Goat Industry… Markets & Marketability Presenter: Michael Domingues Woolwich Dairy Inc.

1. Goat Industry…Markets & MarketabilityPresenter: Michael Domingues Woolwich Dairy Inc.

2. Topics • A brief synopsis of the industry, specialty cheese then specifically goat cheese • What is fueling the growth of the industry • Future challenges and opportunities facing the industry in years to come

3. Cheese Consumption

4. More Cheese please…NOW! • The cheese industry continues to grow in leaps and bounds • Cheese consumption in Canada, Mexico and the US combined exceeded 5.0 million metric tons in 2006. • Since 2001, cheese consumption in North America has increased at an annual average rate of 2.3%, with most of the gains occurring in the US.

5. US Cheese Consumption • Cheese consumption is currently estimated at about 31.4 pounds per capita • US annual cheese consumption per capita is projected to reach 33 lbs. by 2013 (What’s in Store 2006)

6. US Consumption continued… • Between 1994 and 2003, total U.S. cheese consumption grew from 7.0 billion lbs to 8.8 billion lbs, a 26% increase. (Source: US Dept. of Agriculture, 2005)

7. Canadian Cheese Consumption • Annual per capita consumption of overall cheese reached 26.84 lbs in 2006 • Specialty cheese per capita consumption doubled from 8 lbs in 1980, to 16 lbs in 2006 ( Source: Canadian Dairy Council, 2007)

8. Comparative Cheese Consumption (Source: FAS/CMP/DLP, 1999)

9. Specialty Cheese

10. Specialty Food…still on the rise! • Entire specialty foods market in US demonstrated a compound annual growth rate of 7% over past several years Source: Packaged Facts released by marketresearch.com

11. Specialty Cheese • Specialty Cheese sales in America soared to more than $650 million in 2005, a 14.2% increase from the previous year • In 2004, over 35% of stores in the US offered a Specialty Cheese department, (Source: What’s In Store 2006)

12. Deli items responsible for the most growth! • Most growth in 2002-2004: • Salads: 13% • Prepackaged Items: 13% • Deli Specialty Cheese: 12% (Source: What’s in Store 2004)

13. Specialty Cheese • In the US, Specialty cheese consumption increased five times faster than commodity cheese consumption between 1994 and 2003 (Source: What’s in Store 2006) • Between 1994-2003 Specialty cheese consumption increased from 420 million lbs to 815 million lbs, a 94% jump. (Source: US Dept. of Agriculture, 2005)

14. Specialty Cheese • 1993 to 2003, cheddar production in Canada grew by 21% while specialty cheese production grew by 32% (Canadian Dairy Commission, 2004) • 2004, Canada’s production of specialty cheese was 215,750 tonnes (Canadian Dairy Commission, 2004)

15. Growth of Cheddar vs. Specialty Cheese • Source: York University (1995)

16. Getting your Goat!

17. Goat Milk Production in Canada • National production of Goat’s milk increased by approx. 20% between 2001-2004 • National production surpassed 20 million litres in 2004 (Source: Ministry of Agricultural Food and Rural Affairs, OGMPA, 2004)

18. Goat Milk Production in Canada • Total: 20, 069,000 litres produced in 2004

19. Goat Cheese Supply & Demand • Demand for goat milk is primarily driven by increased demand for goat cheese • In 2001, approximately 45% of all goat milk produced was used for cheese • In 2004, this number exceeded 60% • Ontario continues to be Canada’s largest producer of goat’s milk in Canada (Source: Ministry of Agricultural Food and Rural Affairs, OGMPA, 2004)

20. Fastest Growing Cheese Type in Deli! • In 2005, Goat cheese was the 9th fastest growing type of cheese. (Source: What’s in Store 2006) Top 10 List of Fastest Growing Cheese Types… *Gorgonzola, Asiago, Mascarpone began with a smaller base resulting in inflated growth rates

21. Goat Cheese Category • The key categories of goat cheese are Fresh Unripened, Soft ripened, and mixed cheeses

22. Goat Cheese Sales Segment • The majority of goat cheese product is sold at the large retail outlet level (Source: Ministry of Agricultural Food and Rural Affairs, OGMPA, 2004)

23. Goat Cheese • Goat cheese sales dollars increased more than 101% from 2003 – 2005 • Dollar sales in 2005 were up 48% from 2004 • Consumers no longer have to go to specialty stores to find their goat cheese, because it’s stocked at almost all major grocery retailers Source: What’s In Store 2007

24. Goat Cheese Growth • Source: York University (1995)

25. Goat Cheese Growth…Why? • Health Conscious consumers are better educated on nutritional facts • In comparison to other soft cheeses, such as cream cheese made from cow’s milk, goat cheese is significantly lower in fat, cholesterol, AND calories

26. Goat Cheese Growth…Why? • Lactose Intolerance- lower levels of lactose found in Goat’s cheese can make it a suitable alternative to cow’s cheese • Goats milk contains 13 % less lactose than cow’s milk and 41% less than human milk • Cow’s Milk Allergy- consumers with cow’s milk and cheese allergies may be able to consume goat’s milk products because it contains a different type of protein • 5% of consumers are allergic to the proteins in cow milk cheeses

27. Bolder Cheese is the future… • Consumers continue to be fascinated with stronger, bolder offerings…maturing tastes • Domestically produced aged cheeses can rival European imports • Surface Ripened cheese sales are up 15% from 2004-2005 (What’s in Store 2006) • In years to come, the movement toward artisan, ethnic and organic cheese types will become stronger (Source: What’s In Store 2007)

28. Identify the trends…no longer just a fresh chevre world! • These consumers are better traveled and their palates have expanded towards more adventurous foods • Almost a necessity for stores to offer a range of products to distinguish themselves from competitors

29. Challenges to the Goat Cheese Industry • Sku/Industry Consolidation- Mergers & acquisitions and increased competition as more players enter the market • Control Label-Increased pressure from large chain store towards private label • Pricing- result of increased competitive landscape

30. Thank You