KSA Jeddah Market Insights

June 2014

Val Misra

Agenda

• KSA Demographics

• Jeddah Market Visit Key Takeaways

• MDLZ Candy KSA Financials + Growth

Factors

• Jeddah Trade Visit

• Backup- 2013 Visit Consumer Insights

* KSA Demographics

KSA Demographics

Socio-Economic

• Oil-based economy, 17% of world’s petrol reserves

• GDP: $921.7B (20th largest world economy)

• GDP Per Capita: $31,800

• GDP By Sector of Origin: Industry 64.8%, Services 33.3%, Agriculture 1.9%

• Unemployment R: 11%

Population

• Population: 26.35M (82% in urban areas)

• Median Age: 25.7 y.o. (20% 15-24 yo., 44% 25-54 y.o.)

• Literacy Rate: 87.2% (90% male, 82.2% female)

• Culture: Family oriented, religious, relaxed lifestyle

• Entertainment: Shopping malls, parks, restaurants, sports

compound living, gatherings (no cinemas)

* June 2014 Jeddah Market Visit Key Takeaways

June’14 Market Visit Key Takeaways

• HALLS CHERRY is still the #1 Candy SKU in Jeddah – MT/Wholesale/TT

• HALLS XS well regarded by Trade!! Out of/Short of stock in some MT (Panda) /

Wholesale / TT locations (need supply!!)

• HALLS MT FSUs highly regarded by Trade!! Great design, look, color, brand recognition

and incremental sales has been achieved (not quantified); POSMs in TT not yet deployed

• Opportunity exists to create a SAR 0.5 HALLS CHERRY SKU – change for COKE/PEPSI

• We should delver further into HALLS In-Store Activation (keep the momentum going), as

MT FSUs are highly regarded by Trade and incremental sales have occurred – we can

create in-store Football POSM for HALLS (like Gillette); POSMs for TT have not yet been

deployed in KSA

• We should Digitally Activate HALLS (FB) to further engage consumers– generally, KSA

men/women are very susceptible to media/advertising

• Copycat Competitors are looking to enter our space – PIX, HB Jelly Cola, Taja Jelly Cola

• Cadbury Eclairs from Poland is a stronger offering than Egypt (quality, taste, packaging)

• Top Cakes in MT: 7 Days, L’uisine, Yamama; TT: 7 Days, L’usine, Yamama, Nahool

* MDLZ Candy KSA Financials

KSA Candy Domains

Mouth Fresheners

$332M Market

“Snacks for freshening

breath”

Halls

Sweet Sensations

$669M Market

“Sweet snacks with

mouth melting and

smooth taste”

Halls, Jelly Cola, Eclairs

*KSA Candy Domains

*KSA domain data provided by AMRB Market Research Middle East from

“Saudi Arabia Snacking Market Structure” for MDLZ

MDLZ Candy Financials – AC2014

HALLS GCC Halls KSA

Vol 1,239t 925t

NR $6.59M $5.177M

GP 58.5% 52.4%

Jelly Cola GCC Jelly Cola KSA

Vol 463t 400t

NR $2.376M $2.1M

GP 26.3% 27%

Eclairs GCC Eclairs KSA

Vol 251t 58T

NR $1.238K $352K

GP 45.2% 47.7%

HALLS XS GCC Halls XS KSA

Vol (EDS) 88mt (EDS) 47t (EDS)

NR $1.807M $965K

GP 62% 63%

Total

HALLS

KSA

Vol % of

Business

Modern

Trade

700t 8%

Wholesale 65t 80%

Traditional

Trade

90t 12%

8%

80%

12%

Total Halls KSA (% Business)

MT

Wholesale

TT

* HALLS GCC GROWTH FACTORS 2014

Brand Idea is grounded in product truth and demonstrated via ‘ownable’ consumption ritual

Intense liberation, encouraging, inspiring

BRAND CHARACTER: Starts with MOVEMENT + 2 words

CONSUMER INSIGHT PRODUCT RIGHT TO WIN

CULTURE OPPORTUNITY CATEGORY REFRAME

Breathe

Into

Action

BRAND IDEA

We believe in the power of people who DO. We

believe that inside every doer is an arsenal of

ambition. Ambition to create, improve, and be

the best they can be. The doer doesn’t let life

happen to them, they happen to life, and we are

passionate about being their partner each day.

Never before has the gap between reality and

ambition been as close as it is today. What’s

possible is only limited by your will to imagine

and do. These basic beginnings all start with a

breath that invites possibility and potential into

your body. Halls is the breath and the jolt of

self actualization that sets you on course to

make your ambition happen. We fight to give

you that magic breath. That deep, super-

charged breath that jolts you into action. We

fight to switch on the power inside you. The

power to imagine, believe, and do.

BRAND MANIFESTO:

Further describes beliefs and values underlying the

BRAND IDEA

Associate Halls with breathing so we can own

“doing”

Our Goal: How we will grow our brand.

Taking a deep breath is a natural way I prepare myself for

action

Creating your destiny depends on the power

within you

From refreshing candy to

invigoration

Legendary power of menthol that jolts open your

breathing

11

Halls – 4 Box

Halls 2014 GCC Growth Factors

• Candy category driven by Halls

• Halls total Vol to grow +29%, +46% total NR growth, OIM steady

• 77% EDS KSA driven

Growth/Profitability Factors:

1. Launch Halls XS (2 premium SKUs: lemon, peppermint)- 88mT Vol’14 @ SR2

Expected GM per pack of 62.8%

2. Increase Visibility/Media Awareness For Halls:

- Executing in-store activation (POSMs) for TT/MT/Pharma in key markets –

(KSA, UAE)

- Growing Halls Base by placing with Halls XS at POB

- Halls Digital Media Strategy (Facebook Page/YouTube Halls Football TVC)

3. Shift from 3rd party distributor (Tamer) to Mondelez Arabia/Moyya in Q2’14-

gives us 9-month price advantage

4. Decrease Egypt IBRs ($2.22/kg vs. $2.58) based on plant reaching targeted

productivity (conditional)

12

TT Prefilled Display

A2 & A3 Posters

TT In-Store Activation - GCC Red vs. Turkey Black

New PVC Parasite Stand!!

NEW Countertop @ TT HZ!! - XS Lemon/Peppermint on top - Base Cherry outer at bottom

TT Store in KSA (HZ)

NEW Posters @ TT!!

1)

2) 3)

MT In-Store Activation

NEW FSU @ MT!!

MT FSU

4)

Halls Pharmacy Channel Opportunity (work in progress)

• Opportunity: (1) Place Halls at ready-made displays

at pharmacies, (2) Place new countertop @ checkout

• Major chains: Nahdi (left), Daan, Dawa, Unilet

Ready-made displays

New Halls Countertop

15

Halls Digital Media Strategy

Facebook

• Dedicated Halls Arabia page

(merge with Halls Egypt page)

• Communication vehicle to our

existing and new consumers of Halls

(existing line and NPDs)

• Share Egypt content, fanbase, and

create GCC specific content/fanbase

• Increase #fans, engagement, likes,

competitions, align message

• Target: 340,000 fans (young males

age 15-29 y.o.)

YouTube

• Halls Football TVC shown during

World Cup (May-Jun 2014)

• Communicate Halls message of

“invigoration” / “mighty breath” to

our target GCC consumers

• Target: 1,000,000 views

Digital Media Strategy

*Market Visit KSA Jeddah Competitive Analysis

MDLZ KSA Candy & Competitor PP

MDLZ Competition

SAR 1/stick

*Regarded as candy

SAR 5.95/pack SAR 1.5/pack SAR 1.5/stick

SAR1/stick

*Regarded as medicine

SAR 14.95/box SAR 4/pack SAR 4.50/pack

SAR 0.5/pack

Jelly Cola

*Regarded as jelly candy

SAR 0.50/pack

SAR 13.50/bag

SAR 8.95/bag

Jelly

Belly

SAR 13/bag

*Regarded as milky choc

candy

SAR 1.95/pack SAR 2.95/pack SAR 3/pack

* Market Visit CANDY Opportunities/Insights

*New* Mini-HALLS SAR 0.5 Offering

• HALLS CHERRY is still the #1 Candy SKU in Jeddah – MT/Wholesale/TT

• Opportunity exists to create a SAR 0.5 HALLS CHERRY SKU – change for

COKE/PEPSI

• COKE/PEPSI sells for SAR 1.50 and consumer pays SAR 2; change is given as

mini-Mentos, mini-Polo, mini-Toffo, or Nova gum/Gandour gum

• We can create a mini-HALLS offering for SAR 0.5 (like mini-Mentos, mini-Polo, mini-

Toffo)

CADBURY Eclairs Potential Opportunity

• Jeddah Airport Duty Free had Eclairs from Poland – excellent

product/packaging/quality/taste

• ‘Potential’ opportunity to re-source Eclairs from Poland and

have a premium offering!

Eclairs Poland Eclairs Egypt Eclairs Poland Eclairs Egypt

SAR 12.95/bag (85pcs/bag) Bag = 425gr

SAR 46/bag (80pcs/bag) Bag = 630gr

SAR 0.15/pc 5gr/pc

SAR 0.575/pc 7.90gr/pc

COPYCAT Competitors

PIX (identical Halls offering)

1. Manufacturer: MASTER

Gums & Candies Lebanon

2. Price: SAR 1/stickpack

3. Weight: 32gr/stickpack,

9pcs/stickpack

4. Placement: Next to Halls

in MT/TT

1. 3. 2.

Jelly Cola (identical offering)

1. Manufacturer: MDLZ Egypt

@ SAR 0.5/minipack

2. Manufacturer: Taga KSA

@ SAR 0.5/minipack

3. Manufacturer: Balubaid (China)

@ SAR 0.5/minipack

* Market Visit KSA Jeddah Modern Trade

MT – Hyperpanda, Al Anasdala

• Halls MT FSUs well regarded by Trade- good instore placement,

great design and accessibility (4 sides), incremental sales has

been achieved (not quantifiable)

• Good availability of Halls base. Halls XS sold out! Need more supply.

• Good availability of Jelly Cola & Cadbury Eclairs

MT – Danube, Red Sea Mall

• Halls FSUs well liked by Danube Manager Andy –

they would like to see continued innovation for

the Halls brand (in-store, TV, digital)

• Competitor FSUs (Mentos, TicTac) are circular in design

• Gillette has an excellent FSU that incorporates a

Football goal with Floor sticker, FSU, and product

- incorporate similar design for Halls/XS

MT – Farm Super, Jarir Mall

• Halls FSU not well placed in store – hidden away,

poor visibility; as a result, Halls XS is still on shelf

• PIX placed directly

under HALLS (9pc stick

pack @ SR1)

MT – Danube, Al Madeena St

Top Cakes: 7 Days, L’Usine, Yamama

* Market Visit Top KSA Jeddah Wholesalers:

Balubaid Al Harbie Saudia

WHSL – Balubaid/Al Nejoum

• Balubaid is dominated by MDLZ Candy & Biscuits

WHSL – Al Harbie

• Top Sellers: Halls Cherry, Oreo, CDM

Needs Halls XS Supply!

WHSL – Al Saudia

Top Sellers:

Halls Cherry

Jelly Cola

Oreo

Memories

McVities

Needs

Halls XS

Supply!

* Market Visit KSA Jeddah Traditional Trade

(Vans)

TT – Halls @ Every Checkout

Needs

Halls

XS

Supply!

Needs

Halls

XS

Supply!

TT – Halls + XS @ Checkout

Halls

XS

Present!

TT – Halls @ Every Checkout

Needs

Halls

XS

Supply!

TT – Halls @ Every Checkout

Needs

Halls

XS

Supply!

TT – Cakes

• Top Sellers: 7 Days, L’Usine, Yamama, Nahool

* Market Visit KSA Jeddah Pharmacy

Pharmacy – Big Opportunity Still Exists!

Needs Halls Cherry +

Halls XS

Supply!

Pharmacy – Big Opportunity Still Exists!

• Pharmacists recognize Halls very well and would welcome the brand + Halls XS

in store

• Place our new Halls Countertop in Pharmas

* CANDY Consumer Insights (Nov 2013 Visit)

Halls CV – Young Adult Male

- Name: Wael

- Age: 23 y.o., Single

- Household Members: Father, mother, 3 elder sisters, 2 brothers

- Profession: Student, King Abdul Aziz University

- Likes: Candy, Football, Playstation, TV, Mobile, Twitter, Socializing

- Ideal Destination: Travel to foreign beach and sleep/relax//pray/massage

Wael’s Candy/Halls Insights

• Favorite Candies: Halls, SMINT fruit, other fruit flavor candies, Jelly Cola

• Disliked Candies: Polo (pure mint)

• Favorite Candy Flavors: Cherry, blueberry, raspberry, all fruity flavors, cola

• Opinion of Halls: Best candy, strong heritage, mouth refresher, personal use/shared; Feelings of

happiness, enjoyment, childish feelings of fun (heritage)

• Halls Cherry #1: Delicious, sweet flavor- it’s unique (no competitor has this), can drink with water

(unlike menthol/spearmint - leaves tingy, spicy, medicine like taste)

• Likes about Halls: Can suck them for 1-2 mins and then discard (unlike gum), better breath,

portable design pack – Wael considers Halls special

• Halls Usage: 7am upon waking up as a mouth freshner (won’t brush) – functional use

After meals, need something sweet and mouth fresher

• Halls Buying Frequency: 3 stickpacks/week, when buying at TT/groceries at night for his mother

• Halls Recommendations: (1) Advertising – TVC, radio, instore, street posters, (2) Change the

packaging, (3) increase fruit flavors- berry, grape, vanilla, (4) have

2-in-1 flavors – ½ pellet is cherry, ½ is berry, (5) HZ presence

Halls User – Purchase Insights

Purchasing Criteria Rating for Halls: 10 = important to consumer, 1 = not

important

Price 7-8/10 (product should be affordable)

#SKUs/Flavors 9/10 (max flavors is good, fruits)

Product Quality 9/10 (more important than price)

Package Quality 8/10 (product should continue to innovate)

Brand Effectiveness 9/10 (brand is very important, advertising is key)

MT Presence 9/10 (should be present in Hyper/Supermarkets)

TT Presence 9/10 (not so important to be in groceries)

* JELLY COLA

Jelly Cola CV – Married Female with kids

- Name: Umrayan

- Age: 30 y.o.

- Household Members: Husband, Children: 2 girls, 1 boy

- Profession: Housewife (currently); PR at ARAMCO (pre-marriage),

- Likes: Children/family, Friends, Cooking, Travel, Read, Sleep, Instagram

- Ideal Wish: Have a full-time job (contribute to family, have interesting conversations with husband/lady-friends, have self-respect)

Umrayan’s Jelly Cola Insights

• Primary Purchaser of Candy: Umrayan buys for her kids; husband will buy for himself

• Buying Frequency: Once a month, she buys in bulk at discount store – planned purchase

• Favorite Candies: Jelly Cola

• Disliked Candies: Chupa Chups (lollipops) – waste 30mins on consumption

• Favorite Candy Flavors: Cola, fruits

• Opinion of Jelly Cola: Best candy, strong heritage, childhood memories (her parents would eat it);

Feelings of happiness, less stress – “reward/bribe” for kids

• Likes about Jelly Cola: Tasty, affordable, easy to chew- kids can’t choke, quality, trusted brand

• Jelly Cola Usage: Morning – kids may want chocolate or candy/Jelly Cola;

After 3pm, kids eat candy; Umrayan places big plate full of Candy for kids

*Umrayan always carries Jelly Cola in her handbag*

• Health concerns: Umrayan considers Jelly Cola/candy safe for her kids – just watches quantity

• Recommendations: (1) Increase size of bag/# of pieces, (2) Have TVC feat. Hala Turk or Noor

Al Othman – young actresses that kids/mothers like, (3) Introduce other

carbonated drink flavors- Sprite, Fanta, Fruit Colas

Jelly Cola User – Purchase Insights

Purchasing Criteria Rating for Jelly Cola: 10 = important to consumer, 1 =

not important

Price 9/10 (must provide value for higher price)

#SKUs/Flavors 9/10 (max flavors is good, don’t get bored)

Product Quality 10/10 (quality and taste is high for the kids)

Package Quality 9/10 (product should continue to innovate)

Brand Effectiveness 9/10 (brand is very important)

MT Presence 8/10 (should be present in Hyper/Supermarkets)

TT Presence 5/10 (not so important to be in groceries)

*CADBURY ECLAIRS

Cadbury Eclairs CV – Married Female, no kids

- Name: Wiam

- Age: 25 y.o.

- Household Members: Husband

- Profession: Housewife

- Likes: Chocolate, TV, internet, Books, Jokes, Sleeping, Studying

- Ideal Wish: Have a happy family and good job (Art gallery), maybe B.A.

Umrayan’s Jelly Cola Insights

• Primary Purchaser of Candy: Wiam buys for her home (herself, husband, family, guests)

• Buying Frequency: Purchases once a week – planned purchase

• Favorite Candies: Cadbury Eclairs, Malteasters, M&Ms, Smarties

• Disliked Candies: Mint flavor

• Favorite Candy Flavors: All milk tasting candies

• Opinion of Eclairs: Suggests something beautiful, delicious milk taste

Feelings of relaxation (eats Eclairs when taking a break), happiness

• Likes about Eclairs: Loves milk taste, melts in mouth, product consistency, sharing, brand trust

• Eclairs Usage: She eats candy anytime she passes by them (keeps them out on a glass tray)

9am, eats candy- Eclairs, M&Ms

5:30-6pm Coffee time- eats Eclairs with husband/sister/friends

Before going to the gym in evening + 10pm- eats milk tasting candies

• Recommendations: (1) Don’t change formula concentration/filling, (2) change the wrapper, no

twist sides, (3) create good TVC: show milk content, good filling, sweet/tasty

Cadbury Eclairs User – Purchase Insights

Purchasing Criteria Rating for Eclairs: 10 = important to consumer, 1 =

not important

Price 4/10 (price not the most important)

#SKUs/Flavors 9/10 (max flavors is good, don’t get bored)

Product Quality 9/10 (quality and taste is important)

Package Quality 9/10 (product should continue to innovate)

Brand Effectiveness 9/10 (brand is very important, advertising is key)

MT Presence 8/10 (should be present in Hyper/Supermarkets)

TT Presence 5/10 (not so important to be in groceries)

Thank you