avon turkey investor meeting -...
TRANSCRIPT
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Avon Turkey Investor MeetingMarch 8, 2007
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Please see our 10-K for the year ended December 31, 2006, for our cautionary statement
regarding forward-looking comments made in today’s remarks.
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Agenda
• Welcome
• Overview of Avon Turkey
• The Representative Experience
• Luncheon with Representatives
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Avon Turkey Overview
Ron GriffithsGeneral Manager
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Turkey – A Growing Beauty Market
• Brief overview of market– Population: 72 million– Female population 15-64:
24 million– 3-year 10% CAGR CFT market growth
• Per capita CFT spend was $14 in 2006
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Strengths of Turkish Market• Largest economy of the region
• Only democratic Muslim nation
• Young, well educated population
• Large variety of industrial sectors
• Developed energy, communications, transportation infrastructure
• Dynamic entrepreneurial spirit
• Elastic labor market
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Risks of Turkish Market• Political instability and populism
– Unproductive central administration– Ineffective public sector enterprises– Slow legal system– Presidential elections: May, 2007
• Lack of confidence in Turkish Lira– Chronic high inflation– Low foreign direct investment– High account deficit and public debt– Inadequate market regulation / Unregistered economy
• Vulnerable to external shocks– Unexpected external shocks / global fund movements– Changes in internal political environment
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Avon Turkey• Entered through joint
venture in 1993
• Bought out JV interest in May, 2003
• Rationale for JV buy out:– Prospect for growth in CFT– Prospect for growth in
Direct Selling – Strategic gateway to Middle
East and Central Asia
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Avon Turkey – Key Messages• The beauty market leader • Avon: a powerful beauty brand• The premier direct selling company • Dedicated to building on Representative Value
Proposition• Positions Avon to launch into Middle East &
Central Asia
A Growth Engine in Avon’s Portfolio
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Avon Turkey Overview
AVON TURKEY
WEMEA
SUPPLY CHAIN
IT
MARKETING
SALES LEADERSHIP
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Supply ChainSupply Chain
• Products are sourced mainly from Avon’s Poland and Germany facilities
• 4 week campaign cycle; 13 campaigns per year• 100% home delivery to Representatives • Local delivery network capable of delivering
more than 86% of Representatives within 24 hours
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Total Revenue ($MM)
Avon Turkey
2003 2006
55%CAGR
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Healthy Representative Base
2006May 2003 Added Since 2003
152%
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Healthy Mix of BusinessHealthy Mix of Business
Fragrance38%
Skin Care23%
Colour21%
Personal Care18%
CFT Category Shares
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Solid Growth in All CategoriesSolid Growth in All Categories
0%
20%
40%
60%
Colour Skin Care Fragrance PersonalCare
TOTAL
2006 vs 2005 in LC
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Solid Growth in All CategoriesSolid Growth in All Categories
0%
20%
40%
60%
Make Up Skin Care Fragrance PersonalCare
TOTAL
2006 vs 2005 in LC
#1Market ShareRank
#1 #1
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219
175
Supported by a Strong Beauty Image…
TurkeyAvonAverage
Beauty Image Index
Source: Avon Global Consumer Tracking Study 2005
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That is Highest in Turkish MarketBeauty Image Index
Source: Avon Global Consumer Tracking Study 2005
219
165141
129106
94 89 83
Avon Max Factor Nivea Dove L'Oreal Arko Maybelline Oriflame
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Advertising
• First time advertising in 2006
• In beauty market– share of voice in Colour #1– share of voice in Skin Care #2– share of voice in all categories #4
• Continued higher level advertising investment in 2007
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The Representative Experience
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Avon Turkey as a Direct Seller
• Premier direct seller
• Balanced topline growth from both number of Representatives and productivity of Representatives
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RepresentativeEarnings Representative
EffortRepresentative
Key Actions• Compelling Consumer
Proposition• Sales Leadership• Field Training• Increased Advertising
“Tip the Scale” for RVP
• Webenablement
• Enhanced service levels
• Flexible payment options
Turkey RVP Improvements
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RVP: Web Enablement• 96% on-line ordering
– despite low Internet penetration (14%)
• Continuously improving functionality, ease of use and flexibility
– Differentiated functionalities to Zone Managers, Sales Leaders, and Representatives
– Effective and up-to-date communications– Personalized, Representative-specific alerts and
prompts– Value-added “Intelligent” ordering
• Removal of the mail-plan: Internet orders are shipped within 24 hours
• For public, offer PR site enhanced by the local web shopping with up-selling, cross selling functionalities
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RVP: Enhanced Service Capability
• One central branch on the Anatolian side of Istanbul
• No mail plan; all Representatives send their orders any time during the campaign
• More than half of the orders are processed and shipped to Representatives within the same day that they are received.
• Local delivery network capable to deliver more than 86% of Representative within 24 hours
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RVP: Enhanced Service Capability
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RVP: Flexible Payment Options• 92% pay through automated means
Installment Cards14%
Credit Cards18%
Direct Debit System
60%
Bank Transfer
8%
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Avon Turkey – Key Messages• The beauty market leader • Avon: a powerful beauty brand• The premier direct selling company • Dedicated to building on Representative Value
Proposition• Positions Avon to launch into Middle East &
Central Asia
A Growth Engine in Avon’s Portfolio
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The Representative Experience
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The Representative Experience
Didem Anıl13 years Avon
Representative
As told by..
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The Representative Experience
Sevda Demirbaş7 years Avon
Representative
As told by..
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The Representative Experience
Tülin Bayrak7 years Avon
Representative
As told by..
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Avon Turkey Investor MeetingMarch 8, 2007