Global Ingredients
US Cheese
Jeff Williams CEO
US CHEESE
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
AMERICAN STYLE CHEESE MARKET
 Consumed by 98% of households
 c.2 million tonnes in 2012
 20 year CAGR c.2%
 Quick service restaurants key
growth driver in recent years
28%
46%
Ingredients
Retail
26%
Food service
Source: US Department of Agriculture
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
STRATEGIC PILLARS
CUSTOMERS,
INNOVATION
AND NEW
PRODUCT
DEVELOPMENT
EXPORT
MARKETS
OPERATIONAL
EXCELLENCE
EXPANSION
OPPORTUNITY
SUSTAINABLE, FORMULA-BASED BUSINESS MODEL
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
BUSINESS FOOTPRINT
GOODING,
IDAHO
TWIN FALLS,
IDAHO
• 4m litres of milk
per day
• 1.2m litres of
milk per day
• 150k tonnes of
cheese
annually
• 50k tonnes of
cheese
annually
• 59k tonnes
value added
whey
• Largest barrel
cheese plant in
the world
RICHFIELD,
IDAHO
CLOVIS,
NEW MEXICO
BLACKFOOT,
IDAHO
• 4.8m litres of milk
per day
• 8k tonnes of
value added
whey annually
• 11k tonnes of
cheese
annually
• One of the
largest
dedicated whey
processing
plants in the US
• Flexible plant,
acquired in
2013
• 18k tonnes of
value added whey
annually
• Supports niche
innovation
agenda
• Largest natural
cheese plant in the
US
• 180k tonnes of
cheese annually
TOTAL VOLUMES
• 3.7 billion litres
of milk
processed
• 390,000 tonnes
of cheese
• 80,000 tonnes
of value added
whey
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
CUSTOMERS AND SUPPLY CHAIN
Our customers...
 Branded & private label
 Producers for food service
 Processors/converters
 Retailers
 Ingredients
 Food service
End
Consumer
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
INNOVATION
 Improve engagement & collaboration customers
 Reduce cycle time on projects
 Respond faster to customer needs and market trends
 Produce cheese ingredient solutions of superior quality and value
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
EXPORT PLATFORM WELL ESTABLISHED
EU
19kg
USA
16kg
CHINA
0.2kg
MEXICO
3kg
growth in exports
over the next 10 years
New middle class
consumers
globally by 2020
correlation between
GDP growth and protein
consumption
Rates of per capita cheese consumption in certain markets
GLOBAL INGREDIENTS US CHEESE
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2012 Full Year Results
GPS SYSTEM
 Brilliant at the basics
 Manufacturing excellence system
 Driving to zero losses
 Builds organisation capability
 Leveraging scale operations
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
EXPANSION OPPORTUNITY
DEMAND
SUPPLY
MODEL
 2% p.a. forecast
growth rate
 Deep market
understanding
 No scale cheese plant
investments currently
planned
 Milk growth pools
identified
 Replicate successful
Southwest Cheese
model
 Estimated demand gap of
100-200 ,000 tonnes
by 2016
 Attractive partner
 Build and operate
track record
 Commercial expertise
 Enabler for whey
strategy
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
SOUTHWEST CHEESE CASE STUDY
• $200 million plant on time and on budget (2005/06)
• $90 million 40% capacity expansion in 2009/2010
• Milk supply guaranteed by JV partner
• $40 million equity contribution from each partner
• Non-recourse financing
• Formula-based milk price referenced to end product
prices - provides almost full margin protection to JV
• Glanbia receives profit share, commission on sales of
cheese and whey and dividend stream
SWC viewed by the
industry as the “new”
model dairy plant
structure of the future.
Milk supply guaranteed ¦ Non-recourse ¦ Stable margins ¦ High return on equity
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results
SUMMARY
✓
INNOVATION
✓
EXPORT S
✓
WORLD CLASS
✓
GROWTH
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GLOBAL INGREDIENTS US CHEESE
2012 Full Year Results