Unilever PLC · LSE:ULVR
Unilever — JP Morgan Investor Conference, Moscow 2008
35 slides from Unilever's conference presentation, May 16, 2008
Slide 1: Unilever in Russia
Unilever in Russia Antoine de Saint-Affrique, GVP Central & Eastern Europe Herman 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
Slide 2: Agenda
Agenda • Unilever’s D&E strategy • Building a stronger business in CEE • Outpacing the market in Russia • Questions & Answers Agenda • Unilever’s D&E strategy • Building a stronger business in CEE • Outpacing the market in Russia • Questions & Answers
Slide 3: Unilever's strategic priorities
Unilever’s strategic priorities Personal D&E Vitality Care GDP of D&E countries has already eclipsed the Developed world GDP $trillion (at PPP exchange rates) 10.8 30 20 33.8 31.9 10 0 Developed D&E CAGR 2007-2010e 2.5% 6.8%
Slide 4: The D&E opportunity: 1 billion new consumers
New consumers 1 billion new consumers in the next ten years The D&E opportunity Population in 2007 (billions) Have lots 0.5 Haves 2.6 Not yets 2.6
Slide 5: Unilever in D&E
Unilever in D&E As % of Unilever total turnover 2004 2007 Other Other developed D&E developed 26% 24% D&E 36% 44% Western Western Europe Europe 38% 32% Profitable growth Operating margin before RDIs 2007 Unilever average Developed D&E D&E excl. Russia & China
Slide 6: Unilever in CEE
Agenda • Unilever’s D&E strategy • Building a stronger business in CEE • Outpacing the market in Russia • Questions & Answers 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 mana
Slide 7: Strong, sustained GDP growth
Strong, sustained GDP growth Real GDP growth % 2006 2007-2011 CEE has same GDP • Western Europe as China 2.8 2.3 • CEE 6.3 5.5 Source : Economist Intelligence Unit 2007 A rapidly increasing middle class Segmentation by Economic Class in Russia 100% 90% 80% x 2! 70% LSM6 60% LSM5 LSM4 50% LSM3 40% LS
Slide 8: Opportunities for market development
Opportunities for market development Annual per capita consumption (EUR) Deo EUR / Capita Shower Gel EUR / Capita 8.0 7.1 8.0 7.0 6.8 6.1 7.0 6.0 6.0 5.0 4.6 5.0 4.0 3.3 3.6 2.8 4.0 3.0 3.0 2.0 1.6 1.3 2.0 1.6 1.0 1.0 0.5 0.7 0.4 0.0 0.0 Brazil Ukraine Russia Romania Poland Germany USA Brazil Ukrain
Slide 9: Unilever CEE by Geography and Category
Unilever CEE by Geography Russia, Ukraine, Belarus c30% Poland & Baltics c30% The Balkans c15% Central Europe c25% Unilever CEE by Category Ice Cream and Beverages c20% Home Care Personal Care c10% c30% Savoury, Dressings and Spreads c40%
Slide 10: Strong market positions across the region
Strong market positions across the region Russia Poland Hungary Czechia Romania Skin Cleansing #2 #2 #1 #1 #2 Hand and Body Care #3 #2 #2 Hair #2 Deo #1 #2 #1 #1 Household Care #2 #1 #1 #2 #1 Savoury #3 #1 #1 #2 #1 Dressings #1 #1 #1 #1 Spreads #1 #1 #1 #1 #1 Ice Cream #1 #1 #1 #1 Source: GMI1 (MAT
Slide 11: Differentiated brand portfolio
Differentiated brand portfolio Spreads Hungary Differentiated portfolio with brands Pyramid bags Tea bags Packet tea Lipton Tea Russia
Slide 12: Building markets – driving penetration
Building markets – driving penetration Mayonnaise pouch Deo ministicks Mini cubes Driving penetration profitably Conventional Cost + Margin = Price Reverse Engineering Affordable Unit Price – Margin = Target Cost
Slide 13: Building markets – trading up
Building markets – trading up Staple surface cleaner Triggers Staple bleach Premium bleach Winning with Customers Best supplier 2007 Best customer service 2007 Poland 5 Mia Piac (Hungary) awards for best launches 4 PIATA awards in Romania in 2007 OPERATIONAL EXCELLENCE PARTNER FOR VITALITY DOING WEL
Slide 14: Unilever's local roots
Unilever’s local roots Our heritage and local expertise mean that D&E is in our DNA • 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 roots Local talent m
Slide 15: What's changed
What’s changed • Increased global leverage • Sharper strategic clarity • Enhanced operational excellence • Doing well by doing good Global Innovation: Clear
Slide 16: Global brands, local activation
Global brands, local activation Bom Chicka songs & video clip TV Print Trade Radio Internet PR Bom Chicka Events Sponsorship Devergo • The best integrated campaign summer • Creative local execution collection Advertising: Knorr
Slide 17: Leveraging scale
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 M
Slide 18: Investing to grow the Deo category
Strategic choices: Investing to grow the Deo category GROW MARKET GROW SHARE annualised Operational excellence: in-store activation
Slide 19: Doing well by doing good
Operation excellence: aggressive shelf management Doing well by doing good Nutrition Hygiene in Poland for Women’s empowerment Sustainability KIDS
Slide 20: Outpacing the market in Russia
Outpacing the market in Russia Accelerating change 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
Slide 21: A healthy base, and a great potential
A healthy base, and a great potential Skin Cleansing #2 #3 • Total € 5 bln market (all categories) H&B Hair #2 • Growing at 8% in 2007 Deo #1 • Strong potential for appreciation: HHC #2 ¾ Penetration / conversion (e.g. tea) Savoury #3 ¾ Repeat (e.g. deodorants) Dressings #1 ¾ Value (e.g. dressings)
Slide 22: Driving for category leadership
Our growth strategy for Russia Delivering sustainable value in Russia: ¾ Building leadership in large categories ¾ Trading markets up, working the consumer pyramid ¾ Building capabilities as a competitive advantage Do it all consistently: excellent execution Driving for category leadership Since 200
Slide 23: Grow the category: deodorants education campaign
Grow the category: deodorants education campaign POS Metro / T Transport V Beauty Salons PR Malls Don’t let Body Odor undermine your Beauty We 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
Slide 24: Drive category value: global Clear hair care innovation
Drive category value: global Clear hair care innovation Drive category value: Clear with superior anti-dandruff technology 16 14 12 10 8 6 4 2 0 JF 07 MA 07 MJ 07 JA 07 SO 07 ND 07 JF 08 Clear Head&Shoulders Pantene Elseve Fructis Gliss Kur Clear gained 63% weighted distribution during 10 month peri
Slide 25: Building leadership in dressings
Building leadership in dressings: changing the rules of the game Dressings market shares in Russia TOTAL UNILEVER 12.9 TOTAL BALTIMOR 10.4 TOTAL GK SOLNECHNYE PRODUKTY 8.7 TOTAL EFKO 8.6 TOTAL GK NIZHEGORODSKIY 8.6 TOTAL HEINZ-PETROSOUZ 7.5 TOTAL ESSEN PRODAKSHN 6.7 TOTAL SKIT 5.4 TOTAL KAZANSKIY ZH
Slide 26: Dressings: changing the rules of the game
Dressings: changing the rules of the game Developing the Light Mayonnaise Segment Light Mayo Market (value) Others Calve Light 36% 51% MrRicco Light 13% Nielsen retail audit, urban Russia market Dressings: changing the rules of the game Developing Functional Segments New Becel Mayonnaise • Rich in O
Slide 27: Extend category footprint: Inmarko acquisition
Extend category footprint: Inmarko acquisition Our growth strategy for Russia Delivering sustainable value in Russia: ¾ Building leadership in large categories ¾ Trading markets up, working the consumer pyramid ¾ Building capabilities as a competitive advantage Do it all consistently: excellent exec
Slide 28: Trading the tea market up
Trading the tea market up: migrating to a more profitable segment Value composition – urban Russian tea market 100% 80% 37.6 34.9 48.4 43.7 60% 40% 62.4 65.1 51.6 56.3 20% 0% 2005 2006 2007 DJ-FM 2008 Total Teabags Total Loose Nielsen retail audit, urban Russia market Beseda in the tea market: addin
Slide 29: Lipton premium pyramid tea bags
Lipton in the tea market: launching premium pyramid tea bags (#1 in 2008) Our growth strategy for Russia Delivering sustainable value in Russia: ¾ Building leadership in large categories ¾ Trading markets up, working the consumer pyramid ¾ Building capabilities as a competitive advantage Do it all c
Slide 30: Developing capabilities: Create a sustainable edge
Developing capabilities: Create a sustainable edge Capabilities to enable excellence in execution • Win With Customers • Flexible and responsive supply chain • Talent management Win With Customers: Control the route-to-market Focus on: • reach and availability: highest weighted numerical distributio
Slide 31: Win With Customers: Enhance focus and grip on execution
Win With Customers: Enhance focus and grip on execution 1. What are we trying Improved Business Performance to achieve? Market share and + CM investment TO growth efficiency 2.What? Availability Quality of shelf Promotion Speed to shelf Relevant On-shelf Share of Off shelf promo New items Assortment
Slide 32: Flexible and responsive supply chain
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 a
Slide 33: Supply chain reach and talent management
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 100 • A local talent base: % F 90 80 78 73 • 40% of Board is local a v 70 60 62
Slide 34: Talent Management: Developing great business leaders
Talent Management: Developing great business leaders Unilever Russia Academy • High potential development • Focused special development program • 2-year executive program • Developed and delivered in partnership with Darden School of Business Talent Management: Diversity as a competitive advantage S
Slide 35: Outpacing the market in Russia
Outpacing the market in Russia Delivering sustainable value in Russia: ¾ Building leadership in large categories ¾ Trading markets up, working the consumer pyramid ¾ Building capabilities as a competitive advantage Do it all consistently: excellent execution
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