42 FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES | ANNUAL REPORT 2019

CEO Business Review Dairies CORE MARKETS Malaysia • Thailand Singapore •

NEW Products • F&N MAGNOLIA Gotcha Range for Kids in Thailand • Healthier Choice Symbol Beverages Endorsed by the HPB in Singapore • Range of New Products in Malaysia and Thailand

No. 1 F&N is the No. 1 No. 1 Sweetened CARNATION is the No. 1 Total Evaporated Milk in Malaysia Brand in Thailand

No. 2 F&N MAGNOLIA is the No. 2 Liquid Milk in Singapore BUILDING A SUSTAINABLE FUTURE 43

No. 1 F&N KING’S Potong is the No. 1 Potong Brand in Singapore 44 FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES | ANNUAL REPORT 2019

CEO Business Review Dairies CORE MARKETS Malaysia • Thailand Singapore • Ice Cream

DAIRIES MALAYSIA to extract value in the canned milk segment. The strong performance was due to successful +0.9% FY2019 PERFORMANCE product launches, effective marketing activities Dairies Malaysia and increased production capacity, bolstering The Malaysia F&B sector continued to be revenue grew 0.9%. characterised by sustained downward price Dairies Malaysia’s position as the clear market Due to higher trade pressure and poor consumer sentiment. Despite leader in the country. promotion, its PBIT challenging market conditions, Dairies Malaysia fell 5.6% maintained its undisputed leadership position The Group reinforced its No.1 condensed milk in the condensed and evaporated canned milk position with F&N, GOLD COIN and TEAPOT with segment with F&N, TEAPOT, GOLD COIN and the introduction of F&N Full Cream Condensed CARNATION brands. This year, our sales volume in Milk in milk sticks and squeeze tube packaging evaporated canned milk and sweetened condensed formats. The first-of-its kind in Malaysia’s full cream milk each grew ahead of its respective categories. sweetened condensed milk segment, the new Accordingly, Dairies Malaysia FY2019 revenue grew on-the-go packaging provided consumers the No. 1 0.9%, to $307.0m, boosted mainly by strong export convenience they need to enjoy the sweetness volumes to halal core markets, China and the SEA and goodness of F&N’s famous milky and creamy The Group reinforced its No. 1 condensed region. Despite higher sales, Dairies Malaysia PBIT condensed milk, anytime and anywhere. Available milk position with fell 5.6% to $38.2m due to higher trade promotion. in three flavours – full cream, chocolate and F&N, GOLD COIN and strawberry – these new products were unveiled at TEAPOT in Malaysia; To reinforce our canned milk leadership position the launch of F&N 135th ANNIVERSARY FIESTA, sales volume grew in Malaysia, the Group will continue to innovate a five-day on-ground event to reward customers ahead of its respective to achieve growth. We believe that there is scope for their unwavering support to the F&N brand for categories to further deepen Dairies Malaysia’s distribution the past 135 years. coverage, as well as develop new product applications and packaging to generate sales. CARNATION also introduced a new product this Following our hugely successful introduction of year – the CARNATION Sweetened & Condensed squeezable tube for sweetened condensed milk, Creamer. The new product roll out was held in the Group is continuing to look at applying new conjunction with the CARNATION GO GOURMET Introduced F&N Full Cream Condensed COOKING SHOWCASE campaign, where celebrity packaging formats to launch more innovative Milk in milk sticks products. By leveraging its strong position in the chef created delicious gourmet dishes using the and squeeze tube canned milk category, Dairies Malaysia will also new product in a series of cooking demonstrations. packaging formats, continue to focus on growing its presence in the first of its kind in the RTD milk category. Building on the tagline, LIQUID MILK: NEW GROWTH PILLAR Malaysia “PURE ENJOYMENT. PURE GOODNESS”, it will continue with its targeted marketing activities F&N MAGNOLIA/FARMHOUSE to drive the growth of this segment in the F&N MAGNOLIA continued to invest in online years ahead. Leveraging the Group’s in-house media campaigns as well as sponsorships to technical expertise, product offerings and trusted increase brand awareness and drive product trial. relationships with consumers, F&N MAGNOLIA Rolled out the and FARMHOUSE are well-positioned to support One of the key events this year was the renewal new CARNATION Sweetened & Dairies Malaysia’s ambition of building its new pillar. of F&N MAGNOLIA’s packaging. F&N MAGNOLIA Condensed Creamer revitalized its packaging design for all its liquid in Malaysia CANNED MILK: F&N/TEAPOT/GOLD COIN/ milk products in Malaysia. Through the years, CARNATION the brand has constantly stayed relevant to Dairies Malaysia is the undisputed leader in consumer needs and lifestyles by providing quality Malaysia’s condensed milk category. This year, fresh wholesome nutritious milk to nourish despite intense market competition, each of Malaysians. F&N MAGNOLIA aims to play a Dairies Malaysia’s sweetened and evaporated bigger part in consumers’ lives through product Renewal of F&N canned milk sales outpaced its respective innovation, offering milk that is great-tasting MAGNOLIA packaging segment, underscoring our ability to continue and nutritious. In line with the new packaging roll design in Malaysia BUILDING A SUSTAINABLE FUTURE 45

out, F&N MAGNOLIA collaborated with Disney coverage, CARNATION was able to grow volume for joint promotions with favourite Disney movie and reinforce its image as the premium and preferred +9.9% character collectibles that consumers love. choice in food and beverage applications. Today, Dairies Thailand The brand advertised through digital social CARNATION is the No.1 Evaporated Milk brand revenue grew 9.9%; media, outdoor billboards, in-store displays in Thailand. PBIT surged 36.6% and sampling activations to drive brand visibility and consumer trial. In 2007, the Group acquired relevant Nestle’s production facilities and equipment in Thailand, along with the TEAPOT brand and licensing rights DAIRIES THAILAND to some of Nestle’s canned and sterilised milk brands. Nestle’s trademark licence agreement was FY2019 PERFORMANCE subsequently renewed in 2015 for 22 years, until Dairies Thailand continued to excel as the Group’s 2037, for the manufacturing and distribution of best performing unit. This year, driven by successful Nestle’s products – CARNATION and BEAR BRAND TEAPOT is now marketing and branding initiatives for domestic and in Singapore, Thailand, Malaysia, Brunei and Laos. amongst the top Indochina markets, along with capacity expansion, canned milk brands in Dairies Thailand FY2019 revenue grew 9.9%, This year, CARNATION ran a three-month long Cambodia and Laos to $620.8m. Boosted further by lower input costs campaign, CARNATION AROI THUENG JAI, and favourable translation effects, its PBIT surged AROI GRAI KAB NADECH, using outdoor, 36.6%, to $118.4m. In constant currency, Dairies digital and print advertising platforms to reach Thailand FY2019 PBIT grew 31.5%. consumers. The campaign covered both point-of- purchase advertising – sampling, shelf talkers and Despite the current competitive landscape, Dairies promotion – and off-premise advertising which Thailand was able to maintain its leading canned included decoration of pushcarts, restaurants milk position with TEAPOT and CARNATION brands, and coffeeshops in CARNATION livery. Rolled out and continued to outperform its competitors in the nationally from March to June 2019, the campaign condensed milk and evaporated milk categories, resulted in double-digit volume growth during 5 achieving volume share gains. The better-than this period. NEW PRODUCTS market performance was due to its ability to innovate launched in Thailand products that consumers love, supported by CANNED MILK: TEAPOT successful trade programmes, as well as its focus Riding on the launch of TEAPOT’s popular • TEAPOT Caramel on expanding distribution across the country. sweetened condensed milk in squeezable tube last with added fresh milk year, Dairies Thailand recently added another flavour Dairies Thailand export markets of Cambodia and to its range of convenience on-the-go squeezable • F&N MAGNOLIA Lactose-Free Plain Laos continued to perform strongly. Higher exports tubes – TEAPOT Caramel with added fresh milk, from the expansion of TEAPOT Sweetened Beverage the first and only caramel flavoured sweetened • F&N MAGNOLIA Plus Lactose-Free Creamer Squeeze Tubes to Indochina accounted for condensed milk in squeezable tube in Thailand. Peppermint Brownie the strong performance. As a result of our intensified Supporting the launch was a series of marketing • F&N MAGNOLIA Plus efforts to position TEAPOT as the preferred export activities, including television commercials, digital Lactose-Free Vanilla brand, TEAPOT is now amongst the top canned milk and mobile campaigns, extensive nationwide White Chocolate brands in Cambodia and Laos. sampling and various point-of-sales initiatives. • F&N MAGNOLIA As a result of the successful marketing campaign, Gingko Plus Milk Dairies Thailand will continue to invest for the TEAPOT gained volume and market share. in Salted Caramel long-term growth in our brands, assets and people. We will continue to focus on the execution of marketing activities and innovate to find the best solutions for our customers. We will leverage our brand strength and established distribution network to grow our positions in the RTD milk segment in Thailand; and reinforce our leading positions in canned and sterilized milk segments through innovation and renovation and brand support. In addition to driving domestic volume, we will also continue to look to increase our exports and seek to expand the market for our products regionally by expanding our sales and distribution networks and increasing our product offerings.

CANNED MILK: CARNATION CARNATION, one of Nestle’s brands licenced to NCARNATION is the No. 1 evaporatedo milk brand .in Thailand 1 F&N, remains the favourite brand in the canned milk sector in Thailand. Since securing the manufacturing, marketing and distribution rights of CARNATION in 2007, the brand has grown from strength to strength. Through targeted brand marketing initiatives and expansion of hawker 46 FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES | ANNUAL REPORT 2019

CEO Business Review Dairies CORE MARKETS Malaysia • Thailand Singapore • Ice Cream

LIQUID MILK: F&N MAGNOLIA AND LIQUID MILK: FARMHOUSE AND BEAR BRAND F&N MAGNOLIA 7 Dairies Thailand extended its F&N MAGNOLIA’s In the Christmas festive season, FARMHOUSE NEW PRODUCTS offering of UHT milk to include a premium lactose-free launched a new limited-edition FARMHOUSE launched in Singapore, range – F&N MAGNOLIA Plus Lactose Free Plain, Peppermint Chocolate Flavoured Milk that brought including F&N MAGNOLIA Plus Lactose Free Peppermint a perfect combination of peppermint, chocolate and • F&N MAGNOLIA Brownie and F&N MAGNOLIA Plus Lactose fresh milk. Available during the festive season, this Plus Kurma Free Vanilla White Chocolate. F&N MAGNOLIA new addition delighted fans with farm fresh milk from • F&N MAGNOLIA successfully ran a targeted online campaign coupled Australia with a refreshing delicious burst of cool Purple Taro with in-store sampling to garner awareness. peppermint. To create awareness and generate trials, • F&N MAGNOLIA The Group gained a 6% of lactose free segment FARMHOUSE rolled out a two-month long campaign Summer Peach market share. More recently, Dairies Thailand added supported by point-of-sales materials, online Yoghurt Smoothie a new caramel flavoured milk to its F&N MAGNOLIA advertising, in-store sampling and PR activities. with Pear Bits Plus Ginkgo range of malt, chocolate and plain • F&N FRUIT TREE flavoured UHT milk. Our increasing product offering F&N MAGNOLIA, Singapore’s trusted brand of milk Fresh Wonders Kale, in the UHT milk segment allows us to continually for over 80 years continues to delight consumers Spinach & Broccoli Juice Drink meet the diverse and changing needs of our with great tasting milk, innovative products and consumers. We expect our focus on this segment exciting collaborations with Walt Disney. The new • FARMHOUSE Peppermint will contribute to the sales growth of Dairies Thailand. addition to the F&N MAGNOLIA Fresh Milk lineup Chocolate Flavoured were the F&N MAGNOLIA Plus Fresh Milk with Milk BEAR BRAND continued to educate consumers on Kurma, and the limited-edition F&N MAGNOLIA the nutritional importance of folate, especially to Purple Taro Fresh Milk. F&N MAGNOLIA continues women. This year, BEAR BRAND collaborated with to reinforce its position as the leading and trusted Nestle Mom & Me in giving out BEAR BRAND High milk brand in Singapore. Folate Sterilised Milk to mothers who were in their first trimester of pregnancy. As part of the in-store YOGHURT DRINK: F&N MAGNOLIA promotional exercise, soon-to-be mothers were This January, F&N MAGNOLIA added a delicious, provided with product knowledge and sampling. fat-free new flavour to its no-fat yoghurt smoothie range. F&N MAGNOLIA Summer Peach Yoghurt Smoothie with Pear Bits is absolutely fat-free, DAIRIES SINGAPORE and made from real fruit juice with added juicy pear bits. This bio-live yoghurt contains not only FY2019 PERFORMANCE live cultures, which are necessary for a healthier This year, Dairies Singapore continued to excite the digestive system, it also contains calcium, market by introducing new and healthier products. a mineral essential for building strong bones. It expanded its F&N MAGNOLIA Plus milk range F&N MAGNOLIA Summer Peach Yoghurt Smoothie with the introduction of F&N MAGNOLIA Plus with Pear Bits, just like its other yoghurt smoothies, Fresh Milk with Kurma, as well as limited-edition carries the HPB’s Healthier Choice logo. To drive F&N MAGNOLIA Lo-Fat Higher-Cal Purple Taro awareness, the rollout of this new flavour was Fresh Milk. F&N MAGNOLIA also launched a new supported by both digital and in-store advertising. reduced sugar yoghurt smoothie, F&N MAGNOLIA Summer Peach Yoghurt Smoothie with Pear Bits. JUICE: F&N FRUIT TREE FRESH F&N FRUIT TREE Fresh Wonders – the premium F&N continued to respond to consumers’ desire pasteurised juice range of F&N FRUIT TREE Fresh – for healthier beverage options by adding another launched another chia seed juice drink, F&N FRUIT no-sugar variant to its F&N FRUIT TREE Fresh TREE Fresh Wonders Kale, Spinach & Broccoli Wonders range. Launched in February, F&N FRUIT Juice Drink with Organic Chia Seeds in the local TREE Fresh Wonders Kale, Spinach & Broccoli market. Supported by launch campaigns, these new Juice Drink with Organic Chia Seeds is made from products generated positive response and helped 100% juice with no added sugar! This healthy, boost sales and market shares. antioxidant-rich juice blend comprises a healthy BUILDING A SUSTAINABLE FUTURE 47

blend of three super vegetables (kale, spinach and gula-melaka flavoured filling, F&N KING’S Potong No. 1 broccoli) with organic chia seeds, the much-loved once again excited taste buds with much fanfare superfood. throughout the island. Supported by roadshows, F&N KING’S Potong online and digital advertising and in-store sampling remains the No. 1 Potong brand in Awarded HPB’s Healthier Choice symbol, across major retailers in Singapore, F&N KING’S Singapore one serving of the F&N FRUIT TREE Fresh Wonders Potong Signature Potong Onde Onde successfully Kale, Spinach & Broccoli Juice Drink fulfils the raised brand awareness and drove trials. recommended daily vitamin C intake and the daily requirement of 2+2 servings of fruits and Another addition to the F&N KING’S Grand family vegetables. To further build awareness and drive is the F&N KING’S Grand Mint ice cream stick. product trial, F&N FRUIT TREE Fresh Wonders Featuring the familiar crunchy chocolate coating focused its consumer engagement initiatives on and creamy ice cream core, which is synonymous digital platforms, outdoor and sampling activities, with F&N KING’S Grand, this new introduction also extending its reach to more consumers both comes with a touch of refreshing mint, crispy wafer on-ground and on its social media pages. bits and roasted almonds.

F&N MAGNOLIA Wafer is a classic ice cream, DAIRIES ICE CREAM loved and enjoyed by Singaporeans. In October, its three popular flavours – Chocolate, Durian and MALAYSIA Yam – were joined by two new exciting flavours – On the back of successful marketplace execution, Blueberry and Mango. F&N MAGNOLIA Wafer ice new product introductions and effective marketing cream is the delectable sweet treat conveniently campaigns, F&N KING’S Potong cemented its packed for everyone’s enjoyment. F&N MAGNOLIA position as the leader in the potong ice cream brought this classic ice cream closer to home category in Malaysia. through effective advertising and roadshows in the marketplace. In March, in conjunction with the Hari Raya festivities, F&N KING’S unveiled the new F&N F&N MAGNOLIA Mag-A-Cone also expanded KING’S Potong Signature Onde Onde, an all-time its offerings with the introduction of the new favourite flavour amongst locals. F&N MAGNOLIA F&N MAGNOLIA Mag-A-Cone Strawberry. F&N also rolled out a limited-edition superheroes ice MAGNOLIA Mag-A-Cone Strawberry boasts a delicate cream range. In collaboration with Warner Brothers, balance of sweet and tangy tastes with the of three limited-edition variants from the F&N an ice cream cone, offering a delightful indulgence MAGNOLIA Justice League range were introduced. that is guaranteed to please ice cream fans. Supported by digital and strong point-of-purchase and other in-store programs, the campaign THAILAND successfully elevated F&N MAGNOLIA’s presence FY2019 was another exciting year for F&N in the market. MAGNOLIA as it rolled out a slew of new products from its ice cream range in Thailand. 25 In addition to introducing new products to excite the locals, F&N also secured the contract to First up was the F&N MAGNOLIA Gotcha range. Ice Cream introduced supply ice cream to the Malaysia Airlines (“MAS”), This year it extended its offerings by introducing 25 NEW PRODUCTS, the national carrier of Malaysia. As part of the three new cartoon character ice cream variants to including collaboration, F&N would supply delicious, capture the hearts and minds of kids. Launched • F&N KING’S Potong bite-sized ice cream to passengers flying to Japan, during the summer months, F&N MAGNOLIA Signature Onde Onde Hong Kong and Australia. In addition to reaching Gotcha introduced the F&N MAGNOLIA Gotcha wider customer base, the contract with MAS Koala, a bubble-gum flavoured ice cream in the • Range of F&N MAGNOLIA underscores our ability to meet stringent food shape of a koala; F&N MAGNOLIA Doraemon Justice League safety requirements imposed by the airline. Bell, a refreshing grape and strawberry flavoured ice confection ice cream inspired by the popular Japanese manga • F&N KING’S Grand Besides our contract with MAS, F&N has also made character, Doraemon; and the F&N MAGNOLIA Mint ice cream stick further inroads into the convenience sector. Through Gotcha Cool Gel Grape, a new grape-flavoured • F&N MAGNOLIA various programs, we successfully expanded our ice ice cream. These new flavours were met by strong Wafer ice cream cream freezer placements to a convenience retail positive response. in two flavours, chain store, MyNews, and more than 300 petrol marts Blueberry and minimarts and provision shops across Malaysia. In response to the increasing demand in ice Mango cream variety, distinct tastes and consumption • F&N MAGNOLIA SINGAPORE convenience, F&N MAGNOLIA further expanded Mag-A-Cone Strawberry F&N KING’S Potong remains the No.1 potong its on-the-go ice cream range with the introduction of a limited-edition flavour, F&N MAGNOLIA Wafer • F&N MAGNOLIA brand in Singapore. This year, F&N KING’S Potong Gotcha Koala, captivated fans with the launch of F&N KING’S Taro, and F&N MAGNOLIA Sundae Strawberry cup Doraemon Bell and Potong Signature Onde Onde in March. Made with this year. These conveniently packaged ice creams Cool Gel Grape real grated coconut and infused with a delicious are the perfect treats for all to enjoy.