03_2012_Breaking_the_walls_of_the_category

Category Management CEE Example

CAtegory STrategy LEadership

Hot Beverages Czech Republic 2011 - 2013

We are here to show the real example of the catman cooperation and with the results…

Zdeněk MELOTIK NESTLÉ Czech Category and Channel Sales Development Manager

Václav KOUCKY NESTLÉ Czech Category Developement Manager

Patricie JAKESOVA University of Economics Prague, Business partner

Category management has positive challenges

Efficient resources

Business based on partnership

Efficient communication HQ and stores Invest sources people/time/finance Overall discipline

Cooperation and mutual understanding Keep business agreements Keep continuity in category management

Business strategy Business process Information technologies

Performance measurement

Data sharing Information pool

Applicable results Project evaluation and fine tuning

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What were the overall growth opportunities?

RETAILER

SHOPPER

SUPPLIER

Desired sales

Penetration of the category

Margin enhancer

Loyalty to chain of the retail / brand

Basket growth Enjoyable shopping experience

How we build up the success story to deliver category GROWTH ‌ Here is the success story of The Hot Beverages ‌ but potential should be unlocked in all the categories.

Category Story

Consumer&Shopper

Strategy for growth 2011-2013

Retailing structure of the Czech Republic is quite fragmented with a clear dominance of the international players.

SOURCE: ACNIELSEN, 2010

…We aimed Hot Beverages, based on the consumer needs which defined the category.

Category definition: SOURCE: PROJECT CAKE; INTERNATIONAL NEED STATE STADY, 2010

All beverages that are prepared primarily in hot way satisfying whole day needs; accompanying person through the whole day.

We have found a huge PREMIUMISATION opportunity in the world of our consumers!

Background Background

• Hot beverages represent • 35% of the drinking occasions • …but only 25% of share of throat • and “just“ 20% of share of wallet

•There is still a potential to overcome the gap in the share of wallet with the share of throat and convince consumers to migrate towards more value added propositions

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… and also our shoppers did not find any attractivity while buying hot beverages • Background Whereas consumption of Hot Beverages is highly emotional, connected with need states such as kick start, socializing or having a break…

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The shopping reality differs a lot and is essentially functional : • Category shopping is confusing • Purchase is promotion driven • Decision is made on “autopilot” mode • Shopping is planned

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There is a big potential in connecting the emotional consumption with emotional shopping

Based on the shopper and consumer needs we defined CATEGORY GROWTH DRIVERS … with a direct link to our customers and activation at the Point of Sales .

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Combination is great - Leverage the

the synergy between Hot Beverages segments by reflecting in store the shopper decision tree. Attractiveness and easier navigation within the category will contribute to incremental growth.

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cross-consumption potential of Hot Beverages by placing them in proven sales driving locations and with affinity categories.

Convenience in stores - Leverage

Bet on winners – Reflect/anticipate segments sales dynamics in space allocation and breadth of assortment

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Purposeful promotions - Use all consumer and shopper knowledge to • attract them with the right promo mechanics and appropriate communication at the right place in store. Trade plan preparation

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Convenience in stores

Combination is great!

Attract Youth – Young people (<30) are under-indexing on consumption. It is critical to bring them to Hot Beverages through cocoa (6-12 years) and transition them to Coffee (teens+)by developing and communicating on specially designed varieties (foaming mixes)

Bet on winners

Attract youth

Healthy Growth - The hot beverages category suffers from a lack of education and negative myths about health. This opportunity can be unlocked by appropriate communication in&out the store.

Purposeful promotions

Healthy growth

Delivering category growth approach helped us together with customers to overcome the crises.. Current 2012 growth +2,7%

+ 1,2%

Source: ACNielsen, total retail, January 2012

Coffee was the key growth driver of the Hot Beverages. Continues to growth above the market performance. Portioned Coffee= key growth driver = BET ON WINNERS

Source: ACNielsen, total retail, August2012

Tesco managed to growth the share on the market by 1,4% within the HOT BEVERAGES

Stores in scope: 230 in Czech

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*At the expense of tea and creamer category

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Kaufland managed to grab the opportunity within highly developing segment with premium shoppers

100 HM Stores in scope: 40 HM

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Globus managed to bring excitement to a destination category and catch future shoppers

Stores in scope: 15

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There are some key challenges in cooperation between the manufacturers and retailer.

•It´ s not the project but rather the long term process and a mindset

•It’s not a “One size fits all” approach : Not all customers are willing to engage on Category Development initiatives Segmentation of the customers is needed to allow for tailored plans.

• Managing complexity : As multi –functional teams are involved on both the customer and Nestlé’s side, it is essential to clearly define roles, responsibilities, timing and quantified deliverables • Top management endorsement is crucial : If engaged from day 1,it will help solving problems (escalation) and will create a sense of ownership on both sides. Crucial part of the

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Category Ultimate Plan NestlĂŠ Baltics

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