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1 CLOVER INDUSTRIES LIMITED Merrill Lynch conference Sun City 15 March 2013

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  • 1

    CLOVER INDUSTRIES LIMITED

    Merrill Lynch conference

    Sun City 15 March 2013

  • 2

    AGENDA

    Introduction & background

    Business drivers

    Challenges

    Potential

    What keeps us awake

  • 3

    INTRODUCTION

    AND BACKGROUND

  • 4

    CLOVER IS

    A JSE listed Branded Consumer Goods (BCG) Company with a

    114 year heritage

    One of the largest distribution companies in SA

    The largest chilled distributor in South Africa

    Substantial critical mass due to its milk delivery frequency

    Strong Beverages brand portfolio

  • 5

    The of Italy

    The of New Zealand

    The of France

    The of Spain

    The of Argentina

    CLOVER IS

  • 6

    Vision

    To be a leading branded foods and beverages group in South Africa and

    selected African countries, providing accessible nutrition to all consumers

    Mission

    Clover's mission is to reach the Groups widely dispersed customers on a daily

    basis, and to provide trusting consumers with quality products through its

    extensive network underpinned by its leading dairy business. Care is taken to

    develop or acquire brands which have the potential to occupy the number one or

    two positions in their chosen segments. It focusses on way better operations

    across the supply chain including services to the trade, and on delivering

    sustainable shareholder value by being a responsible corporate citizen and

    preferred employer

  • 7

    OUR BRANDS

  • 8

    KEY RECENT EVENTS

    Change in mind-set

    at Clover

    Evolution of the

    business platform

    from a co-operative

    dynamic to a

    corporate dynamic

    Achieved with the

    full support of milk

    producers

    Clover positioned to raise capital

    to implement growth and efficient plans

    2003

    2006

    2007

    2010

    2011

    National Co-operative Dairies Limited converted to Clover Industries Limited

    Fundamental shift from a supply driven company to a demand driven company

    Clover SA acquires Danones 39.5% shareholding in Clover Beverages

    Sale of UltraMel custard brand to Danone

    Sale of 45% shareholding in Danone Clover for R1.08bn to Danone

    Dual share structure abolished

    Delinking of ordinary shares from milk delivery agreements together with the

    amendment to the rights attached to the preference shares

    Buy-back of Hosken Consolidated Investments ordinary shares

    Listing on the JSE

    Buy out of minority shareholders in Clover Beverages Limited

    Transfer of the Clover Beverages business into Clover SA

  • 9

    THE SOUTHERN AFRICAN DAIRY MARKET

    South African national dairy production is 2,7bn litres

    The market is predominantly a liquid (drinking) milk market

    Fresh milk constitutes the majority of the liquid milk market

    The annual market is approximately R36bn for dairy based products

    Clover buys approximately 24% of national milk production

    (including milk for Danone)

    Import potential limited to cheese, butter, powders and long life milk

    Unlike Europe and the USA liquid milk is still very much a branded domain

    with DOB market shares in the top end (Spar, Shoprite, Pick n Pay) being:

    Fresh milk 31%

    UHT 45%

    Butter 28%

    Cheese 12%

  • 10

    THE SOUTHERN AFRICAN

    NON-ALCOHOLIC BEVERAGE MARKET

    South African national market for non-alcoholic beverages is R56bn

    Markets not currently serviced and investigated by Clover are:

    Carbonated beverages

    Long life fruit drinks

  • 11

    0

    10

    20

    30

    40

    50

    LSM 1-3 LSM 4-5 LSM 6-8 LSM 9-10%

    Increasing income levels and LSM migration

    2003 2006 2009 2010 2011 2012

    INDUSTRY FUNDAMENTALS

    Increased level of consumption to be underpinned by stronger growth,

    increasing incomes, trend toward urbanisation and electrification

  • 12

    MILK CONSUMPTION PER CAPITA

  • 13

    100% JUICE AND NECTAR

    ANNUAL CONSUMPTION PER CAPITA

    33.331.3

    27.826.6

    22.8

    8.7 8.0

    2.41.1

    0

    5

    10

    15

    20

    25

    30

    35

    Germany Finland USA France UK SouthAfrica

    Mexico Brazil NigeriaLitresper capita

    Developed market median of 28 litres per capita

  • 14

    KEY BUSINESS DRIVERS

  • 15

    KEY BUSINESS DRIVERS

    Strong brands with leading market position

    Extensive distribution platform

    Increasing efficiencies and capacity (Project Cielo Blu)

  • 16

    STRONG BRANDS WITH LEADING MARKET POSITION

  • 17

    STRONG BRANDS

    123

    123

    123

    123

    124

    126

    126

    127

    132

    134

    Cadbury

    Handy Andy

    Nokia

    Standard

    Woolworths

    KFC

    Shoprite

    Clover

    Coca-Cola

    Pick 'n Pay

    SA top 10 most engaging brands

    1.92

    1.95

    2.03

    2.08

    2.43

    2.44

    3.00

    3.00

    4.00

    16.00

    BMW

    Levi

    Nokia

    SAB

    KFC

    Clover

    Nike

    KOO

    Vodacom

    Coca-Cola

    SAs most favourite brand

    This is a totally spontaneous mention question

    people can vote for any brand they love

  • 18

    34

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    39

    40

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    50

    50

    50

    55

    57

    57

    60

    65

    0 10 20 30 40 50 60 70

    Aromat

    Simba

    All Gold

    Eskort

    Koo fruit

    Pick n Pay

    Jik

    Black & Crosswell

    Ackermans

    Vodacom

    KFC

    Clover

    Nokia

    Sunlight

    MTN

    Dulux

    Jet

    Black Cat

    JC Le Roux

    Albany

    Coca-Cola

    Robertsons

    Sunlight

    Koo

    Mr Price

    Huletts

    All Gold

    Edgars

    Average

    STRONG BRANDS

    15 236 interviews over 10 months across 8 000 brands in 450 product categories

  • 19

    Clover awards: F2012/13

    Awards Brand Comments

    Apex Awards Tropika Bronze Sustainable brand in marketing and business

    Arrow Awards

    Tropika

    Clover Krush

    Clover Milk

    Clover Cheese

    Diamond

    Diamond

    1st (Gold)

    1st (Gold)

    Best marketing campaign

    Most successful product launch

    Sunday Times

    Top Brands

    Tropika

    Krush

    Top 3

    Winner

    Sunday Times

    Youth SurveyTropika Top 10

    6th

    4th

    Cold drinks

    Dairy drinks category

    Products

    of the Year

    Danao

    Clover UHT Prisma

    Clover 800g Cheese

    Winner

    Innovation

    Icon Brands

    2012

    Clover Fresh Milk

    Clover Cheese

    Icon status

    3rd Dairy category

    STRONG BRANDS

    http://www.google.co.za/url?sa=i&rct=j&q=sunday+times+top+brands&source=images&cd=&cad=rja&docid=8o-jiiK7SyA5nM&tbnid=6B-raFCZ-ZbreM:&ved=0CAUQjRw&url=http://blog.coup.co.za/2011/08/1684/&ei=tyo_UebNG-LW0QW6Ug&bvm=bv.43287494,d.ZG4&psig=AFQjCNHkDYKT90JOz-XjeOhqUKN2djRCMA&ust=1363180576356752http://www.google.co.za/imgres?q=PMR+Diamond+Arrow&hl=en&sa=X&biw=1024&bih=673&tbm=isch&tbnid=sakqWu_6kM7lxM:&imgrefurl=http://www.fairbridges.co.za/&docid=g61_U25uKxu4iM&imgurl=http://www.fairbridges.co.za/uploads/news/17.jpg&w=702&h=292&ei=_Ck_UZvWEsiJhQfvxoCYBg&zoom=1&ved=1t:3588,r:20,s:0,i:148&iact=rc&dur=943&page=2&tbnh=145&tbnw=348&start=15&ndsp=20&tx=157&ty=88http://www.google.co.za/imgres?q=Apex+brand+awards&start=105&hl=en&biw=1024&bih=673&tbm=isch&tbnid=JVwEz8ssQqipFM:&imgrefurl=http://www.themarketingsite.com/live/article/2012-apex-awards-judges-announced/17733/&docid=SW-jYzzVgsZVHM&imgurl=http://www.themarketingsite.com/content/Apex Awards Feat~2.jpg&w=292&h=170&ei=dSo_UYSpCNKBhQfxx4CYBg&zoom=1&ved=1t:3588,r:13,s:100,i:43&iact=rc&dur=599&page=7&tbnh=129&tbnw=227&ndsp=16&tx=123&ty=79http://www.google.co.za/url?sa=i&rct=j&q=sunday+times+top+brands&source=images&cd=&cad=rja&docid=8o-jiiK7SyA5nM&tbnid=6B-raFCZ-ZbreM:&ved=0CAUQjRw&url=http://blog.coup.co.za/2011/08/1684/&ei=tyo_UebNG-LW0QW6Ug&bvm=bv.43287494,d.ZG4&psig=AFQjCNHkDYKT90JOz-XjeOhqUKN2djRCMA&ust=1363180576356752

  • 20

    TANGIBLE BRAND PREMIUMS

    10%13%

    23%

    -7%

    23%

    29%

    3%

    32%

    8%

    -12%-10%

    20%

    13%11%

    40%

    Clover 2ltFresh

    Clover 1LUHT milk

    Fresh Milk1L

    CloverFeta

    cheese400gr

    CloverPre-packNaturalCheese240gr

    Elite Pre-pack

    NaturalCheese300gr

    CloverPre-packNaturalCheese450gr

    Tropikadairy fruit

    mix 2lt

    Krush purefresh juice

    1.5lt

    Manhattanice tea500ml

    Aquartz500ml Still

    water

    Super Mflavoured

    milk 300ml

    FreshCream250ml

    Butter -Mooi River

    500gr

    Danao 1Ldairy fruit

    mix

  • 21

    MARKET POSITION

    Source: Aztec (Total Defined Supermarkets (Incl Pnp Grp, Shprt/Checkers Grp, Spar Scanning Grp)

    Note: The Krush & Quali fresh juices market shares include the real Beverage Co. market shares for all three years

    28.4% 29.0%31.0%

    Dec 10 Dec 11 Dec 12

    Fresh and UP milk

    24.7% 25