Market Opportunities for Irish Dairy 2025 National Dairy Conference 2014 Red Cow Moran Hotel, Dublin Aidan Cotter Chief Executive Wednesday, 19 th November, 2014 AIDAN COTTER BORD BIA CHIEF EXECUTIVE 28 JANUARY 2009
The Emerald Isle Dairy exports to grow by 1.8 Ireland billion over the next five years (based on 2013 prices & product mix) Meat & Livestock 3,305 m 33% Hort & Cereals 225 m Seafood 520 m Prepared Foods 967 m Beverages 1,250 0 m Dairy 3,642 m 37% And account for over 45% of total food & drink exports (based on 2013 non-dairy volumes and prices)
Dairy Exports are more internationally oriented.. Distribution by region 2013 (%) 50 Food & Drink Dairy 40 42 39 30 32 32 29 26 20 10 0 United Kingdom Other EU Int. Markets Irish dairy products were exported to more than 140 countries in 2013
The industry has been reaching out beyond Europe Distribution of Dairy Exports 2000 to 2013 (%) UK Continental EU International Markets 100% 80% 60% 40% 20% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Dairy Exports to International Markets Diversified 100% 80% 60% 40% 20% Other US ME Africa Asia 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Irish Dairy Exports to China growing rapidly m 350 300 250 200 150 Other Whey Butter & cheese Milk Powders IMF 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
What s Driving Global Demand for Food Billions 10 9 8 7 6 5 4 3 World Population 1950-2050 6 billion 5 billion 4 billion 8.1 billion ion 7.3 billion 54% in cities 58% in cities 9 billion 66% in cities 2 1 0 3 billion 30% in cities Source: UN World Population Prospects; the 2012 revision 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
India and China Make Waves in the Global Middle Class 100% 90% 80% 70% 60% 50% 40% 30% 3 billion consumers 2015 will join the middle classes from 2010 to 2030 United States % EU Shares of Global Middle Class Consumption, 2000-2050 2025 Others Other Asia India 20% 10% % Japan changing lifestyles, shifting dietary habits China 0% 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: OECD Working Paper
% 70 More than three of every four people live in Asia or Africa 2010 2015 2025 60 50 59 From 2015 to 2025 population will grow by 760m Latin America +61m North America +29m 40 30 Africa +302m Asia +364m 20 10 0 18 9 9 Asia Africa Europe Latin America North America 5 1 Oceania Source: UN World Population Statistics, 2012
Global population continues to grow older % of population aged over 60 in Europe, by 2025 more than 200 million people will be over 60 30 27 25 20 15 15 2010 2015 2025 10 6 0 World Asia Europe North America Source: UN Population Division 2012 Africa
Ending the War on Fat
Climate Change Supply Challenges The most frequent and significant factor causing volatility is unpredictable weather conditions. FAO/OECD Agricultural Outlook, 2011-2020 By 2025, two-thirds of the world s population could be living under water stress conditions. UN Food for Fuel: 40% of US corn used for ethanol Agriculture uses 70% of the world s freshwater
Emerging markets driving global demand Global demand for livestock & fish products (% Ch 2023 vs. 2011-2013 average) 50 World Developing OECD 40 30 20 10 0 Beef Pigmeat Poultry Sheepmeat Butter Cheese WMP SMP Fish Source: OECD & FAO Secretariats
Global Consumption of Dairy Products to 2023 Annual consumption to grow by 2.4% North America 1.4% Latin America And Caribbean 1.9% Europe 0.4% Africa 3.3% Russia 0.7% Saudi Arabia 3.6% China 3% India 3.7% SE Asia 2.7% Japan 0.4% Oceania 1.2% Annual Increase 2013-2023 Source: OECD FAO
Global Consumption of Dairy Products to 2023 Total consumption to grow by 27% North America 15% Latin America And Caribbean 21.1% Europe 4.1% Africa 38.5% Russia 7.4% Saudi Arabia 41.9% China 33% India 43.9% SE Asia 30% Japan 3.9% Oceania 12.7% Total Increase 2013-2023 Source: OECD FAO
Global Milk Production to 2023 Europe India US China Pakistan Russia Brazil New Zealand Turkey Argentina Ukraine Australia Mexico Canada 2023 2011-13 Annual growth down from 2.2% to 1.9% 78% of growth in developing countries Source: OECD FAO 0 50 100 150 200 M tns
World trade in dairy products to 2023 EU, US, NZ and Australia account for almost 80% of exports SMP +2.5% pa US largest source at 34% by 2023 Cheese +2.4% pa EU to account for 39% by 2023 Butter +0.7% NZ the primary source 47% market share WMP +1.7%pa NZ share to rise to 57% Annual, global import growth and export market share
The Importance of China Thousands MT 200 150 100 50 World s largest dairy importer Declining self-sufficiency sufficiency Per capita consumption less than 1/3 rd world average Rising import demand Butter +24%, Cheese +228%, SMP + 86%, WMP + 44% Growth to 2023 Liquid Milk Imports 0 2007 2008 2009 2010 2011 2012 2013
World Dairy Prices to 2023 6,000 2014 $/tonne 5,000 4,000 3,000 Cheese WMP SMP Butter 2,000 1,000 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: OECD FAO
Customer priorities..sourcing from Ireland
Customer priorities..europe
Customer priorities..saudi Arabia
Customer priorities..china Wandashan Yili Feihe
Customer priorities..sourcing from Ireland long-term agreements
Energy Emissions Water Traceability Welfare Food Safety Environment Animal Health Biodiversity Socio-economic data
South Senegal Indonesia Korea Vietnam Consumer insights through ethnography in dairy markets Growing the success of Irish food od & horticulture
300+ hours in-field 3 Cities Shanghai Beijing Chengdu 14 brand clinics 48 home visits 36 store visits Consumer insights through ethnography in dairy markets
Components of S & P 500 Market Value 100% 80% 17 32 60% 68 80 80 40% 83 68 20% 32 20 20 0% 1975 1985 1995 2005 2010 Intangible Assets Tangible Assets Source: Ocean Tomo
Market Opportunities for Irish Dairy 2025 National Dairy Conference 2014 Red Cow Moran Hotel, Dublin Aidan Cotter Chief Executive Wednesday, 19 th November, 2014 AIDAN COTTER BORD BIA CHIEF EXECUTIVE 28 JANUARY 2009