Carlsberg Capital Markets Day - Carlsberg Group

CarlsbergCapital Markets DayRussia13 September 2012

AgendaWelcomeEastern EuropeJørgen Buhl Rasmussen, President & CEO, Carlsberg GroupRussia and BaltikaIsaac Sheps, President, Baltika BreweriesMarketingDenis Sherstennikov, VP Marketing, Baltika BreweriesSalesEvgeny Shevchenko, VP Sales, Baltika BreweriesQ&AOff-trade tourCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 4

20042005200620072008200920102011Volatile Eastern European operating margins35%26-29% medium-termEBIT margin target30%25%20%15%Note: Before 2008 - BBH numbers, including the Baltic StatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 7

Eastern Europe – volume growth opportunitiesPer capita beer consumption (litres)Beer share of throat (% of pure alcohol consumption)1127096608050644048303220161000Source: Canadean and Carlsberg estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 8

Russia – long-term volume and value growthRussian beer market (m hl)Russian beer market, consumer value (RUB bn)11963010254085450683605127034180179000Source: Nielsen and Carlsberg estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 9

Eastern Europe value growth opportunities• Declining economy segment as economiesgrow and consumers become more affluent• Driving premiumisation– Product launches– Roll-out of international premium brands– Packaging innovation• Underdeveloped on-trade• Changing retail landscape– Growing importance of modern trade– Channel marketing opportunities– Implementation of key accountmanagementMarket segmentation8% 4%17%27%48%18%44%34%12%25%52%11%Russia Ukraine MaturemarketsOff-trade split:Modern trade vs traditional trade70%30%84%16%55%45%40%60%Super premiumPremiumMainstreamEconomyTraditionaltrade/small outletsModern tradeRussia Ukraine Poland WESource: Nielsen, Canadean and Carlsberg estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 10

Further integration opportunities• Roll-out of Group tools– Portfolio optimisation– Value management– Return-on-marketing-investment• Employee capability upgrade– Stronger leadership– Exchange of people• Longer term back-end integration opportunitiesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 11


Agenda1. Setting the scene – Baltika2. Russia macro, consumer &demography3. Beer dynamics4. Legislation5. Back to growth –management building blocksCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 13

Baltika management teamCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 14

Baltika – as big as Russia• Market leader – 37.8% market share (H1 2012)• The Baltika brand holds a 13.4% market share• No. 2 in energy drinks and no. 4 in kvass• The no. 2 FMCG in Russia• Approx. 30 beer and 10 non-beer brands• Nationwide distribution - 98%• Breweries in 10 cities across Russia• Capacity > 50 m.hl• 2 malt houses (Tula and Yaroslavl)Source: Nielsen Urban+Rural H1 2012, internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 15

HeinekenAmstelKronenbourgCarlsbergCarlingBaltikaStella ArtoisFoster'sGuinnessMahouBaltikaHeinekenCarlsbergEfesTuborgStella ArtoisCarlingAmstelObolonKronenbourgBaltika – the no. 1 brand in Europe• Baltika: the Russian flagship brand and backbone of the Russian businessEurope beer market, 2000 Europe beer market, 2011m hlm hl1515121299663300Source: Euromonitor, internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 16

Confidence and spending remain resilient,impacting GDP growthPremiumdemand back togrowthStrong incomegrowthMore pricesensitiveRobust spending& confidenceRecoveringbut consciousconsumerLooking fortangiblebenefitsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 17

GDPProductionInvestmentReal wagesRetailCPIReal inc.Recovering Russian economy• Growth is consistent• Domestic demand remains upbeatMacro economy dynamics Macro indices, H1 2012%20%1215101085604-52-100GDP Retail Real wagesSource: RosstatCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 18

Q1'09Q2'09Q3'09Q4'09Q1'10Q2'10Q3 10Q4 10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Consumer confidence showing positive trendNielsen consumer confidence index(%)100GlobalRussia80604020Source: NielsenCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 19

Consumer expenditures on growth trend• Consumer expenditures on a continuous rise– 2011 outgrew pre-crisis level of 2008• Russian retail market the largest in Europe and no. 3 globallyConsumer expenditures in Russia(USDbn)Top European grocery retail markets, 2011(€bn)800700Non-FoodFood & BeverageNetherlandsPoland600Switzerland500Turkey400SpainItaly300UK200Germany100France0'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12FRussia0 50 100 150 200 250Source: Rosstat, MER, IGDCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 20

Russian demographics showing positive trend• Number of births growing• Positive trend in natural increase of populationRosstat death/ birth rate(thousand people)2,4001,200No. of birthsNo. of deathsNatural increase, decrease0-1,200-2,4001990 1995 2000 2005 2010 2011Source: RosstatCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 21

Growing value of beer category• Beer market value development in last 3 years impacted byexcise increase ahead of CPI level• 7.4% CAGR in consumer value expected to result in growthof RUB 134bn in 2011 vs. 2007Beer market in consumer value(RUB bn)60050040030020010002003 2004 2005 2006 2007 2008 2009 2010 2011 2012FSource: Nielsen Urban, Rosstat, internal estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 22

Stabilising beer consumption• Beer consumption per capita expected to stabilise in 2012• Growth potential in regionsPer capita consumption(litre)80Regional per capita consumption(litre)1002008 20118060604040202000'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12FSource: Internal estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 23

Consumer spending on beer growing fasterthan other beveragesPer capita consumption of beverages(litre)80Per pocket spending, beverages(RUB)5,000603,750402,500201,2500'03 '04 '05 '06 '07 '08 '09 '10 '11 '12F0'03 '04 '05 '06 '07 '08 '09 '10 '11 '12FVodkaBeerJuiceMineral & Drinking WaterWinesRTDCoctailsCarbonated Soft DrinksVodkaBeerJuiceMineral & Drinking WaterWinesRTDCoctailsCarbonated Soft DrinksSource: Rosstat, Nielsen, Euromonitor, internal estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 24

Frequency and penetration dynamics• Consumers starting to increase frequency of beer consumption• New drinkers coming into category2011 - Factor breakdown of decline H1 2012 - Factor breakdown of growthPenetration24%Penetration35%Frequency76%Frequency65%2011 - Penetration/frequency dynamics vs PY H1 2012 - Penetration/frequency dynamics vs PY0%-1%-2%-3%-4%PenetrationFrequency4%3%2%1%0%PenetrationFrequencySource: TNS Brand Track, internal analysisCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 25

Beer market showing positive signs in 2012• After 4 years of decline, beer market is gradually comingback to growth:– Market H1 2012 vs. H1 2011 : +2.0%Beer market(volume)2%2.0%0%-0.4%-2%-4%-6%-4.2%-3.4%-8%-10%-12%-10.3%2008 2009 2010 2011 H1 2012Source: Internal estimatesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 26

Premiumising Russian beer market• Positive mix within categories%8.1 8.1 8.3 8.3 8.4 8.7 8.9 8.7 8.9 9.418.4 18.9 19.3 18.8 18.3 18.9 19.5 18.8 17.8 18.225.7 26.6 27.4 28.3 27.928.629.128.127.327.730.8 29.4 28.5 28.4 29.128.227.828.629.2 28.417.0 17.0 16.6 16.3 16.3 15.7 14.7 15.8 16.8 16.4Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12Discount Lower mainstream Mainstream Premium Super premiumSource: Nielsen retail audit, Urban RussiaCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 27

Baltika market share on positive trend%16.6 17.0 17.2 17.1 17.2 16.8 17.117.4 17.0 16.217.016.612.9 11.4 11.1 11.4 11.7 11.7 11.812.4 12.6 12.811.712.716.3 16.9 17.1 16.8 16.4 16.316.915.8 15.1 15.016.315.038.8 39.3 39.2 39.6 39.1 39.0 37.5 36.8 37.0 37.3 39.0 37.2Q1 '10 Q2 '10 Q3'10 Q4'10 Q1 '11 Q2 '11 Q3'11 Q4'11 Q1 '12 Q2 '12 H1'11 H1'12Baltika ABI Heineken Efes + SABMillerSource: Nielsen Urban+RuralCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 28

The annual Nielsen retail universe recalibrationpositively impacting market share• Baltika absolute volume share up following annual Nielsen recalibrated universe• Decline vs. PY has decreasedMarket shares in Russia -Before recalibration (%)Market shares in Russia -After recalibration (%)17.2 16.8 17.117.4 17.0 16.217.016.617.0 16.5 16.8 17.0 16.5 15.816.716.111.7 11.7 11.812.4 12.6 12.811.712.711.8 11.8 12.112.8 13.1 13.111.813.116.4 16.316.915.8 15.1 15.016.315.016.2 16.016.515.5 14.7 14.616.114.639.1 39.0 37.5 36.8 37.0 37.3 39.0 37.239.1 39.2 37.8 37.2 37.6 37.9 39.2 37.8Q1 '11 Q2 '11 Q3'11 Q4'11 Q1 '12 Q2 '12 H1'11 H1'12Q1 '11 Q2 '11 Q3'11 Q4'11 Q1 '12 Q2 '12 H1'11 H1'12Baltika ABI Heineken Efes + SABMillerBaltika ABI Heineken Efes + SABMillerSource: Nielsen Retail Audit, Urban+Rural RussiaCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 29

Indisputable leadership across RussiaMarket shares - regions100%80%60%40%20%0%100%80%60%40%20%0%North-West13.815.511.746.8South13.03.313.848.9Moscow-Centre100%80%20.760%11.740% 14.820%30.40%100%80%60%40%20%0%100%80%60%40%20%16.216.616.0Ural-Volga 34.315.716.815.733.90%Efes + SABHeinekenABIBaltikaSiberia-Far EastSource: Nielsen Retail Audit, Urban+Rural Russia, H1 2012Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 30

Robust beer category despite regulatory challengesPremiumdemand:natural,nostalgic,localMinimumprice & taxhike forvodkaOn-tradewith apromisingfutureDarkmarketStrongbrandshaveopportunityBeercategoryRetailuniversereductionCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 31

Upcoming and actual regulatory changes• Alcoholic products +0.5% abv banned in non-stationary outlets (01.01.13)• Sales of alcoholic products +0.5% abv in off-trade from 11pm to 8am (01.01.13)• Advertising restrictions– TV, radio, external advertising (23.07.12)– Front and back covers of papers and magazines (23.07.12)– Public transport (23.07.12)– Internet (23.07.12)– Print media (01.01.13)• Packaging restrictions (PET) and beer definition being discussed within the Customs UnionExcise duties 2009 2010 2011 H1 2012 H2 2012 2013 2014 2015*Beer 0.5-8.6 ABVRUB/l 3.0 9.0(+200%)10.0(+11%)12.0(+20%)15.0(+25%)18.0(+20%)20.0(+11%)Alcoholbeverages> 9% ABVRUB/lpurealcohol191.0 210.0(+10%)231.0(+10%)254.0(+10%)300.0(+18%)400.0(+33%)500.0(+25%)600.0(+20%)Minimum retail price 2010 2011 H1 2012Alcoholbeverages> 9% ABVRUB/½ l 89 98 125* ProposedCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 32

Strongly supporting responsible consumption• High level of self-regulation– RBU: Initiating a campaign for control ofthe ban of beer consumption of minorsin 2004– RBU: Introduction of CommercialCommunication Code in 2010– RBU: Voluntary responsible consumptiontext on packaging from 2010– RBU: Voluntary labelling in advertisingof ”Beer sales to minors is prohibited”• Baltika has operated beer patrols regularlysince 2008• Targeted campaigns– ”Are you 18? – prove it!” campaign– ”Soberness while driving” campaign– ”Responsible bartendes” campaign– Social advertising campaign with theMinistry of Home AffairsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 33

Building blocks for ”Back to Growth”Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 34

Ingredients of leadershipUnity ofpurposeClarity ofdirectionConsistencyof messageChallengingtargetTolerance ofmistakesFocus on what can be done, not why it can‟tCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 35

CASH FLOWEBITMARKET SHARECarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 36

Baltika strategy aligned with GroupCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 37

Leveraging Group and local capabilities• Strong focus– Brands– Innovation– Commercial execution• Pan Eastern Europe focus– Portfolio synergies– Capitalising Baltika brand across all markets• Network sourcing• Continued focus– Optimisation– Achieving efficiencies• Strong leadership, people development• Ability to act and implement fast• Group task forces– When and where required• Highly experienced in markets and cultureCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 38

Baltika value management - 3 leversPricingPromotionAssortmentPricing strategyPromotion strategy andguidelinesOptimising product mixSetting right price points foreach SKU in each channeland geoOptimising return of tradeinvestmentsShelf & assortmentproductivityBest practices, tools &systemsTools and systemsComplexity managementPricing, Promotion and Assortment toolsPricing tools Promotion tools Assortment toolsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 39

Wheel based approach to performance managementStrategy Wheel2013-2015FunctionStrategyStrategicDepartmentProjectsPersonalDevelopmentPlansSteering Wheel201_Functionactivity plans,KPIs and keyprojectsDepartmentActivity Planfor 201_Performanceplans +individual KPIsKey CompanyProjectsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 40

Meetings & eventsEvent Audience Periodicity AimWorkshops Top management 2-3 times yearsStrategy development andalignmentQuarterly informationmeetingsKey employeesQuarterlyMain corporate agenda andprogressSteering wheelprogress reportTop 60MonthlySteering wheel progressdiscussion and special themespresentationSpecial events• Best employee ofthe year• Suggestion systemwinners etc.Employees Yearly Awarding and recognitionCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 41

Steering wheel progress meeting• Management– Top 60• Frequency– Monthly• Venue– Baltika Breweries HQ in St Petersburg• Agenda– Progress by each of steering wheel KPI– Topic of the month• Speakers– Isaac Sheps– Directors responsible for each KPICarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 42

Tracking progress on a monthly basisCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 43

Information meetings• Frequency– Quarterly• Venue– Baltika Breweries HQ in St Petersburg• Agenda– Company progress in steering wheelformat– Topics of the month• Audience– HQ employees starting from keyspecialists level– Regional employees (10 cities) via videoconferenceCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 44

Corporate mediaPrinted• The President‟s letter– Corporate magazine - bimonthlyWeb• Isaac Sheps Blog– Planned to be issued biweekly• E-letters to employees– OutstandingCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 45

The 3 “C” of managementCompetence – be good in what you are doingConfidence – express your views with no fearCaring – show you care for 3 „C‟• Customers• Company• ColleaguesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 46

Change-oriented organisationThe ”change” formulaSharedFirstChange = dissatis- x Vision x practical x GutsfactionstepsWhy? What? How?Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 47

Target setting“The greatest danger formost of us is not that ouraim is too high and we missit, but that it is too low andwe reach it !”MichelangeloCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 48

Continuous improvement" …do better if possible, andthat is always possible…"Vacheron Constantin watch makers motto (1755)Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 49

Accept the market situation and work with itThe Queen’s Croquet - GroundAlice: “You can’t play like that.The Queen: “That’s the way we play here”.Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 50

EXECUTION, EXECUTION, EXECUTIONThe effective organisationThe most brilliant strategy in the worldwon‟t do any good if you can‟t deliver on itCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 51


Agenda1. Consumer & shopper trends2. Brand portfolio growth levers- Grow in key consumer platforms nationally andregionally- Drive Baltika brand leadership- Accelerate premium growth with internationalportfolio- Address new platforms with selective innovations- Reconstruct consumer communication model innew “dark” conditionsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 53

How does the Russian consumer feel in 2012?• Looking for tangible benefits & clear evidence of quality– Natural ..– Organic ..– Local ..– Specialty ..– Nostalgic ..… trends drive growth of category• Squeezing price segments– Affordable premium– Premium discount• More price sensitive– More price offers & promotionsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 54

Consumers in 2012 care about quality ……but price matters to them~ 40%of shoppersactively search forpromotions~9%change storesbased on bestpromos offered~16%change (andregularly buy)different brandsbecause ofpromotionsvs.81%care about qualityand are willing topay more forquality productsSource: NielsenCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 55

In store –the main channel to influence the purchase• Point-of-sale– Now the main touch point and place formaking decisions• Modern trade – gains in popularity– Enjoyable shopper experience– Convenience (one-stop shopping occasion)– More attractive price• Traditional trade still significant in beer category– Neighbourhood stores/convenience– Little space for storage at home– Relationship• Modern trade continues to gain shareBeer market volume spit by channel100%75%More than50%of purchasingdecisions aremade in store50%25%0%2008 2009 2010 2011On-trade Modern trade Traditional tradeSource: NielsenCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 56

Several strategic opportunities to retain smartand demanding consumerSmartinnovationswith addedvalueFocuson qualityRegularpriceincreasecombinedwith tacticalpricereductionOccasionbasedmarketingNewpremiumlaunchesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 57

Cross-category portfolio strategy• Main focus: Beer and malt-based beveragesShare of importanceBeerKvasFocuscategoriesEnergydrinksRTDCSDTacticalcategoriesWaterCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 58

Brand portfolio• Excellent mix of international, national and regional brands• Baltika has 4 of the top ten brands in RussiaBaltikasegmentpositionBaltikamarketshareH1 „12LargestbrandSuperpremium# 1 34% TuborgPremium # 1 37% Baltika 7Mainstream # 1 50% Baltika 3Lowermainstream# 1 28% ArsenalnoeDiscount # 1 37%BolshayaKruzhkaNon-beerbrandsSource: NielsenCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 59

Key brand portfolio growth levers• Grow in key consumer platformsnationally and regionally• Drive Baltika brand leadership• Accelerate premium growth withinternational portfolio• Address new promising platforms withselective innovations• Reconstruct consumer communicationmodel with focus on channel marketing- Clear portfolio strategy based on platforms- Relevant set of national brands/SKUs for eachregion/city/channel- Regional strongholds / “regional pride” platform- Flexible pricing strategy- Extensive innovation pipeline- Big activation platforms- Massive in-store execution- Drive Tuborg brand leadership- Premiumise Carlsberg brand- Clear channel plans for wide international portfolioof K1664, Asahi, Corona- Leadership in Czech segment with Gus- Strengthening German platform with Holsten- Exploiting female platform with Eve and newproducts- Develop “draught” concept- Point of sale is the main battlefield- Packaging strategy is key- On-trade is increasingly important- Aggressive in-store innovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 60

Customised regional portfolio strategy• Relevant set of national brands/SKUs for each region/city• Strong regional brand per region / “regional pride” platform• Flexible pricing strategyCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 61

Key brand portfolio growth levers• Grow in key consumer platformsnationally and regionally• Drive Baltika brand leadership• Accelerate premium growth withinternational portfolio• Address new promising platforms withselective innovations• Reconstruct consumer communicationmodel with focus on channel marketing- Clear portfolio strategy based on platforms- Relevant set of national brands/SKUs for eachregion/city/channel- Regional strongholds / “regional pride” platform- Flexible pricing strategy- Extensive innovation pipeline- Big activation platforms- Massive in-store execution- Drive Tuborg brand leadership- Premiumise Carlsberg brand- Clear channel plans for wide international portfolioof K1664, Asahi, Corona- Leadership in Czech segment with Gus- Strengthening German platform with Holsten- Exploiting female platform with Eve and newproducts- Develop “draught” concept- Point of sale is the main battlefield- Packaging strategy is key- On-trade is increasingly important- Aggressive in-store innovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 62

Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 63

Baltika brand – the clear market leader• Baltika - the 3 rd most valuable consumer brandin Russia several years in a row• Baltika brand market share (H1 2012): 13.4%Market share, largest brands(%)8.6#3;4.94.73.52.8BaltikaKlinskoye,Sun InBevOhota,HeinekenArsenalnoye,BaltikaSource: AC Nielsen, June 2012, Urban+RuralCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 64

New identity to help in dark market conditionsPremium, stylish and recognisableConsistent across channelsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 68

Key brand portfolio growth levers• Grow in key consumer platforms nationallyand regionally• Drive Baltika brand leadership• Accelerate premium growth withinternational portfolio• Address new promising platforms withselective innovations• Reconstruct consumer communicationmodel with focus on channel marketing- Clear portfolio strategy based on platforms- Relevant set of national brands/SKUs for eachregion/city/channel- Regional strongholds / “regional pride” platform- Flexible pricing strategy- Extensive innovation pipeline- Big activation platforms- Massive in-store execution- Drive Tuborg brand leadership- Premiumise Carlsberg brand- Clear channel plans for wide international portfolioof K1664, Asahi, Corona- Leadership in Czech segment with Gus- Strengthening German platform with Holsten- Exploiting female platform with Eve and newproducts- Develop “draught” concept- Point of sale is the main battlefield- Packaging strategy is key- On-trade is increasingly important- Aggressive in-store innovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 69

Driving super premium portfolio• Baltika share in super premium segment: 34%Launch year 2000 2002 2005 2008 2010 2012** Relaunch by BaltikaNielsen, July 2012 Total Russia (Urban & Rural); Super premium segmentCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 70

TuborgSuccessful rejuvenation campaignCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 71

CarlsbergWining the biggest 2012 occasion – EURO 2012Carlsberg global relaunch 2011Big EURO 2012 campaignDigitalNPD evolutionNationalpromoOOH360 activation(TV, OOH,Internet, PR)Break theclutter solutionsin retailRetail –EURO2012BE PART OFEURO 2012EXPERIENCETVNationalStrong corporatefocusFanzonesPromoKeyAccountKey results• Stable growth since relaunch:– 2012 sales: +12% vs. prior year• Positive brand KPIs– Increased brand awareness andconsumptionsNon-standard activationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 72

Kronenbourg 1664Blanc development and new platform introduction• Clear distribution strategy– Focus on key potential regions– Activation in targeted channels and outlets• Additional focus on Kronenbourg Blanc– Blanc Outdoor in St Petersburg and Moscow– Multipacks– Promo with design glasses• Beer with food programme– On-trade focus (special programmes)– Digital supportBrand dynamics+38%H1 2011 H2 2012Source: Secondary sales,Internal Data, July 2012Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 73

Key brand portfolio growth levers• Grow in key consumer platforms nationallyand regionally• Drive Baltika brand leadership• Accelerate premium growth withinternational portfolio• Address new promising platforms withselective innovations• Reconstruct consumer communicationmodel with focus on channel marketing- Clear portfolio strategy based on platforms- Relevant set of national brands/SKUs for eachregion/city/channel- Regional strongholds / “regional pride” platform- Flexible pricing strategy- Extensive innovation pipeline- Big activation platforms- Massive in-store execution- Drive Tuborg brand leadership- Premiumise Carlsberg brand- Clear channel plans for wide international portfolioof K1664, Asahi, Corona- Leadership in Czech segment with Gus- Strengthening German platform with Holsten- Exploiting female platform with Eve and newproducts- Develop “draught” concept- Point of sale is the main battlefield- Packaging strategy is key- On-trade is increasingly important- Aggressive in-store innovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 74

Zatecky Gus continues to grow• All varieties are brewed with Zatec (Saaz) aromahop• Key range: Svetle, Cerny, Domaci z Taverny• In the TOP 5 brands in Russian beer marketsince launchZatecky Gus share of market2.8%3.2%1.8%0.2%2009 2010 2011 H1 2012Source: Nielsen 2012Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 75

Holsten in Baltika portfolio -Developing German platform• Launch description– Launch in Baltika portfolio – May 2012(transition from SABMiller)– Great opportunity in German platform• Brand support– Activation in retail– Focus on distribution build-up & clear price– Visibility programmes / point of salematerial placement• Results– 3.5% segment share*– Growing distribution in modern trade andtraditional trade* Source: Nielsen national urbanCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 76

EVEDriving female platform with innovations• EVE Mango-Orange 5.8% ABV launch– Expand consumption occasions– Recruit new consumers outside beercategory and switch from competitors• Through-the-line new image campaign– Reinforce brand image– Drive fruitiness and naturalness• Brand performance– 2.0% share in super premium segment– High consumer response and growingconsumer KPIsSource: Nielsen, July 2012Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 77

InnovationsAn important contributor to share performance• All new product launches as of July 2012– ~15% of total beer volume (rolling 12 months)15%New products shareof total beer volume(July 2012)Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 78

Key brand portfolio growth levers• Grow in key consumer platforms nationallyand regionally• Drive Baltika brand leadership• Accelerate premium growth withinternational portfolio• Address new promising platforms withselective innovations• Reconstruct consumer communicationmodel with focus on channelmarketing- Clear portfolio strategy based on platforms- Relevant set of national brands/SKUs for eachregion/city/channel- Regional strongholds / “regional pride” platform- Flexible pricing strategy- Extensive innovation pipeline- Big activation platforms- Massive in-store execution- Drive Tuborg brand leadership- Premiumise Carlsberg brand- Clear channel plans for wide international portfolioof K1664, Asahi, Corona- Leadership in Czech segment with Gus- Strengthening German platform with Holsten- Exploiting female platform with Eve and newproducts- Develop “draught” concept- Point of sale is the main battlefield- Packaging strategy is key- On-trade is increasingly important- Aggressive in-store innovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 79

From awareness to point of purchaseRestrictedAllowed- Print (starting 1 January, 2013)- Internet- TV- Outdoor- Radio- Public transportation and infrastructure(excluding point of sale)- Packaging- Sampling at point of sale- Events (with some limitations ofbranding)- CRM (direct communication usingindividual personal data)- Below-the-line, including personalisedpromo- On-trade co-business (e.g. Baltika Brew)- PromoCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 80

Key brand portfolio growth levers• Grow in key consumer platformsnationally and regionally• Drive Baltika brand leadership• Accelerate premium growth withinternational portfolio• Address new promising platforms withselective innovations• Reconstruct consumer communicationmodel with focus on channelmarketing- Clear portfolio strategy based on platforms- Relevant set of national brands/SKUs for eachregion/city/channel- Regional strongholds / “regional pride” platform- Flexible pricing strategy- Extensive innovation pipeline- Big activation platforms- Massive in-store execution- Drive Tuborg brand leadership- Premiumise Carlsberg brand- Clear channel plans for wide international portfolioof K1664, Asahi, Corona- Leadership in Czech segment with Gus- Strengthening German platform with Holsten- Exploiting female platform with Eve and newproducts- Develop “draught” concept- Point of sale is the main battlefield- Packaging strategy is key- On-trade is increasingly important- Aggressive in-store innovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 81


Agenda1. Retail landscape and development2. Changed legislation: market impact3. Baltika’s sales organisation and set-up4. Step change in sales- Product availability- People- Distributors and customers- In-store activation- Effectiveness- InnovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 83

A complex retail landscape of 325,000 outletsShare ofoutletsHyper/SupermarketsShare in Baltikavolume6%16%Share ofoutletsSuperettesShare in Baltikavolume10%16%Traditional food storesOpen marketsShare ofoutlets58%Share ofoutlets4%Share in Baltikavolume49%Share in Baltikavolume2%KiosksPavilionsShare ofoutlets16%Share ofoutlets6%Share in Baltikavolume13%Share in Baltikavolume4%Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 84

Steady decline of traditional retail outlets share infavour of the modern formats• Growth in modern trade is driven by:– Price– Choice– One-stop shopping– Convenience– Lately, ban on sales of beer from nonstationaryoutletsChannel split100%80%60%40%20%0%2008 2009 2010 2011On-trade Modern trade Traditional tradeSource: BA; Nielsen (June 2012); internal estimationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 85

Sales outlet transition• No long-term volume loss is expected from theban of sales from non-stationary outlets• Short-term disruption in sales is possible untilconsumers re-route their usual ways for beerpurchase to the new points of salesNon-stationary outlets1/3expected toconvert intostationary2/3expected to disappear, butwith volumes going toother channelsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 86

Non-stationary outlets are disappearing• Depending on the territory, 18-35% of non-stationary outletshave disappeared• Closed by July 2012: 8,263 outletsSaint-PetersburgSmolenskVologdaMoscowTulaYaroslavlKurskN NovgorodLipetskVoronezhKazanRostov-na-Donu SaratovSamaraKrasnodarVolgograd UfaPyatigorskSyktyvkarPermEkaterinburgTumenChelyabinskOmskKrasnoyarskNovosibirskKemerovoIrkutskKhabarovskVery significant % of kiosks closed (>20%)Ulan-UdeVladivostokSignificant % of kiosks closedInsignificant % of kiosks closed (< 10%)Source: Internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 87

Baltika’s route-to-market is mostly wholesaleBaltika BreweriesExportShipments from Baltika to distributors and retail key accounts13% 81% 6%Distributors Off-tradeDistributors On-tradeShipments from distributors to retail outlets13%9%57%15%1%5%WholesalersModern retailTraditional retailConsumersCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 88

The 94 best-in-industry distributors generate 81%of Baltika’s volume• Strongest distributors with constant andstrict evaluation of service quality• Distributors‟ key performance indicatorsaligned with Baltika‟s strategic goals• Majority of distributors have been workingwith Baltika for 8-10 yearsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 89

A powerful and effective sales organisation• Almost 6,000 well-trained sales people - more thanany other competitor• Equipped with the best tools (automated customerrelationship management system, personal digitalassistants, point of sales materials)• Highly competitive compensation package andtransparent performance tracking system• Best results in the industry– Sales representatives‟ coverage: 85%– Distribution: 98%Annual sales/head(k hl)9.55.24.8 4.5Baltika Competitor 1 Competitor 2 Competitor 3Source: AC Nielsen; internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 90

From early 2011: step changes in many key areasProduct availabilityPeopleDistributors and customersIn-store activationEffectivenessInnovationsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 91

Product availabilityProject What was done What was achievedPortfolio optimisationCustomised effective assortment andplanograms for each sales channelSimplification – from 1,500assortment matrixes to 100Coolers placementProduct out-of-stockmitigationNew products launchesExtensive increase of number of coolersIdentification and mitigation of productabsence (out-of-stock) factorsStretch distribution targets setting andfulfillmentChilled shelf share increase by7%Out-of-stock reduction by 30%Shelf share and sales volumeincreaseNumber of coolers Out-of-stock dynamics Speed of new launchesThs.30025020015010050Baltika Competitor 1Competitor 2 Competitor 3%4.03.02.01.0%5040302010ZATECKY GUSBALTIKA KULERBALTIKA #302010 2011 H1 20120.0JUN 2011 JAN 2012 JUN 20120MAR 2012 JUL 2012Source: Nielsen, internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 92

Decreased number of planogrammes leading towell organised chilled spaceCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 93

Highlighting new launches in coolersCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 94

PeopleProject What was done What was achievedKPI streamliningTurnover rate decreasePerformance managementsystemStreamlined organisationalstructureKPI structure simplification and alignmentto company strategy (# reduced: 2x)Complex of actions (motivationalprograms, personnel development)Transparent motivation system for theentire sales structureModern trade and traditional tradechannels structures merge; heads ofregions report to the VPConcentration on the mostimportant tasksTurnover rate decreasefrom 20% in 2010 to12% in 2012Growth of the employees‟engagementAll departments focusedon common not justchannel targetsCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 95

Regional structure - from complexityto simplicity and efficiencyFrom seven separate regions in 2010 …… to five united divisions in 2012, including the on-trade from 2013, and 13 topmanagers instead of 17Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 96

Distributors and customersProject What was done What was achievedRoute-to-marketTrade termsCustomers‟ satisfactionsurveyCustomer relationshipmanagement systemInvestigation and optimization of the wholedistribution model, distributors‟ consolidationSimplification of the trade terms andalignment with the company‟s strategyKey accounts‟ satisfaction surveyData integration with the largest keyaccounts, new personal digital assistantplatform implementationStrongest distributors working withBaltikaTargets aligned with field sales forceKPIsSurvey enables us to respond toareas of improvements. Achieved2 nd place in 2011 among all keyaccount suppliers in AdvantagereportProcess and data transparency andaccuracy increaseNumber of distributors12411610399942008 2009 2010 2011 H1 201280%75%70%65%60%55%50%45%40%35%30%Share of distributors with 100% or moresales volume target fulfillment2Q20113Q20114Q20111Q20122Q2012Source: Advantage report, internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 97

The most advanced CRM system in the industry -covers all areas and all sales processes• CRM concept includes 3 areas– Sales management– Marketing management– Service managementAnalyticalCRMOperationalCRMSFAsolution• More than 4,500 sales representatives• 900 back office users in 80 regionalBaltika‟s offices• 504 data exchange points with alldistributors• 16 national / local chains EDI dataexchangeTMefficiency& optimisationCustomerRelationshipManagementServicemanagementInf. systemintegrationmodule• 3 national service centers data exchange• More than 70 service centersCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 98

In-store activationProject What was done What was achievedCategory managementPioneering in the category managementwith the most important key accountsPilot project with 5 main chains withan aim to accelerate category growthfor dark market preparationActivation standardsCustomised brand activation for eachsales channelUnified standards across all channelsand geographiesReporting planPowerful tool for evaluation of theactivations‟ effectiveness is createdGrowth of activations‟ efficiency ofand planning accuracy by 15%Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 99

“Reporting plan” project: the way to spend eachruble in the most effective wayCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 100

EffectivenessProject What was done What was achievedEffective resourceallocation (place strategy)All resources were allocatedaccording to the growth plans and marketdevelopment forecast for each sales areaGrowth of the salesvolumes and share ofmarketSegmentation of theoutletsOutlets prioritisation and guidelinesdevelopmentSales force standardsoptimisation & increasedinvestment efficiencyCoolers effectivenessCooler efficiency evaluation toolCoolers‟ utilisationefficiency increaseSales volume growth in outlets ofdifferent segmentsShare of efficient coolers(seasonality factor taken into account)+9%June 2010June 201172%74%65%I II III IVMay 2012 June 2012 July 2012Source: Nielsen, internal dataCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 101

Investment strategy focused on growth ofmarket share in all areasMarket share growth+1.2%44.4%45.6%+0.4%49.8%50.2%+0.6%26.6%27.2%High investment priorityareasAverage investmentpriority areasApril 2012 June 2012Low investment priorityareasCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 102

InnovationsProject What was done What was achievedMultipacksMultipacks for best sellers have beenlaunchedListing in the 4 main keyaccountsNew in-storecommunicational toolsInnovative coolers and equipmentImproved visibility at thepoint-of-salesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 103

Volume share growth in both modern andtraditional trade• Modern trade– Share decline in the modern trade due toprice leadership– Share recovery from Q1 2012 andonwards• Traditional trade– More effective cooler placement andassortment– Increased on-shelf availabilityBaltika share of volume (%)Modern trade & Traditional trade40.237.739.3 38.9 38.4 38.3 38.536.133.031.830.631.7• Strong brands and category management– Playing key role in strengtheningnegotiation power in modern tradeQ1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012Modern tradeTraditional tradeSource: NielsenCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 104

Ready for dark marketNeed to doToolsBe the category expertCategory managementGet a deeper knowledgeof a shopperExclusive shopper insightsBe effective in theinvestmentsValue management, promo trackingtoolHave the right assortmentEffective assortment managementtoolsBe closer to thecustomersCustomised promo and new role of thesales representativesCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 105

Advantage of being the first in the beer categorymanagementPilots started:Pilots will start soon:Carlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012Page 106

DairyDairyFrozen foodDairyFrozen foodFrozen foodFrozen food,Powdered foodFrozen food,Powdered foodPowdered foodPowdered food,SweetsPowdered foodSweet, AlcoholPowdered foodPowdered food,SweetsSweetsAlcoholAlcoholBeerBeerSweets, Tea, CoffeeWineTablewareHH cleanersHygieneAlcoholJuiceTea, coffe, waterJuiceWater, Canned foodPowdered, canned Other food non-foodHH cleanersHH cleanersOther non-foodOther non-foodOther non-foodPress, books, disks Other non-foodOther non-food Other non-foodOther non-foodExclusive research techniques help us to betterunderstand the shoppersN=30OtherfoodOther non-foodMeatMeatDairyMeat Bakery WineWineChild products Cosmetics,Cosmetics Hygiene,Other non-foodOther non-foodOther non-foodOther non-food“Temperature” growthDairyFishFishFishFruit&VegetablesFruit&VegetablesFruit&VegetablesOther non-foodOther non-foodOther non-foodOther non-foodSeasonal goods,AlcoholSeasonal goodsSeasonal goodsEntranceCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 107

Assortment management tool focuses on thechannel assortmentSignificantly improveproductivity of theassortment, starting with“hero” SKUs• Drive higher business focus onthe hero SKUs (i.e. widelydistributed, highly rotating)• Push distribution of highlyrotating SKUs• Improve Rotation on the heroSKUsIntroduce winning, highermarginpackaging formats• Target emerging consumer needsthrough packaging• Attack specific price points withdifferent-size multi-packs• Match competitor‟s offering and fillthe assortment gaps• Replace existing formats toimprove the gross marginCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012 108

The new role of a sales representative includesactive communication with consumersCarlsberg Capital Markets Day - St. Petersburg, Russia - 13 September 2012Page 109

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