october 2005 seminar presentation: trevor...

AMERICAS CONFECTIONERY

Generating SustainableProfitable Growth

Trevor Bond

EVP Finance, Americas Confectionery

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Agenda for the Day

• Overview

• Driving our Growth Agenda

• Growth Bazaars

• USA: Awakening a Sleeping Giant

• Canada: Building a Total Confectionery Powerhouse

• Mexico: Continuing to Deliver World Class Performance

• Brazil: Transforming the Business Model

• Q&As

Objective of Today’s Presentations

• To demonstrate that Americas Confectionery is building a

sustainable growth machine

• Fueled by outstanding cost management

• Via a platform of it’s people, brands and insights

My Agenda

• Overview of the region

• Delivering what we said we would

• Creating the platform for continued superior performance

We Have Strong Geographical Participation Across the Americas

22%

37%

14%

4%

23%

CanadaPopulation 32mConfy Market Position #1

KEY% of CSAC NSV

USPopulation 293mConfy Market Position #4

MeccaPopulation 182mConfy Market Position #1

BrandinaPopulation 300mConfy Market Position

Brazil #1Colombia #1Venezuela #2

Southern ConePopulation48mConfy Market Position#2

Population Source: 2004 Census dataConfectionary Market Position: Euromonitor

With Strong Market Positions in Many Categories

US#2 in Gum #1 in Cough/Cold #5 in Sugar

Mexico#1 in Gum #1 in Sugar

Brazil#1 in Gum #1 in Sugar

Colombia#1 in Gum#2 in Sugar

Venezuela#1 in Gum #1 in Sugar

Argentina#1 in Gum #2 in Sugar

Canada#1 in Gum & Sugar#1 in Cough #3 in Chocolate

Figures are sourced from IRI/Nielsen/Cortinas/Euromonitor - latest 52 weeks

Supported by Strong Power Brands That Operate Across the Region

October 2003: Key Priorities

1. Deliver the integration – create the new business

2. Generate the Fuel for Growth

3. Create sustainable, profitable, top line growth via Smart Variety

Integration is Now Behind us

• Unified invigorated sales force in each market

• North American warehousing and distribution delivering excellent

customer service

• Shared services established in all markets

• Two primary SAP platforms cover 80% of the Region

Major Elements of FFG Successfully Executed

• Head Office rationalization

• SBS implementation

• IT consolidation & rationalization

Back Office

• 3 factory closures

• US distribution costs reducing post transition

• Procurement benefits ahead of expectations

Supply Chain

• Commercial structures integrated

• Good early progress on value optimization & SKU

rationalization

• Organizational focus on costs as well as growth

Commercial

The Results: Profitable, Double-Digit Growth

2004 Performance versus Plan Versus Year Ago, Like for Like

• Sales up 10%

• Profits up 24%

• Marketing up 25%, or 150 basis

points as a % of sales

• Margins up 140 bps

Sales Profit

Index

We are ‘Beating the Model’

140 150

Our Vision has Stood the Test of Time

BUILD POWER BRANDS

DRIVE TOTAL AVAILABILITYGROW OUR PEOPLE

INNOVATE TO WIN

Working together to create brands people love

Working together to create the Americas’ fastest growing

total confectionery powerhouse.Our Vision:

Grow shareholder value by driving our sales growth to double

digits – “A Pack in Every Pocket Every Day”Our Goal:

Our Culture: A passion for winning – beat the competition. Get the facts.

Move with speed and courage. Be accountable. Be adaptable.

Be aggressive.

GENERATE THE FUEL FOR GROWTHOur Focus:

Sustaining Fuel for Growth

• Leverage the regional supply infrastructure:

Sourcing

Manufacturing Network

Ewen(41)

EmeraldRockford*(35)

Cali

Bertrand

Puebla

Buenos Aires

Rockford

Gladstone

Cali

Bauru

Emerald

Ewen Granby

Our current manufacturing network

comprises 10 factories producing over

330,000 tons

2005 ProductionVolume(k tons)

122

Customers

Canada Canada, US

United States 38 US, Canada

MeCCA, US, CanadaMeCCA 64

Brandina 81 Brandina, EMEA

Southern Cone 25 S. Cone, Brandina

Total Region 330

Sustaining Fuel for Growth

• Leverage the regional supply infrastructure:

− Mexico supply of Splash to NA

− South American gum base supply

Sourcing

Sustaining Fuel for Growth

• Leverage the regional supply infrastructure:

− Mexico supply of Splash to NA

− South American gum base supply

Sourcing

• SKU rationalization enabling automationSimplify toreduce costs

SKU/Piece Size Rationalisation: Swedish Fish

beforeafterafter

• Reduced Piece Sizes from 14 to 4 (71%), SKUs by 50%

• Simplification enabled automation, increasing gross margin by

600 basis points

• No impact on brand growth (H1 05 growth 29%)

Sustaining Fuel for Growth

• Leverage the regional supply infrastructure:

− Mexico supply of Splash to NA

− South American gum base supply

Sourcing

• SKU rationalization enabling automation

• Value optimizationSimplify toreduce costs

Value Optimization: A Way of Life in Canada

From • Multiple projects underway which

will deliver $3m+ in 2005

• Dentyne Ice project alone saved

$1m across North America

• Further projects already

underway, expanding into

distribution & merchandising

spend

To

Sustaining Fuel for Growth

• Leverage the regional supply infrastructure:

− Mexico supply of Splash to NA

− South American gum base supply

Sourcing

• SKU rationalization enabling automation

• Value optimization

• Non production spend

Simplify toreduce costs

Sustaining Fuel for Growth

• Leverage the regional supply infrastructure:

− Mexico supply of Splash to NA

− South American gum base supply

Sourcing

• SKU rationalization enabling automation

• Value optimization

• Non production spend

Simplify toreduce costs

• US distribution network

• Continuous improvement programmes

• Procurement practices into Latin America

Furtheroptimisation

Creating Profitable Growth… by Building Power Brands Across the Region

3%

11%

0%

2%

4%

6%

8%

10%

12%

14%

2000-2 2002-5

Power brand growth is nearly 4x that of pre-acquisition given

double-digit increases in marketing spend

Average Annual Growth 15%

Marketing Spend Powerbrand Sales CAGR

*Proforma, at constant currency

… Underpinned by Great Innovation

• 2.4% share in Canada

• #1 Trident SKU

• Brought novelty to the brand and

category

• Represents 6% of Halls sales in

Brazil, highly incremental and

margin enhancing

…Executed by Advantaged RTM

• Expansion in key growth channels

• Distribution gains of legacy Cadbury products

• Sales force now biggest in Canada

• Conducted largest ever shopper research

• Investment behind RTM in Mexico

• Sales force expansion to drive growth

• See the growth Bazaar

Route to market is an investment

Enabled by Growing our People

• Commercial capabilities programme

• Develop and refresh the talent pool

• Corporate social responsibility plans across the Region

• Striving to become “ The Place To Be”

Each BU is Playing its Role• Continue growth in gum via differentiated, relevant

innovations

• Expand and grow Halls

• Profitably grow chocolate share

• Use Total Confectionery position to leverage next

chapter of growth

• Drive gum growth via innovation, RTM and

commercial investment

• Continue the expansion into differentiated sugar

• Continue focus on core brands

• Expand profitably into other consumer types and

categories

Summary

• We have delivered what we

promised

− In the market place

− To our colleagues

− To our shareowners

• We are well placed to build

a track record of profitable

growth through our

− Power Brands

− RTM scale & insight

− Ongoing cost agenda