Successful Strategies in Traditional Trade Around The Globe: Pedro Manosalva May 2016

SUCCESSFUL STRATEGIES
IN TRADITIONAL TRADE
AROUND THE GLOBE
Pedro Manosalva
May 2016
AGENDA
Global Economic Scenario

Developed (Lead) and Developing (Growth, China & Emerging Markets)
Emerging Demands & Retail Trends

Middle Class, Urban & Rural Populations and Labor Force
Traditional Trade: A black Box?

Copyright ©2016 The Nielsen Company. Confidential and proprietary.
Shop, Shopper and Shopkeeper
Manufacturer’s Market Playbook

Successful Distribution, Shopkeeper Strategies, Execution Standards & Manufacturer Operations
2
GLOBAL ECONOMIC
SCENARIO
% VARIATION - GLOBAL GDP
5,4%
4,2%
3,4% 3,4% 3,4% 3,4% 3,6%
3,1%
2010 2011 2012 2013 2014 2015 2016 2017

FORECAST
4
SOURCE: International Monetary Fund
NIELSEN CLUSTERS
Looking to align countries with broadly similar needs, challenges and growth opportunities:
LEAD MARKETS, GROWTH MARKETS, GREATER CHINA & EMERGING MARKETS
LEAD MARKETS GROWTH MARKETS Bangladesh Greece Philippines
Australia Brazil Hong Kong Guatemala Puerto Rico
Austria Mexico Taiwan Romania
Honduras
Belgium Colombia
EMERGING MARKETS Israel Saudi Arabia
Canada Chile
Japan Algeria Jordan Serbia
Denmark
Korea Argentina Kazakhstan South Africa
Finland
Indonesia Belarus Kenya Tanzania
France
Singapore Bolivia Kuwait Macedonia
Germany Bosnia
Sri Lanka Latvia Thailand
Ireland Bulgaria
Malaysia Lebanon Uganda
Italy Cameroon
Nepal Lithuania Ukraine
Netherlands Costa Rica Montenegro
Russia United Arab Emirates
New Zealand Poland Croatia Morocco Uruguay
Norway Turkey Dominican Republic Myanmar Venezuela
Portugal Czech Republic Ecuador Nicaragua Vietnam

Slovenia Slovakia Egypt Nigeria
Spain Hungary El Salvador Oman
Sweden India Estonia Pakistan
Switzerland Ethiopia Panama
U.K. GREATER CHINA Georgia Paraguay
U.S.A. China Ghana Peru
5
GROWTH MARKETS AND CHINA TEND TO BE MORE
RELAVANT IN GDP VS. POPULATION
Lead 2016 2017 Growth

Markets +2.1% +1.8% Markets
Growth Markets
w/o India
% Population 13%
% GDP per region 18%
2016 2017
2016 +2.4%
+2.1% +3.4%
Greater Emerging
China Markets
2016 2020 2016 2017
+6.5% +6.2% +2.8% +3.9%
6
SOURCE: International Monetary Fund * Estimated
ECONOMY IS A COMMON WORLD CONCERN
Main Concern per Region for the Next 6 Months
LEAD MARKETS GROWTH MARKETS
Job Security 11% Job Security 16%
Economy 11% Economy 16%
Health 9% Health 8%
Terrorism 9% Debt 7%
Immigration 8% Terrorism 7%
GREATER CHINA EMERGING MARKETS
Economy 22% Job Security 19%

Health 12% Economy 14%
Job Security 11% Health 9%
Work/Life Balance 10% Work/Life Balance 7%
Political Stability 7% Debt 6%
Increase vs. Q1’15

7
SOURCE: Global Consumer Confidence Report Q1’16
0%
10%
30%
40%
50%
60%
70%
80%
90%
20%
100%
Denmark
New Zealand
Germany
Czech Republic
China
Vietnam
Australia
U.K.
Philippines
Switzerland
Slovakia
Lithuania
Sweden
Singapore
Israel
India
U.S.
GLOBAL AVERAGE
Romania
Ireland
Poland

UAE
Indonesia
Netherlands
Latvia
Saudi Arabia
Peru
Hungary
Austria
LEAD
Belgium
Pakistan
MARKETS
Chile
Estonia
Canada
Hong Kong
Norway
Bulgaria
Slovenia
Spain
Turkey
GROWTH
MARKETS
Portugal
Colombia
France
Egypt
Tahiland
Japan
Finland
CHINA
Greece
South Africa
GREATER
Malaysia
PERCENTAGE OF PEOPLE WHO BELIEVE WE ARE IN A RECESSION IN Q1’16
Mexico
MORE THAN HALF OF THE WORLD POPULATION
Taiwan
Serbia
Argentina
Italy
Russia
Croatia
MARKETS
Korea
EMERGING
FEAR OF A RECESSION IS STILL A MAJOR CONCERN FOR
Brasil
Ukraine
Venezuela
8
WHEN CONSUMERS HAVE A RECESSION
SENTIMENT, THEY SACRIFICE CONSUMPTION
Actions taken to save money during a recession
LEAD MARKETS GROWTH MARKETS
Spend less on new clothes 53% Spend less on new clothes 50%
Switch to cheaper grocery brands 52% Cut down on out of home entertainment 45%
Try to save on gas and electricity 45% Try to save on gas and electricity 45%
GREATER CHINA EMERGING MARKETS
Cut down on out of home entertaiment 51% Spend less on new clothes 51%
Spend less on new clothes 48% Cut down on out of home entertaiment 48%
Delay upgrades 36% Switch to cheaper grocery brands 40%
9
EMERGING DEMANDS
& RETAIL TRENDS
DEMOGRAPHICS ARE INEVITABLE
Taking advantage of the emerging opportunity remains a challenge
Middle class
Have TVs and phones before tap water
Urban Populations
Urban population growth far outpaces rural
Labor force
Working population & working women
11
DEMOGRAPHICS ARE INEVITABLE
Taking advantage of the emerging opportunity remains a challenge
LESS TIME AVAILABLE
MORE CONVENIENCE
MORE CONSCIOUS DECISIONS

MORE VALUE-PRICE
12
GROWTH MARKETS & CHINA WILL MAKE UP FOR
58% OF TOTAL GLOBAL GDP IN 2060 2015 2060
GDP Contribution per Cluster
600.000.000 Million USD
15% 15%
500.000.000
35% 21%
400.000.000
300.000.000 20% 26%

200.000.000
30% 32%
100.000.000
0
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
LEAD GROWTH GREATER EMERGING

MARKETS MARKETS CHINA MARKETS
13
SOURCE: OECD (Organization for Economic Co-Operation and Development) PROJCTIONAS based on historical data
AVERAGE INCOME
LEAD MARKETS
GDP PER CAPITA 2050
$ 58.248
GREATER CHINA
$ 36.151
GROWTH MARKETS
$ 24.243
EMERGING
MARKETS
$ 14.171
US Dollars
5 BILLION
2 BILLION For the middle class by 2030
2014 2050
14
SOURCE: OECD (Organization for Economic Co-Operation and Development) PROJECTIONS based on historical data
AVERAGE SIZE PER HOUSEHOLD 3.33
2.81 2.65
2.49
2.31 2.25
MARKETS
GREATER
CHINA
LEAD
2000 2015 2020 2000 2015 2020

4.01
3.64 3.64 3.52
3.21 3.06
EMERGING
MARKETS
MARKETS
GROWTH
2000 2015 2020 2000 2015 2020
5 BILLION
2014 2050
15
SOURCE: TekCarta, Households: Average Household Size (68 countries)
AVERAGE SCHOOL ENROLLMENT INDEX (%)
58,67
48,72
Elementary
73,95
53,57
95,21 GROWTH MARKETS

98,64
Junior and High-school Universidad GREATER CHINA
121,47 LEAD MARKETS
96,9 EMERGING MARKETS
103,87
107,28
College Education
104,29
103,38
0 20 40 60 80 100 120
5 BILLION
2014 2050
16
SOURCE: The World Bank Data, Average School Enrollment 2013
LABOR FORCE
6.000.000.000
5.000.000.000
LEAD MARKETS
4.000.000.000
GREATER CHINA
3.000.000.000 EMERGING MARKETS
GROWTH MARKETS
2.000.000.000
39% GLOBAL LABOR FORCE

1.000.000.000 will be in Growth markets in 2050
-
2015 2050
5 BILLION
2014 2050
17
WOMEN IN WORKFORCE
Employment to Population Ratio, 15+, Female (%)
70 68
65 63
61,5
60
55
51,9
50,9
50 48,8
47 47,6
44,9
45 43,4
41,5
40,1
40
35
EMERGING MARKETS GREATER CHINA GROWTH MARKETS LEAD MARKETS

2000
2020
2014
5 BILLION
2014 2050
18
% URBAN POPULATION
LEAD GREATER
MARKETS CHINA
GROWTH EMERGING
MARKETS
MARKETS
5 BILLION
2014 2050
19
GLOBAL RETAIL
DYNAMICS
HOUSEHOLD STOCK UP, IS THE MAIN REASON TO
PURCHASE IN THE WORLD
Thinking about Shopping for Groceries, what is the ONE PRIMARY Reason for it?
7%
3% 6% 2% 6% 2%
4% 4%
3% 29%
7% 32% 10%
10%
36% GLOBAL
LEAD GREATER
MARKETS CHINA
19% 16%
26%
20%
12% 19%
HOUSEHOLD STOCK UP
6% 3% 5% 3%
4% BUY SOMETHING QUICK 4%
31% TRIP 7% 33%

10% BUY A FEW ESSENTIAL
GROWTH ITEMS EMERGING
MARKETS BUY A PREPARED MEAL OR MARKETS
INGREDIENTS TO PREPARE A MEAL
25%
FOR TODAY
25%
19% TO BUY A NON-FOOD ITEM(S)
22%
BUY SOMETHING THAT WAS
ADVERTISED THIS WEEK
OTHER
21
SOURCE: Global Survey - Growth Strategy – Q1 2016
CONVENIENCE IS STILL A KEY DRIVER FOR
GROWTH, CHINA AND EMERGING MARKETS
Shoppers consider store location to be the most influential part of the purchase
23% 48% 49% 56%
“Grocery shopping is a chore and I try to spend as little time on it as possible”

37% 45% 44% 46%
LEAD MARKETS GROWTH MARKETS GREATER CHINA EMERGING MARKETS
22
SOURCE: Global Survey - Growth Strategy – Q1 2016
THAT’S WHY, ACROSS THE GLOBE, THERE IS A RISE
OF PROXIMITY RETAILING
1%
2%
5%
5%
15% 38% 40%

Traditional Trade
7% 64%
Modern Trade*
Drugstores
11%
MODERN TRADE
10%
Hard Discount 30%
7% 3%
Convenience 2%
3%
Small Supermarket 18%
Small Formats &
14%
Hypermarket Hard Discount are

growing
Large Supermarket 11%
35% 12% 36%
18%
13%
Lead Markets Growth Markets China Emerging Markets*
Formats growing vs. 2014 23

SOURCE: Retail Index 2015 ACV (*Modern Trade breakdown not available in Emerging Markets)
PRICE CONTINUES TO BE THE MOST IMPORTANT
REASON FOR CHANGE
Retail and Brand Switching Reasons
19%
30% 26% 29% 32%
EMERGING 42% LEAD 44% 5% GROWTH GREATER
MARKETS
6% MARKETS 6% MARKETS CHINA
59%
8% 8% 10% 11%
6% 16%
14% 16% 12%
25% BETTER PRICE BETTER FEATURES
GLOBAL 48% BETTER SERVICE AGREEMENT BETTER QUALITY

7%
7% BETTER SELECTION
13%
24
SOURCE: Global Report of Loyalty Sentiment
DIGITAL IS INFLUENCING CONSUMER AND RETAIL
TRENDS
% of population with internet access
83% 57% 63% 42%
LEAD GROWTH GREATER EMERGING

MARKETS MARKETS CHINA MARKETS
25
SOURCE: World Bank – Internet Users Penetration 2015
RETAILERS MUST EVOLVE TO STAY AHEAD OF THE
PACK AND KEEP CONSUMERS ENGAGED
Flexible Retailing is About Adding Value and Differentiation
CONSIDER CHANNEL
DIFFERENCES
ADD VALUE MAKE IT

EASY
AISLE 1
KNOW B2B
YOUR SHOPPERS B2C
B2C C2C
RETAIL RETAIL DIGITAL DIGITAL
(BRICK AND MORTAR)
26
SOURCE: Global Survey Shopper Trends & Behaviors Q3’15
THERE IS A HUGE POTENTIAL FOR E-COMMERCE
ORDER ONLINE FOR USE A VIRTUAL ORDER ONLINE AND PICK
HOME DELIVERY SUPERMARKET UP INSIDE THE STORE
58%
Willing
55% 63%
to use 59% 68%
59% 58%
59% 59% 57% 57%
51% 56%
47% 49%
Already
33%
using 25% 20%
11% 18% 16% 13% 15% 12%
9% 8% 7% 9% 10%
5%
LEAD MARKETS GREATER CHINA

GLOBAL
GROWTH MARKETS EMERGING MARKETS
27
SOURCE: Global Survey Shopper Trends & Behaviors Q3’15
ESTIMATED SIZE OF E-COMMERCE
TRILLIONS 2019
US EUROPE
$5.989
+3.3%
12.8% $6.566
WE. 1% C&EE.
CAGR (2014-2019) Total Global Retail 5.2%
CAGR (2014-2019)
APAC
$11.460
7.7%
LATAM CAGR (2014-2019)

ROW
$2.249
$1.652
5.3%
CAGR (2014-2019 18.2%
CAGR (2014-2019
28
Source: Forrester and Channel Advisor Estimates, Total Size at Global Retail ~
LOCAL INFRAESTRUCTURE AND GOVERNMENT TAXES FOR B&M,
FAVORED THE SUDDEN GROWTH OF E-COMMERCE IN CHINA
Sales value of Alibaba (Billion CNY)

91.2
57.1
36.2
19.1
0.05 0.93 3.36

2009 2010 2011 2012 2013 2014 2015

Growth vs.
Year ago
1700 261 468 90 58 60
CHINA BUSINESS CASE

29
SOURCE: ALIRESEARCH
RETAIL TRENDS ARE ORIENTED TOWARDS
GENERATIONAL SEGMENTATION
GENERATION Z GENERATION X
(15-20) (35-49)
MILLENNIALS BABY BOOMERS

(21-34) (50-64)
SILENT GENERATION
(65+)
LEAD
MARKETS EMERGING
MARKETS
GREATER
CHINA
GROWTH
MARKETS
Although the fastest growing generation are the Boomers,

in next few years Millennials will be the most powerful
economically and will dictate global consumption trends
30
SOURCE: The me generation meets generation me -Millennials, Boomers & your Advertising
MILLENNIALS AND GENERATION Z ARE THE MOST
AVID ONLINE GROCERY SHOPPERS
ORDER ONLINE FOR USE ONLINE AUTOMATIC USE A VIRTUAL ORDER ONLINE AND PICK
DELIVERY TO HOME SUBSCRIPTION SUPERMARKET UP INSIDE THE STORE
28% 55% 20% 55% 14% 66% 14% 59%
30% 57% 19% 60% 18% 64% 17% 61%
22% 57% 11% 56% 10% 61% 10% 59%
17% 48% 6% 40% 4% 46% 6% 48%

9% 35% 5% 21% 2% 28% 2% 31%
Willing Already
to use using
GENERATION Z MILLENNIALS GENERATION X BABY BOOMERS SILENT GENERATION

(15-20) (21-34) (35-49) (50-64) (65+)
(15-20)
31
Source: Nielsen Global E-Commerce and The New Retail Report
TRADITIONAL TRADE
A BLACK BOX?
TRADITIONAL TRADE IS THE LARGEST CHANNEL,
WITH THE LARGEST REACH
There is 1 store
for every
250 people…
Have you bought home

cleaning products in TT in
the last 6 months?
25% 40% 24%
GROWTH CHINA EMERGING

MARKETS MARKETS
33
SOURCE: Global Survey Shopper Trends & Behaviors Q3’15 & Global Survey Home Cleaning Products Q1’16
THREE MAIN ACTORS IN THIS STORY…
SHOPKEEPER
HOW
SHOPPER
WHAT
SHOP
WHERE
34
30% SALES, COME FROM
GLOBALLY SHOP
TRADITIONAL STORES
7% 36% 40% 55%

Lead Markets Growth Markets Greater China Emerging Growth
TOP 250 RETAILERS TOTALED

ALMOST US$4.5 TRILLION ~40%
35
SOURCE: Avg. % of Traditional Trade SOM in Value SaLes RMS
Korea 4%
Estonia 9%
Slovakia 10%
Chile 14%
Czech Republic 21%
Lithuania 23%
Latvia 26%
Malaysia 29%
Singapore 29%
Argentina 31%
Colombia 32%
México 32%
Philippines 33%
Brasil 35%
Greece 37%
CAM 37%
Hungary 37%
UAE 38%
Romania 39%
South Africa 40%
China 40%
Poland 43%
Perú 43%
SOURCE: % of Traditional Trade SOM in Value Sales RMS – Nielsen Baskets 2015
46%
AVERAGE
Ukraine
3 MARKETS
Average 48%
Croatia 49%
Tahiland 50%
Venezuela 56%
Indonesia 57%
60%
GROWTH
MARKETS Russia
Turkey 60%
Saudi Arabia 62%
Bulgaria 65%
TRADITIONAL TRADE REPRESENTS HIGER
Montenegro 67%
Bosnia 69%
CHINA
70%
GREATER
Serbia
Kenya 70%
Vietnam 74%
PERCENTAGE OF SALES IN EMERGING MARKETS
Belarus 83%
India 94%
SHOP
Ghana 96%
Cameroon 98%
MARKETS
EMERGING
Nigeria 98%
36
SHOP
AVERAGE GROWTH OF TRADITIONAL TRADE

Uruguay and Ukraine had a Significant Growth (More Than 10.1%). But in Half of the
Reported Countries Growth is Less than 1% or has no Growth.
ARGENTINA
SINGAPORE
COLOMBIA
GERMANY
HUNGARY
MALAYSIA
URUGUAY
SLOVENIA
AMERICA
CENTRAL
UKRAINE
POLAND
KUWAIT
MEXICO
GREECE
ARABIA
RUSSIA
ALPINE
BRAZIL
SAUDI
INDIA
PERU
LOSING SALES






LESS THAN -
1%
NO GROWTH



REPORTED
+/- 1%
BETWEEN




1% TO 5%



5.1% TO 10%
MORE THAN


10.1%
SOURCE: CS SURVEY: Traditional Trade Market Trends (Alpine, Brazil, Argentina, CAM, Colombia, Germany, Greece, Hungary, India, Kuwait, 37
Malaysia, Peru, Poland, Russia, Saudi Arabia, Singapore, Ukraine, Uruguay) – Avg. growth in Value Sales
SHOPPER
WHO IS SHOPPING IN TRADITIONAL TRADE?

65% FAMILY WITH KIDS 54% MEN
Peru, Colombia, Venezuela, UAE (90%), Kuwait (88%),
Turkey, Philippines, Vietnam Turkey (86%) & Venezuela
& Indonesia (More Than (62%) increases the
70%) relevance of men
31% YOUNG ADULTS

Turkey, UAE, Russia,
46% WOMEN Cambodia & Chile
(More than 35%)
Vietnam (67%), Philippines
& Brazil (61%), Argentina

(59%), Czech Republic,
Peru, Cambodia, Colombia
& Russia (More than 50%)
15% TEENS
Mexico, Philippines, Turkey,
Indonesia & Cambodia (More
than 20%)
SOURCE: Nielsen Global Shopper Trends (Indonesia, Philippines, Turkey, Russia, Argentina, Chile, Mexico, Peru, Cambodia, Kuwait, Czech Rep., 38
Venezuela, Colombia, Vietnam, UAE & Brazil)
SHOPPER
BEVERAGES ARE THE MOST COMMON PRODUCTS

TO BUY IN TRADITIONAL TRADE
Top 5 most sold categories in the world
FRUIT JUICES
26.3%
CIGARRETTES MILK
31.6% 31.6%
BEER
52.6%
SOFT DRINKS
57.9%
“In average, Shoppers buy 2 items per visit”

Malaysia, Peru, Poland, Russia, Saudi Arabia, Singapore, Ukraine, Uruguay)
SHOPPER
Shoppers make at least

28 VISITS PER MONTH
to traditional trade around the world
And spends only

5 minutes per visit
68%
ARRIVES WALKING
86% GOES ALONE to the traditional trade

SOURCE: Nielsen Global Shopper Trends (Indonesia, Philippines, Turkey, Russia, Argentina, Chile, Mexico, Peru, Cambodia, Kuwait, Czech Rep., 40
SHOPPER
SMALL PACKAGES ARE THE SIZE WITH HIGHEST

NUMBER OF SALES IN TRADITIONAL TRADE
BEVERAGES FOOD
47% ← PERSONAL PACKAGES →
16%
21% ← SMALL PACKAGES →
58%
21% ← LARGE OR FAMILY PACKAGES → 16%
HOUSEHOLD PRODUCTS
PERSONAL PACKAGES → OF SHOPPERS SELECT THEIR

household cleaning products
SMALL PACKAGES → 74% because packaging is convenient
LARGE OR FAMILY PACKAGES → 16% to hold/use/store or packaging
size (small or large) fits my
family needs
SHOPPER
STOCKING UP OF HIGH ROTATION CATEGORIES IS THE MOST

IMPORTANT MISSION IN THE WORLD FOR TRADITIONAL TRADE
What is the Main Role (Shopper Need) of the Traditional Trade in Your Country?
57.9% 47.4% 42.1%
LAST MINUTE STOCK UP ON LAST MINUTE

REPLACEMENT OF HIGH HIGH ROTATION REPLACEMENT
ROTATION CATEGORIES* CATEGORIES* FOR FMCG
15.8% 10.5% 5.3%
STOCK UP FMCG FOR READY-MADE READY-MADE MEALS

THEIR HOMES (ENTIRE MEALS TO EAT TO EAT OUT OF HOME
FAMILY SHOPPING) AT HOME (OFFICE, STREET, SCHOOL)
AVERAGE 34% 29% 20% 3%
VIETNAM 57% 7% 13%
KWAIT 56% 3% 31%
ARGENTINA 53% 21% 11%
CHILE 45% 39% 7% 3%
DAILY SHOP

BRAZIL 36% 21% 24% 3%
CAMBODIA 36% 30% 13% 4%
UAE 35% 33% 22% 1%

% Shoppers per mission in Traditional Trade
OUT OF HOME
INDONESIA 33% 12% 28% 3%
COLOMBIA 33% 34% 16% 2%
TURKEY 33% 49% 10% 3%
URGENT ITEM
PHILIPPINES 30% 9% 31% 17%
IS RELEVANT FOR MANY COUNTRIES
CZECH REPUBLIC 27% 30% 16% 3%

NON GROCERY
MEXICO 25% 48% 9% 9%

MEANWHILE, PURCHASE OF URGENT ITEMS
PERU 23% 38% 20% 4%
RUSSIA 23% 21% 45% 1%

SOURCE: Nielsen Global Shopper Trends (Indonesia, Philippines, Turkey, Russia, Argentina, Chile, Mexico, Peru, Cambodia, Kuwait, Czech Rep.,
SHOPPER
VENEZUELA 20% 62% 2% 1%

43
SHOPKEEPER
of shoppers interact
with shopkeeper
of countries declare that Traditional store

owners are relevant because s/he decides
the main product portfolio in the store and
will continue selling any brand
SHOPKEEPER
RETAILER VOICE NEEDS TO BE HEARD

Owner priorities & concerns around the globe
31% 50%
OF COUNTRIES OF COUNTRIES
store credit Discounts and
with suppliers promotions per
volume of purchase
81% Listen to retailers

OF COUNTRIES
voice to help manufactures
Margin
to innovate and elevate
the relationship
44% 33%
OF COUNTRIES OF COUNTRIES
Threat: Better prices Threat: Small
in other channels Formats Growth
SOURCE: CS SURVEY: Traditional Trade Market Trends (Alpine, Brazil, Argentina, CAM, Colombia, Germany, Greece, Hungary, India, KUwait, 45
SHOPKEEPER
IN MEXICO SHOPKEEPERS DECLARED THAT THEY

WOULD LIKE TO RECEIVE MORE CREDIT OPTIONS
MEXICAN SHOPKEEPERS: Which actions do you consider manufacturers should take to help you
in your business?
36%
More credit 13%
25%
30%
More product per volume of purchase 23%
27%
12%
Promotional packages 18%
15%
7%
More frequent visits 10%
8%
5%
Extra benefits for my business (wall painting) 12%
8%
46
SOURCE: Mexico Store Owners Survey
SHOPKEEPER
DISTRIBUTORS ARE THE MAIN PURCHASE PLACE

WHERE DOES THE STOCK MAINLY COME FROM?
WHOLESALERS
52.7% CASH & CARRY
PRICE CLUBS
DIRECT DELIVERY
FROM WHOLESALERS
AND MANUFACTURERS,
47.4%
CASH & CARRY,
PRICE CLUBS
DIRECT DISTRIBUTION
26.3% FROM OTHER COMPANIES
WITH A DELIVERY SERVICE
DIRECT DELIVERY 21%

FROM MANUFACTURERS
SHOPKEEPER
MANUFACTURERS NEED TO UNDERSTAND BOTH

SHOPKEEPER AND SHOPPER NEEDS
SHOPPER SHOPKEEPER
PROFILE WHO? PROFILE
MISSIONS WHY/WHERE/WHEN? HISTORY

PRODUCT NEEDS WHAT? BUSINESS NEEDS
IN-STORE HOW? STORE OPERATIONS

BEHAVIOUR
48
MANUFACTURER’S
MARKET PLAYBOOK
SOMETHINGS TO CONSIDER…
1. All successful strategies should take into account a deep understanding of how
Shoppers differ in the world… How and Why they are choosing stores and
products, how they arrive to the stores, etc. and which are the main concerns of
Shopkeepers at local level
2. TT shopping is not a “monthly stock up trip”, nor is it always a ‘top up’ shop - it
all depends on the size of the store, the range available (assortment depends of
Shopkeeper budget -limited- and their deals with distributors) and the purchase
occasion, Shoppers need, preferences and out of pocket
3. Merchandising can also take on a life of its own in a traditional trade

environment where interior and display space is limited, especially for fridges
or free standing units. Shopkeepers often use cross merchandising so color
coding and labeling becomes key in order for products to stand out, packaging
is key for offerings such as everyday staples which are displayed at the front of
the store
50
Source: Nielsen Knowledge Center
MANUFACTURER’S MARKET PLAY BOOK
Manufacturer
Operations
Execution
Standards
Shopkeeper
& Distributor
Loyalty Plans
Segmentation
Strategy
51
Segmentation Strategy
MANUFACTURER’S
MARKET PLAYBOOK
IT’S PRACTICALLY IMPOSIBLE TO REACH ALL OF THEM,
WITHOUT INVESTING MILLIONS IN DISTRIBUTION…
MORE THAN 23 MM
TRADITIONAL STORES
AROUND THE WORLD
AND IT IS NOT NECESSARY TO ACCOUNT FOR ALL
THE STORES IF YOU SEGMENT
80% SALES 20% SALES
30% STORES 70% STORES
RIGHT STORE MARGINAL STORE
4% (RIGHT) STORES NOT 13% (OTHER) STORES

REACHED – 20% UPLIFT REACHED DIRECTLY
9% (RIGHT) STORES REACHED

INDIRECTLY – 13% UPLIFT
$ OPPORTUNITIES BY
REACHING THE RIGHT STORES
54
India Business Case
IF WE FOCUS OUR EFFORTS IN THE RIGHT PLACE,
OUR RESULTS WILL BE MUCH BETTER
Less than 20% of households contribute with 46.5%
of target in this Neighborhoods
AVG. TARGET HOSEHOLDS PER NEIGHBORHOOD
T. VDM 244
A. Obregón 288
Atizapán 298
Azcapotzalco 404
B. Juárez 681
Coyoacán 537
Cuauhtémoc 360
Cuautitlán Izcalli 268
Ecatepec 251
G. A. Madero 296
Iztapalapa 226
M. Hidalgo 314
Naucalpan 291
Nezahualcóyotl 392
Tlalnepantla 301
Tlalpan 287
55
Mexico Business Case
FOCUSING ON THE DETAILS GUARANTEE A
MORE SUCCESSFUL IMPLEMENTATION…
Case brand
BENITO JUÁREZ distributed in IZTAPALAPA
stores in these
Total Target Households 69,432 Total Target Households 103,736
neighborhoods
Total AGEBs (Neighborhoods) 102 and grew (1st.Total
Yr) AGEBs (Neighborhoods) 458
Target Households per AGEB

(Neghborhoods)
681
70% Target Household per AGEB
(Neighborhoods)
226
Top Colonias
Hogares
Target In value sales Top Colonias
Hogares
Target
Narvarte Poniente 7,737 U. Hab. V. Guerrero 2,237
Del Valle Norte 3,974 Los Paseos de Churubusco 1,787
Del Valle Sur 3,861 Constitución de 1917 1,784
Del Valle Centro 3,709 Escuadrón 201 1,769

Portales Norte 3,200 San Andrés Tetepilco 1,749
Portales Sur 2,857 Sector Popular 1,356
Letrán Valle 2,372 La Esperanza 1,345
Álamos 8
2,352 With only Héroes de Churubusco With only
1,296 48
Nápoles 1,575 Fracc. Las Palmas 1,243
neighborhoods, neighborhoods,
Extremadura Insurgentes 1,156 Real del Moral 1,241
Centro Urbano Pdte. M. Alemán
it’s possible to
1,073 U. Hab. P. Elías Calles
it’s possible
1,210
Independencia 1,045 reach Chilero 1 1,145 to reach
U. Hab. 8 de Agosto 40%
986 of target Reforma Educativa 40%
1,069 of target
U. Hab. Esperanza 957 Zacahuitzco 1,015
Vértiz Narvarte 846 Colonial Iztapalapa 1,012
56
Mexico Business Case
CHANNEL AND MICRO UNDERSTANDING IS CRUCIAL
Winning Strategies for Store Segmentation
LOCATION
ATTRIBUTES
Dividing stores into regions or areas by store density,
GDP, population density, economic class or income
level enables efficient planning of sales force,
numbers per region and provides guidance on
brands/SKUs to be pushed in each region.
Modeling across multiple data sources will help

identifying high potential provinces/districts that will
help realize potential with lower reach costs.
57
Source: Nielsen District Level Distribution Prioritisation, illustration
QUANTIFY DISTRIBUTION EFFICIENCY AND
OPPORTUNITY
Winning Strategies for Store Segmentation
PERFORMANCE
ATTRIBUTES
Whether at total store level or individual category
level, performance attributes provide a clear focus
for store visits to the highest potential stores.
Sales territories can be allocated based on the

store performance profile. It is complex and
cost-intensive for manufacturers to reach all

the category stores.
Understanding how your distribution is built can

help to identify and quantify distribution
opportunities.
ASIA BUSINESS CASE
58
Source: Nielsen District Level Distribution Prioritisation, illustration
USE FOWARD LOOKING CRITERIA TO SEGMENT FRAGMENTED
TRADE FOCUSING ON GROWTH POTENTIAL AND PORTFOLIO NEEDS
Criteria used to segment stores % of companies that chose each criteria
Store segmentation criteria
Forward looking criteria Spread
# of criteria used to segment stores
Quality of 50
the relationship 6
44%
67
Share at the store
29
38%
1.5x Profitability 33
potential 6
27%
Socioeconomic level 67
of the area 35
32%
50
Potential share
29
21%
9 Typical consumption 50
21%
occasions 29
6
Current performance
100
Channel
71
29%
Own sales 67
at the store 47 20%
Winners Others Physical store 50
characteristics 35
15%
Winners Others
59
SOURCE: 2015 LatAm GCCB Survey: Nielsen & McKinsey analysis
Shopkeeper &
Distributor Loyalty Plans
MANUFACTURER’S
MARKET PLAYBOOK
SHOPKEEPER INFLUENCES HIGHLY THE PURCHASE
DECISIONS OF SHOPPERS
Do the store's personnel who are friendly & knowledgeable, influence your
decision to shop at a particular retailer?
36% 38% 44%

GROWTH GREATER EMERGING
MARKETS CHINA MARKETS
42%
GLOBAL
61
SOURCE: Global Survey, Growth Strategy 2016- Results based in the % HIGHLY INFLUENTIAL ATTRIBUTE
ENGAGING RETAILERS OF TRADITIONAL TRADE AND TAKING THE
BUSINESS TO THE NEXT LEVEL IS A POSSIBILITY
62
SOURCE: Nielsen Knowledge Center
WHEN USING THIRD PARTY DISTRIBUTORS WINNERS PRIORITIZE
EXCLUSIVE AND COLLABORATIVE RELATIONSHIPS OVER PARTNERING
WITH LARGER, LOWER-COST PLAYERS
Most important attributes to choose a distributor
% of companies that chose each attribute as one of their 3 most important attributes Spread
50%
Openness to collaboration
10% 40%
63%
Exclusivity
38% 24%
13%
Qualified employees
5% 8%
13%
Relationship with retailers
10% 3%
38%
Quality
38% -1%
50%
Geography
57% -7%
13%
Range of services
24% -11%
38%
Distributor cost/margin
52% -15%
13%
Size/scale
29%
-16%
Category Knowledge 0% -33%
33%
Winners Others
63
Execution Standards
MANUFACTURER’S
MARKET PLAYBOOK
STORE FRONT IS THE GOLDEN GATE
All Brands Should Aim to Land at Store – Front to Maximize Visibility
Image on Sign-board
Image on Fridge/Coolers
Image on Shelf
65
VIENTAM BUSINESS CASE
SHOPPERS’ CONTACT WITH THE BRAND IN STORE
COULD PUSH PURCHASES
66
INDIA BUSINESS CASE
BRAND B INCREASES DEMAND DUE TO ACCESIBILITY
Vv. Brand A, which diminishes accessibility as a consequence of lost demand
80% of total purchases are not pushed by the owner, that’s why
accessibility is a key factor to gain shoppers
Brand A LESS accesible Brand B MORE accesible

45 10,0 40,0 8,0
40 9,0 35,0 7,0
35 8,0
30,0 6,0
7,0
30
6,0 25,0 5,0
25
5,0 20,0 4,0
20
4,0 15,0 3,0
15 3,0
10 10,0 2,0
2,0
5 1,0 5,0 1,0
0 0,0 0,0 0,0
Demand Accessibility Demand Accessibility
67
MEXICO BUSINESS CASE
Another challenge is achieving in-store
effective communication with the shopper:
only 11% of shoppers interact with POSM
SOURCE: Nielsen Global Shopper Trends (Indonesia, Phillipines, Turkey, Rusia, Argentina, Chile, Mexico, Peru, Cambodia, Kwait, Czech Rep., 68
Venezuela, Colombia, Vietnam, UAE & Brazil) – POSM: Point of sale Marketing
DISCOUNTS ARE THE MOST EFFECTIVE ACTIVATION
IN TT STORES AROUND THE WORLD
Activation in store: What types of marketing activities are the most successful in Traditional
Trade for your country?
PAINT THE INNOVATE

DISCOUNTS FOR BRAND POSTERS INSIDE PROMOTIONAL
WALLS OF A PRODUCT
SHOPKEEPER FURNITURE THE STORE PACKAGES
STORE DISPLAYS
42.11% 31.6% 31.6% 15.8% 15.8% 5.3%

ALPINE ARGENTINA CENTRAL BRAZIL CENTRAL ARGENTINA
BRAZIL COLOMBIA AMERICA CENTRAL AMERICA
CENTRAL AMERICA MALAYSIA COLOMBIA AMERICA PERU

HUNGARY
PERU GREECE INDIA URUGUAY
MALAYSIA
SAUDI ARABIA PERU
POLAND
URUGUAY URUGUAY
SINGAPORE
UKRAINE
SLOVENIA
SHOPPERS LEAVE IN 5 MINUTES
Things happen fast but there’s at least 3 minutes to capture the shopper while he/she is idle.
LAST 25
FIRST 25 AT LEAST 3
SECONDS
SECONDS MINUTES
70
DISTRUPT THE TRANSACTION
Not all is lost when most transactions are being planned. There are opportunities to
intervene and create opportunities for unplanned purchases and build your brand
In
76%
Planned purchases 5
minutes
you can… SAMPLING
71
SOURCE: Nielsen Global Survey: Traditional Trade Thought Leadership Q1’16
CREATE AFFORDABILITY WITH INNOVATIVE
PACKAGING
Bringing together affordability and convenience will translate into higher shopper
value perception
AFFORDABILITY CONVENIENCE
OPPORTUNITY
• Find the right pack and price to provide value and convenience
• Innovate with new convenience friendly pack formats e.g. sachets, pouches, etc.
• Single use packs meet TT consumer needs for immediate consumption and
frequent store visits
72
Source: Traditional Trade Shopper Report
EVEN WITH MORE COMPETITORS SANCOR IS STILL THE LEAD
IN TETRABRICK REGULAR YOGURT SEGMENT
SOM within T. Yogurt – Tetrabrick Regular Yogurt
1.7
500cc
3.0
1L
NOV13
NOV14
JUL15
JUL14
JUN14
ABR14
ABR15
JUN15
SEP13
SEP14
SEP15
OCT15
OCT13
OCT14
DIC13
DIC14
MAR14
MAR15
ENE15
MAY15
MAY14
FEB15
FEB14
AGO14
AGO15
YOGS YOGURÍSIMO
TOTAL REGULAR REGULAR (BOTTLES)

Even though Sancor is not
the leader in regular 16.4
segment, being the pioneer
45.1
in tetrabrick package has lead 54.2
them to be leaders of the 55.6
regular bottled yogurt
segment 73
BRAND DETECTED A NICHE MARKET, IN TERMS OF
OUT OF POCKET AND GAINED 2ND SOM SKU
PRICE POINTS - COOKIES
$10,00
2.5%
$9,00
SOM
$8,00
$7,00
$6,00
$5,00
$4,00
$3,00
BUSINESS CASE COLOMBIA

74
SOURCE: Nielsen Scantrack - Cookies
MATCHING THE FLEXIBILITY THE VENDOR HAS
DEVELOPED, THINGS TO BE CONSIDERED ARE:
Repackaging and branding products into single servings or smaller sizes
Providing branded packaging such as wrappers or sachets

that retailers can use if they spilt up larger portions
BRAND
Branding the selling vessel, for example,
the basin from which water sachets are sold
Providing branded cooler boxes for table-top vendors

to sell products which require refrigeration
Providing small, portable display stands for kiosk vendors

to stack products and add visibility
Branding re-usable product packaging or containers

for top-ups and repurchases
75
WINNERS MEASURE PRICE ELASTICITY IN A MORE
DETAILED MANNER (BY REGION AND CHANNEL)
Level of price elasticity measure
% of companies
Region 67% 28%

39%
Channel 83% 27%
57%
Packing size 50% 20%
30%
SKU 67% 19%
48%
City 33% 16%
17%
Brand 67% 1%
65%
Customer 17% -1%

17%
Store format 0% -9%
9%
National 50% -11%
61%
Category 33% -19%
52%
Winners Others
76
WINNERS LEVERAGE ADVANCED TOOLS TO SET PRICES,
SIMULATE PRICE SCENARIOS AND DIAGNOSE OPPORTUNITIES
Tools utilization to support pricing activities
% of companies who have tools for each activity
67%
Definition of recommendations 35%
for price changes 32%
50%
Price diagnostic tool
23%
27%
67%
Volume, revenue and

profit simulator 59% 8%
Complaints monitoring 33%

and sales execution -21%
55%
Winners Others
77
Manufacturer Operations
MANUFACTURER’S
MARKET PLAYBOOK
WINNING STRATEGIES AROUND THE WORLD
Strategies in your region that manufacturers should focus on to win in TT
Ensuring the right portfolio Gaining loyalty and increasing

according to the out of distribution with Wholesalers,
pocket of local shoppers C&C and Price Clubs
81% 50%
Developing their own Ensuring the

distribution method owner’s satisfaction
38% 25%
SOURCE: CS SURVEY: Traditional Trade Market Trends (Alpine, Brazil, Argentina, CAM, Colombia, 79
Germany, Greece, Hungary, India, Kuwait, Malaysia, Peru, Poland, Russia, Saudi Arabia, Singapore, Ukraine, Uruguay)
PRIORITIZE IN-STORE EXECUTION BASICS:
MINIMIZING STOCK OUTS AND EXECUTING THE
PLANOGRAMS
Top in-store challenge in traditional trade % of companies that chose each challenge
63%
Minimize stock outs
33%
Execute the 25%

planogram
10%
13%
Introduce new SKUs

14%
Increase coverage of 0%
Secondary SKUs
43% Winners Others
80
WINNERS LEVERAGE TECHNOLOGY FOR SALES FORCE ENABLEMENT
FOCUSING ON GPS TRACKING, POS SURVEYS AND EXECUTION
MONITORING
Sales processes which use technology effectively
% of companies that use technology effectively in each sales process
63%
Tracking of sales people by GPS 40% 23%
88%
POS surveys 68% 20%
75%
Execution monitoring 60% 15%
38%
GPS delivery tracking 36% 2%
50%
Online ordering 52% -2%
38%
Auto-replenishment 40% -2%

25%
Dynamic routing 36% -11%
38%
Manual ordering 52% -14%
13%
Telemarketing 32%
-19%
Winners Others 81
WINNERS EXPAND HANDHELD CAPABILITIES TO TRACK
POS PERFORMANCE (CAMERAS, STOCK) AND TO SUPPORT
SALES ACTIVITIES (MAPS, RADIO, DATA TRANSFER)
Most used handheld features
% of companies that use the features in their handhelds
75%
Camera for photos at the store
17%
75%
Stock by SKU
33%
50%
Maps with locations and directions
17%
Radio transmitter and receiver 25%
0%
Ability to send consumer 25%
service requirements 0%
50%
Software applications
33%
Pictures of success by store 50%
33%
Product and releases information 50%
33%
Winners Others
82
MANUFACTURER’S MARKET PLAYBOOK
Segmentation EnReach
Focus in the real Golden Stores
opportunity Trade Dimensions
Spectra / Sabines
Shopkeeper &
Distributor Loyalty
Built a relationship Shopper
Merchandising
Value-Price Price Elasticity

Right price points Marketing Mix
and Assortment Assortment
Execution Store Observation

Define and guarantee Instant Survey
Advantage Survey
Pedro Manosalva
Managing Director Colombia &
Growth Group Retail Vertical Leader
Pedro.manosalva@nielsen.com

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What are the different economic clusters discussed in the document?

What are the different economic clusters discussed in the document?

What are some challenges faced by manufacturers in traditional trade?

What are some challenges faced by manufacturers in traditional trade?

SUCCESSFUL STRATEGIES

Global Economic Scenario

Emerging Demands & Retail Trends

Traditional Trade: A black Box?

Shop, Shopper and Shopkeeper

Manufacturer’s Market Playbook

2010 2011 2012 2013 2014 2015 2016 2017

Portugal Czech Republic Ecuador Nicaragua Vietnam

Lead 2016 2017 Growth

LEAD MARKETS GROWTH MARKETS

Job Security 11% Job Security 16%

Economy 11% Economy 16%

GREATER CHINA EMERGING MARKETS

Economy 22% Job Security 19%

Health 12% Economy 14%

Job Security 11% Health 9%

Work/Life Balance 10% Work/Life Balance 7%

Political Stability 7% Debt 6%

Increase vs. Q1’15

SOURCE: Global Consumer Confidence Report Q1’16

LEAD MARKETS GROWTH MARKETS

GREATER CHINA EMERGING MARKETS

Delay upgrades 36% Switch to cheaper grocery brands 40%

LESS TIME AVAILABLE

MORE CONSCIOUS DECISIONS

300.000.000 20% 26%

LEAD GROWTH GREATER EMERGING

2000 2015 2020 2000 2015 2020

2000 2015 2020 2000 2015 2020

95,21 GROWTH MARKETS

3.000.000.000 EMERGING MARKETS

39% GLOBAL LABOR FORCE

EMERGING MARKETS GREATER CHINA GROWTH MARKETS LEAD MARKETS

31% TRIP 7% 33%

23% 48% 49% 56%

“Grocery shopping is a chore and I try to spend as little time on it as possible”

37% 45% 44% 46%

LEAD MARKETS GROWTH MARKETS GREATER CHINA EMERGING MARKETS

15% 38% 40%

Hypermarket Hard Discount are

Lead Markets Growth Markets China Emerging Markets*

Formats growing vs. 2014 23

25% BETTER PRICE BETTER FEATURES

GLOBAL 48% BETTER SERVICE AGREEMENT BETTER QUALITY

83% 57% 63% 42%

LEAD GROWTH GREATER EMERGING

ADD VALUE MAKE IT

LEAD MARKETS GREATER CHINA

LATAM CAGR (2014-2019)

Sales value of Alibaba (Billion CNY)

0.05 0.93 3.36

2009 2010 2011 2012 2013 2014 2015

CHINA BUSINESS CASE

MILLENNIALS BABY BOOMERS

Although the fastest growing generation are the Boomers,