The secrets of our success...




A wealth of        brand power
An unquenchable thirst for more
85%                                                                                                                       ...
Corporate
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Corporate

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Corporate

  1. 1. The secrets of our success... A wealth of brand power
  2. 2. An unquenchable thirst for more
  3. 3. 85% $515 85% $485 $440 $462 $431 85% $402 85% 5% Operations Summary ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 CAGR $1,728 $515 $485 $1,502 $440 $462 $431 $1,338 $402 $1,183 5% $1,040 $1,095 11% ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 CAGR 61% CAGR $515 $1,728 $485 $440 $462 $431 Category Category U.S. and Canadian Beverages Annual Sales (Dollars in Millions) $1,502 Category Category U.S. Ready-to-Eat Cereals Annual $402 Sales (Dollars in Millions) Position Share ‘95 ‘96 ‘97 ‘98 $1,338 ‘99 ‘00 Position Share ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 Gatorade thirst quencher is an extraordinary $1.7 billion brand, commanding $1,728 With a 10 percent share, Quaker is the number-four player in the highly 5% $1,183 $712 $725 CAGR 1 $693 $690 4 $1,040 $1,095 11% $665 more than an 85 percent share of the rapidly growing U.S. sports beverage competitive $7.5 billion ready-to-eat cereal category. Four strong brands # $626 # $1,502 CAGR $1,338 category. With an average annual growth rate in excess of 10 percent over the $1,183 $1,728 comprise the majority of that share: Cap'n Crunch, Life, Quaker Toasted 85% 61% 1% last five years, Gatorade is recognized as one of the fastest-growing beverage $1,095 11% $1,040 $1,502$1,728 CAGR 10% 61% Oatmeal and Quaker bagged cereals. After three years of solid growth, CAGR $1,338 $725 brands in the marketplace. In 2000, its sales grew an impressive 14 percent. ‘95 ‘96 ‘97 $371 ‘98 $375 $1,502 ‘00 ‘99 61% Quaker cereal sales declined in 2000, as price promotions were reduced in ‘95 $665 ‘96 ‘97 $693 ‘98 $712 ‘99 ‘00 $690 $1,183 $335 61% New flavors and packaging, effective marketing and expanded distribution $1,040 $1,095 $1,338 $333 11% favor of investment in brand-building programs. Although this strategy had $626 $308 U.S. Category Size $283 $1,183 CAGR 4% U.S. Category Size $2 Billion contributed to that robust growth. But it is the rehydrating functionality of $1,095 $1,728 11% an impact on near-term sales, it, combined with operating-cost efficiencies, $1,040 CAGR $7.5 Billion 1% ‘95 ‘96 ‘97 ‘98 ‘99 CAGR‘00 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 CAGR Gatorade that keeps consumers coming back for more. Scientifically formulated $1,502 85% $1,338 boosted operating income and profit margins significantly. For the future, 85% One-Year Trends: One-Year Trends: and athletically proven to rapidly replace fluids and provide energy to working $1,183 Quaker’s focus is on keeping its brands strong, while running its business $693 $712 $725 $690 ‘95 $1,095 ‘97 $1,040 ‘96 Sales Volume‘98 ‘99 Category ‘00 11% Sales $665 Volume Category 85% muscles, Gatorade is a superior product designed to quench active thirsts. In $371 $375 CAGR 40% more profitably. To this end, in 2000, the Company embarked on a major $626 ‘95 ‘96 $335 ‘97 ‘98 $333 ‘99 ‘00 10% -5% -5% -2% 85% 2000, Quaker introduced vitamin-fortified Propel fitness water to 25 percent $308 ‘95 15%‘96 ‘97 13% ‘98 ‘99 ‘00 10% restructuring project, announced in 1999, that should significantly reduce ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 $283 5% 4% 1%$341 of the United States. $371 CAGR $375 10% ready-to-eat cereal operating costs in 2001 and beyond. $298 $305 CAGR $335 $333 10% $285 $291 ‘95 $308 ‘96 ‘97 ‘98 ‘99 ‘00 $269 $283 Category Sales by International Beverages Annual Sales (Dollars in Millions) 4% $371 $375 Category Category Grain-based Snacks Annual Sales (Dollars in Millions) 3% CAGR Position Geographic $335 $333 Position Share CAGR Opportunities abound for Gatorade in the international marketplace. Today, Quaker took consumers by storm in 2000 with its line of great-tasting, 1 Region $308 $371 $375 ‘95 ‘96 ‘97 ‘98 ‘99 $341 ‘00 1 # $283 4% Gatorade thirst quencher is available in more than 55 countries throughout $335 $333 ‘00 wholesome grain-based snacks, including Quaker Chewy granola bars, $298 $305 # ‘95 ‘96 ‘97 ‘98 ‘99 CAGR $285 $291 61% $308 $269 $283 4% 40% 70% Latin America, Europe and the Asia/Pacific region. In 2000, international $485 $515 40% Quaker Fruit & Oatmeal cereal bars and Quaker Crispy Mini's rice snacks. $440 $462 $371 CAGR $375 ‘95 ‘96 ‘97 ‘98 ‘99 3%‘00 beverage sales grew 13 percent to $375 million and operating income rose $402 ‘95 ‘96 ‘97 $431 ‘98 ‘99 ‘00 Granola 40% Sales grew 12 percent to a record $341 million. Quaker Chewy granola bars CAGR 85% $335 $333 Bars 40% 85% 162 percent. These results reflect a rebound in Latin America, where sales $308 $283 5% delivered exceptional growth, capturing a 40 percent share of the $400 million 4% CAGR $341 U.S. Category Size reached a record $274 million, an increase of 20 percent. In Europe, sales were ‘95 ‘96 ‘97 ‘98 ‘99 CAGR ‘00 $400 Million category. Over the past five years, Quaker Chewy granola bars have grown $298 $305 ■ Latin America $285 $291 1 ■ Europe61% depressed by the weakening of currencies, though volume increased 9 percent. ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 more than 7 percent per year on average—13 percent in the last three—making ‘95 ‘96 $269 ‘97 ‘98 ‘99 ‘00 # 61% $515 $343 $341 $344 3%$335 ■ Asia/Pacific In the Asia/Pacific region, Gatorade sales grew 18 percent, as the Gatorade $485 it one of the Company’s fastest-growing brands. Quaker Crispy Mini’s rice $324 $316 One-Year Trends: $431 $440 $462 One-Year Trends: CAGR 61% brand continued to be underwritten and introduced to consumers in the region. $402 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 36% snacks also contributed strongly to growth. Its sales grew 63 percent, as two 10% Sales Volume 70% 70% Sales Volume Category 61% ‘95 ‘96 ‘98 ■ Asia/Pacific ‘97 ‘99 5%‘00 $515 Rice new flavors were added to the line. A new Gatorade energy bar also was 1% $485 $462 ■ EuropeCAGR Cakes 70% CAGR 13% $440 $402 14% $431 70% added to the snacks line-up in 2000. It was introduced primarily in convenience 12% $343 9%$341 $344 1%$335 ■ Latin America $324 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 $515 U.S. Category Size $316 $485 5% $170 Million stores, where it is already one of the top-selling energy bars. $462 $440 $431 CAGR $402 $725 $515 $693 $712 $485 $690 1% 10% $665 $462 ‘98 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘95 $440 ‘97 Annual Sales (Dollars$431 ‘99 5% ‘96 ‘00 Category Category 10% U.S. Hot Cereals $402 $626 in Millions) Category Category Golden Grain Annual Sales (Dollars in Millions)CAGR Position Share CAGR Position Share 40% Quaker oatmeal sales reached $515 million in 2000—a record high for this 5% Rice-A-Roni, Pasta Roni and Near East brands continued to bring great 1 10% 1% $515 34% 36% $343 $341 $344 $335 1 $485 CAGR 36% $324 # highly profitable 124-year-old brand. This performance proves, once again, ‘95 ‘96 ‘97 $462 ‘98 ‘99 CAGR ‘00 taste, convenience and variety to consumers of main-meal side dishes. $316 # $440 $431 10% $402 36% 61% that Quaker is still America’s number-one choice for a nutritious, hot cereal 36% These flavorful grains and pastas hold leading positions in the $590 million ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 61% 5% 1% breakfast. With a 61 percent category share, Quaker oatmeal is clearly a leader ‘95 ‘96 ‘97 $693 ‘98 $712 ‘99 $725 ‘00 $690 CAGR Value- flavored rice and the $315 million flavored pasta categories. Near East, Golden $505 $518 $521 $500 $501 CAGR $501 $665 among heart-healthy foods. Beyond its scientifically proven cholesterol-reducing ‘95 $626 ‘96 ‘97 ‘98 ‘99 ‘00 added Grain’s line of all natural couscous and pilafs, grew in popularity in the specialty ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 Rice 40% properties, the brand’s new flavors, new varieties and packaging innovations U.S. Category Size grains segment. Despite strength in these premium brands, Golden Grain’s 0% 40% $712 $725 1% $693 $690 $590 Million CAGR U.S. Category Size $665 CAGR have kept Quaker oatmeal on the breakfast tables of children and adults alike. $626 17% sales declined 3 percent in 2000, reflecting weakness in the regional Golden 2 $850 Million 40% 70% ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 # 34% $518 $521 In 2000, two new indulgent instant oatmeal flavors were introduced nationally, $693 $712 $725 $690 34% Grain-Mission pasta business. Withstanding this shortfall, operating income $505 $500 $501 $501 $665One-Year Trends: 1% One-Year Trends: 40% as were microwaveable cups of Quaker Instant Oatmeal Express. In addition, $626 and profit margins expanded, as the business adopted a more efficient $712 CAGR $725 $341 34% Sales $693 Volume Category$690 34% Sales Volume 0% Category 10% on a regional basis, Quaker Instant Oatmeal Nutrition for Women was introduced. $665 $305 operating structure. CAGR ‘95 $298 ‘96$626 ‘97 ‘98 $291 ‘99 1% ‘00 Value- ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 10% $285 $269 added -3% -5% This product is fortified with iron, calcium, folic acid and soy protein—nutrients 6% 4% CAGR 4% Pasta 2% $725 1% 3% $690 U.S. Category Size 70% important to today’s health-conscious woman. $665 ‘95 ‘96 $693 ‘97 $712 ‘98 CAGR ‘99 CAGR ‘00 $315 Million $505 $518 $521 $500 $501 $501 70% $626 17% $371 $373 70% CAGR= Compound Average Growth Rate 17% ‘95 $345 ‘96 ‘97 ‘98 ‘99 0%$346 ‘00 36% ‘95 ‘96 ‘97 ‘98 ‘99 1% $341 ‘00 76% $319 $308 CAGR $298 $305 CAGR 17% 70% $285 $291 ‘95 ‘95 ‘96 ‘96 $269 ‘97 ‘97 ‘98 ‘98 ‘99 ‘99 ‘00 ‘00 17% 2% 40% $341 CAGR 40% 3% $371 $373 $298 $305 CAGR $285 $291 $345 $346 ‘95 ‘96 $269 ‘97 ‘98 ‘99 ‘00 $319 $308 $341 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 36% $298 $305 3% 36% $285 $343 $291 $341 $344 CAGR $335 $341 ‘95 ‘96 ‘97 ‘98 ‘99 2%‘00 $324 $316 $269 CAGR 36% 34% ‘95 $298 ‘96 ‘97 ‘98 $305 ‘00 ‘99 $285 $291 76% $269 3% CAGR 76% $371 $373 36% 1% $345 $346 Operations Summary 70% ‘95 ‘96 ‘97 ‘98 ‘99 CAGR $305 3% CAGR $341 ‘00 Our Value Creation Strategy 76% 76% $319 $308 $298 $291 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 70% $285 $269 $215 2%$210 $209 $207 $206 Top-line $203 $343 $341 $344 $335 CAGR ‘95 $324 ‘96 ‘97 ‘98 ‘99 ‘00 3% $316 34% CAGR 34% ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 0% ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 Growth CAGR 17% $343 $344 34% $341 1% $335 $324 $316 $215 CAGR $209 ‘95 $207 ‘96 $206 ‘97 $203 ‘98 ‘99 $210 ‘00 34% ‘95 $324 ‘96 ‘97 $343 ‘98 $341 $344 ‘99 ‘00 $335 Our formula for creating value is simple. We use Category 36% Category Other U.S. and Canadian Foods Annual Sales (Dollars in Millions) 1% $316 0% $344 CAGR Position Share 36% Quaker's smaller but well-established brands, including Aunt Jemima syrups $324 $518 $343 $521 $341 $335 cost savings to help fund innovation and brand ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 CAGR 1 $505 ‘95 ‘96$316 ‘97 $500 ‘98 $501 ‘99 $501 ‘00 1% # 17% 17% and mixes, Quaker grits and Masa Harina tortilla flour and corn meal, are all CAGR building, which in turn drive top-line growth. $215 $209 $207 $206 $203 $210 0% highly profitable leading brands, though in relatively mature categories. In $343 $341 $344 1% CAGR $335 17% $324 Our hunger to constantly improve every element ‘95 $316 ‘96 ‘97 ‘98 ‘99 CAGR ‘00 Syrup 2000, the Aunt Jemima brand enjoyed a 17 percent share of the $560 million ‘95 ‘96 ‘97 ‘98 ‘99 0%‘00 76% 17% syrup category and a 22 percent share of the $310 million pancake mix category. CAGR U.S. Category Size ‘95   ‰

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