2004 Business Plan

Condiment
October 2004
Vision
Maintain current majority share and profitability through use of
technology and cost reduction while exploring next generation
packaging options.

Business Plan 2004 Confidential Property of Alcan

Market Analysis
Condiment Market
 Total 2004 market size is estimated at $168MM
 Alcan sales are approximately $69MM or 40% of the overall
market
 Annual market dollar growth rate is estimated at 2.4%
 Alcan dollar growth rate forecast with the market at 2.4%
 Segments:
 High barrier (foil) is 75%
• Alcan’s share approx. 52%
 Low/Medium barrier is 25%
• Alcan’s share approx. 24%

Business Plan 2004 Confidential Property of Alcan

Market Analysis
Condiment Market – Dynamics / Drivers
 Customers continue to consolidate and to leverage their suppliers
 Foodservice / eating away from home continues to grow at a faster rate
than retail grocery
 Food consumed away from home will reach 60% of the food market
by 2010. Source: Pakintell Trendwatch, November 2003
 Quick Service Restaurant (QSR) sales drive condiment market growth,
products, trends.
 Over the past five years, off-premise consumption has grown at twice
the rate of on-premise to the extent that over half of all restaurant
meals are considered ‘takeout’. Source: Technomic, Inc.
 Due to rapid inventory turnover at larger chains, there is a potential
for substitution of lower barrier packaging
• from foil to non-foil, from current non-foil to more cost-effective
non-foil

Business Plan 2004 Confidential Property of Alcan

Market Analysis
Condiment Market – Dynamics / Drivers
 Consumers value convenience, time, freshness, ease of
preparation and portability
 Source: USA Today, Marketers feed kids’ craving for dippable food, April 8,2004

 Trend from sachets to cups with peelable lidstock allowing

consumers to dip foods into sauces / condiments
 Ongoing trend of adults and kids eating fewer meals and
snacking more often

Business Plan 2004 Confidential Property of Alcan

Customer Analysis
Other
Heinz Customer Market Share
43%
30% Value ($M) Share
Heinz / PPI $50.9 30.4%
Golden State $20.0 11.9%
Unilever $16.0 9.6%
McCormick $4.5 2.7%
Kraft $4.1 2.4%
GSF Other $72.0 43.0%
Kraft McCormick Unilver 12% Total $167.5 100.0%
2% 3% 10%

 The ketchup market includes many players; although the volume

remains primarily with Heinz (largest share), Golden State Foods
& McCormick

Business Plan 2004 Confidential Property of Alcan

Customer Analysis
 These large customers have enormous leverage as they
purchase flexible packaging for products outside as well as within
this market.
 Smaller accounts allow higher profit margins.
 Contract / Bid Calendar

2004 2005 2006 2007

 $5MM  $3.5MM  $60MM
Heinz Benchmarking Unilever McCormick – May Heinz / PPI – April

Business Plan 2004 Confidential Property of Alcan

 Competitor Analysis
Total Market Size = $167.5 million (2004)

Competitive Market Share

Value ($MM) Share
Winpak Other Alcan $69.0 41.2%
4% 13%
Curwood $24.0 14.3%
Alcan Printpack $24.0 14.3%
ClearLam 41% ClearLam $23.0 13.7%
14% Winpak $6.0 3.6%
Other $21.5 12.8%
Total $167.5 100.0%
Curwood
Printpack
14% 14%

 A limited number of competitors focus on this market; Curwood &

Printpack in foil and ClearLam in non-foil

Business Plan 2004 Confidential Property of Alcan

Competitor Profile - Curwood
 Historical
 Estimated $24MM in 2004
 Volume at GSF declined over four years from $16MM to $3MM
 Retained TacoBell business at Unilever in 2003 by cutting Pechiney’s
proposed price 16% at the last minute and agreeing to pay for
efficiency losses in Santa Ana and Corona ($335M paid in early
2004)
 Technology
 Consolidated structures and created uniform sealants with wide
operating windows
 Extrusion and adhesive laminations, blown film

 Tactics Exhibited in Condiment Market

 Retain remaining volume at current condiment customers and gain
new volume in higher margin markets such as Lidstock & Specialty

Business Plan 2004 Confidential Property of Alcan

Competitor Profile - Printpack
 Historical
 Estimated $24MM in 2004
 Technology
 Extrusion and adhesive laminations, blown film
 Flexo printing
 Tactics Exhibited in Condiment Market
 Service, sales coverage & consistency of sales

Business Plan 2004 Confidential Property of Alcan

Competitor Profile - ClearLam
 Historical
 Estimated $23MM in 2004
 Technology
 Single head adhesive lamination (non-foil), flexo printing
 Families of non-foil structures, strong cello offering
 Tactics Exhibited in Condiment Market
 Aggressive pricing
 Very strong service, responsiveness
 Guaranteed two week turnaround for repeat orders
 Limited product range

Business Plan 2004 Confidential Property of Alcan

Critical Issues Analysis
 Pressure on ketchup condiment structure
 Negative margin at Heinz on current mayo structure
 Complete qualification of alternate raw materials for high volume
structures
 Condiment structure transfer from Akron to SLP
 Lack of access to Heinz Marketing
 Heinz considering Heinz Europe metallized structure or low-
barrier alternative for ketchup
 NTC Product Development Engineer not focused exclusively on
condiments

Business Plan 2004 Confidential Property of Alcan

 SWOT Analysis
Market share creates barrier to entry Large scale customers and suppliers

Weaknesses
squeeze converters in the middle
Opportunities Strengths

Industry knowledge
Ability to service very small order
Extensive product offerings
quantities
Related product offerings (lidstock,
cupstock, bulk liquid)

Leverage technological resources to Changing requirements may allow lower

invent proprietary structures barrier options where we lack a clear

Threats
leadership position
Continue to drive out costs to make this
market unattractive to competitors Sales are concentrated at Heinz / PPI,
where Alcan is the largest packaging
Leverage capital availability to improve
supplier
cost position

Business Plan 2004 Confidential Property of Alcan

Goals
In 2005, Alcan will grow its Condiment business by:
 Commercializing more cost-effective ketchup structure
 Commercializing better value mayo structure
 Create ketchup package for Dashboard Dining market trend
 Create high barrier, non-foil heat resistant surface (non-
laminated) for unprinted backweb
 Create high barrier, non-foil heat resistant surface (non-
laminated) for printed frontweb.

Condiment Platform Structures / PCP Projects list has detailed

summary

Business Plan 2004 Confidential Property of Alcan

Objectives

2005 2004 2005 2004

Sales Sales Income Income
Condiment $80,892 $73,430 $ $
% %

Business Plan 2004 Confidential Property of Alcan