Reverse the trend v1.0 (english)

Greek FMCG Market Trends
Reverse the Trend
Angelo Massaro
General Manager Greece and Italy
October 2nd, 2013

Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 2
KEY MACROECONOMICS INDICATORS
The recovery from the existing situation risks to be a slow process
-10
-8
-6
-4
-2
0
2
4
6
2008 2009 2010 2011 2012 2013 2014
GDP Private Consumption Inflation
Source: OECD Economic Outlook 93 Projection, May 2013, summary of projections

GREEK FMGC SUPERMARKETS TREND
And FMCG sector is no exception, 250 millions will be lost by the end
of 2013. Can part of that be recovered?
Sources: IRI InfoScan®, FMCG DB. Data at August 2013. Data in Million EUR. Bazar and Random Weight excluded.
5,930
5,748
3,501
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2011 2012 2013 YTD 2014 Fcst
-3,1% -4,4%

• Global Analytics Center of Excellence in Athens
• 12 North America Offices – HQ in Chicago
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- InfoScan Data (1987)
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- First scanning data service in Greece (1998)
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Companies
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Consulting
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ADVISOR TO THE WORLD’S LEADING
CPG AND RETAIL COMPANIES
ESTABLISHED GLOBAL PRESENCE
AND NETWORK
1 Aztec acquisition announced on September 4, 2013

Volume dynamics exclusively based on a spending review
of the shopper basket
TOTAL FMCG DYNAMICS
Source: IRI InfoScan® FMCG DB. Data at August 2013. Volume Sales Trend = Value Sales at constant Price. Bazar and Random Weight excluded.
-3.4%
1.0%
-4.4%
-4.4%
0.7%
-5.1%
Value
Volume
Price
YTD Aug 13
MAT Aug 13
• Are FMCG manufacturers dramatically lowering their price cards?
• Are we observing a loss of loyalty toward major brands?
• Is there a reshaping of shopper basket?

TREND BY DEPARTMENT
The trade-off between price and volume highlights a relevant
sensitivity to price
-1.7%
-0.6%
3.0%
8.7%
0.9%
-8.5%
1.0%
-3.5%
-2.5%
-7.1%
-10.9%
-4.0%
1.8%
-4.4%
Alcoholic Beverages
Food
HBA
HH Care
Non Alcoholic Beverages
Petfood
Total FMCG
Var % Price Var % Volume
• What is food loss of volume describing? Is this a shift toward other channel and shopping occasions? How to
attract shopper back to Supermarkets?
• Non food baskets are full and purely driven by price based decisions. Volumes are there but what about margins?
Source: IRI InfoScan® FMCG DB. MAT August 2013. Volume Sales Trend = Value Sales at constant Price. Bazar and Random Weight excluded.

VALUE SALES MONTHLY % CHANGE
Short term dynamics showing that things are getting worse.
Negative are reported against other negatives.
-10
-8
-6
-4
-2
0
2
4
Var % vs Previous Year Underlying trend
Source: IRI InfoScan® FMCG DB. Total FMCG Value Sales % Change. Underlying Trend: basic sales trend net from seasonality and irregular fluctuations

CATEGORIES PERFORMANCE MATRIX INSIGHTS
• 42 categories performing above
market averages including:
- Milk
- Soft Drinks
- Beer
- Chocolate Tablets
- Margarines
- Choco Wafers
- Fabric Conditioners
- Dishwash
- Infant Milk
• These categories on average are
showing a better price and promotion
elasticity management
• Prices are down only -1,1% and
volume growing above market
averages (+3,1%)
• Is this only due to shopper migration
from other channels or there is a
better trade marketing mix
management?
However not everything is doing badly.
¼ of the categories are growing in supermarkets
Source: IRI InfoScan® FMCG DB. Matrix showing categories performing above and below Total Market Average on Volume and Pricing % Change on a MAT basis
 43 Categories
 25% of Value
 - 1,0% decline
 42 Categories
 25% of Value
 +3,1% growth
 24 Categories
 6% of Value
 - 12,5% decline
 124 Categories
 43% of Value
 - 6,2% decline
-%Volume+1,0%+
- % Price - 4,4% +

MANUFACTURERS AND PRIVATE LABELS
Everybody is playing the pricing game although with different results.
The market is concentrating
-6.5%
2.2%
-2.9%
-3.3%
6.6%
1.7%
-3.3%
-4.1%
-4.5%
-8% -6% -4% -2% 0% 2% 4% 6% 8%
All Others
Private Labels
Top 25
Var % Price Var % Volume Var % Value
45,1% +0,2pp
17,7% +1,0pp
37,2% -1,2pp
• Significant shift of market share points with Private Labels gaining competitive advantage.
• Top branded manufacturers (still favorite destination of Greek Shopper) holding volume via price pressure
• The remainder, representing 37% of the market seems to be stuck in a price war they can’t probably sustain

STORE FORMATS TREND
Modernization of Greek retail structure making a step back.
Smaller supermarkets performing better
8.0%
2.0%
-3.0%
-4.0%
-3.7%
-4.3%
-6% -4% -2% 0% 2% 4% 6% 8% 10%
0-400 Sqm
400-1000 Sqm
1000 + Sqm
Var % Price Var % Volume
• Volume shift from larger surfaces to smaller?
• Smaller surfaces seems to be more aggressive on price (91 and 96 index vs. large Hypermarkets)
- 7,1%
- 1,8%
+ 3,7%

MARKET TREND OTHER CHANNELS
But that does not seem to be the case for traditional retail
reporting a significant step back
Sources: IRI Cash & Carry Service, IRI Traditional and Impulse service, Moving Annual Total August 2013
(*) Trend based on the basket of categories audited representing c. 40% of total channel sales
-4.7%
-9.7%
-7.7%
Cash & Carry
Self Service (*)
Impulse (*)
Var % Value Sales

SHOPPER STORE SELECTION CRITERIA
Greek Shopper is more demanding and willing to switch stores in
order to find what he is looking for.
39%
14%
19%
21%
25%
25%
24%
30%
30%
32%
32%
36%
Familiarity with the store
Good Quality at Low Price
Products
Big Range of Prices
Promotions
Low Prices at Favoured Brands
Brand Range
2013 2010
Source: IRI Shopper Dynamics™ . Answer to Question: What are the criteria to select stores?

FMCG PRICE INFLATION AND BASKET INFLATION
… and his behavior is clearly showing a defensive strategy to protect
his purchasing power.
Source: IRI InfoScan® FMCG DB. Price Inflation calculated on Top 10000 EAN selling across 24 months representing 63% of Sales.
Basket Inflation = average index of the basket price (influenced by the mix)
88
90
92
94
96
98
100
102
104
Price Inflation Basket Inflation

VALUES SALES AND PRICE PROMOTED SALES
Manufacturers and retailers reaction heavily based on price
promotions with clear impacts on margins
90
95
100
105
110
115
120
MAT 2011 MAT 2012 MAT 2013
Value Sales Index MAT 2011 = 100
Promo Sales Index
Source: IRI InfoScan® FMCG DB. MAT August 2013. Bazar and Random Weight excluded.

Sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text
sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text
FORECAST
The formula used in the past few months does not seem to generate
value. If nothing changes this is what we can expect for 2014
Forecasted data points based on historical trends analysis and dynamic regression models leveraging
variables such as available income trends, pricing, promotional pressure evolution by sector
Value Sales %
Change
Volume Sales Price
Actuals
2012 H1 -3,7% -3,2% -0,5%
2012 H2 -2,4% 0,5% -2,9%
2013 H1 -3,3% 2,1% -5,3%
Forecast
2013 H2 -5,4% 0,0% -5,4%
2014 H1 -4,0% -0,4% -3,6%
2014 H2 -1,8% 0,6% -2,4%
Source: Statistical projection on IRI InfoScan® FMCG DB.

QUESTIONS REQUIRING APPROPRIATE ANSWERS
• Are we using the best promotional
mechanics?
• Is there an alternative to price cuts?
• Are we planning the activities properly?
• Are we differentiating our tactics?
• Where are Shopper thresholds in terms of
price sensitivity?
• Are there Shopper segments or trip missions
for which price strategies are not relevant?
• Do we have the right range of products on
the shelf? What is the impact on sales and
margin of range optimization?
• Are we balancing the investment between
media and trade to maximize the margin?
• …
We believe that there are opportunities for both manufacturers and
retailers if we have proper solutions to answers difficult questions

And the size of these opportunities can be as big as €120m. more in
2014
“DO NOTHING SCENARIO” FORECAST VALUE RECOVERY
5,930
5,748
5,339
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
2011 2012 2013 Fcst 2014 Fcst
Sources: IRI InfoScan®, estimation based on existing case studies
5.498
-3,1% -4,4% -2,9%
5,498
5,459
2013
Fcst
Current
Fcst
Promo Pricing Range Media
vs
Trade
2014
Fcst
illustrative -0,7%

CASE STUDY BRAND X (2013)
IRI has been delivering measurable value to clients around the world
leveraging its Analytical engine in Athens (ACE)
ANALYTICAL CAPABILITIES
• Completing over 2,000 custom client
projects annually
• Team of experienced and dedicated IRI
Analytics professionals
• A total of ~300 professionals engaged in
Analytics central production at the
Athens Analytics Center of Excellence
(ACE)…
• … which consists of modelers with diverse
backgrounds and rich analytical expertise
PhDs, MBA, MS and Mas
• Partnering with leading FMCG
manufacturers and retailers
Business
Issue
Background:
• Client was using two promotional mechanics (price cut
and multi-buy) at the same discount level
Business Need:
• Understand effectiveness of each mechanic and
provide strategic direction for the price and promo
strategy.
Findings&
recommendation
Findings:
IRI Brand Advantage Price & Promotion
Optimisation identified that:
• The multi-buy mechanic delivered 65% higher value
uplifts compared to price cut when promoted from
display and 166% greater when promoted on shelf.
Recommendation:
• Move all promotions behind the multi-buy mechanic.
• An estimated EUR 3M opportunity was identified by
moving focus to the more effective promotional
mechanic across the entire range in the 4 major
retailers.
Impact

What do you think?
We would like to hear from our panelists now…
BRAND AND STORE LOYALTY
• Shoppers are recomposing their baskets to cope with a limited budget
• In the meantime they are prepared to visit more stores
• How do you plan to protect your brand and store franchise?
HOW EQUIPPED ARE WE TO REVERSE THE TREND?
• This context poses to manufacturers and retailers leaders serious challenges
with respect to how, where and when invest scarce resources.
• How does the decision making process work today? Are you leveraging solid
information, insights and analytics? Is there anything more you need?
SUSTAINABILITY
• The market has pursued a volume strategy pushing on price and promotions.
• This is eroding market value, how sustainable this strategy is in the long run?
• Is the market supposed to further concentrate i.e. only the stronger will
survive?
PRODUCT MIX
• Private Labels continue to grow. Do you see further opportunities?
• What should a branded manufacturer do to cope with this situation?
• What are the processes and tools to define the optimal assortment in this
context?

Thanks for your attention!
FOR MORE INFORMATION
Angelo Massaro
Angelo.Massaro@IRIworldwide.com
+30 210 2787648
Nancy Tziola
Nancy.Tziola@IRIworldwide.gr
+30 210 2787648
ABOUT IRI
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data to ignite extraordinary growth for our clients
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forward at IRIworldwide.gr
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