Astera Premium tooth paste Feasibility assessment

Astera Astera Premium tooth Premium tooth

pastepaste

Feasibility assessmentFeasibility assessment

Romanian marketRomanian market

Premium and mid-tier brands dominate the Premium and mid-tier brands dominate the marketmarket

Premium:Premium: 66%66%– ColgateColgate 43.3%43.3%– Blend a MedBlend a Med 16.3%16.3%– AquafreshAquafresh 4.7% 4.7%– VademecumVademecum 1.7% 1.7%

Low tier:Low tier: 34%34%– Super CristalSuper Cristal 15.6%15.6%– AsteraAstera 3.8% 3.8%– MaxamMaxam 3.1% 3.1%– Super FreshSuper Fresh 2.3% 2.3%– OthersOthers 9.2% 9.2%


This makes the Romanian market This makes the Romanian market highly different vs. its neighbors – highly different vs. its neighbors – Bulgaria and Serbia-Montenegro.Bulgaria and Serbia-Montenegro.

Premium / mid Premium / mid tiertier

Low tierLow tier

RomaniaRomania 6666 3434

BulgariaBulgaria 2626 7474

Serbia – MNSerbia – MN 3232 6868

BosniaBosnia 6262 3838

Romanian marketRomanian market However, the consumption per capita is significantly lower vs. However, the consumption per capita is significantly lower vs.

its neighbors, revealing a strong development potentialits neighbors, revealing a strong development potential

Market sizeMarket size PopulationPopulation ConsumptioConsumptionn

(000 liters)(000 liters) (millions)(millions) (liters / 100) (liters / 100)

RomaniaRomania 3,0003,000 22.222.2 13.5213.52

BulgariaBulgaria 1,9001,900 7.57.5 24.7524.75

Serbia – Serbia – MNMN

2,0002,000 10.610.6 18.6818.68

BosniaBosnia 900900 4.04.0 21.1521.15

MoldovaMoldova 400400 4.44.4 8.778.77

RussiaRussia 39,00039,000 144.5144.5 26.7726.77


Within premium segment, anti-cavity Within premium segment, anti-cavity continues to be the largest, but it is continues to be the largest, but it is strongly challenged by multi-benefit strongly challenged by multi-benefit variants.variants.

% of premium % of premium segmentsegment

Anti-cavityAnti-cavity 57%57%

Multi-benefitMulti-benefit 31%31%

Single benefitSingle benefit 12%12%


Key competitors in premium / mid-tierKey competitors in premium / mid-tier– ColgateColgate

Plays in 2 price points: anti-cavity and multi-Plays in 2 price points: anti-cavity and multi-benefitbenefit

Market leader, local production, strong imageMarket leader, local production, strong image

– Blend-a-MedBlend-a-Med Plays in 2 price points: anti-cavity and multi-Plays in 2 price points: anti-cavity and multi-

benefitbenefit Key challenger, heavily investing in TV Key challenger, heavily investing in TV

advertising and promotionsadvertising and promotions


Price to trade ex Price to trade ex VATVAT

Brands / VariantsBrands / Variants

PremiumPremium 26.50026.500 Colgate Total, BAM CompleteColgate Total, BAM Complete

24,00024,000 Colgate Triple Action, Herbal, White, Colgate Triple Action, Herbal, White, etcetc

22,00022,000 Colgate Anti-Cavity, BAM Mineral Colgate Anti-Cavity, BAM Mineral ActionAction

Mid-tierMid-tier 20,00020,000 Aquafresh FamilyAquafresh Family

Low tierLow tier 16,30016,300 Astera Total, Herbal WhiteAstera Total, Herbal White

14,70014,700 HerbalHerbal

12,40012,400 Anti-cavity, anti-tartarAnti-cavity, anti-tartar

OpportunityOpportunity

Enter the premium segmentEnter the premium segment– Create a new brand name.Create a new brand name.– Product: Product: Multi-benefit Astera Multi-benefit Astera

variants.variants.– Pricing:Pricing: Parity to Colgate and BAM Parity to Colgate and BAM

anti-cavityanti-cavity– Sizes:Sizes: 50 ml and 100 ml50 ml and 100 ml






22,00022,000 Colgate Anti-Cavity, BAM Mineral Colgate Anti-Cavity, BAM Mineral ActionAction





OpportunityOpportunity





22,00022,000 NEW ASTERA BRANDNEW ASTERA BRANDColgate Anti-Cavity, BAM Mineral Colgate Anti-Cavity, BAM Mineral ActionAction





Why is this launch Why is this launch important ?important ?

Astera is currently playing only in low-Astera is currently playing only in low-tier segment.tier segment.

In the following years, it is expected the In the following years, it is expected the market to shift upwards in the premium market to shift upwards in the premium tier (all EU countries have dominant tier (all EU countries have dominant premium tiers)premium tiers)

Multi-nationals enter opportunistically Multi-nationals enter opportunistically low-tier: Colgate Super Cristal low-tier: Colgate Super Cristal (Romania), Colgate Kolynos (Serbia-(Romania), Colgate Kolynos (Serbia-Montenegro), P&G Blendax (Russia), any Montenegro), P&G Blendax (Russia), any time Unilever can exploit Maxam across time Unilever can exploit Maxam across Eastern Europe.Eastern Europe.

Why is this launch Why is this launch important ?important ?

In order to continue its growth, it In order to continue its growth, it is compulsory for Astera to play in is compulsory for Astera to play in all market segments – attacking all market segments – attacking the premium tier, while defending the premium tier, while defending the low tier.the low tier.

Why is this launch Why is this launch important ?important ? Why Romania needs to be the testing Why Romania needs to be the testing

ground for an Astera premium ground for an Astera premium brand ?brand ?– Market is already in majority in premium.Market is already in majority in premium.– Costs / risks are lower than in Russia.Costs / risks are lower than in Russia.– Media landscape is well defined and Media landscape is well defined and

controlled.controlled.– There is no risk of parallels (like in There is no risk of parallels (like in

Russia).Russia).– There is a strong Astera organization.There is a strong Astera organization.

Financial implicationsFinancial implications Year 1 Year 2 Year 3

Market share (%) 5 7 10

Sales (th. liters) 99 146 218

Sales (euro) 1,003,106 1,467,081 2,189,395

Distribution (euro) 220,683 322,758 481,667

Cost of goods (euro) 611,820 891,371 1,325,051

Overhead (euro) 160,497 220,062 306,515

Marketing (euro) 332,000 313,000 325,000

Profit BT (euro) -321,894 -280,110 -248,838

Profit BT (%) -32.09 -19.09 -19.37Key assumptions:Share progression: year 1 – 5%, year 2 – 7%, year 3 – 10% of premium; Cost of goods – 0.32 euro; overhead – 16% in year 1, decreasing to 14%; split 50 ml / 100 ml: 80 / 20, following to 70/30 in year 3.6 mths advertising (2 mths@400 GRPs, 4 mths@250 GRPs), 125 euro/GRP; Copy shoot – 30,000 per year; Listing + trade mktg – 50,000 year 1, 20,000 afterwards; Promotions – 10,000 euro per year; POSM – 2000; Misc – 15,000.

Financial implicationsFinancial implications

As this project is important for all As this project is important for all international Astera business, we international Astera business, we recommend the financing of recommend the financing of marketing activities by Astera marketing activities by Astera Bulgaria.Bulgaria.

Financial implicationsFinancial implications

Year 1 Year 2 Year 3 Total


Sales (th. liters) 99 146 218 463

Sales (euro) 1,003,106 1,467,081 2,189,395 4,659,582

Distribution (euro) 220,683 322,758 481,667 1,025,108

Cost of goods (euro) 611,820 891,371 1,325,051 2,828,242

Overhead (euro) 160,497 220,062 306,515 687,074

Profit BT (euro) 10,106 32,890 76,162 119,157

Profit BT (%) 1.01 2.24 3.48 2.56

We do not recommendWe do not recommend Launching only 50 ml would hurt profitability as Launching only 50 ml would hurt profitability as

100 ml is more profitable.100 ml is more profitable.

Year 3 50 ml 100 ml Total


Sales (euro) 1,579,728 609,667 2,189,395

Cost of goods (euro) 347,540 134,127 481,667

Overhead (euro) 977,962 347,089 1,325,051

Marketing (euro) 221,162 85,353 306,515

Profit BT (euro) 33,064 43,098 76,162

Profit BT (%) 2.09 7.07 3.48

What happens if we launch What happens if we launch with minimum marketing with minimum marketing

support ?support ? Year 1 Year 2 Year 3



Sales (euro) 601,863 838,332 1,128,377

Distribution (euro) 132,410 184,433 240,833

Cost of goods (euro) 367,092 509,355 662,525

Overhead (euro) 96,268 125,700 153,258

Marketing (euro) 242,000 192,000 198,000

Profit BT (euro) -235,937 -173,203 -159,919

Profit BT (%) -39.20 -20.66 -14.61

Key assumptions:2 mths advertising @400 GRPs, 125 euro/GRP; Copy shoot – 30,000 only in year 1; Listing + trade mktg – 75,000 year 1, 50,000 afterwards; Promotions – 20,000 euro per year; POSM – 2000; Misc – 15,000.

Key conclusionKey conclusion

Project is strategically importantProject is strategically important – – Romania is already a premium market, the Romania is already a premium market, the others markets will follow sooner or later.others markets will follow sooner or later.

Project helps defend Astera positionProject helps defend Astera position – – multinationals have already entered low-tier multinationals have already entered low-tier (Colgate’s Super Cristal in Romania, Kolynos (Colgate’s Super Cristal in Romania, Kolynos in Serbia-Montenegro, P&G’s Blendax in in Serbia-Montenegro, P&G’s Blendax in Russia, maybe Lever will exploit Maxam), Russia, maybe Lever will exploit Maxam), attacking Astera’s traditional segment.attacking Astera’s traditional segment.

Project can be replicated in other marketsProject can be replicated in other markets..

Next stepsNext steps

Our recommendation is to proceed Our recommendation is to proceed with a full fledged premium brand with a full fledged premium brand development work – this will help us development work – this will help us also validate the volume objectives.also validate the volume objectives.

Our recommendation is to use Our recommendation is to use Romania as test market – upon Romania as test market – upon success, roll it over Eastern Europe.success, roll it over Eastern Europe.

Our recommendation is to use Concept Our recommendation is to use Concept Marketing & Vanzari expertise in brand Marketing & Vanzari expertise in brand development.development.

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Astera Premium tooth paste Feasibility assessment