profitable growth in the markets and reliable...

64 Integrated Report 2016

PROFITABLE GROWTH IN THE MARKETSAND RELIABLE BRANDS

Purpose

STRATEGY GRI 103-2 PROGRESS GRI 103-3

Strengthening the differentiated value propositions of brands and networks.

» The Organization deepened its understanding of consumers, shoppers and customers in the strategic region by means of marketing studies.

» The brands were aligned with Grupo Nutresa’s segmentation and the communication codes were strengthened in accordance with the established positions.

» The Company capitalized the strengths of the transverse brands that are present in different regions and categories.

» Grupo Nutresa worked on increasing the understanding of customers and shoppers from the commercial networks with the purpose of delivering better value propositions that ensure their loyalty.

Managing the portfolio of brands and products in accordance with the market needs.

» The portfolio of key business segments was organized to streamline references by region, channel and brand role.

» The portfolio was adapted to consumer needs in accor-dance with the brand´s purposes

Strengthening the commercial networks and generating customer loyalty.

» The customer loyalty strategy was implemented in ac-cordance with each customer’s segment and potential in order to ensure the delivery of differentiated value.

» The Organization standardized its customer service policy, and successful commercial practices were shared among the companies with the purpose of strengthening the market entry model.

» Grupo Nutresa consolidated its commercial networks in Central America, United States and Chile by incorporat-ing categories of powdered beverages, nuts and coffee.

Profitable development of the strategic markets with brands, distribution networks and value propositions that deliver memorable and differentiated experiences that fulfill the needs, motivations and purposes of customers, shoppers and consumers of different segments.

On the other hand, to understand the new realities of the market, the culture and the society through the Brands and Networks Management Model, and through a portfolio of brands and products based on the everyday life in pursuit of the consumers’ quality of life.

Fostering profitable growth and effective innovation

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Risks and opportunities GRI 103-1

The changes in the consumption and purchase patterns produced by the offer of new experiences, such as private brands and commer-cialization formats with low prices, are a challenge for the commercial system. Consequently, the differen-tiation of experiences was innovated based on the creation of brands valued by the consumer.

The submission of the yearly World Health Organization (WHO) report, the discussions on healthy eating habits and the new nutritional, tax and non-tariff regulations have intensified the efforts to acquire better technology and differentiated value propositions with improvements in the nutritional profiles.

The volatility of the commodities and the exchange rates in the stra-tegic region continue to be a risk for

Outlook

With a view to the MEGA 2020, it is essential to grow in terms of the leadership of brands and flagship categories with the aim of harnessing market opportunities and ensuring the international expansion. In this regard, new value experiences will be designed and adjusted according to the changes in the lifestyles and consumption habits and preferences, based on the Brands and Networks Management Model.

Due to the foregoing, it becomes necessary to continue to push effective innovation forward in order to expand the brands into new market categories, improve the nutritional

the profitability of the businesses, which could negatively affect them or positively favor them depending on their strategic position. Therefo-re, market diversification becomes highly important in order to main-tain the Organization’s competitive advantages.

The constant changes in the tax regulations around the world are an important risk for Grupo Nutresa. Additionally, the new environmen-

Grupo Nutresa Commercial Developer, Surtifamiliar Cali.

A Cold Cuts Business customer at a point of sale.

tal protection and human health trends have made it necessary to take legislative measures aimed at mitigating the social issues. For that reason, a constant monitoring is performed to the financial impacts caused by the legislative projects, allowing thus to explore strategies focused on an efficient taxation suited to the legal provisions.

profiles, advance to healthier and better-perceived categories, as well as to develop more affordable al-ternatives for the consumer.

The Organization visualizes growth opportunities for the main brands by means of a profitable expansion in strategic territories. Likewise, it is feasible to develop special projects focused on new business models.

The growth dynamics should be supplemented with the internationalization of the businesses and the en-try into new categories that provide higher value by

means of the implementation of both the “Go to Market” Service Model and the sustainability concepts.

With the purpose of consolidating the leadership in the strategic region, it is important to have an efficient channel participation that allows to ensure the sustainability of the businesses, deve-lop synergies of categories to optimize resources and strengthen the value pro-position of the industrial products with higher rates of effective innovation, ser-vice, technical support to customers and flawless logistics.


Success stories and acknowledgments GRI 103-3

C=0 M= 100 Y= 100 K=0

Pantone 1795C

Compañía de Galletas Noel received several acknowledgments for its 100 years of history: Order of Merit Don Juan del Corral, Gold Grade awarded by the Medellín Council, and the Order of Business Merit awarded by the ANDI (Colombian Industrialists Association), among other.

Pozuelo was awarded the Gold EFFIE in Costa Rica for its campaign called “Familia en cualquiera de sus moldes” (Family in any of its molds).

Saltín Noel was ranked 11th in Kantar World Brand’s top 20, a specialized board that audits the main mass consumption categories of the market in Colombia.

Zenú made the tenth place in the study on the most valuable Colombian brands, which assesses financial, market-related and brand-related aspects. This study was conducted by the firms Compassbranding and Raddar.

Corona, with its campaign called “Amo el Chocolate” (I love chocolate), focused on introducing different ways of preparation, consumption and communication to Millennials. The brand grew 16% in terms of value, 2% in volume and reached more than 5 million users with the recipe videos in social networks.

The “Campamento Jet” (Jet Camp) experience was acknowledged with a Gold EFFIE award in the category of Activations. This award is the most relevant accolade in the Colombian advertising industry.

Entry to the capsule business in Colombia with “Cápsulas Express Nutresa,” which in just three months achieved a 14% share in the market of the main customer in the country.

Doria was acknowledged as the 14th most dominant brand among the basic grocery items producers according to P&M’s (an advertising and marketing firm) study.

Lucchetti, was selected, for the fifth consecutive year, as one of the 15 most valued brands in Chile in the study called “Chile 3D,” which was conducted by the consulting firm GfK Adimark.

El Corral was ranked 1st among the fast food chains by the La Barra magazine. The selection of the winners was audited by KPMG and endorsed by a committee of six representatives of associations from the hotel, restaurant and bar industry.


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Progress achieved in 2016 GRI 103-3

Grupo Nutresa’s Brand and Network Management Model

In the consolidation of the Brands and Ne-tworks Management Model as the fundamen-tal axis and articulator of Grupo Nutresa’s commercial strategy, three key agent groups have been established: consumers, shoppers and customers. The Organization strives to in-terpret their needs, motivations and purposes in order to gain their loyalty.

By executing the Model, Grupo Nutresa de-livers relevant, memorable and differentiated value experiences through brands that are beloved and known well by the consumers in the regions where it operates, supported on distribution networks with a vast capacity and availability to reach the consumers at the mo-ment and place they establish.

In 2016, the Organization created a unified brand map for all the Businesses. Additionally, as a differentiating factor, a strategic defini-tion was established for each brand with a role and a specific positioning in order to efficient-ly serve the market.

The saturation and fragmentation of the digital media make it increasingly harder to stand out and gain customers’ preference through the traditional media. This fact im-plies that the relation among the advertisers goes from being unidirectional to being bidi-rectional, which means that consumers deter-mine what they want from the brands and so they start having a fundamental role. There-

fore, Grupo Nutresa co-creates with the consumers by liste-ning and understanding the interactions that take place in the digital media it is exposed to.

The Organization is permanently working on improving its capabilities to maintain its omnichannel presence based on the distribution and value propositions of its brands, and it understands that today’s shoppers are more demanding in their purchase decisions and in terms of information research, brand purpose, money and time saving, risk reduction, chan-nel convenience and diversity, among other aspects.

Considering the foregoing, Grupo Nutresa’s Brand and Ne-twork Management Model generates a characteristic and unified knowledge of the commercial system. In the future, it will integrate diverse information sources by means of big data analysis to enable a better reading of the needs of customers, shoppers and consumers.

2013

2016

Impecc ble execution

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2014-2015


Reliable brands with an excellent price-value ratio GRI 102-2

Pantone 485 C

Pantone Yellow 012 C

PANTONE 485 C

C=0 M= 100 Y= 100 K=0

Pantone 1795C

To maintain and increase brand capital, the Organization makes a rational use of the resources for the production and commercializa-tion process, based on the reinforcement of three core capabilities: knowledge of both the markets and the consumer needs, market en-try excellence, and efficiency in the planning and management of the supply chain.

Likewise, a permanent surveillance is maintained over the trade-mark registries in order to ensure the protection and defense of the rights, secure the value and recognition of the brands and avoid con-sumer confusion. This constant management has allowed the Organi-zation to receive multiple notoriety statements regarding its brands from the Superintendency of Industry and Commerce, granting a reinforced protection to several of them, which should be preserved.

Food

Snacks

Beverages

Ice creams


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Impeccable executionGrupo Nutresa implemented several initiatives focused on developing and strengthening customers’ capabilities, such as training activities, co-crea-tion sessions, loyalty pro-grams, collaborative models, experience centers, events, use of sustainable materials and an impeccable execution at the points of sale.

In addition, a comprehen-sive advisory was provided to the traditional channel in Colombia, allowing the reno-vation of the points of sale, the display fixtures and the merchandising material in order to improve the consumer experience, as well as the administration and manage-ment of the customers.

In the international operations of Bon and POPS in the Dominican Republic and Central America respectively, the Organization achie-ved the consolidation of a network comprising more than 450 ice cream shops in 8 countries. 80 of these shops were renovated in order to provide a better consumer experience.

Internationalization ModelThis Model is aimed at achieving that, by 2020, the sales abroad will represent 45% of Grupo Nutresa’s total sales, which in 2016 it was equivalent to USD 1,09 billion. In this regard, the Organization deepened its study of the strategic region mar-ket and focused on meeting its needs. Furthermore, Grupo Nutresa started using the international segmentation model in all four countries, classifying them as strategic, tactical and opportunity-driven, which allowed to efficiently allocate the resources for brand building and distribution.

Grupo Nutresa offers the best value proposition to customers and consumers

Ice Cream Shops in Dominican Republic


Raw materials volatility managementDue to the relevance of raw materials for Grupo Nutresa’s sustainability, the management of this matter is focused on its diversification, the development of policies of co-verage with defined risk levels managed by a specialized committee, a trained team dedicated to the follow-up and negotiation of supplies, and the permanent search for new opportunities and schemes for the efficient and

(COP millions) 2013 2014 2015 2016

Revenue from net sales 5.898.466 6.481.813 7.945.417 8.676.640

Revenue from financial investments 52.261 55.267 56.844 61.527

Revenue from sales of property, plant, and equipment

19.094 3.247 8.339 917

Direct economic value generated 5.969.821 6.540.327 8.010.600 8.739.084

Operation expenses 2.897.124 3.359.372 4.238.042 4.460.544

Salaries 480.120 579.353 768.070 820.042

Social benefits 342.880 354.612 413.037 431.774

Dividends paid to shareholders 177.201 198.476 212.588 229.582

Interest payments to credit providers 80.206 127.374 180.660 250.289

Payments to the government 213.971 206.170 290.548 255.842

Community investments 20.523 33.737 46.651 55.273

Benefits 63.105 69.117 88.797 98.387

Direct economic value distributed 4.275.130 4.928.211 6.238.392 6.601.733

Economic value retained 1.694.691 1.612.116 1.772.208 2.137.351

Direct economic value generated and distributed GRI 201-1 [SDG 2] [SDG 5] [SDG 7] [SDG 8] [SDG 9]

competitive raw materials sourcing at a worldwide scale.

This focus has allowed the Organization to minimize the impact of the surge of the Ame-rican Dollar exchange rate (with respect to the Colombian Peso) and the raise in the pri-ce of the commodities.

profitable growth in the markets and reliable...

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