CSL Conference September 2011 · ‣Spending power still in hands of lower middle ... •Major...
Transcript of CSL Conference September 2011 · ‣Spending power still in hands of lower middle ... •Major...
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Quality Food Products
CSL Conference September 2011
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Promasidor Nigeria Ltd
Who…..
What……
&
Where we are going !
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Consumer Market - summary
‣ Total population is around 150 million
‣ Demographics are skewed towards young
‣ Spending power still in hands of lower middle and
working classes – large numbers/low income
‣ Growth of middle class both in economic terms &
changing consumption patterns
‣ Vast majority of purchases still in traditional channels
‣ Local markets, lock ups, table tops
‣ Major growth in formal shops but from small base
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Densely Populated
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Change & Growth in the FMCG Sector
• GDP growth will boost an increase in disposable income
– Rising income levels
• Increase in minimum wage from end of June 2011
• Westernisation and Sophistication
– at the higher end of the market as western culture is influencing consumption patterns.
• Strong demographics
– The average age of Nigerians is 18 years as at 2009 and is estimated to average 20 years by 2020
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Distribution of the population by social class
Source: Euro monitor International
•Euro monitor estimates that the size of the middle class will expand to 35% of the population in 2015 •Lower class will shrink to 59% of the population as against 66% in 2009•Upper class will experience an increase to 6% of the population (Growing at an average rate of 7%)
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Income Distribution In Nigeria
Top 10%
Lowest
20%
Next 20%
Middle 50%
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FMCG: Key Facts
• Food sector has grown by an average of 10% p.a.
• 42% of Disposable income spent on food
• Bread and cereal consumption represents an average of
21% of total food and beverage basket
• Dairy represents 4%
• Major changes in consumer patterns
• Household spending on fast food grew by over 200% in 2011
• Nigeria fast food industry is worth about N250bn
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Nigeria: Household disposable Income 2009
Nigeria: Household disposable Income 2015
Disposable Income Distribution
Total Private Consumption $127bn
Total Private Consumption $233bn
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Milk consumption
Per head, litres p.a.
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Retail Sector
• Strong growth being experienced in the organized retail market
• Retail sector currently averaging a 10% annual growth rate
• Major chains expanding to new cities in response to increased consumer demand
• Growing product base to attract middle class
• Only 2% of the retail market is catered for by the formal retail outlets
• Drive to improve the quality of the shopping experience
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That’s the background
What about us?
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An African owned business developed through product and marketing innovation
to meeting basic consumer needs with a commitment to the communities in which
we live and work
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A brief History
•Founded 1993
•Pioneer in small pack/low retail price
•Rapid growth
•Product diversification
•Strong Market positions
•Successful distribution
•High brand awareness
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Ownership
•Rose family 75%
•E. Oppenheimer & Sons 25% (since 2006)
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2010 Revenue vs peer group
$190m $300m $306m
$409m $590m $540m
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17PNG Brand Planning Workshop June 2010: Pre-read CONFIDENTIAL
BU
SIN
ES
S A
MB
ITIO
NTO BE IN THE TOP 5 OF 20 PEER GROUP
COMPANIES (1) BY PBIT BY 2013
Triple turnover in naira terms
Double case volume
5 brands in the top 3 by volume market share in
their segments
10 brands with at least 75% spontaneous brand
awareness (2)
Promasidor to be an Employer of Choice when judged against
peers (3)
1) Guinness, NBL, NBC, 7-UP, Nestlé, Unilever, Friesland Campina, Chi Foods, PZ Cussons, C-Way, Dangote Foods Divisions, Limca, Viju, Foremost Dairies Plc, Classic Beverages, Dana Foods Divisions, etc. Will require significantly higher PNG turnover than several of the others
who play in premium and higher-margin segments.2) Combination of 5 brands in top 3 market share and 10 in top unprompted recall would mean a powerful portfolio with strong and developing
brands.3) Judged against recruitment/retention & industry surveys
4) Price Waterhouse Cooper peer group poll
Promasidor corporate brand in the top 10 most
admired companies (4)
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18PNG Brand Planning Workshop June 2010: Pre-read CONFIDENTIAL
BU
SIN
ES
S A
MB
ITIO
N
1. Play to our strengths
• Delivering product we understand, to consumers we understand, through channels we understand
• Quality products at an affordable price to C2D consumers (the bulk of Nigerians who can afford commercially-
produced food & beverages)
• (Recruit new consumers to the PNG franchise)
Grow current baseExisting brands in current & new formats, to existing consumer segments, in existing channels
2. Use consumer insight to introduce new products that will enhance margins
• Low cost of supply
• Higher added-value
• Grow frequency amongst existing consumers
• (Recruit new consumers to the PNG franchise)
Grow frequencyLine extensions & new brands/ products, to existing consumer segments, in existing channels
E.g.: Evaporated milk, flavoured milk
3. Use consumer insight to enter new channels & categories
• Leverage innovation skills (first in sachets, first round teabag, first seasoning powder)
• Move as middle class grows
• Higher risk but potential for higher margin
• Recruit new consumers to the PNG franchise
Grow franchiseLine extensions & new brands/
products, to new consumer segments, in new channels
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Our
Brandsand the categories we play in
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POWDERED MILK
CATEGORY
POWDERED MILK CATEGORY
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CATEGORY SALES VOLUME AND VALUE TREND.
Source: AC Nielsen RAM June 2011
The Category is currently worth about $473 million.> 59,000 Tons sold annually.
11% & 3% YOY average value & volume growth respectively over the last 4 yrs.
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VOLUME & VALUE SHARE TREND - BRANDS
The 3 brand strategy (dual flanking of Cowbell – our flagship brand) has been repositioned and is gradually yielding results.
Volume Share % Value Share %
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COMPETITIVE LANDSCAPE.
Promasidor, with its 3 brand strategy,
is a strong number 2 in the
category.
Source: AC Nielsen RAM June 2011
House vol
share
30.4%
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BRAND FACTS
• Our flagship brand Cowbell was launched into the Nigerian market in March 1993.
• It was the 1st milk brand to be sold in single serve units in Nigeria.• Its launch and aggressive market penetration strategies completely
revolutionized the marketing landscape in Nigeria.• Single serve units have now been exploited in every single category
– margarine, detergents, alcoholic beverages, evaporated milk, water, etc.
• It is a fat filled milk, contains 28 essential vitamins and minerals and is available in 6 pack sizes.
• Loya Premium Milk is our Full cream powdered milk initially launched in May 2004.
• It was repositioned, re-packaged and reformulated (with 50% more calcium – HiCal) and relaunched in October 2010.
• PNG Revenue c $200m
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SKUS & PRICING.
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COCOA BASED BEVERAGES CATEGORY
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CATEGORY SALES VOLUME AND VALUE TREND.
The Category is currently worth about $565 million.> 72,000 Tons sold annually.
12% & 5% YOY average value & volume growth respectively over the last 4 yrs.
Source: AC Nielsen RAM June 2011
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PROMASIDOR VOLUME AND VALUE SHARE TREND.
Growing Volume share.Flat Value share.
Source: AC Nielsen RAM June 2011
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Market Shares
11 years post launch, Cowbell Chocolate has grown rapidly and is now the Number 3 brand in the category.
Source: AC Nielsen RAM June 2011
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BRAND FACTS
• Launched into the Nigerian market in August 2000.• Prior to its launch, market was dominated by Milo,
Bournvita, Vitalo and Ovaltine.• Pioneered the 3-in-1 segment (Cocoa + Sugar + Milk)
of the category.• Vitamin enriched – contains 28 essential vitamins &
minerals.• Has 4 SKUs: 9g Sachet, 23g Sachet, 450g Sachet,
and 500g Tin.• Active both ATL & BTL (RFE, Chocademy, Funfairs &
SYS)• Revenue $80m
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SKU’s & PRICING.
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The Seasoning Category
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74,891 Tons
US$320
Volume
5,483
63,892
5,516
Value
$32m
$265m
$23m
63,892(85.3%)
5,483(7.3%)
5,5165,516(7.4%)
$265m(83%)
$32m(10%)
(7%)
Amongst all three sub categories, the powder sub segment commands higher value relative to its volume share.
Source: AC Nielsen RAM - June ’11
Cube
Powder
MSG
The Seasoning Category
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Source: AC Nielsen RAM - June ’11
0
10000
20000
30000
40000
50000
60000
70000
80000
20082010
YTD '10
Total Volume (1000kg)
0
100000
200000
300000
400000
500000
600000
20082010
YTD '10
Total Value (bN)
Both cubes and powder growing, but powder growing faster than cubes.
Growing by Volume and Value
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The Brand Onga: Summary๏ July 2004: Launched
‣ 4 variants; Stew, Chicken, Classic and Crayfish;
‣3 SKUs, 6g, 1kg and 3kg
๏ Q4 2010: Add 5th variant, Onga Soup in 6g & 3kg
๏ Q1 2011: Launched Shaker packs – first in Market.
๏ Other facts:
‣ 1st Powder seasoning in Nigeria
‣ Target: Females, 18 - 35 yrs.
(Those just starting to cook/who are not yet set/hooked on Cubes)
‣ Key competition; Maggi, Knorr, Royco, and Aji no moto
‣ Brand Ambassador: Kate Henshaw Nuttal to re-enforce the younger aged
targeting and build brand affinity.
‣ Marketing activities: Both ATL and BTL
‣Revenue $25m
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The Tea Category
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The Tea Category
Volume
Value
US$ 43 Million
The market is dominated by bagged tea, with negligible volume from loose tea sub-category
3,017 Tonnes pa
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The Brand Top Tea: Summary
April, 1998:4 Pack sizes: BP x26 bags, PP x26 bags, PP x100 & PP x500
March, 2004: Pack Consolidation and Introduction of Sachet Tea
November, 2009: Package Change & New Communication Direction
Other Facts:
First Tea in round bags in Nigeria
Target: 30-45 yrs male/Females, Professional, Contemporary
Key Competition: Lipton, Prime Tea, Highland Tea, City Tea
Marketing support: ATL & BTL
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Volume shares
Tea Category - Shares
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Revenue $10m
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SALES VOLUMES
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Retail pack sales volumes in million cases
63% growth in
last 3 years
63% growth in
last 3 years+26%
+25%
+11%
+14%
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Retail pack sales volumes in million cases
+117%
+100%
+28%
+100%
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DIVISIONAL & REGIONAL
SALES ANALYSIS
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REGIONAL SPREAD & DELINEATION JAN – JUNE ’11
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DIVISIONAL VALUE SALES ANALYSIS ($) JAN – JUN ’10 vs. ‘11
0
20
40
60
80
100
120
140
NORTH SOUTH WEST NAT.
58
4437
139
62
4539
146
Millions
2010 2011 #160:1$
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Our
Operations
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Our operation is fun but it also has some complexities
• We operate from about 240,000sq ft combined warehousing capacity
• We import about 40 thousand tons of milk per annum• equivalent of 1.6 million 25kg bags
• We use about 280,000 50kg bags of sugar pa• Inbound approx 220 (40ft) containers a month
• We are in Maersk & MC shipping lines top 2%• We handle about 40 trucks per day inbound &
outbound in our Isolo site • We handle about 55 skus
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• We ship about 1.8 million cases a month to support sales operations not including bulk sales
• Some 75% of our Volume is single serve (8/10/22 gm etc)
• That’s around 4 billion sachets per annumnot including large packs, pillows & boxes
• Distributed via 41 distribution centres nationally• 38 of our DC’s outsourced & managed by
MDS
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Robert ROSE’s visit
July 2011
CAPEX UPDATE 2011
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Revenue growth, USD m
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EBIT growth, USD m
Naira
devaluation
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Again but with bullets AND picture
‣ This is a first bullet
‣ Next one
‣ Last bulletSubject to Market Conditions
& Regulatory Approvals
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Same as previous
‣ But with reversed
‣ colours
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Quality Food Products
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Our Future - Expansion and diversification
– Current factory expansion project
– New land acquired close to site
– Potential acquisition
– Potential MNC partnership
– New site in North of Nigeria
– Yoghurt/soya/cheese/juice/evap
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THANK YOU !