1. Non-food as a business engine in Food retail Stephen Schueler Procter and Gamble 4 Feb 2011

2. P&G IN RUSSIA

3. Who wants to increase your market share?

4. What determines your ability to drive market share? YOUR SHOPPER!

5. Top drivers to increase your market share: Attract New Shoppers Build Loyalty of Existing Shoppers Win with High Spenders

6. WHY NON-FOOD CATEGORIES ARE IMPORTANT TO WIN WITH SHOPPERS?

7. 1.Non-Food has strong potential with your existing shoppers food Dairy 59 Juice 49 Cheese 44 Biscuits 46 non-food Hand Dish28 Fem Care31 Shampoo32 Dentifrice34 Size of the prize = 400 mln.$ for HM channel % of store shoppers buying category in this store (Hypermarkets)

8. 2. Non-Food helps shoppers to choose your store for Bulk Shopping Bulk shopping Refill shopping Laundry & Home CareBakery Coffee & TeaMilk& Dairy Shampoo & ShowerFruits & Vegetables Toilet Paper & TowelsSoft drinks& Juices Fem CareCheese Oral CareFresh Meat & Poultry Snacks CheeseToilet Paper & Towels Soft drinks & JuicesCoffee& Tea Fruits & VegetablesOral Care Non-food categories are highlighted Top powerful categories that define shoppers’ satisfaction by the store: Value of Bulk trip = 4.7x Value of Refill trip

9. How to leverage non-food to win with Your Shopper Three Business Ideas: 1.Improve Shopping experience in Beauty Care. 2. Leverage Innovation in Non-Food −Attract new Shoppers −Get disproportionate share by being first with new item. 3. Win with Young Families – Heavy Spenders

10. … win her man Importance of:RussiaWE Being attractive to men, %9041 Having stylish feminine clothes, % 8957 She needs to be beautiful to… 1.Russian consumers are “Thirsty for Beauty”

11. P&G is committed to develop Beauty business in Russia Plays in 12 out of 13 Beauty Categories Market leader in 5 out of 12 Focus on Category Development to drive basket size HAIR CARE EXAMPLE: Conditioners /Treatments – significant growth Potential vs Shampoo behind increase in penetration and consumption

12. P&G is committed to develop Beauty business in Russia Conditioner/treatment driven innovation Trade Across through Shelving by collection: co-location of Shampoo/Conditioners/ Treatments Category Turnover growth + 13%, Category growth up to 6 %

13. Beauty Categories are the most sensitive to shopping atmosphere and new innovation Beauty Categories are the most sensitive to shopping atmosphere and new innovation Beauty Department Objective within Food retailer: Create better Shopping Environment: Enjoyable/emotional Spends more time/ browsing Trying new things Diapers Fabric Softeners

17. 2. Attract new shoppers via innovation 45% of Russian shoppers are experience-driven. This means that they: enjoy shopping and like shop around before making a purchase; need a comfortable shopping experience; are driven by new items.

18. Non-food suppliers are investing heavily in TV creating strong demand for new products GRPs 30+ 20092010 Food 289 655 311 713 Non-Food 705 404 768 122 Non-food advertisers are highlighted TOP 10 advertisers 2010 1 Procter & Gamble 2 Henkel Group 3 L'Oreal 4 Mars-Russia 5 Unilever 6 Nestle 7 Reckitt Benckiser 8 Danone 9 Wimm-Bill-Dann 10 Beeline

19. 1. In-Store Support – massive in-store communication linked to TV 2. On-line announcement of new product launches/marketing campaigns Get Disproportionate share of New Items!

20. 3. Winning with Young Families Child birth is a point of change in values Now baby is #1, #2 and #3 spending priority Now she has less time in her new role: =>she visits less stores and shop more in E-commerce (Intensity Ind=124);

21. Spending IndexTotal RussiaModern Trade Young parents113112 Mature parents120101 Parents with teenagers10694 Families w/o children12197 Adults87108 Seniors8186 Families spend more, especially younger ones… especially in Modern Trade GFK, 2009

22. Baby Diapers is the biggest category in moms basket GFK, 2009 Baby Diapers is the Destination categories for Young Moms Shoppers Basket is 4x times bigger in case diapers are in Total Basket Spending on Baby, % in value Shoppers of Hypermarkets, 1HY 10 MoscowRussia w/o Moscow Diapers & Wipes32,942,7 Baby Food27,338,2 Clothes & Shoes15,75,6 Other (incl. toys, cosmetics)24,113,5

23. Pampers Charity program Partnering with Retailers and leading websites P&G donates 1 vaccine for UNICEF with every purchased pack of Pampers Communication tools: - Internet (mail.ru) - In-Store

24. In Summary Key Partnership Opportunities to drive Non-Food in Food Retailer: Bring in New Shoppers : Co-Marketing programs (e.g. Pampers Unisef) E-media partnership with Manufacturers Drive Loyalty of Existing Shoppers: Drive Basket via regimen Beauty Purchases Novelties exploitation in-Store; Improve Shopping Experience on Beauty Attract Heavy Spenders Win with Young Families by leveraging Diapers as destination category

25. Thank you!