Dumex Vietnam Route To Market

Project Committee 1.Project Leader: Nguyen Van Tho – Sales Director 2.Project Coordinator: Pham Xuan Dai - Sales Analysis & Dev. Mgr 3.Project Member: Nguyen Dinh – HR Director Le Hoang Hai – Supply Chain Manager Do Thi Kim Dung – Financial Analysis & Reporting Mgr 4.Consultant:  Regional Bruno CHEVOT - Sales Pascal TOUVRON - RTM Noel DUNBAR – Supply Chain  CBU Burhan – Finance Director 5.Sponsor: Rich Pham - Managing Director

RTM is at the heart of the Danone Mission and is strongly linked with our Baby Sales Strategy To bring health through food to the largest number of people People Category Customer Investment Availability It’s in the heart of the Baby Sales Strategy

Aim of Route to Market Drive top line growth Improve efficiency Control of POS Channel Development Distributor Development

Issues 1.Financial capabilities of current Distributors Cash payment Territory assignation High inventory. 2.Control of POS.

Project Objectives 1.Keep up high sales growth. 2.Improve business productivity. 3.Enhance sales management & control.

Project Roadmap Reco of targeted Model Implementation AS-IS Understanding Identification of Alternative Scenarios 1.Master data Volumes per City/Region Volumes per channel/Region Milk powder universal stores 2.Distributor profitability S. Dist costs Sales force costs Management costs Logistics costs 3.Current Role & Responsibility between DANONE and Distributors 4.AC Nielsen performance review 5.Benchmark with FMCG in Vietnam. 1.Model assessment based on the scenarios: Current model. Recruit more Distributors with current model Multi S. Distributors Few Distributors* Direct to Retailers 2.Description of each scenario 3.Define the criteria of assessment including: Dif. to implement Risk & Opps P&L Productivity Control 4.Deliverable: Pilots recommendation (incl. assessment + impl. requirements) 1.Implementation/Ex ecution of Pilots 2.Define Criteria of success for each pilot. What is the key success factors? (Costs versus Control Complexity/Feasibi lity) 3.Organizational impacts & Change Management Anticipation (internal Danone) 4.Formalize Support for Decision. 5.Roll-out plan. 6.Communication Plan (Both External & Internal). To be completed after scenario selection 30 th Jun

Phase 1: As-Is understanding 1.Master data Volumes per city/regional  geographic organization. Volumes per channel/regional  channel organization. Universal store by city  Sales force organization 2.Distributor profitability S. Distributor costs by region Sales force costs by channel by region Management costs Logistics (Both of Distributor & S. Distributor) 3.Current Role & Responsibility between DANONE Vietnam and Distributors 4.Nielsen performance review  find new opportunity in chasing more volumes Distribution / Rotation per channel per segment per city. Market share per channel per segment per city. Distribution / Volume sales per SKUs per city. 5.Benchmark with FMCG in Vietnam

Phase 1: Action Planning Action plan 1 st phase (AS-IS) PICRemarksMayJuneJul W1W2W3W4W1W2W3W4W1W2W3W4 Volume per city/region/channel/MP universal store Dai/ThoMarket assumption NPD Plan Distributor profitability S. Distributor cost per region Sales force cost by channel per region Management cost Logistics cost (both Distributor & S.Distributor) Dai/Kim Dung/Hoang Hai/Son/Hoi Prepare P&L format Current role & responsibility bw Danone and Distributor Dai/Son/Hoi ACN performance review (Distribution per region, market share per brand, store rotation…). Find out new opportunity Dai/Son/Hoi Benchmark with FMCG in VietnamDai/Son/HoiAbbott, MJ, Dutch Lady, Nestle, Unilever, SC Johnson & son

Phase 2: Identification of alternative scenarios 1.Distributor model assessment 1.1. Current model Improve performance / execution. Limit S. Distributor costs. Enhance sales management / control DANONE Vietnam DANONE Vietnam 05 Distributors 05 Distributors 82 S. Distributors 82 S. Distributors RETAILERS  Mead Johnson* model

Phase 2: Identification of alternative scenarios 1.Distributor model assessment 1.2. Multi S. Distributor Go Direct to S. Distributor. DANONE Vietnam DANONE Vietnam XX S. Distributors XX S. Distributors RETAILERS  Dutch lady, Nestle, Vinamilk & Uniliver model

Phase 2: Identification of alternative scenarios 1.Distributor model assessment 1.3. Recruit more Distributor Improve performance / execution. Limit S. Distributor costs. Enhance sales management / control Distributor direct to Retailer in key cities. DANONE Vietnam DANONE Vietnam XX Distributors XX Distributors RETAILERS in small cities RETAILERS in small cities XX S. Distributors XX S. Distributors RETAILERS in key cities RETAILERS in key cities  Abbott*, SJ Jonhson & son model

Phase 2: Identification of alternative scenarios 1.Distributor model assessment 1.4. Few Distributors Go direct from Distributors to Retailers DANONE Vietnam DANONE Vietnam RETAILERS Few Distributors Few Distributors  P&G model

Phase 2: Identification of alternative scenarios 1.Distributor model assessment 1.5. Multi S. Distributor Go Direct to S. Distributor. DANONE Vietnam DANONE Vietnam RETAILERS  For reference only

Phase 2: Identification of alternative scenarios 2.Description of each scenario Role & Responsibility between DANONE & (Sub) Distributor. Sales force organization (recruitment, management, payment ). Difficult to implement Risk & Opps P&L Productivity Control  Deliverable: Pilots recommendation (incl. assessment + implementation requirements).

Phase 2: Action Planning Action plan 2 nd phase PICRemarksJuneJulAug W1W2W3W4W1W2W3W4W1W2W3W4 Model assessment based on the scenarios: Current model. Recruit more Distributors with current model Multi S. Distributors Few Distributors* Direct to Retailers Description of each scenario Define the criteria of assessment including: Dif. to implement Risk & Opps P&L Productivity Control Deliverable: Pilots recommendation (incl. assessment + implementation requirements) Open discussion: Can we do parallel if we start pilot run for model 3 at beginning of July? If we do so we will have 2 months for assessment (complete pilots at the end of Aug  Can be well prepared for the budget of next year submission…. In case these 2 models are not the best options, we still have time for pilot run for the other option at the beginning of Aug…..

Phase 3: Reco of targeted model 1. Implementation/Execution of Pilots 2. Define Criteria of success for each pilot. (Costs versus Control Complexity/Feasibility) 3. Organizational impacts & Change Management Anticipation (Internal DANONE) 4. Formalize Support for Decision. 5. Roll-out plan. 6. Communication Plan (Both External & Internal) Phase 4: Implementation To be completed after scenario selection

Phase 3: Action Planning Action plan 3 rd phase PICRemarksAugSepOctNovDecJan 11 W1W2W3W4 Implementation/Execution of Pilots Define Criteria of success for each pilot. What is the key success factors? (Costs versus Control Complexity/Feasibility) Organizational impacts & Change Management Anticipation (internal Danone) Formalize Support for Decision Roll-out plan Communication Plan (Both External & Internal) Implementation

Last Points Key success of RTM  Full support s from CODIs We will meet every 2 weeks to ensure things are fully under our control. Keep this information among Project’s committee members only.

Thank You

Micro Planning

AS-IS Understanding Sales Volume per City 1. Master data:  Volume per city: 6 key cities (ACN’s definition) contribute 53% of total sales 21 top cities contribute 80% of total sales GT contributes 91% of total sales nationwide 1. Master data:  Volume per city: 6 key cities (ACN’s definition) contribute 53% of total sales 21 top cities contribute 80% of total sales GT contributes 91% of total sales nationwide

AS-IS Understanding 1. Master data:  Volume per channel: GT channel contributes 91% of total sales DRC in GT channel contributes 65% of total sales Grocery is the 2 nd contribution and we will focus on this channel in this year 1. Master data:  Volume per channel: GT channel contributes 91% of total sales DRC in GT channel contributes 65% of total sales Grocery is the 2 nd contribution and we will focus on this channel in this year Sales Volume per Channel

AS-IS Understanding 1. Master data:  Average trade support per channel (mio VND/ton): Local store and Big C are the most expensive Metro is the most productivity in term of cost/ton Define cost per territory then 1. Master data:  Average trade support per channel (mio VND/ton): Local store and Big C are the most expensive Metro is the most productivity in term of cost/ton Define cost per territory then Trade Support per ton Unit: mio VND/ton

AS-IS Understanding Milk Powder Universal Store Channel/Outlet (MP ) GrocerySpecialtyMarket Stall PharmacyTotalCurrent Dumex covered % Dumex covered HCMC3, ,5422, % Hanoi3, ,2501, % Cantho % Nhatrang % Danang % Haiphong % Other Provinces 7,0007,9247, % Total15, ,00012, %

AS-IS Understanding Current Distributor Profitability

AS-IS Understanding Current role and Responsibility bw Danone & Dist. Current roles and responsibility DanoneDistributor Sales strategyX KPIs alignmentX TrainingX TMKT supportX WarehousingX Inventory ControlX Credit ControlX Sales people and facilityX DeliveryX DistributionX Support promotionX

AS-IS Understanding ACN Performance Review

Identification of Alternative Scenarios Model Assessment DANONE Vietnam DANONE Vietnam 05 Distributors 05 Distributors 82 S. Distributors 82 S. Distributors RETAILERS DANONE Vietnam DANONE Vietnam 10 Distributors 10 Distributors RETAILERS in small cities RETAILERS in small cities 54 S. Distributors 54 S. Distributors RETAILERS in key cities RETAILERS in key cities DANONE Vietnam DANONE Vietnam 82 S. Distributors 82 S. Distributors RETAILERS DANONE Vietnam DANONE Vietnam RETAILERS 06 Few Distributors 06 Few Distributors DANONE Vietnam DANONE Vietnam RETAILERS Option 1 Option 2 Option 3 Option 4 Option 5 Layer Danone Distributor S. Distributor Retailer

Identification of Alternative Scenarios Model Assessment

Identification of Alternative Scenarios Model Assessment

Identification of Alternative Scenarios Model Assessment

Identification of Alternative Scenarios Description of each scenario

Identification of Alternative Scenarios Define the criteria of assessment

Identification of Alternative Scenarios Deliverable: Pilots recommendation

Reco of targeted Model Implementation

Reco of targeted Model Define criteria of success for each pilot

Reco of targeted Model Organization Impacts

Reco of targeted Model Finalize support for decision

Reco of targeted Model Roll out Plan

Reco of targeted Model Communication Plan

Pilot of Distributor Model 3

Map Universe vs Actual Stores -> Provision Store (incl. Dumex) -> DRC -> Ideal Route Planning Territory Pilot Audit As-Is -> Pic of success Compliance -> OSA -> Uncovered Stores -> Delivery: * Actual cost from * Existing Model Simulation of Resources Required -> #Presellers -> # vehicles -> Freq Visits per Cluster/Channel -> Time Study with with SubDist -> Delivery: * FTE * Cost to serve 6 Pilot Roadmap-direct July-Aug Sep:launch

Reco of targeted Model