21.0

$24.4

$20.0

$15.0
$10.8 $11.5 $11.9 $12.3 $12.4

$12.8

$10.0

$5.0
$0.9 $0.9 $0.9 $1.1 $1.2 $1.2

$0.0

2005

2006

2007 Asia Pacific

2008 North America World

2009

2010 Source: Zpryme

World, Asia, and North America Frozen Food Growth Rates 2005 - 2010

From 2005 to 2010, the world frozen food market grew by 5.0% annually. The world frozen pizza, frozen potato, and frozen ready meal markets grew by 5.5%, 4.0%, and 4.3% annually, respectively.
Frozen Food Compound Annual Growth Rates by Segment and Region Time Period: 2005 - 2010 Market Segment Frozen Processed Food Frozen Pizza Frozen Processed Potatoes Frozen Ready Meals World 5.0% 5.5% 4.0% 4.3% Asia Pacific 7.3% 3.1% 4.8% 6.8% North America 4.3% 5.3% 4.8% 3.4%

2011 Zpryme Research & Consulting, LLC

Source: Zpryme

UK Frozen Food Trends

Declining consumer purchasing power coupled with a stronger monitoring of overall healthy (more convenient and fun) foods will be the key drivers of the frozen pizza, potato, and ready meal markets. Market
2011 Zpryme Research & Consulting, LLC

Trends
According to Zpryme (May 11) UK consumers opted more often for frozen pizza over restaurant dining as: a) pizza offerings have been more fun (e.g. more assortments like pineapple) b) can save money while being with family/friends (e.g. staying in and watching movie). According to Zpryme (June 11) UK parents are looking for varieties of frozen potato products with food manufacturers concealing additional veggies (also fortified vitamins and minerals). According to Zpryme (July 11) UK consumers have become more aware than ever of their growing waistline and dwindling pockets, shifting their taste for healthier (high protein, lower sugar/sodium) that offers value for money.

Frozen Pizza

Frozen Potatoes

Frozen Ready Meals

Source: Zpryme

North American Frozen Food Trends

Harsh economic times combined with health and convenience will be the key drivers of the frozen pizza, potato, and ready meal markets.
Market
2011 Zpryme Research & Consulting, LLC

Trends
In 2010 about 68% of U.S. households consumed frozen pizza products, up about four percentage points since 2007. In 2010, the market leader in this category was Digorno. In 2010 about 64% of U.S. households consumed frozen potato products, up about three percentage points since 2007. The Ore-Ida brand of products is the market leader in the this category.

Frozen Pizza

Frozen Potatoes

Frozen Ready Meals

In 2010 about 53% of U.S. households consumed frozen ready meals, up about five percentage points since 2007. Fresh or ready to eat meals in supermarkets have become a significant threat to the frozen ready meal market.

Source: Zpryme

North American Frozen Food Outlook

Asia Pacific consumers will increasingly use frozen potatoes and ready meals in 2011 and 2012, creating strong opportunities for companies able to capture the attention of consumers in the region. Market
2011 Zpryme Research & Consulting, LLC

2011 2012 Outlook

The north American market will continue to drive growth in the frozen pizza market. Frozen pizza sales will see growth between 6% to 8% a year in north America. Families with children will continue to make up the majority of sales in the category. Healthy pizzas will also see strong growth in 2011 and 2012. Frozen Potatoes sales grow faster in Asia Pacific than North America. However, frugal North American consumers will increasingly fit frozen potato products into their three main meals of the day. Baked potato products will see a surge in demand due as well as new varieties of healthy potato products. The world ready meal market will grow by 4% to 5% a year. Demand in Asia Pacific will grow by 7% to 8%. Middle class families in North America and Asia Pacific will continue to drive sales in both these markets.

Frozen Pizza

Frozen Potatoes

Frozen Ready Meals

Source: Zpryme

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CONFIDENTIAL AND PROPRIETARY 2011 Zpryme Research & Consulting, LLC Any duplication, reproduction, or usage of this document or any portion thereof without the written 14 consent of the firm is prohibited.