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Current and Long-Term Prospects for U.S. Dairy Trade Niamh Kelly Vice President of Strategy

Current and Long-Term Prospects for U.S. Dairy Trade Niamh Kelly Vice President of Strategy Glanbia Foods Inc. Agenda. Glanbia background Why export cheese? Our history so far Key areas of focus Key challenges. Introduction to Glanbia.

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Current and Long-Term Prospects for U.S. Dairy Trade Niamh Kelly Vice President of Strategy

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  1. Current and Long-Term Prospects for U.S. Dairy Trade Niamh Kelly Vice President of Strategy Glanbia Foods Inc

  2. Agenda • Glanbia background • Why export cheese? • Our history so far • Key areas of focus • Key challenges

  3. Introduction to Glanbia Glanbia is an international cheese and nutritional ingredients Group Headquartered in Ireland with c. 4,000 employee worldwide 2011 sales of €3.3billion ($4.5 billion) C. €600 ($800 )million market capitalisation C. 293 million shares in issue; free float 45%; Co-op ownership 55% Our vision is to be a world leader in cheese and nutritional ingredients

  4. US Cheese Business- Who we are • The largest producer of American-style cheddar cheese in the USA • Two business units, – in high quality, scale farming, milk supply regions – 1,000 employees • Idaho-Three wholly-owned locations • Southwest Cheese Joint Venture • In 2011, processed 8.1 billion lbs of milk, produced 830m lbs (377,000 tonnes) of cheese

  5. Track record of growth and development Barrel cheese expansion to 150,000 tonnes SWC II Total Glanbia cheese >375,000 tonnes 1990 -2009: 15% volume CAGR Barrel cheese expansion to 113,000 tonnes Barrel cheese expansion to 136,000 tonnes Southwest Cheese 113,000 tonnesblock cheese plant Cheese production starts in Gooding Barrel cheese expansion to 86,000 tonnes Twin Falls plant purchase Acquisition of Wards Cheese 1990 1991 1993 1999 2005 2006 2007 2008 2010

  6. Glanbia and Exports • The Glanbia organization in Ireland has a long history of exports • On an Island with a lot of milk and only 4 million people, you have to! • In the US, we have exported lactose and WPC successfully for almost two decades • But in the cheese business, it is relatively new territory for us

  7. Why now, what is the size of the Prize? Let’s revisit some of the key takeouts from the Dairy Globalization Study by Bain and Company funded by:

  8. The United States- And Glanbia- has a window of opportunity to step up and fulfill the “latent demand gap.”

  9. Key Dairy Import and Export Countries

  10. Cheese exporting countries The US accounts for 9% of global cheese exports, but, with the right pieces in play, can steadily increase exports to fulfill increased global demand.

  11. Glanbia Specific Exports: A Regional focus for a Global Player MEXICO and LATAM MENA ASPAC

  12. Glanbia has established itself as a credible cheese exporter over the last 5 years • We have maintained a consistent presence in the market • We have grown volumes over the last five years • Largest exporter of American style cheese • We are now focusing on particular regions of the world to continue to grow our exports.

  13. Glanbia Cheese Exports • Exports have grown significantly over the past five years. • 2012 forecasted exports are up 800% over 2007 levels.

  14. Percentage of Glanbia Production Exported • A larger and larger percentage of Glanbia products are being exported each year making this an important area of focus for us

  15. We have defined three regions for focus based on the following criteria:

  16. Key regions of focus

  17. We are working to become a preferred supplier:

  18. Current cheese per capita consumption CHINA: 200 grams USA: 14,500 grams Chinese market is still in its infancy but with huge potential

  19. Key Challenges • Culture/language • Lack of good information/communication issues • Paperwork/logistics • Differing specifications, quality, functionality • Regulation, gov’t bureaucracy • Pricing • Your product is a long way from home

  20. Opportunistic or sustainable? • We believe it is sustainable but requires investment and patience • Can’t be the “Henry Ford of cheese” • 4-5% of US cheese and 13% of total US milk production • Risk management tools • Still not easy/timing risk/execution • Dedication – resources and product and willingness to take some risks • Good for Glanbia, US dairy famers and global consumers

  21. Thank you for your time

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