Category Management CEE Example

Hot Beverages Czech Republic

2011 - 2013

CAtegory

STrategy

LEadership

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

4

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

What were the overall growth opportunities?

Desired sales

SUPPLIER RETAILER SHOPPER

Penetration of the category

Margin enhancer

Loyalty to chain of the retail / brand

Basket growth

Enjoyable shopping

experience

Category Story

Consumer&Shopper Strategy for

growth 2011-2013

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.

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: All beverages that are prepared primarily in hot way satisfying whole day needs; accompanying

person through the whole day.

SOURCE: PROJECT CAKE; INTERNATIONAL NEED

STATE STADY, 2010

Background

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We have found a huge PREMIUMISATION

opportunity in the world of our consumers!

• 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

Background Background

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• Whereas consumption of Hot Beverages

is highly emotional, connected with need

states such as kick start, socializing or

having a break…

• 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

Background

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

… and also our shoppers did not find any

attractivity while buying hot beverages

12

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 .

Convenience

in stores

Healthy growth

Attract youth

Purposeful

promotions

Combination

is great!

Bet on winners

• Convenience in stores - Leverage

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.

• Bet on winners – Reflect/anticipate

segments sales dynamics in space

allocation and breadth of assortment

• 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

• Combination is great - Leverage the

cross-consumption potential of Hot

Beverages by placing them in proven

sales driving locations and with affinity

categories.

• 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)

• 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.

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

Source: ACNielsen, total retail, August2012

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

15

Stores in scope: 230 in Czech

*At the expense of tea and creamer category

* * *

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

16

5 Stores in scope: 40 HM

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

100 HM

17

6 Stores in scope: 15

*

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

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•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

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

Nestlé Baltics 22

Category Ultimate Plan