Dear Growers, We would like to thank you for your continued support of T&G Global in 2016. It has been another strong year for the New Zealand Apple and Pear industry and T&G is proud to be associated with the continued growth in profit and volume we have seen in recent years.

The 2016 season has been, on the whole, a positive one, with key markets continuing to demand our variety range from NZ. We have been very pleased at the consistent growth and demand for Jazz across our traditional markets of the UK, Germany and USA, while newer markets such as Thailand, China, Japan and the UAE continue to perform and compete for fruit. Envy has again increased in volume in 2016, allowing us to reach a wider audience and ensure we are building the base of Envy consumers as volumes increase over the next 3-4 years. Highlights included a strong performance in Vietnam for Envy plus better outturns late in the season.

Our Royal Gala programs performed well across many markets and NZ Royal Gala continues to be preferred due to its superb taste, colour intensity and overall eating experience. Both Braeburn and Pink Lady performed well mainly selling in the UK and EU, with returns stronger than previous seasons. Fuji had a successful season with Taiwan again preferring NZ fruit over other southern hemisphere growing regions.

The NZ industry and the T&G team are well placed to meet 2017 season with prospects in general looking similar to 2016. All of our main markets are indicating they require similar programs to last season and we expect pricing levels to also be similar to last season. We have seen some major world events such as the US election and Brexit occur, with the main impact for NZ growers being currency. Unfortunately the UK pound has depreciated sharply and this will impact returns if it stays at current levels in 2017. However, the US economy seems positive after the election result and we hope that confidence is reflected in the strength of the USD.

The T&G team would like to wish our loyal and dedicated growers well through the summer months leading up to harvest. We also hope you take the time to have a well-earned break over the Christmas and New Year period as we gear up for a record NZ crop in 2017.

T&G Apple Grower Update NOVEMBER 2016 | 1 From the Markets

NORTH AMERICA

The Taylors Gold, Comice and Bosc pears sold well this summer with higher selling prices achieved in market and a continued breakthrough on accepting size 100’s which helped the hail affected volume.

Royal Gala sales were well executed with a higher volume, the import Gala market turned out to be disappointing relative to expectations created by a smaller WA crop. However with 50% of the ENZA Royal’s selling to specific retail programs in Canada and Eastern USA, the ENZA price was higher than the previous season.

Jazz™ had initial issues with bitter pit but continues to sell very well with Walmart demanding to stock bagged and loose Jazz™ 12 months. Good demand for small sizes in bag formats has been created for 100’s and smaller on a 12 month basis.

Envy™ continues to buck trends with the selling price rising to average over $US57.00 on all sizes, despite a 40% increase in volume over the previous year. Envy™ is a top 10 apple by sale dollars and the best commercially available apple of the North American summer. Great strides were made in sales to Walmart, Trader Joes, HEB and Costco; all accounts that have capacity to grow sales as volume increases.

Braeburn, Fuji, Pacific Rose and Pink Lady sold better than the previous season and helped round out NZ themed promotions Oppy ran with retailers.

New Zealand Jazz™ and Envy™ apples on display in stores throughout North America. Below Right, Envy™ billboard in Times Square, New York.

T&G Apple Grower Update NOVEMBER 2016 | 2 UNITED KINGDOM

We have just concluded another excellent season. NZ$ we have already begun the task of increasing Cox, Braeburn, Envy™ and Pink Lady all sold Jazz™ selling prices to our customers, which is through in the correct timeframes, with values a necessity in order to maintain a similar level of holding to where we expected them to be. Market grower returns both for European growers in the conditions were not dissimilar to 2015, with little season just commenced, and for NZ in 2017. For oversupply on the major varieties and selling the 2016/17 Northern Hemisphere season the through well, in order to meet up with New Season Jazz™ crop looks to be +6% in volume terms, up Northern Hemisphere. to 1.6 million TCE, which presents no issues for that volume to be sold in the correct timeframe With Jazz™ we had a stand out season, 11% more between UK, Continent and Asia. volume sold than 2015, values holding at a least 2015 levels, and making for another record season. Jazz™ was showcased at two tasting Shows this Summer, The growth of both Jazz™, and Pink Lady continues BBC Good Food Show NEC, UK’s premier tasting event and unabated in the UK, highlighted in Kantar data BodyPower, Europe’s biggest fitness and nutrition event. below. The apple market is static but consumers are changing what they are buying, less of the traditional varieties such as Granny Smith, Golden and Braeburn and more of Jazz™ and Pink Lady.

The Jazz™ value at retail level is now at all-time high of £36.5million, making it the 7th most popular apple in the UK, we have seen an increase in Jazz™ sales in the UK of +31% over the past 3 years, and selling values are increasing. With the post- Brexit deflation of the £ sterling versus Euro and

APPLE VARIETAL PERFORMANCE OCTOBER 2016

% CHANGE SPEND % CHANGE VOLUME % SHARE VALUE % SHARE VOLUME 40

29 30

24 24

20 20 18 20 17

12 10 10 10 7 7 6 6 5 4 4 3 3 3 3 2 1 1 1 1 1 1 1 1 0 0 0

-1 -3 -4 -4 -5 -5 -10 -7 -7 -9 -11

-15 -15 -16 -20 -19 -20

-30

-36 -40 COX BRAEBURN GALA/ROYAL GALA GRANNY SMITH GOLDEN DELICIOUS EMPIRE PINK LADY JAZZ JONA GOLD RUSSETS RED DELICIOUS BRAMLEY

SOUTHERN HEMISPHERE JAZZ CUSTOMER SPLIT 2016

120

100

80

60 TCE K

40

20

0 Sainsbury Aldi Tesco M&S ASDA Waitrose Morrisons AXIS TITLE

T&G Apple Grower Update NOVEMBER 2016 | 3 CONTINENT

The 2016 NZ season was another major success, expectations. During the meeting we gave a sneak having achieved the second best result in the preview of the Jazz™ brand re-fresh which will history of our office for Jazz™, Cox Orange Pippin officially be launched early February 2017 at the and the organic apple category. Fruit Logistica Fair in Berlin. Everybody was very enthusiastic and agreed this is an important step Particularly encouraging this year was the to give Jazz™ more visibility. performance of Jazz™. Based on the market demand and growth the plan is to increase As a first indication and outlook for the upcoming plantings with a further 1300ha of Jazz™ over the NZ season we can say that volume expectations next few years as well as 300 ha of Envy™. for the current European season are estimated to be 3% down on last year. When looking to the We ended the NZ Jazz™ season mid September individual countries it has to be noted that crop and started loading the first European Jazz™ in estimate for our main market Germany is 8% South-East France and Italy as soon as it became up on last year. The Russian ban continues for available in the first week of October. The cold European countries and given the main volume nights just came in at the right time to give the in the variety portfolio is not suited for the Asian European Jazz™ and Envy™ the right coloration. market, the European marketers remain worried The eating quality has been outstanding and first for their future. fruit was very well received in the market although the fruit size in the main growing areas is slightly T&G stand at the Fruit Attraction Fair in Madrid. down on last year. Loire Valley are just now finishing their last Jazz™ picks.

In early October we participated at the Fruit Attraction Fair in Madrid. It is a relatively new fair which is still growing in size. The timing of the show suits very well the kick off of the European apple season. Our stand was focused on Jazz™ and Envy™ and this occasion was also used to invite the European growers to our AGM. The meeting was very positive and growers were happy and proud to have Jazz™ and Envy™ in their portfolio as most of the standard varieties and a lot of the other club varieties in Europe are not delivering up to

T&G Apple Grower Update NOVEMBER 2016 | 4 ASIA / REST OF WORLD became a more consistent market at retail level. Kenya The Rest Of World (ROW) selling season for 2016 has and Puerto Rico received their first Jazz™, Envy™ and finished with last shipments departing in week 42 which Pacific Rose shipments which was well received. is 4 weeks earlier than 2015 . To posistion Jazz and Envy in a premium space at retail, A major hail event in Nelson in 2015 saw lower total marketing actiivty, in Thailand, Japan, Vietnam and volumes for 2016 sales. Total TCE’s sold were 1,501,073, UAE, was focused on increasing demand and building down 2% from 2015. exictment with consumers. 2017 will see an increased marketing focus in China , On a more positive note, the following varieties showed Hong Kong , Singapore, Malaysia and Taiwan. encouraging growth. Envy™ 13.9%, Jazz™ 7.2%, Pacific Queen 7.9% and Pacific Rose 16.6%. This shows the Customers responded postively to the efforts put in focus on Enza PVR varieties and their strong demand in by growers to improve quality, with many comments the ROW markets. recieved, praising the great taste, better coloured fruit grown. The improved pressures, decrase in comestic For the first time ever, Envy™ was our largest variety in defects and rots were also noted. ROW overtaking Jazz™. These two key varieties made up 69% of our total ROW sales. Thank you all for your efforts in providing better Due to the aforementioned hail and increased demand quality fruit, this has paid off in your final returns. The in North America and Europe, sales of Royal Gala and stem clipping on Envy™ & Pacific Rose in particular has Fuji in Asia were reduced. However Royal Gala remains significantly reduced puncture defects which caused our third largest variety in ROW with 15.5% of total problems in 2015 . sales.

This volume growth has seen increased selling prices for Envy™, Jazz™ and Royal Gala. Unfortunatley Pacific Queen & Pacific Rose did not perform as well against 2015 pricing due to increased competitior supply and lower demand in certin key markets; China, Singapore and Malaysia.

Thailand remains our largest market despite a planned reduction in volume help maintain pricing and support other markets. Vietnam became number two market for the first time showing the largest growth while maintaining strong selling prices and has become an important reatail market for Envy™ & Jazz™. Other markets to show growth over 2015 were China , Indonesia and Japan. Above: Tesco in Thailand gave away 1,000,000 Jazz™ apples China is an increasingly important market to T&G; Jazz™ over 2 days to customers who brought fresh produce and Envy™ varities did well, contributing to our growth instore. from 2015. The flattening of general economic activity in China saw other NZ premium apples performing below Below: Envy™ and Pacific Rose gift boxes for sale in expectations. Singapore.

Other Asian markets including Hong Kong, Singapore, Malaysia and Hong Kong are all closey linked to China. This means they too were behind in sales comapred to 2015 but fortunatley pricing remained unaffected in some of these markets.

UAE remains our third largest market. Envy™ was launched with a longer term strategy and Jazz grew well in sales. Unfortunatley we experienced slightly lower volumes in Royal Gala.

We continued to develop new markets, Myanmar

T&G Apple Grower Update NOVEMBER 2016 | 5 NEW ZEALAND GROWER RETURN FOR 2016 SEASON

Jazz™ Envy™ Braeburn Royal Gala Granny Smith CN Average $30.05 CN Average $48.25 CN Average $25.20 CN Average $30.12 CN Average $26.40 HG $52.52 HG $32.47 FO $46.48 FO $48.33 SG $42.45 SG $28.12

FO $42.44

Pacific Queen Pacific Rose™ Fuji Fuji Supreme Pink Lady

CN Average $40.50 CN Average $35.25 CN Average $32.00 CN Average $39.40 CN Average $32.60 HG $44.11 HG $37.27 HG $33.49 SG $30.57 SG $30.23 SG $30.79 BG $34.93 FO $50.58 FO $60.03

Cox Orange Pippin Kiku™ Taylors Gold Beurre Bosc Doyenne du Comice CN Average $28.30 CN Average $41.90 CN Average $43.69 CN Average $29.23 CN Average $39.30

KEY CN AVERAGE = CONVENTIONAL AVERAGE HG = HIGH GRADE SG = STANDARD GRADE Red Delicious BG = BLOCK GRADE CN Average $23.87 FO = FULL ORGANIC

Please note: These returns do not include any grower premiums.

T&G Apple Grower Update NOVEMBER 2016 | 6