Market Entry Strategy

Contents Companies overview ……………….………………3 Market overview ……………………........…………8 Launch strategy ……………………………………11 Investments/earnings….…………………….…….21 Project plan ………………………………...….......24

Companies overview ……………….………………3

Market overview ……………………........…………8

Launch strategy ……………………………………11

Investments/earnings….…………………….…….21

Project plan ………………………………...….......24

Companies and Market overviews

Who is Teekanne A company with a 125-year history A wide range of premium tea products More than 1300 employees Represented with production facilities and branches in eight countries around the world Distribution partners in many different countries

A company with a 125-year history

A wide range of premium tea products

More than 1300 employees

Represented with production facilities and branches in eight countries around the world

Distribution partners in many different countries

Why Choose Raritet? One of the largest distributors in Russia Over 5 000 clients. Contracts with the main retail chains Almost 1000 employees 5 private brands 80% coverage of economically active regions

One of the largest distributors in Russia

Over 5 000 clients. Contracts with the main retail chains

Almost 1000 employees

5 private brands

80% coverage of economically active regions

Our Services Direct distribution in Moscow and SPb region 98% direct delivery to the key retail inc. A&B+ National sub-distributor network Regional development and supervisor program Merchandizing support Logistics and storage Planning and marketing support All the service you may need

Direct distribution in Moscow and SPb region

98% direct delivery to the key retail inc. A&B+

National sub-distributor network

Regional development and supervisor program

Merchandizing support

Logistics and storage

Planning and marketing support

Logistics and Warehouse 24 000 pallets just build logistics center (class A) on own 10 hectare land for future increase. Over 110 000 pallets on 55 000 sq.m. by 2009 Over 160 own trucks and lorries. Delivery TODAY for order before 10 a.m. Free delivery up to 1000 km for full truck wholesale loadings Free delivery starting from € 150 for retail European quality and service in Russia

24 000 pallets just build logistics center (class A) on own 10 hectare land for future increase.

Over 110 000 pallets on 55 000 sq.m. by 2009

Over 160 own trucks and lorries.

Delivery TODAY for order before 10 a.m.

Free delivery up to 1000 km for full truck wholesale loadings

Free delivery starting from € 150 for retail

Why enter into Russian market? Fast-Growing in regular time; stable enough in crisis ~ 15 regions with 1mln+ population. Strong consumption all over the country Tea – traditional and popular product consumed by most citizens Russian market Hit the ceiling Highly competitive European market Growth rates of mature European market decline Competition on European market grows strong Fast-Growing Large Profitable

Fast-Growing in regular time; stable enough in crisis

~ 15 regions with 1mln+ population. Strong consumption all over the country

Tea – traditional and popular product consumed by most citizens

Growth rates of mature European market decline

Competition on European market grows strong

Tea market in Russia (Tons) Black Tea is a key part of the market

Industry Sales Volume No evident leader and strong competition according to the Euromonitor International : June 2009

Launch Strategy

The average price for a 50g pack of tea in Russia Twinings – 1,9 * Akhmad – 1,23 Dilmah – 1,47 Riston – 1,31 Lipton – 1,23 Curtis - 1,75 Mayskiy – 0,72 Milford – 1,5 Greenfield – 1,5 Messmer – 2,5 Akbar – 1,32 Tetley – 1,34 Prices in Euro (1 Euro = 44,5) Source: internal retail audit. July, 2009

Twinings – 1,9 *

Akhmad – 1,23

Dilmah – 1,47

Riston – 1,31

Lipton – 1,23

Curtis - 1,75

Mayskiy – 0,72

Milford – 1,5

Greenfield – 1,5

Messmer – 2,5

Akbar – 1,32

Tetley – 1,34

Price The average price for a 50g pack of tea in Russia is 1,48€ Teekanee is a premium segment tea The average price for a 50g pack of Teekanne should be not more than 1,80 € according to the research our company made This price segment includes Curtis, Twinings and Dilmah brands

The average price for a 50g pack of tea in Russia is 1,48€

Teekanee is a premium segment tea

The average price for a 50g pack of Teekanne should be not more than 1,80 € according to the research our company made

This price segment includes Curtis, Twinings and Dilmah brands

Pricing Teekanne According to the monitoring of the tea market, the price on a shelf should be no more than 1,8 € If the price on the shelf is 1,8 € the EXW will be 0,77 € 1,8 € 1,2 € + 35% 0,98 € + 18% 0,77 € + 22% 0,77 € Shelf Price Retail Mark-up Distribution Company Logistics + Customs EXW

What can Raritet Offer? Distribution Chains Promotion ATL Wholesales BTL

Listing in federal and local chains 12 sku in every shop on average “ Perekrestok” – 110 shops (360,000 €) “ Pyaterochka” – 80 shops (160,000 €) “ Karusel” – 7 shops (25,000 €) “ 7 Kontinent” – 110 shops (80,000 €) “ Auchan” – 39 shops (100,000 € (25 000 official listing, 75 000 - motivation) “ Billa” – 36 shops (14,000 €) “ Victoria” – 50 shops (27,000 €) “ Real” – 11 shops (40,000 €) “ Giperglobus” – 8 shops (21,000 €) “ Alie Parusa” – 17 shops (8,000 €) “ Azbuka Vkusa” – 24 shops (20,000 €) Total: 855,000 € There is an additional option to list Teekanne in “Metro CC” for 858,000 € (1300 € per 1 outlet)

12 sku in every shop on average

“ Perekrestok” – 110 shops (360,000 €)

“ Pyaterochka” – 80 shops (160,000 €)

“ Karusel” – 7 shops (25,000 €)

“ 7 Kontinent” – 110 shops (80,000 €)

“ Auchan” – 39 shops (100,000 €

(25 000 official listing, 75 000 - motivation)

“ Billa” – 36 shops (14,000 €)

“ Victoria” – 50 shops (27,000 €)

“ Real” – 11 shops (40,000 €)

“ Giperglobus” – 8 shops (21,000 €)

“ Alie Parusa” – 17 shops (8,000 €)

“ Azbuka Vkusa” – 24 shops (20,000 €)

Listings in regional clients through wholesale partners “ Raritet” recommends to deal with ~ 50 wholesales in Moscow and regions. We suggest listings through wholesale companies: 45 hypermarkets/100€/sku (12 sku) 300 supermarkets/45€/sku (12 sku) 500 retail stores/20€/sku (5 sku) 600 retail stores for free (3-4 sku) Total: 266,000 €

“ Raritet” recommends to deal with ~ 50 wholesales in Moscow and

regions. We suggest listings through wholesale companies:

45 hypermarkets/100€/sku (12 sku)

300 supermarkets/45€/sku (12 sku)

500 retail stores/20€/sku (5 sku)

600 retail stores for free (3-4 sku)

Promo plan for 3 months ATL BTL

ATL Moscow: 40 billboards – 22,000 € 17 brandmauers – 38,000 € Regions: TV: 2000 GRP in each of 15 regions with the best sales – 4,500,000* € (~300,000 € per 1 region) Moscow and Regions: Magazines: 20 most read magazines + sampling 2,000,000 € (10 federal + 10 regional) Total: 6,560,000 € * - marketing and creative concept, TV commercial production and media planning is not calculated

Moscow:

40 billboards – 22,000 €

17 brandmauers – 38,000 €

Regions:

TV: 2000 GRP in each of 15 regions with the best sales – 4,500,000* € (~300,000 € per 1 region)

Moscow and Regions:

Magazines: 20 most read magazines + sampling 2,000,000 € (10 federal + 10 regional)

BTL Extra layouts: 100 shops - 28,000 € Promo leaflets: 30 chains – 34,000 € Degustation: 1200 hours – 30,000 € Merchandising and sampling 36,000 € (12,000 € per month) Total: 128,000 €

Extra layouts: 100 shops - 28,000 €

Promo leaflets: 30 chains – 34,000 €

Degustation: 1200 hours – 30,000 €

Merchandising and sampling 36,000 € (12,000 € per month)

Monthly Turnover/Investments ATL campaign March-May 2010

Cumulative Earnings

Where is the budget going? 14% Total coverage of 15 regions Distribution 1% Reach: 1 million people In-store Promotions 1% Reach: 2 million people Outdoor 25% Reach: 5 million people National Magazines 57% Reach: 12 million people TV Percentage of total budget Reach/Frequency Media Vehicle

Project plan

This strategy will help Teekanne effectively enter Russian market and develop successfully

Thank You