Quality Food Products

CSL Conference September 2011

Promasidor Nigeria Ltd

Who…..

What……

&

Where we are going !

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

Densely Populated

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

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%)

Income Distribution In Nigeria

Top 10%

Lowest

20%

Next 20%

Middle 50%

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

Nigeria: Household disposable Income 2009

Nigeria: Household disposable Income 2015

Disposable Income Distribution

Total Private Consumption $127bn

Total Private Consumption $233bn

Milk consumption

Per head, litres p.a.

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

That’s the background

What about us?

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

A brief History

•Founded 1993

•Pioneer in small pack/low retail price

•Rapid growth

•Product diversification

•Strong Market positions

•Successful distribution

•High brand awareness

Ownership

•Rose family 75%

•E. Oppenheimer & Sons 25% (since 2006)

2010 Revenue vs peer group

$190m $300m $306m

$409m $590m $540m

17PNG Brand Planning Workshop June 2010: Pre-read CONFIDENTIAL

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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)

18PNG Brand Planning Workshop June 2010: Pre-read CONFIDENTIAL

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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

Our

Brandsand the categories we play in

POWDERED MILK

CATEGORY

POWDERED MILK CATEGORY

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.

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 %

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%

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

SKUS & PRICING.

COCOA BASED BEVERAGES CATEGORY

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

PROMASIDOR VOLUME AND VALUE SHARE TREND.

Growing Volume share.Flat Value share.

Source: AC Nielsen RAM June 2011

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

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

SKU’s & PRICING.

The Seasoning Category

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

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

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

The Tea Category

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

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

Volume shares

Tea Category - Shares

Revenue $10m

SALES VOLUMES

Retail pack sales volumes in million cases

63% growth in

last 3 years

63% growth in

last 3 years+26%

+25%

+11%

+14%

Retail pack sales volumes in million cases

+117%

+100%

+28%

+100%

DIVISIONAL & REGIONAL

SALES ANALYSIS

REGIONAL SPREAD & DELINEATION JAN – JUNE ’11

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$

Our

Operations

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

• 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

Robert ROSE’s visit

July 2011

CAPEX UPDATE 2011

Revenue growth, USD m

EBIT growth, USD m

Naira

devaluation

Again but with bullets AND picture

‣ This is a first bullet

‣ Next one

‣ Last bulletSubject to Market Conditions

& Regulatory Approvals

Same as previous

‣ But with reversed

‣ colours

Quality Food Products

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

THANK YOU !