memilk project presentation - 140430 rev1 (1)

8/12/2019 MeMilk Project Presentation - 140430 Rev1 (1)

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Me Milk Project

30 April 2014


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Agenda

A. Executive Summary

B. Product Information

C. Financial Simulations

D. Competitive Portfolio


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Executive SummaryRecommendation: Not to pursue qualification of Me Milk project for the following reasons:

Me Milk Dairy Cream and Drink play in a small market. RTD Milk category and Yoghurtcombined market is P8.4B (P7.7B RTD Milk + P700MM Yogurt). However, flavored milkis only estimated at P0.4B size

High procurement price of Me Milk will require a super premium selling price in trade,making the products uncompetitive

Currently Me Milk concept does not provide strong differentiation in a marketdominated by entrenched brands, to justify premium price Me Milk Dairy Cream USP only on packaging and format but product benefits is lower than yoghurt drinks

and just parity to flavored milk drinks

Me Milk Dairy Drink Me too vs. other RTD Milk players

There are established brands in the categories where Me Milk will compete in Yogurt: Nestle

RTD Milk: Cowhead, Selecta. Nestle

Barrier to entry in A&P is big as Me Milk is a new brand in the Philippines. Media Spend Yogurt: P935MM (rate card) YTD Oct 2013

SRP Per Gram/mL Index vs

CompetitionMe Milk Dairy Cream 90g P50.25 2.25

Me Milk Dairy Drink 200ml P56.35 3.22


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Market Background And Me Milk Product Information

Product Description Competition Market Size

Me Milk Dairy Cream

90g

Cream similar to custard

First acid custard in the market

Contained in flexible pouch with

spout

First long life dairy ambient

product in pouch in the world

Shelf Life: 12 mos.

Variants: Strawberry & Pineapple-Mango

Spoonable Yogurt

Nestle Yogurt, Nestle

Acti-V, Creamy Delight

Drinkable Yogurt

Nestle, Dutch Mill,

Alaska Yogurt

Yogurt:

P700MM

(estimates only)

Me Milk Dairy Drink

200ml

Acidified UHT milk similar to liquid

yogurt

Packed in TBA 200ml

Ambient stable

Shelf Life: 12 mos. Variants: Strawberry, Pineapple-

Mango, Peach-Mango

RTD Yogurt Dutch Mill,

Alaska Yogurt, Nestle

RTD Flavored Milk (non-

choco) Cowhead,Goody Gulp, Ri-Chee

RTD Milk:

P7.7B

Flavored Milk

(non-choco) only5% of total RTD

Milk at P386MM


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Me Milk Dairy Cream

Financial Simulations


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Scenario 1: At given COGS of 0,342/pack, retail price to breakeven on Year 2

is close to 3x vs. Yoghurt Drinks and 2x vs. Yoghurt

SCENARIO 1: Using Provided COGS, Needed A&P, Breakeven NIBT in Year 2

5 year FORECAST

Per Case Per pack % to Rev Y1 Y2 Y3 Y4 Y5

Volume (in cs) 1 24 12,000 13,200 14,600 16,000 17,600

SRP 1,206.00 50.25

LIST PRICE 1,148.40 47.85 13,780,800 15,158,880 16,766,640 18,374,400 20,211,840

Vat 123.04 5.13 1,476,514 1,624,166 1,796,426 1,968,686 2,165,554

Revenue, Net Vat 1,025.36 42.72 100.0% 12,304,286 13,534,714 14,970,214 16,405,714 18,046,286

Returns & Allowances 20.51 0.85 2.0% 246,086 270,694 299,404 328,114 360,926

Net Revenue 1,004.85 41.87 98.0% 12,058,200 13,264,020 14,670,810 16,077,600 17,685,360

COGS at 0.34/pack 537.67 22.40 52.4% 6,452,097 7,097,307 7,850,051 8,602,796 9,463,076

Gross Profit 467.18 19.47 45.6% 5,606,103 6,166,713 6,820,759 7,474,804 8,222,284

Variable Operating Expenses 140.68 5.86 13.7% 1,688,148 1,856,963 2,053,913 2,250,864 2,475,950

Contribution Margin 326.50 13.60 31.8% 3,917,955 4,309,750 4,766,845 5,223,940 5,746,334

A&P 6,000,000 4,300,000 4,300,000 4,300,000 4,300,000

NET INCOME BEFORE TAX (2,082,045) 9,750 466,845 923,940 1,446,334

ROI -96.7%NI Bef Tax ( Y1 to Y5) 764,824

Total Investment (A&P ) 23,200,000

Statistic :

COGS at 0.342 / pack 8.21 8.16 8.16 8.16 8.16 8.16

Freight per case 0.09 0.09 0.09 0.09 0.09 0.09

Forex 1 : Php (04/28/14) 61.70 61.70 61.70 61.70 61.70 61.70

Duty / Incidental 5% 5% 5% 5% 5% 5%

CM Computation


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Scenario 2: At given COGS of 0,342/pack, and Retail price of parity vs.

competition, Project has negative Y-o-Y

SCENARIO 2: Using provided COGS, Ideal Price, Lower A&P

5 year FORECAST


Volume (in cs) 1 24 28,800 31,600 34,800 38,200 42,000

SRP 720.00 30.00

LIST PRICE 686.40 28.60 19,768,320 21,690,240 23,886,720 26,220,480 28,828,800

Vat 73.54 3.06 2,118,034 2,323,954 2,559,291 2,809,337 3,088,800

Revenue, Net Vat 612.86 25.54 100.0% 17,650,286 19,366,286 21,327,429 23,411,143 25,740,000


Net Revenue 600.60 25.03 98.0% 17,297,280 18,978,960 20,900,880 22,942,920 25,225,200

COGS at 0.34/pack 537.67 22.40 87.7% 15,485,033 16,990,522 18,711,082 20,539,176 22,582,340

Gross Profit 62.93 2.62 10.3% 1,812,247 1,988,438 2,189,798 2,403,744 2,642,860


Contribution Margin (21.16) (0.88) -3.5% (609,372) (668,617) (736,325) (808,265) (888,668)

A&P 5,000,000 4,000,000 4,000,000 4,000,000 4,000,000

NET INCOME BEFORE TAX (5,609,372) (4,668,617) (4,736,325) (4,808,265) (4,888,668)

ROI -217.7%NI Bef Tax ( Y1 to Y5) (24,711,247)


Statistic :

COGS at 0.342 / pack 8.21 8.16 8.16 8.16 8.16 8.16

Freight per case 0.09 0.09 0.09 0.09 0.09 0.09

Forex 1 : Php (04/28/14) 61.70 61.70 61.70 61.70 61.70 61.70


CM Computation


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Scenario 3: To breakeven on Year 2 and parity to other Yoghurts/+76% vs.

Yoghurt drinks, landed price of Me Milk Cream should be at 0,246/pack (-28%)

SCENARIO 3: Ideal Price, Ideal COGS, Good Enough A&P, Breakeven in Year 2

5 year FORECAST


Volume (in cs) 1 24 28,800 31,600 34,800 38,200 42,000

SRP 720.00 30.00

LIST PRICE 686.40 28.60 19,768,320 21,690,240 23,886,720 26,220,480 28,828,800

Vat 73.54 3.06 2,118,034 2,323,954 2,559,291 2,809,337 3,088,800

Revenue, Net Vat 612.86 25.54 100.0% 17,650,286 19,366,286 21,327,429 23,411,143 25,740,000


Net Revenue 600.60 25.03 98.0% 17,297,280 18,978,960 20,900,880 22,942,920 25,225,200

COGS at 0.246/pack 388.41 16.18 63.4% 11,186,211 12,273,760 13,516,672 14,837,267 16,313,225

Gross Profit 212.19 8.84 34.6% 6,111,069 6,705,200 7,384,208 8,105,653 8,911,975



A&P 5,000,000 4,000,000 4,000,000 4,000,000 4,000,000


ROI -93.0%NI Bef Tax ( Y1 to Y5) 1,469,771


Statistic :

COGS at 0.246 / pack 5.90 8.16 8.16 8.16 8.16 8.16

Freight per case 0.09 0.09 0.09 0.09 0.09 0.09

Forex 1 : Php (04/28/14) 61.70 61.70 61.70 61.70 61.70 61.70


CM Computation


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Me Milk Dairy Cream - Competitive Portfolio

Price Index/g Price Index/g Price Index/g Price Index/g Price Index/g Price Index/g

Competition 31.00 1.00 28.00 1.00 14.00 1.00 23.00 1.00 20.00 1.00 18.00 1.00

MeMilk Dairy Cream Scenario 1 50.25 2.25 50.25 1.99 50.25 4.99 50.25 3.03 50.25 3.49 50.25 3.88

MeMilk Dairy Cream Scenario 2 30.00 1.34 30.00 1.19 30.00 2.98 30.00 1.81 30.00 2.08 30.00 2.31

Spoonable YogurtNestle Acti-V Creamy Delight Yogurt Creamy Delight Non-Fat Creamy Delight Thick & Creamy Creamy Delight YogiKidsNestle Yogurt

Price Index/ml Price Index/ml Price Index/ml Price Index/ml

Competition 15.75 1.00 17.00 1.00 32.00 1.00 33.00 1.00

MeMilk Dairy Cream Scenario 1 50.25 6.20 50.25 5.75 50.25 3.39 50.25 3.29

MeMilk Dairy Cream Scenario 2 30.00 3.70 30.00 3.43 30.00 2.02 30.00 1.96

Yogurt DrinkDut ch Mill Nest le Yogurt Drink Nest le Yogurt 0% FatAlaska Yogurt

Me Milk Cream retail price of P50.25 will result to +125% on per gram more than the

market leader. Similarly, if we price parity to market leader, Me Milk Cream will still be

+34% more expensive on a per gram given pack size difference.

Me Milk Cream priced at P50.25 per pack will +475% more expensive than presumed

market leader in drinkable yogurt. Even when priced lower at P30.00, Me Milk Cream

will still be +243% premium than market leader.


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Me Milk Dairy Drink

Financial Simulations


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SCENARIO 1: Using Provided COGS, Needed A&P, Breakeven NIBT in Year 2

5 year FORECAST


Volume (in cs) 1 24 6,000 6,600 7,200 8,000 8,800

SRP 1,352.40 56.35

LIST PRICE 1,287.60 53.65 7,725,600 8,498,160 9,270,720 10,300,800 11,330,880

Vat 137.96 5.75 827,743 910,517 993,291 1,103,657 1,214,023

Revenue, Net Vat 1,149.64 47.90 100.0% 6,897,857 7,587,643 8,277,429 9,197,143 10,116,857


Net Revenue 1,126.65 46.94 98.0% 6,759,900 7,435,890 8,111,880 9,013,200 9,914,520

COGS at 0.20/pack 316.89 13.20 27.6% 1,901,325 2,091,457 2,281,590 2,535,100 2,788,610

Gross Profit 809.76 33.74 70.4% 4,858,575 5,344,433 5,830,290 6,478,100 7,125,910

Variable Operating Expenses 157.73 6.57 13.7% 946,386 1,041,025 1,135,663 1,261,848 1,388,033


A&P 6,000,000 4,300,000 4,300,000 4,300,000 4,300,000


ROI -97.1%NI Bef Tax ( Y1 to Y5) 664,354


Statistic :

COGS at 0.200 / pack 4.80 8.16 8.16 8.16 8.16 8.16

Freight per case 0.09 0.09 0.09 0.09 0.09 0.09

Forex 1 : Php (04/28/14) 61.70 61.70 61.70 61.70 61.70 61.70Duty / Incidental 5% 5% 5% 5% 5% 5%

CM Computation

Scenario 1: At given COGS of 0,20/pack, retail price to breakeven on Year 2 is

3.3X vs. leading Yoghurt Drinks/RTD Milk


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SCENARIO 2: Using provided COGS, Ideal Price, Lower A&P

5 year FORECAST


Volume (in cs) 1 24 29,760 32,800 36,000 39,600 43,600

SRP 408.00 17.00

LIST PRICE 388.56 16.19 11,563,546 12,744,768 13,988,160 15,386,976 16,941,216

Vat 41.63 1.73 1,238,951 1,365,511 1,498,731 1,648,605 1,815,130

Revenue, Net Vat 346.93 14.46 100.0% 10,324,594 11,379,257 12,489,429 13,738,371 15,126,086


Net Revenue 339.99 14.17 98.0% 10,118,102 11,151,672 12,239,640 13,463,604 14,823,564

COGS at 0.20/pack 316.89 13.20 91.3% 9,430,571 10,393,909 11,407,949 12,548,744 13,816,294

Gross Profit 23.10 0.96 6.7% 687,531 757,763 831,691 914,860 1,007,270


Contribution Margin (24.50) (1.02) -7.1% (729,003) (803,471) (881,859) (970,045) (1,068,029)

A&P 5,000,000 4,000,000 4,000,000 4,000,000 4,000,000

NET INCOME BEFORE TAX (5,729,003) (4,803,471) (4,881,859) (4,970,045) (5,068,029)

ROI -221.2%NI Bef Tax ( Y1 to Y5) (25,452,408)


Statistic :

COGS at 0.200 / pack 4.80 8.16 8.16 8.16 8.16 8.16

Freight per case 0.09 0.09 0.09 0.09 0.09 0.09

Forex 1 : Php (04/28/14) 61.70 61.70 61.70 61.70 61.70 61.70


CM Computation

Scenario 2: At given COGS of 0,20/pack, and Parity pricing vs. Yoghurt Drinks

of P17.00, CM is negative Y-o-Y


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SCENARIO 3: Ideal Price, Ideal COGS, Good Enough A&P, Breakeven in Year 2

5 year FORECAST


Volume (in cs) 1 24 29,760 32,800 36,000 39,600 43,600

SRP 408.00 17.00

LIST PRICE 388.56 16.19 11,563,546 12,744,768 13,988,160 15,386,976 16,941,216

Vat 41.63 1.73 1,238,951 1,365,511 1,498,731 1,648,605 1,815,130

Revenue, Net Vat 346.93 14.46 100.0% 10,324,594 11,379,257 12,489,429 13,738,371 15,126,086


Net Revenue 339.99 14.17 98.0% 10,118,102 11,151,672 12,239,640 13,463,604 14,823,564

COGS at 0.105/pack 169.18 7.05 48.8% 5,034,728 5,549,028 6,090,396 6,699,436 7,376,147

Gross Profit 170.81 7.12 49.2% 5,083,375 5,602,644 6,149,244 6,764,168 7,447,417



A&P 5,000,000 4,000,000 4,000,000 4,000,000 4,000,000


ROI -93.4%NI Bef Tax ( Y1 to Y5) 1,395,326


Statistic :

COGS at 0.105 / pack 2.52 8.16 8.16 8.16 8.16 8.16

Freight per case 0.09 0.09 0.09 0.09 0.09 0.09

Forex 1 : Php (04/28/14) 61.70 61.70 61.70 61.70 61.70 61.70


CM Computation

Scenario 3: To breakeven on Year 2 and Parity price vs Yoghurt Drinks of

P17.00, cost of Me Milk UHT should be at 0,105/pack (-48%)


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Me Milk Dairy Drink - Competitive Portfolio

Price Index/ml Price Index/ml

Competition 8.00 1.00 8.80 1.00

MeMilk Dairy Drink Scenario 1 56.35 2.82 56.35 2.50

MeMilk Dairy Drink Scenario 2 17.00 0.85 17.00 0.75

ProbioticsBear BrandYakult

Price Index/ml Price Index/ml Price Index/ml

Competition 19.95 1.00 16.25 1.00 74.50 1.00

MeMilk Dairy Drink Scenario 1 56.35 2.54 56.35 4.33 56.35 3.78

MeMilk Dairy Drink Scenario 2 17.00 0.77 17.00 1.31 17.00 1.14

Ri-Chee CowheadFlavored Milk

Goody Gulp

Me Milk UHT will only be competitive against the 3 milk segments above if

priced at P17.00 and with target cost of goods at 0.105

Me Milk UHT is compared to different liquid milk segments Probiotics, Flavored Milk (non-choco)

and drinkable yogurt:

Price Index/ml Price Index/ml Price Index/ml Price Index/ml

Competition 15.75 1.00 17.00 1.00 32.00 1.00 33.00 1.00

MeMilk Dairy Drink Scenario 1 56.35 3.22 56.35 2.98 56.35 1.76 56.35 1.71

MeMilk Dairy Drink Scenario 2 17.00 0.97 17.00 0.90 17.00 0.53 17.00 0.52

Yogurt DrinkAlaska Yogurt Dutch Mill Nestle Yogurt Drink Nestle Yogurt 0% Fat

memilk project presentation - 140430 rev1 (1)

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