Unilever in Russia · 2020-03-17 · Unilever in Russia Antoine de Saint-Affrique, GVP Central & Eastern Europe Herman Verstraeten, President Russia JP Morgan Investor Conference,

Unilever in Russia

Antoine de Saint-Affrique, GVP Central & Eastern EuropeHerman Verstraeten, President Russia

JP Morgan Investor Conference, Moscow 16 May 2008

Safe harbour statement

This presentation may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words

such as 'expects', 'anticipates', 'intends' or the negative of these terms and other similar expressions of future performance or results, including financial objectives to 2010, and their negatives are intended to identify such forward-looking statements. These forward-looking

statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from

those expressed or implied by these forward-looking statements, including, among others, competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, physical risks, environmental risks,

the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social

conditions in the geographic markets where the Group operates and new or changed priorities of the Boards. Further details of potential risks and uncertainties affecting the Group are described

in the Group's filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report & Accounts on Form 20-F.

These forward-looking statements speak only as of the date of this presentation

Agenda

• Unilever’s D&E strategy

• Building a stronger business in CEE

• Outpacing the market in Russia

• Questions & Answers

Agenda





Unilever’s strategic priorities

PersonalCare

D&E Vitality

GDP of D&E countries has already eclipsed the Developed world

10.8

31.9 33.8

0

10

20

30

Developed D&E

GDP $trillion (at PPP exchange rates)

2.5% 6.8%CAGR

2007-2010e

1 billion new consumers in the

next ten years

New consumers

0.5

2.6

2.6

Have lots

Haves

Not yets

Population in 2007(billions)

The D&E opportunity

Unilever in D&E

Western Europe

38%

D&E36%

As % of Unilever total turnover

2004

Otherdeveloped

26%

2007

Western Europe

32%

D&E44%

Otherdeveloped

24%

Profitable growth

Developed D&E D&E excl.Russia & China

Operating margin before RDIs 2007

Unileveraverage

Agenda





Unilever in CEE

An early entrant in the region

Strong category positions in key countries

Brands sold in total of 20 countries

4 multi country organisations

Strong local management

Strong, sustained GDP growth

Real GDP growth % 2006 2007-2011

• Western Europe 2.8 2.3

• CEE 6.3 5.5

CEE has same GDP as China

Source : Economist Intelligence Unit 2007

A rapidly increasing middle class

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2008

LSM6LSM5LSM4LSM3LSM2LSM1

x 2!

Segmentation by Economic Class in Russia

Shower Gel EUR / Capita

0.4 0.5 0.7

1.6

6.8

3.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Brazil Ukraine Russia Poland Germany USA

Opportunities for market development

Deo EUR / Capita

3.3

1.6 1.3

2.8

4.6

7.1

6.1

0.01.0

2.03.04.0

5.06.0

7.08.0

Brazil Ukraine Russia Romania Poland Germany USA

Annual per capita consumption (EUR)

Source: GMI1/Statistical Offices

Packagedfoods39% Non

packagedfoods61%

Conversion opportunities in foods

Source: Unilever CMI estimates% of Foods market in Russia

Unilever CEE by Geography

Poland & Balticsc30%

Russia, Ukraine, Belarus c30%

Central Europe c25%

The Balkansc15%

Unilever CEE by Category

Ice Cream and Beverages c20%

Home Care c10%

Savoury, Dressings and Spreads c40%

Personal Care c30%

Strong market positions across the region

RomaniaRussia Poland CzechiaHungary

Skin Cleansing

Hand and Body Care

Household Care

Savoury

Spreads

Deo

Hair

Dressings

Ice Cream

Source: GMI1 (MAT 2008 February)

#3

#1

#2

#2

#1

#1

#1

#2

#3

#2

#1

#1

#1

#2

#1

#1

#1

#1

#2

#1

#2

#1

#1

#2

#1

#1

#1

#1

#1

#1

#1 #1

#2

#2

#1

#1

What we’ve done well

• Portfolio across the consumer pyramid

• Capability to build markets

• Winning with Customers

• Local roots

Differentiated brand portfolio

Spreads Hungary

Differentiated portfolio with brands

Lipton Tea Russia

Packet tea

Tea bags

Pyramid bags

Building markets – driving penetration

Mayonnaise pouch Deo ministicks Mini cubes

Cost + Margin = Price

Reverse Engineering

Affordable Unit Price – Margin = Target Cost

Conventional

Driving penetration profitably

Building markets – trading up

Staple surface cleaner Triggers

Staple bleach Premium bleach

Claim resolution delay - Poland

Best supplier 2007

Best customer service 2007 Poland

5 Mia Piac (Hungary) awards for best launches

4 PIATA awards in Romania in 2007

Winning with Customers

OPERATIONAL EXCELLENCE PARTNER FOR VITALITY DOING WELL BY DOING GOOD

Our heritage and local expertise mean that D&E is in our DNA

Unilever’s local roots

Local roots

• Understanding of the local consumer

• Brands and products across a wide range of income levels

• Critical mass on the ground

• Corporate reputation with local stakeholders and talent pool

Local talent meeting local needs

• A long standing Unilever tradition

• Growing local talents

• Leading to a strong local pool of talents

• 34 expatriates out of over 8000 employees

• CEE as a net exporter of talents to Unilever : 65

• Market recognition

• Consistently within the top 3 employers in Hungary and Poland

• Chairwomen of SCE elected Business women of the year in 2007.

• Personal prime minister award to the CE Sales Director

• In the top Head Hunter targets, across the region

What’s changed

• Increased global leverage

• Sharper strategic clarity

• Enhanced operational excellence

• Doing well by doing good

Global Innovation: Clear

Global brands, local activation

• The best integrated campaign

• Creative local execution

TV Print

Radio

Internet

Events

Trade

Sponsorship

PR

Bom ChickaDevergo summer

collection

BomChicka

songs & video clip

Advertising: Knorr

Leveraging scale

Driving growth and margin

• One Unilever

• Shared services and outsourcing

• Simplification and country clustering

• Global and regional buying

• Supply chain efficiency

Strategic choices:Investing to win in Russia

• Priority status: 5 year growth plan

• Increased capabilities in Moscow

•Innovation

•CEE headquarter

• Step-up in marketing investment

• Priority allocation of talent

Strategic choices:Investing to grow the Deo category

annualised

GROWSHARE

GROWMARKET

Operational excellence: in-store activation

Operation excellence: aggressive shelf management

Hygiene

Women’s empowerment

Nutrition

Doing well by doing good

Sustainability

in Poland for

KIDS

Accelerating change

Outpacing the market in Russia

Strategic choices:Investing to win in Russia

• Priority status: 5 year growth plan

• Increased capabilities in Moscow

•Innovation

•CEE headquarter

• Step-up in marketing investment

• Priority allocation of talent

A healthy base, and a great potential

#3

#1

#2

#2

#1

Skin Cleansing

H&B

HHC

Savoury

SCC

Deo

Hair

Dressings

IceCream

Source: GMI1 (MAT 2008 February)

#1

#1

#2

• Total € 5 bln market (all categories)

• Growing at 8% in 2007

• Strong potential for appreciation:

Penetration / conversion (e.g. tea)

Repeat (e.g. deodorants)

Value (e.g. dressings)

• Opportunity for consolidation

#3

Our growth strategy for Russia

Delivering sustainable value in Russia:

Building leadership in large categories

Trading markets up, working the consumer pyramid

Building capabilities as a competitive advantage

Do it all consistently: excellent execution







Driving for category leadership

8% 8% 8% 9% 8% 7% 8% 9% 9% 10% 10% 10% 11% 11% 12% 13% 13% 13% 14% 14% 14% 15% 15% 15% 16% 16% 16% 16% 15% 15% 15% 15% 16% 16% 16% 16% 16% 16% 17% 18% 18% 17%18%

17% 16% 17% 16% 16% 15% 15% 16%17% 18% 19% 18% 17% 17% 17% 17% 17% 17% 17% 18% 19% 19% 19% 19% 17% 18% 19% 19% 19% 19% 18% 18% 19% 19% 19% 19% 19% 19% 19% 19% 19% 18%18%4% 5% 5% 6% 6%

6% 6%7%

7%8% 7% 8% 8% 8% 8% 8% 8% 8% 9% 8% 8% 8% 8% 7% 8% 8% 8% 8% 7% 8% 8% 8%

8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8%

14% 13%13% 13% 13%

14% 14%14%

14%14% 13% 13% 13% 13% 13% 13% 13% 13%

13% 13% 13% 12% 12% 13% 13% 13% 14% 12% 13% 13% 13% 13% 13% 12% 12% 12% 12% 12% 12% 11% 11% 11%11%

5% 5% 5% 5% 6% 7% 8%8%

8%8% 8% 8% 9% 10% 9% 8% 8% 8%

8% 8% 7% 6% 6% 5% 5% 5% 5% 5% 4% 4% 4% 5% 5% 5% 5% 5% 6% 6% 5% 5% 5% 5% 5%

4% 5% 4% 4% 4% 4%5%

5%5%

5% 5% 5% 5% 5% 6% 5% 6% 6%5% 5% 5% 6% 6% 6% 7% 7% 7% 7%

6% 6% 6% 6% 7% 7% 7% 7% 7% 6% 6% 6% 6% 6% 6%

65%66%66%67%66%67%70%71%73%73%74%75%

78%78%78%78%78%77%79%79%79%79%79%78%

80%80%81%80%79%78%79%79%80%80%80%80%81%80%80%80%80%80%80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

JF2001

MA2001

MJ2001

JA2001

SO2001

ND2001

JF2002

MA2002

MJ2002

JA2002

SO2002

ND2002

JF2003

MA2003

MJ2003

JA2003

SO2003

ND2003

JF2004

MA2004

MJ2004

JA2004

SO2004

ND2004

JF2005

MA2005

MJ2005

JA2005

SO2005

ND2005

JF2006

MA2006

MJ2006

JA2006

SO2006

ND2006

JF2007

MA2007

MJ2007

JA2007

SO2007

ND2007

JF2008

UNILEVER P & G COLGATE PALMOLIVE SCHWARZKOPF/HENKEL BEIERSDORF L'OREAL GILLETTE INTERNATIONAL*•Trend breaks due to databases restatement

Since 2001 Unilever more than doubled value market share where it competes in Home & Personal Care (8% to 18%)

* *Top Producers Value Shares in 6 categories, 24 largest cities: Deodorants, Shampoo, Hair Conditioners & Treatments, Liquid PW, Bar Soaps, HHC

Grow the category:deodorants education campaign

POS

TV

Metro / Transport

Beauty Salons

Malls

PR

Don’t let Body Odor undermine your BeautyWe recognize Beauty is the most important driver for women in Russia and build on

Beauty insight to introduce deodorants to everyday Beauty routine of a Russian woman.

On-going engaging of young guys into the Axe world in appealing and relevant way is the key strategic pillar for Axe and the basis of the brand’s success in Russia

Grow the deo category:deploying the global Axe brand

Drive category value:global Clear hair care innovation

Clear gained 63% weighted distribution during 10 month period and reached the target. Value share has reached 4.3% within a year, while market leader H&S is at 13%

0

2

4

6

8

10

12

14

16

JF 07 MA 07 MJ 07 JA 07 SO 07 ND 07 JF 08

Clear Head&Shoulders PanteneElseve Fructis Gliss Kur

Drive category value:Clear with superior anti-dandruff technology

24 Cities, MAT DJ 2008Total Dressings = Mayo + Ketchup + MF Sauces + Salad Dressings + Hot Sauces + Mustard + Vinegar

Nielsen Retail Audit data

Building leadership in dressings:changing the rules of the game

0.9

5.0

5.4

6.7

7.5

8.6

8.6

8.7

10.4

12.9

0 2 4 6 8 10 12 14

TOTAL TORCHIN

TOTAL KAZANSKIY ZHIROVOY K-T

TOTAL SKIT

TOTAL ESSEN PRODAKSHN

TOTAL HEINZ-PETROSOUZ

TOTAL GK NIZHEGORODSKIY

TOTAL EFKO

TOTAL GK SOLNECHNYE PRODUKTY

TOTAL BALTIMOR

TOTAL UNILEVER

Dressings market shares in Russia

0

5 000

10 000

15 000

20 000

25 000

1997 1998 1999 2000 2001 2002

Tons

Dressings: changing the rules of the game

First in the market to introduce Doy Pack Packaging in 1999

Internal sales

2000

5000

8000

11000

14000

17000

Tons

2004 2005 2006 2007

Ketchup New Innovative Packaging Introduction 2006

+54%

Mayo sales in volume Ketchup sales in volume

Light Mayo Market (value)

Others36%

Calve Light51%

MrRicco Light13%


Developing the Light Mayonnaise Segment

Nielsen retail audit, urban Russia market


Developing Functional Segments

New Becel Mayonnaise• Rich in Omega 3&6, heart healthy oils

• Rich in folic acid, vitamins B6 and B12

• Low in saturated fats

• No cholesterol

Help keep your heart healthy

Extend category footprint:Inmarko acquisition







Trading the tea market up:migrating to a more profitable segment

51.6 56.3 62.4 65.1

48.4 43.7 34.937.6

0%

20%

40%

60%

80%

100%

2005 2006 2007 DJ-FM 2008

Total Teabags Total Loose

Nielsen retail audit, urban Russia market

Value composition – urban Russian tea market

Beseda in the tea market: adding consumer value in the economy segment

Beseda Monthly Moving Average Trend

1 450.0

1 500.0

1 550.0

1 600.0

1 650.0

1 700.0

1 750.0

1 800.0

1 850.0

1 900.0

J'07 F'07 M'07 A'07 M'07 J'07 J'07 A'07 S'07 O'07 N'07 D'07 J'08 F'08 M'08

Turn

over

'000

Eur

os

* Source: Unilever shipment data

Beseda: MAT turnover trendJan 2007 – March 2008

Lipton in the tea market:launching premium pyramid tea bags (#1 in 2008)







Developing capabilities:Create a sustainable edge

Capabilities to enable excellence in execution

• Win With Customers

• Flexible and responsive supply chain

• Talent management

Modern Trade RetailerUL Distributor

DistributorUL General Trade/Open Markets retailer

Distributor* UL General Trade/Open Market retailer

Key AccountsUL Logistics provider

Point of Purchase

Point of Purchase

Point of Purchase

Point of Purchase

Whole-saler

Win With Customers:Control the route-to-market Focus on:

• reach and availability: highest weighted numerical distribution across categories

• route-to-market control: through in-depth understanding of the distribution value chain, at national and local levels

Off shelf promo execution(pallets,

gondolas..)

Win With Customers:Enhance focus and grip on execution

Availability Quality of shelf Promotion Speed to shelf

New items introduction

OSA

Share of category shelf

On-shelfAvailability

Relevant Assortment Listing of

Must SKUs

Market share and TO growth

1. What are we trying to achieve? CM investment

efficiency+

Improved Business Performance

2.What?

3.How? In Store checking through a 3rd party

50% of KA and top 50 universe checked monthly

One consolidated Scorecard

Bonuses of sales linked to measured KPIs

Win With Customers:Faster and better in-store execution

Murmansk Saratov

Bryansk

86% of outlets within 2 weeks of sales!

Flexible and responsive supply chain:Building competitive edge

Flexible and responsive supply chain:On-shore production capabilities

• On-shoring strategy• 4 local manufacturing sites• Close 100% of foods volumes• Significant share of HPC volumes• Export to markets outside Russia

• Invest in advanced technology• Pyramid tea bags• Roll-on deodorants

• Focus on customer service

Flexible and responsive supply chain:Availability in “one day’s reach”

.

.

12 Regional Distribution Centers (RDCs)

UKRAINE RUSSIA

One day’s reach (400km radius) 1,000 Km

Talent Management:Competitiveness through people

• A local talent base:• 40% of Board is local• A total of 10 expatriates,

of which 3 from CEE

• A sound capability retain:• 2007 turnover rates below

market average• Strong people surveys

• As a result of:• In market success• Creative approach to

talent development• Unilever reputation /

know-how

78

62

73

0

10

20

30

40

50

60

70

80

90

100

Employe Engagement Index

%Favourable

Unilever RUB External Overall Norm Best in Class Norm

7364

71

0102030405060708090

100

Immediate Boss Effectiveness Index

%Favourable

Unilever RUB External Overall Norm Best in Class N

Talent Management:Developing great business leaders

Unilever Russia Academy

• High potential development

• Focused special development program

• 2-year executive program

• Developed and delivered in partnershipwith Darden School of Business

Talent Management:Diversity as a competitive advantage

Senior management in Russia (45 FTE):

• Locals vs. expats– 35 locals – 10 expats

• Nationality– 11 different nationalities

• Gender– 15 women – 30 men

• Internal vs. external– 37 internal – 8 externally recruited in the past 5 years

Outpacing the market in Russia






Documents

Unilever in Russia · 2020-03-17 · Unilever in Russia Antoine de Saint-Affrique, GVP Central & Eastern Europe Herman Verstraeten, President Russia JP Morgan Investor Conference,