Shelf-Ready Packaging:
  the Balancing Act
   Breakout 4.4 ECR Forum
   Berlin Thursday 29 May
The SRP balancing act

           SRP



Social    Econo-    Environ
           mic      -mental
Structure
09.30   Opening             Xavier Hua, Carrefour, and
                            Bernard Fradin, Kraft Europe
...
Reminder: What has ECR Europe
          delivered so far?

            January 2007                       July 2007
      ...
Several tools were developed to support
the business case methodology and
collaborative engagements

                     ...
Use of SRP is spreading
across major retailers
across Europe
Estimate of sales in SRP

      Baltics                            5-10 % all categories

                                ...
Currently SRP still gives rise to some
                issues – sustainability can only be
                attained throug...
Structure
09.30   Opening             Xavier Hua, Carrefour, and
                            Bernard Fradin, Kraft Europe
...
Structure
09.30   Opening            Xavier Hua, Carrefour, and
                           Bernard Fradin, Kraft Europe

0...
The Social Effect of SRP




Anna Zolotarjova,
Supply Chain & Logistics Development Manager, Rimi Baltic
                 ...
Labour market drivers of SRP
vary across Europe
                               For new EU member
                         ...
SRP helps address the social
challenge faced in store
 • Stores are regularly short of                 Unemployment rate f...
SRP’s social role is not
limited to store employees
 SRP helps to improve
 the shopping experience
  – Consumers demand fo...
RIMI Baltic is making it easier for
staff and shoppers through SRP

 By collaborating
 • Developing Category SRP Roadmaps ...
RIMI Baltic is making it easier for
staff and shoppers through SRP

 By using SRP in stores
 • Educating store employees o...
RIMI Baltic is making it easier for
staff and shoppers through SRP

 By using SRP in stores
 • Educating store employees o...
Structure
09.30   Opening            Xavier Hua, Carrefour, and
                           Bernard Fradin, Kraft Europe

0...
ADVISORY




                                        “The Italian Scenario”




                                          ...
Agenda



  • Italian context

  • Italian pilots

  • A direct experience: selex & kraft

  • Our first results



   ECR...
Italian Project objectives

• Diffuse the SRP experiences deriving from ECR
  Europe model


• Define a collaborative proc...
ECR Italy SRP Project Team




                                                                               XForma




 ...
SRP Development in Italy



                                                                                              ...
SRP Italian Survey 2007: starting point

        Long-List möglicher Fondsgesellschaften
1           Limited diffusion of ...
SRP Italian Survey 2008: one year after

        Long-List möglicher Fondsgesellschaften
1           Confirmed trend of SR...
Italian peculiarities in the ECR Europe SRP
Model

• Overall adherence to the ECR Europe model

• Collaborative approach a...
ECR Italy SRP Pilots

                     SRP complete solution developed
                     in Italy

                ...
ECR Italy SRP Pilots
                                                                   Shelf tray                        ...
A direct experience:
SELEX & KRAFT a successful
      balanced case



 ECR                  Ita lia                      ...
Click to edit Master title style


Shelf Ready Packaging
The Balancing Act
A successful experience

Economic Pillar
      ...
THEClick to edit Master
   BALANCING ACT                  title style



   Develop a WIN WIN WIN
solution in order to und...
Click
AGENDA    to edit Master title style

      Kraft and Selex business
      Category & Shelf analyses
      Project m...
WHO IS KRAFTedit Master
    Click to IN ITALY?               title style
  Helping People Around the World Eat and Live Be...
AND... WHOto SELEX ?
   Click IS edit Master        title style


       2007 Turnover € 7,400 MM;
       Market share 7.7...
Click to edit Master title style
     WHY MAYONNAISE
       CATEGORY?




                                   35
Click to edit Master title
WHY MAYONNAISE CATEGORY?              style
  Low category visibility and appeal in the aisle
 ...
Click to edit Master title
WHY MAYONNAISE CATEGORY?                   style
  Long replenishment time / High risk of break...
Click to edit Master title
WHY MAYONNAISE CATEGORY?                   style
  Difficult identification of brands / variant...
Click to edit Master title
WHY MAYONNAISE CATEGORY?                 style
  Risk of sales loss when the shelf is half empt...
Click to edit Master title style
SITUATION ANALYSIS – CURRENT TRAY

                     # Jars           15
             ...
Click to edit Master title style
SITUATION ANALYSES – CURRENT TRAY
 Reasons of not usage of current tray



              ...
Click to edit Master
PROJECT OBJECTIVES                 title style
          Increase category/brand turn-over
          ...
STRUCTURE OF THEMaster title
   Click to edit PROJECT                 style

              AREAS OF       NEW SRP
        ...
Click to edit Master
CONTROLLED STORE TEST       title style
         Alì Point of sales (Selex)




                     ...
Click to edit Master title style
STRUCTURE OF THE PROJECT
Three different store-formats
  Supermarkets (1000 sm);
  Large ...
Click to edit Master title style




                                   46
Click to edit Master title style
QUALITATIVE & QUANTITATIVE RESULTS




                                     47
Click to edit Master title style
SHOPPER PERSPECTIVE - QUALITATIVE
 In-store questionnaire results
   Brand/Category more ...
Click to edit Master title
TRADE EMPLOYEE PERSPECTIVE            style
    Easier to identify     Easier to replenish




...
Click to edit Master title
TRADE EMPLOYEE PERSPECTIVE            style
Quantitative results - timing

  Pre sorting identi...
Click to edit Master title style
MAIN RESULTS - QUANTITATIVE

 Project resulted economically positive!!!!


              ...
Click to
NEXT STEPS     edit Master title style
  Evaluation of further improvements on SRP

  Roll-out on national scale
...
Click to edit Master title style
THE BALANCING ACT

       A successful story!!
     A WIN WIN WIN
    solution for all !!...
Structure
09.30   Opening            Xavier Hua, Carrefour, and
                           Bernard Fradin, Kraft Europe

0...
Have you ever stopped purchasing food and grocery
    products as a result of any of the following?
                      ...
Retailers’ commitment
     to reduction – in UK

     Courtauld Commitment

     • Aims:

          – Design out packaging...
Packaging protects far more resources than it uses
Energy use in the food chain




                                      ...
Packaging                          Primary                  Secondary            Tertiary
   Lifecycle &
   Secondary     ...
Examples of SRP and packaging reduction




Source: IGD Research                         © IGD
New shipper case is more efficient and environmentally friendly
                                      USA / Macaroni & Che...
Germany / Central Europe Jacobs Coffee SRP tray
facilitates in store handling with minimal outer packaging waste




Corru...
Structure
09.30   Opening            Xavier Hua, Carrefour, and
                           Bernard Fradin, Kraft Europe

0...
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ECR Europe Forum '08. Shelf-ready packaging: the balancing act

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Shelf-ready packaging: the balancing act

The demands on product packaging keep growing. Not only is it required to be shelf-ready and satisfy shoppers, it is increasingly being asked to address a range of sustainability issues – environmental and social as well as economic. This requires a delicate balancing act. In this session leading retailers and suppliers will weigh up the issues and tell us how they are striking the packaging balance.

Speakers: Xavier Hua, Carrefour; Bernard Fradin, Kraft Foods.

Facilitated by ECR Italy and ECR UK.

Published in: Business
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ECR Europe Forum '08. Shelf-ready packaging: the balancing act

  1. 1. Shelf-Ready Packaging: the Balancing Act Breakout 4.4 ECR Forum Berlin Thursday 29 May
  2. 2. The SRP balancing act SRP Social Econo- Environ mic -mental
  3. 3. Structure 09.30 Opening Xavier Hua, Carrefour, and Bernard Fradin, Kraft Europe 09.40 Social Pillar ECR Baltic 09.50 Economic Pillar ECR Italy 10.15 Environment Pillar ECR UK 10.25 Questions to panel of speakers 10.45 Refreshments
  4. 4. Reminder: What has ECR Europe delivered so far? January 2007 July 2007 SRP Blue book SRP business case pilot Guidelines for a collaborative Testing the business case approach to SRP, based on a joint approach for the hair and body business case assessment wash category
  5. 5. Several tools were developed to support the business case methodology and collaborative engagements Business Case Solution Assessment & In-Store Audit High Level Prioritisation Illustrative SRP Solution Assessment ** 10% Medium High Case Count (or Focus Facings) 20% Area Volume 10% 50% Low Medium 10% Shopper Benefit Store Channel / Opportunity Format / Size Business Case Evaluation Store Audit & Checklists ** Adapted from ECR UK RRP Tool
  6. 6. Use of SRP is spreading across major retailers across Europe
  7. 7. Estimate of sales in SRP Baltics 5-10 % all categories 20% private labels France 5% national brands 37% all categories Germany 42 % food 22 % non-food Netherlands < 10% of all SKU Spain 20 - 35 % Tesco: 22,000 lines Asda: 23,000 mainly food lines UK Sainsbury's: All ambient, food, grocery and chilled categories Numbers not available for other markets via ECR organisations
  8. 8. Currently SRP still gives rise to some issues – sustainability can only be attained through a balanced approach ☺ SRP can… SRP can also… • Make shelf replenishment and shopping • Be perceived as labour reduction policy easier • Make shopping more difficult if not well Social designed • Improve shop floor operations • Add costs to supply chain Economic • Improve sales • Make shop floor operations more difficult if no proper design and training of staff • Destabilise pallet loads if not strong enough • Reduce need for primary packaging as it • Lead to higher perceived volumes of Environmental stabilises the product packaging on shelf • Add packaging in the supply chain
  9. 9. Structure 09.30 Opening Xavier Hua, Carrefour, and Bernard Fradin, Kraft Europe 09.40 Social Pillar ECR Baltic 09.50 Economic Pillar ECR Italy 10.15 Environment Pillar ECR UK 10.25 Questions to panel of speakers 10.45 Refreshments
  10. 10. Structure 09.30 Opening Xavier Hua, Carrefour, and Bernard Fradin, Kraft Europe 09.40 Social Pillar ECR Baltic 09.50 Economic Pillar ECR Italy 10.15 Environment Pillar ECR UK 10.25 Questions to panel of speakers 10.45 Refreshments 10
  11. 11. The Social Effect of SRP Anna Zolotarjova, Supply Chain & Logistics Development Manager, Rimi Baltic 11
  12. 12. Labour market drivers of SRP vary across Europe For new EU member states, SRP is largely being driven by labour market conditions – GDP year-on-year growth in 2007 up to 11% in Latvia – Lowest level of unemployment 3.2% in Lithuania – Negative migration index up to -0.3% in Estonia – Population decline up to -0.65% in Latvia 12
  13. 13. SRP helps address the social challenge faced in store • Stores are regularly short of Unemployment rate falls Unemployed as % of workforce planned employees by ≥6%, 16 • Store staff turnover is 14 reaching critical rates 12 • Number of overtime hours 10 in RIMI stores exceeded 8 500,000 in 2007 6 • 87% of employees doing 4 the work in store are women 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Estonia Latvia Lithuania • Hard working conditions is a top reason for store employees to leave SRP is an imperative to improve working conditions in grocery retail 13
  14. 14. SRP’s social role is not limited to store employees SRP helps to improve the shopping experience – Consumers demand for convenience, choice and availability – Sucessful SRP solutions increase brand visibility and add structure to the shelf, thus making it easier for shoppers to navigate – SRP is a solution to secure on shelf availability in the prevailing labour market conditions 14
  15. 15. RIMI Baltic is making it easier for staff and shoppers through SRP By collaborating • Developing Category SRP Roadmaps and fit-for-purpose solutions together through in-store SRP training sessions for suppliers facilitated by IGD • Carefully evaluating category needs for SRP – priorities – main issues – best practice solutions • Showing example with private lable products • Sharing retailer’s understanding and outlining main priorities through SRP manual 15
  16. 16. RIMI Baltic is making it easier for staff and shoppers through SRP By using SRP in stores • Educating store employees on how to recognise and treat SRP • Focusing common efforts of – Category Management – Operations – Supply Chain on in-store implementation of SRP 16
  17. 17. RIMI Baltic is making it easier for staff and shoppers through SRP By using SRP in stores • Educating store employees on how to recognise and treat SRP • Focusing common efforts of – Category Management – Operations – Supply Chain on in-store implementation of SRP 17
  18. 18. Structure 09.30 Opening Xavier Hua, Carrefour, and Bernard Fradin, Kraft Europe 09.40 Social Pillar ECR Baltic 09.50 Economic Pillar ECR Italy 10.15 Environment Pillar ECR UK 10.25 Questions to panel of speakers 10.45 Refreshments 18
  19. 19. ADVISORY “The Italian Scenario” Berlin, 29th MAY 2008 ECR Ita lia Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  20. 20. Agenda • Italian context • Italian pilots • A direct experience: selex & kraft • Our first results ECR Ita lia 20 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  21. 21. Italian Project objectives • Diffuse the SRP experiences deriving from ECR Europe model • Define a collaborative process for the development of SRP solutions • Identify tools in order to support SRP solutions’ development ECR Ita lia 21 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  22. 22. ECR Italy SRP Project Team XForma ECR Ita lia 22 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  23. 23. SRP Development in Italy Deve- Theory Research lopment Test Diffusion ECR State of the Italian Business SRP model Art peculiarities Case implementation diffusion ECR Ita lia 23 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  24. 24. SRP Italian Survey 2007: starting point Long-List möglicher Fondsgesellschaften 1 Limited diffusion of SRP solutions Long-Listof common standards and Lack möglicher Fondsgesellschaften supply chain 2 costs as main SRP barriers Long-Listto identifyFondsgesellschaften Easy möglicher and to shelf as most important 3 functional SRP requisites 4 In-store efficiency / better on shelf availability as SRP benefits: more on the Retail side… ECR Ita lia 24 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  25. 25. SRP Italian Survey 2008: one year after Long-List möglicher Fondsgesellschaften 1 Confirmed trend of SRP expansion Long-List möglicher Fondsgesellschaften 2 Potential common standards difficult to apply Potentia Long-List möglicher or 2 priorities in functional Adoption of 1 Fondsgesellschaften 3 requisites 4 Better brand recognition: significant SRP benefit also on the Manufacturer side… ECR Ita lia 25 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  26. 26. Italian peculiarities in the ECR Europe SRP Model • Overall adherence to the ECR Europe model • Collaborative approach as essential: SRP must not be essential a retailer’s push only… • Waste management as issue but still worthy effort: effort - Limit different materials in the same SRP solution - Adopt solutions in which materials can be easily separated - Reduce primary package where possible ECR Ita lia 26 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  27. 27. ECR Italy SRP Pilots SRP complete solution developed in Italy Implementation of solutions Pilot impact already tested abroad Already on going SRP solutions New concept development M1 M2 M3 M4 M5 M6 … Time ECR Ita lia 27 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  28. 28. ECR Italy SRP Pilots Shelf tray SRP Type Ready to sell pallet Pilot Mono Multi impact High Low Channel Beverage Auchan - CocaCola Carrefour - P&G Grocery non food Esselunga - Mars Italia Selex - Kraft Grocery food ECR Ita lia Efficient Consumer Response Category 28 © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  29. 29. A direct experience: SELEX & KRAFT a successful balanced case ECR Ita lia 29 Efficient Consumer Response © 2008 KPMG Advisory S.p.A., an Italian limited liability share capital company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
  30. 30. Click to edit Master title style Shelf Ready Packaging The Balancing Act A successful experience Economic Pillar Berlin, May 29th 2008
  31. 31. THEClick to edit Master BALANCING ACT title style Develop a WIN WIN WIN solution in order to understand how to build and maintain a balance among the overall involved factors 31
  32. 32. Click AGENDA to edit Master title style Kraft and Selex business Category & Shelf analyses Project milestones Test results Next steps 32
  33. 33. WHO IS KRAFTedit Master Click to IN ITALY? title style Helping People Around the World Eat and Live Better Turnover € 626MM 990 people 3 plants More than 12 brands 33 ti 2006
  34. 34. AND... WHOto SELEX ? Click IS edit Master title style 2007 Turnover € 7,400 MM; Market share 7.7%; 18 associated groups; Associated firm leading the project is Ali in north east Italy 34
  35. 35. Click to edit Master title style WHY MAYONNAISE CATEGORY? 35
  36. 36. Click to edit Master title WHY MAYONNAISE CATEGORY? style Low category visibility and appeal in the aisle Limited / No presence of SRP for mayonnaise jars 36
  37. 37. Click to edit Master title WHY MAYONNAISE CATEGORY? style Long replenishment time / High risk of breakages Difficult to handle in the store, especially 500ml jar 30” for 15 glass jars 37
  38. 38. Click to edit Master title WHY MAYONNAISE CATEGORY? style Difficult identification of brands / variants on shelf 38
  39. 39. Click to edit Master title WHY MAYONNAISE CATEGORY? style Risk of sales loss when the shelf is half emptied 39
  40. 40. Click to edit Master title style SITUATION ANALYSIS – CURRENT TRAY # Jars 15 # Facings 3x5 Dimensions 26 x 44 cm Logistic info on pack 2 materials: carton + plastic Only 10% of clients use current tray on shelf 40
  41. 41. Click to edit Master title style SITUATION ANALYSES – CURRENT TRAY Reasons of not usage of current tray Difficult handling Low appeal / 28% good looking 44% Carton cover brand labels 28% 41
  42. 42. Click to edit Master PROJECT OBJECTIVES title style Increase category/brand turn-over Improve category image & visibility Increase shelf density Improve identification Use SRP as POS outer case in“back store” communication vehicle Reduce Effectiveness & efficiency replenishment time of packaging cost 42
  43. 43. STRUCTURE OF THEMaster title Click to edit PROJECT style AREAS OF NEW SRP IMPROVEMENT Jar 500ml COLOURED GRAPHIC ٧ LABELS’ VISIBILITY ٧ NEW CARTON MATERIAL ٧ 100% CARTON NO (Plastic ensures jars (one material) transportation) 43
  44. 44. Click to edit Master CONTROLLED STORE TEST title style Alì Point of sales (Selex) 44
  45. 45. Click to edit Master title style STRUCTURE OF THE PROJECT Three different store-formats Supermarkets (1000 sm); Large supermarkets (1600 sm); Hypermarkets (2800 sm); Weekly monitoring of data Sales Replenishment timing # of jars / facing on shelf Shelf density 45
  46. 46. Click to edit Master title style 46
  47. 47. Click to edit Master title style QUALITATIVE & QUANTITATIVE RESULTS 47
  48. 48. Click to edit Master title style SHOPPER PERSPECTIVE - QUALITATIVE In-store questionnaire results Brand/Category more visible 72% It contributes to make shelf tidier 68% I Like it! 65% 48
  49. 49. Click to edit Master title TRADE EMPLOYEE PERSPECTIVE style Easier to identify Easier to replenish Reduces breackages risk 49
  50. 50. Click to edit Master title TRADE EMPLOYEE PERSPECTIVE style Quantitative results - timing Pre sorting identification -80% Back store identification -45% Replenishment -82% 50
  51. 51. Click to edit Master title style MAIN RESULTS - QUANTITATIVE Project resulted economically positive!!!! Sales Turnover +4% Packaging costs Net impact Positive 51
  52. 52. Click to NEXT STEPS edit Master title style Evaluation of further improvements on SRP Roll-out on national scale Opportunity of SRP implementation on: other sizes (250ml jar) & variants (Legeresse...) Use SRP to communicate new news to consumer 52
  53. 53. Click to edit Master title style THE BALANCING ACT A successful story!! A WIN WIN WIN solution for all !!! Kraft Selex and final shopper !!! 53
  54. 54. Structure 09.30 Opening Xavier Hua, Carrefour, and Bernard Fradin, Kraft Europe 09.40 Social Pillar ECR Baltic 09.50 Economic Pillar ECR Italy 10.15 Environment Pillar ECR UK 10.25 Questions to panel of speakers 10.45 Refreshments 54
  55. 55. Have you ever stopped purchasing food and grocery products as a result of any of the following? % Main Shoppers Not stopped purchasing for any of these reasons 28 Learning more about how food is produced in a TV documentary 35 News stories about food scares (e.g. bird flu, foot and mouth) 35 Too much packaging 28 Hearing or reading about a company that 27 made you question their ethics / values Discovering from food labelling that products have 17 ingredients you or a member of your family are allergic to Hearing or reading about the government / politicians of the country 15 which made you question supporting products from a particular country Hearing or reading about a logo (e.g. organic or 11 fair-trade) that made you question the claims made 0 20 40 Source: IGD Shopper Research 2007 © IGD
  56. 56. Retailers’ commitment to reduction – in UK Courtauld Commitment • Aims: – Design out packaging waste growth by 2008 – Deliver absolute reductions in packaging waste by 2010 Source: The Brewery © IGD
  57. 57. Packaging protects far more resources than it uses Energy use in the food chain 10 9 (GJ / Person / Year) 8 7 6 5 4 3 2 1 Food supply Primary Secondary Factory to Retailing Consumer Consumer Consumer (farm / sea as packaging & transport shop shopping cooling / cooking prepared food packaging transport freezing leaving the factory) 49% 7% 3% 3% 3% 5% 16% 14% Industry Council for Packaging & the Environment © IGD
  58. 58. Packaging Primary Secondary Tertiary Lifecycle & Secondary Extraction Manufacture Filling Packaging Compost Reuse Return / Recycle Distribution Incineration or Landfill Retail Home Secondary packaging design can have a major influence on the reduction of overall packaging and waste Source: IGD Research © IGD
  59. 59. Examples of SRP and packaging reduction Source: IGD Research © IGD
  60. 60. New shipper case is more efficient and environmentally friendly USA / Macaroni & Cheese 2007 2008 Count: 48 cartons Count: 35 cartons Pack: 6 across X 8 deep Pack: 5 across X 7 deep Pallet Configuration: 8 cases/layer; Pallet Configuration: 9 cases/layer; 80 cases/pallet 90 cases/pallet Benefits Easy open / Less labor Printed case Reduces corrugate Eliminate overhang Reduced case count by 20% © IGD
  61. 61. Germany / Central Europe Jacobs Coffee SRP tray facilitates in store handling with minimal outer packaging waste Corrugate tray – No hood – No wrap © IGD
  62. 62. Structure 09.30 Opening Xavier Hua, Carrefour, and Bernard Fradin, Kraft Europe 09.40 Social Pillar ECR Baltic 09.50 Economic Pillar ECR Italy 10.15 Environment Pillar ECR UK 10.25 Questions to panel of speakers 10.45 Refreshments 62

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