Olam Group Limited · SGX:VC2
Olam — Investor Day (September 2013)
52 slides from Olam's investor day presentation, Sep 30, 2013
Slide 1: Investor Day – Packaged Foods
Investor Day – Packaged Foods 30 September 2013 | Singapore 1
Slide 2: Presenters
Presenters • Ramanarayanan Mahadevan, President & Global Head • Girish Nair, Senior Vice President, Marketing • Kamesh Ellajosyula, Vice President, Manufacturing, Quality & Innovation 2
Slide 3: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 3
Slide 4: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 4
Slide 5: Building a Consumer Facing Business
Building a Consumer Facing Business Only Africa 7 Markets Current play in the Sub-Saharan region: Nigeria, Ghana, Mali, Burkina Faso, Niger, Togo, Benin Culinary: Tomato Paste, MSG Seasonings, Milk Powder Snacking/ Impulse: Biscuits, Candies 8 Categories Beverages: Juice, Dairy Beverages Instant Noo
Slide 6: Our Aspiration
Our Aspiration To achieve leadership position (Top 2) in all our chosen categories and markets by FY2016 To be the favourite snacks, drinks and culinary ingredients provider to the African consumer through brands and products that matter to them 6
Slide 7: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 7
Slide 8: West Africa – Olam's "Home Turf" + Huge opportunity
West Africa – Olam’s “Home Turf” + Huge opportunity 24 years in Africa: Olam has significant local context and distribution infrastructure across West Africa Africa’s Growth: Highest population, consumption and GDP growth for next 2 decades Changing demographic profile: Increasing urbanisation and g
Slide 9: Highest demand growth for consumer facing products
Highest demand growth for consumer facing products 18.00% 16.00% 14.00% 2001-2010 12.00% 10.00% 8.00% 16.30% 15.60% 6.00% 12.20% 11.50% 9.70% 9.10% 9% 8.80% 4.00% 8.20% 2.00% 3.10% 0.00% Russia Nigeria Brazil China Morocco India Algeria South Egypt USA ‘10 Size : 54 B Africa 12% 10% 2011-2020 8% 6%
Slide 10: And a growing middle class!
And a growing middle class! Growing middle class is the engine of growth for value added packaged food products Source: MPS All Media & Products Survey 10
Slide 11: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 11
Slide 12: Sizeable market of US$4.4b in chosen categories
Sizeable market of US$4.4b in chosen categories Seasonings, Juices / Dairy US$ 750 M Beverages, US$ 1,200 M Candies, US$ 350 M Tomato Paste, US$ 400 M Instant Biscuits, Noodles, US$ 850 M US$ 550 M Milk Powder, US$ 300 M Individual categories growing between 6% and 12% CAGR 12
Slide 13: Among Top 2 in 4 categories!
Among Top 2 in 4 categories! Category Position Biscuits 2 Candies 2 Tomato Paste 2 MSG Seasoning 1 Noodles 3 Milk Powder 5 Juices NA Dairy Drinks NA First year of operations 13
Slide 14: Category Overview: Culinary
Category Overview: Culinary Consolidated categories Industry Most players are local Target Highly penetrated categories with consumption across socio- Market economic classes Wholesale contributes to over 90% of sales Distribution Direct redistribution is limited to few players Traditional use of pr
Slide 15: Category Overview: Impulse / Snacking
Category Overview: Impulse / Snacking Biscuits dominated by local players and is fragmented Industry Candies is consolidated with 4 players at 85% market Target Penetration high at low end. Medium to High end segments are Market underserved Redistribution key to drive availability & visibility Distr
Slide 16: Category Overview: Beverages – Juices & Dairy Beverages
Category Overview: Beverages – Juices & Dairy Beverages Industry Top 3 players in each category add to 65% of market Target Moderate penetration levels Market Urban centric consumption Distribution Active redistribution in urban centres Responsive to meaningful innovation and segmentation Innovation
Slide 17: Category Overview: Instant Noodles
Category Overview: Instant Noodles Industry Indomie is the category creator in Nigeria and enjoys dominant position Target Highly penetrated category across socio-economic classes Market Per capita consumption rivals many Southeast Asian countries Distribution One of the highest redistribution reach
Slide 18: Overview of Key Strategy components
Overview of Key Strategy components Key Drivers Strategy Size at the Bottom of Build scale at BOP Target Pyramid Segments Innovative offerings for Growing mid segments mid/high segments Highly penetrated Drive weighted reach across categories Distribution channels Depth & width across Control throug
Slide 19: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 19
Slide 20: Distribution in West Africa
Distribution in West Africa • Highly fragmented retail • Modern trade is very small, albeit enjoying high growth rates • Wholesale channel contributes to over 90% of retail reach and sales for the industry in most categories • Growing investment in direct retail reach capability by select few player
Slide 21: Distribution reach in Nigeria
Distribution reach in Nigeria 21
Slide 22: Distribution reach in Ghana
Distribution reach in Ghana Depots Towns/Cities Depots: 3 Towns: 45 22
Slide 23: Overall Distribution Reach
Overall Distribution Reach Weighted reach 210 2,050 13,750 300,000+ Direct distribution reach : 55,000 outlets growing at 30% p.a 23
Slide 24: Agenda
Agenda • Packaged Foods– An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 24
Slide 25: Marketing, Consumer Insight & Innovation
Marketing, Consumer Insight & Innovation • Low clutter in Products, Brands & Media • Local players invest very little on Consumer Insight and Innovation • Our entire ecosystem of Marketing, Consumer Research and Innovation is dedicated to African consumers • No other multinational has such exclusive
Slide 26: Our Marketing Framework
Our Marketing Framework West Africa Consumer Insights Deep Understanding of Consumers Winning Brand Building Products ‘loved’ by consumers Programmes Wow concepts, Sensorial Superiority, Power Brands – Differentiated World Class Packs Concepts Innovation & Renovation (connected to Business Strategy)
Slide 27: Our Marketing Framework
Our Marketing Framework West Africa Consumer Insights Deep Understanding of Consumers Winning Brand Building Products ‘loved’ by consumers Programmes Wow concepts, Sensorial Superiority, Power Brands – Differentiated World Class Packs Concepts Innovation & Renovation (connected to Business Strategy)
Slide 28: Winning through insights!
Winning through insights! “We want to have a lot more fun with our stick-sweets” with its two unique flavours makes your fun double-double “Sugar is not good for us. Wish we have tasty, natural products with less sugar ” with ‘real’ honey for those health conscious consumers 28
Slide 29: Winning through insights!
Winning through insights! “Wish there was something more in the biscuits, like providing needed nutrition & energy to the kids” make kids energetic and also have sharper minds De Rica is perceived to be ‘Reddest’ of all Tomato Paste brands makes the colour of the dishes so good that it livens up my
Slide 30: Our Marketing Framework
Our Marketing Framework West Africa Consumer Insights Deep Understanding of Consumers Winning Brand Building Products ‘loved’ by consumers Programmes Wow concepts, Sensorial Superiority, Power Brands – Differentiated World Class Packs Concepts Innovation & Renovation (connected to Business Strategy)
Slide 31: Our Power Brands are driven by our brand building programmes…
Our Power Brands are driven by our brand building programmes… Impulse & Juices & Dairy Culinary Noodles Snacking Beverages 31
Slide 32: Our 'Brand Building Programmes' have been successful…
Our ‘Brand Building Programmes’ have been successful… Tomato Paste - Nigeria Vedan - Nigeria Market Share Market Share 09-10 10-11 11-12 12-13 11-12 12-13 90% 92% 95% 104% 105% 110% RPI – Tasty Tom RPI – De Rica Sustained Brand Building along with Distribution initiatives have helped: • Market Share
Slide 33: Innovative Activation as a Brand Building tool
Innovative Activation as a Brand Building tool • Novelty: Instant cash & 350,000 wins • Doubled our sales during the CP – Market Share increased to 38% • Promo Film Distinctive – Idea of showing ‘actual winners’ got in a lot of credibility 33
Slide 34: Our Marketing Framework
Our Marketing Framework West Africa Consumer Insights Deep Understanding of Consumers Winning Brand Building Products ‘loved’ by consumers Programmes Wow concepts, Sensorial Superiority, Power Brands – Differentiated World Class Packs Concepts Innovation & Renovation (connected to Business Strategy)
Slide 35: Our Mini Meal Replacements are "Loved" by consumers
Our Mini Meal Replacements are “Loved” by consumers 230,000 cartons Eat Picnic. Keep Going. 240,000 cartons The Star Among Biscuits Picnic & Starlight are among the top selling brands in their respective price points • Sensorial Superiority • Outstanding Packaging 35
Slide 36: Packaging transformation – Contemporary and appealing
Packaging transformation – Contemporary and appealing Previous Redesigned 36
Slide 37: Backed by World Class Processes
Backed by World Class Processes • Standard World Class Process adapted to West Africa • Consumer validated at every stage NPD Stage-Gate Process • Standard Planning Process followed elsewhere in the world • Validated by our proprietary research • Ensures ‘Bang for the buck’ 37
Slide 38: And a network of competent partners including World Class Designers
And a network of competent partners 0including World Class Designers 38
Slide 39: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 39
Slide 40: Manufacturing in West Africa
Manufacturing in West Africa • 85% of our products sold are locally manufactured or packaged (less than 20%, 2 years back) • Local production has led to key benefits - Improved margins - Rapid time-to-market - More responsive to changes in consumer needs 40
Slide 41: Significant Manufacturing Presence in Nigeria and Ghana
Significant Manufacturing Presence in Nigeria and Ghana Tomato Paste, Tema Confectionery, Lagos Tomato Paste, Lagos Dairy & Juice Drinks, Lagos Noodles, Lagos Biscuits, Tema • 10 manufacturing facilities in Nigeria and Ghana produce more than 170 SKUs • 2 Greenfield; 8 Acquired 41
Slide 42: Modernisation of acquired plants
Modernisation of acquired plants Before After • Modernisation to meet international GMP standards and improve quality, reliability and efficiency • Improved industrial safety – Lost time incidents per month in most acquired plants reduced by half 42
Slide 43: Adding Value through Global Best Practices
Adding Value through Global Best Practices • Reduce waste: Reduce PM waste by min. of 30% and RM waste by min. 20% in Biscuits. Similarly reductions achieved in Sweets and Noodles. • Overall Equipment Effectiveness (OEE) improvements between 10% and 22% across plants • Gas based power generation: Re
Slide 44: Strong Focus on Quality & Food Safety
Strong Focus on Quality & Food Safety Tomato Paste Lab, Tema Biscuits Lab, Lagos Sweets Lab, Lagos Our rigorous focus on quality & food safety is a differentiating factor compared to most other food manufacturers in West Africa • 8 laboratories in our plants in West Africa, 5 set up in the last 15 m
Slide 45: Food R&D centre dedicated to Africa centric innovation
Food R&D centre dedicated to Africa centric innovation • Central R& D centre at Bangalore to support innovation and quality assurance • Category specialists of 15 to 25 years of research experience in their respective product category • Supported by specialist agencies in packaging development and f
Slide 46: Select Innovative products from the R&D center
Select Innovative products from the R&D center Fiber Honey – Formulated to provide fiber health benefits with natural honey and low fat to deliver a delicious and wholesome product enjoying high acceptance in Nigeria Double Pop – Unique double headed depositor (first ever in Africa) engineered to de
Slide 47: Agenda
Agenda • Packaged Foods – An Overview • Africa Opportunity • Category Overview • Sales & Distribution • Marketing & Consumer Insight • Manufacturing, Innovation & Quality • Summary • Q&A 47
Slide 48: Summary
Summary US$4.4 billion size growing at between 6% and 12% p.a Attractive Aspirational consumers moving up the chain Opportunity Relatively lower levels of clutter in products, brands & media Early entrants can erect entry barriers Building a world class packaged foods business in Africa – 100% focus
Slide 49: Thank You
Thank You Thank You 49
Slide 50: Annexure: Speakers Profile
Annexure: Speakers Profile Ramanarayanan Mahadevan Ramanarayanan Mahadevan is the President & Global Head of Packaged Foods business based out of Singapore. Ram started his career in India in front line sales roles. He joined Olam in 1996 as a Branch Coordinator. His subsequent responsibilities incl
Slide 51: Annexure: Speakers Profile
Annexure: Speakers Profile Girish Nair Girish Nair is Senior Vice President of Marketing, West Africa of the Packaged Foods business. He is based out of Lagos, Nigeria. Girish joined Olam in December 2009 and set up the marketing function in Packaged Foods. He previously worked for Dabur India Limit
Slide 52: Annexure: Speakers Profile
Annexure: Speakers Profile Kamesh Ellajosyula Kamesh Ellajosyula is Vice President of Manufacturing, Quality & Innovation for the Packaged Foods business. Kamesh joined Olam in 2010 and has led the setting up of the manufacturing network for Packaged Foods. Kamesh last worked in technology roles in