Jointly Agreed Growth – driving the JAG This session will examine Jointly Agreed Growth, the new ECR Europe process aimed at changing the commercial relationship. We will hear from companies who are engaged in a three-year growth plan to drive demand and generate profitable, sustainable growth by better satisfying shopper and consumer needs. Speakers: Phil Humphreys (Diageo), Sarah Bradbury (Tesco), Jens Weng (McKinsey&Company), Jean-Albert Nyssens (McKinsey&Company)

1. Jointly Agreed Growth (JAG)
The essence of JAG
JAG Break-out session
May 28th from 11.45 AM to 1 PM
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2. Agenda
Agenda Timing Speakers
Looking back (from 2016) 11:50 - 12:05 • Phil Humphreys (Diageo)
to the Genesis of JAG • Sarah Bradbury (Tesco)
The essence of JAG 12:05 - 12:40 • Jens Weng (McKinsey&Company)
• Jean-Albert Nyssens
(McKinsey&Company)
• Company testimonials
So what's next? 12:40 - 12:45 • Phil Humphreys
• Sarah Bradbury
Q&A 12:45 - 13:00 • Facilitated by McKinsey&Company
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3. Current negotiation model not focused
on shopper
How focused is the current negotiation
model on the consumer and shopper, on
driving demand and generating growth?
Percent of respondents
Not at all 22
Not really 55
A bit 10
Moderately 8
Heavily 4
Source: ECR Europe Conference 2

4. What’s ‘new’ about JAG?
JAG is …
• … a shopper and consumer-centric
approach aimed at improving category offer
• … a business plan to drive consumer
demand and generate sales growth for
both retailer and supplier
• … a three-year rolling business plan with
annual reviews
• … a fact-based approach changing buyers’
and sellers’ mindsets , behaviours and
approach to negotiation
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5. Partners need to overcome some
barriers to growth
Trade barriers Jointly Agreed Growth (JAG)
Lack of strategic alignment A Jointly Agreed Growth strategy
Lack of long-term visibility / focus A 3-year framework plan
Fear of private label match impeding An agreed category strategy and set of
product introduction principles
Slow distribution of new products / Long-term integrated process avoiding
general availability issues supply chain disruption
A set of agreed pre-defined growth
Lack of KPIs to measure effective
criteria, balancing financial, marketing
return
and operational KPIs
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6. JAG actions drive win-win-win growth through
genuine innovation
Transaction
Traffic Frequency
size
Example Olympic game Reduce cycle time Premium
promotion for toothbrush smoothies versus
traditional juices
Benefits
• Consumer • Opportunity to • Improved dental • Healthier
win ticket to health lifestyle
Shanghai
• Retailer • Increased traffic • Increased sales • Increased
basket size
• Supplier • Increased sales • Increased sales • Increased sales
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7. The JAG process
Step 1
Review the economic and Step 2
shopper environment Review sales
and agree on
prioritized
growth levers
Step 5 Conditions
Monitor for
and adapt success Step 3
Define and
agree on
3-year
Step 4
JAG
Execute the
plan
JAG plan
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8. The JAG process – Step 1
Objectives
Step 1
Review the economic and Step 2 • Develop common
shopper environment Review sales
and agree on
understanding on
prioritized
growth levers
overall context for
Step 5 growth
Monitor and Conditions
adapt for success Step 3
Define and
• Build rationales to
agree on 3- justify growth targets
year JAG
Step 4 plan
Execute the
JAG plan
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9. The JAG process – Step 2
Objectives
• Diagnose category
Step 1
Step 2
dynamics
Review the economic and
shopper environment Review sales
and agree on
• Understand where
prioritized incremental growth
growth levers
Step 5
comes from
Conditions
Monitor and
adapt for success Step 3 • Select, estimate
Define and
agree on 3-
potential financial
year JAG impact and prioritize
Step 4 plan
Execute the growth levers for the
JAG plan category
• Draft action plan for
priority levers
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10. The JAG process – Step 3
Objectives
Step 1
• Finalize JAG plan by
Review the economic and Step 2 agreeing on:
shopper environment Review sales
and agree on
prioritized –Sales uplift
growth levers
Step 5
–Investments
Conditions
Monitor and
adapt for success Step 3
allocation
Define and
agree on 3- –Activities
year JAG
Step 4 plan –Key performance
Execute the
JAG plan indicators (KPI) and
JAG plan
monitoring
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11. The JAG process – Step 4
Objectives
Step 1
• Ensure alignment on
Review the economic and Step 2 JAG plan
shopper environment Review sales
and agree on
prioritized • Develop clear
growth levers
implementation plan
Step 5
Monitor and Conditions that ensures a fluent
adapt for success Step 3
Define and progress of
agree on 3-
year JAG execution
Step 4 plan
Execute the
JAG plan
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12. The JAG process – Step 5
Objectives
Step 1
• Ensure realization of
Review the economic and Step 2 targets of JAG
shopper environment Review sales
and agree on collaboration:
prioritized
growth levers
–Review project
Step 5
Monitor and Conditions plans and monitor
adapt for success Step 3
Define and progress
agree on 3-
year JAG –Evaluate overall
Step 4 plan
Execute the collaboration
JAG plan
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13. Conditions for success
Jointly Agreed Growth Agreement
Trust between collaboration partners
Sufficient and quality resources
Information sharing
People performance review
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14. The JAG journey continues …
Next steps
• Launch pilots
• Refine JAG manual based on
experience from pilots
• Develop JAG training program with ICI
• Further integrate ECR practices to
address all growth levers
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15. Pilots are currently being finalized
Who? Where? What category?
• UK • Healthcare
• Eastern Europe • Spirits
• Poland • Coffee or
confectionary (TBD)
• The Netherlands • Cosmetics
• UK • Skincare
• France, Spain & Italy • Household items
Many other
pilots are still
under
discussion
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16. Toolkit of templates available for participating
companies
Achieved Forecast
Growth (%) n-4 n-3 n-2 n-1 n n+1 n+2 n+3
GDP
Private Consumption
- Food
Investments/Budget (Value - - Beverages
Year n+1 Year n+2… N° of Stores Weighted Distribution
Responsible financial or not, e.g., GRPs) - Personal care
Activities to support growth - Household
Actions 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 n+1 n+2 n+3 n+1 n+2 n+3 n+1 n+2 n+3 Out of home food and beverages
Assortment / Planogram Household disposable income
Population
Action 1
Inflation
Action 2 Household savings ratio
Action 3 Value growth (%) n-4 n-3 n-2 n-1 n n+1 n+2 n+3
Product innovation Hypermarkets
Action 1 Supermarkets
Convenience
Action 2
Discount
Action 3
Drugstores
In-store activation/ Promotions Total
Action 1 Region value share (%)
Agreement on Growth Strategy and its relevant n-4 targets
n-3 n-2 n-1 n n+1 n+2 n+3
Action 2 Region 1
Action 3 Region 2
Region 3 Achieved Current Plan
On-shelf availability
Region 4 n-2 n-1 n, YTD Year n n+1 n+2 n+3
Action 1 Region 5
Action 2 Population segmentation (No.
SALES TURNOVER FOR SUPPLIER BRANDS IN CATEGORY (sell-out from retailer) n-4 n-3 n-2 n-1 n n+1 n+2 n+3
Action 3 Of households)
Current Assortment (Total all growth activities to support sales)
TOTAL 1 member household
Linear growth (market/consumption growth rate), no specific initiativeshousehold
2 members
Manufacturer In-store activities (displays, features, in store media…) 3 members household
Retailer
Account Manager Buyer Price/ discounts 4 or more members household
Director Director Assortment Extension Grocery shopping behavior n-4 n-3 n-2 n-1 n n+1 n+2 n+3
VP VP - Existing products not previously listed at retailer (listed on market) of facia visited/year
Average No.
- New products (to be launched) Only shop at one retailer (%)
Total (Current Assortment + Assortment Extension) Shop at 2 fascia
Shop at 3 fascia
GROWTH RATE (%) Shop at 4 fascia
Sales of Supplier brands in Category at retailer Shop at 5+ fascia
Retailer Category Sales nationwide
INVESTMENTS (Marketing, Trade, etc…) in VALUE
Manufacturer
Retailer
KPI Unit Year n-1 Year n Year n Year n+1 Year n+2 Year n+3 Do we use this KPI? Report frequency Source
(Yes/No)
LOGISTICS
Financial KPIs YTD Target Target Target Target
Inventory Turnover
Category sales - Volume units Annual Turns
Category sales - Value Euro Inventory Level (N° of Days)
Category Growth - Volume % Service level
Category Growth - Value %
Financial KPIs Market share of category at retailer %
Market share of supplier in category % DISTRIBUTION
Sales per store Units Number of Channels
Sales per sqm Euro Number of Stores
Incremental supplier sales EUR Sales Weighted Distribution
Consumer / Shopper KPIs
SHOPPER METRICS
Penetration % Penetration
New category shoppers % Frequency
Purchase frequency define time Loyalty
Repeat Purchase %
Consumer / Shopper KPIs
Loyalty %
Shopper Satisfation (activity) %
Shopper Awareness (activity) % Manufacturer Retailer
Average transaction size Euro
Account Manager Buyer
Director Director
Operational KPIs
VP VP
The ECR Europe Essential Guide to Day to Day Category Management (Appendix 5)
lists a set of consumer, market, financial and productivity measures with the data source origin and the recommended report frequency
http://www.ecrnet.org/04-publications/blue_books/pub_2000_essential_guide_daytoday_catman.pdf
Assortment / Planogram
Product innovation
In-store activation/
Promotions
On-shelf availability
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17. For further information…
• Marianne Dehousse, marianne.dehousse@ecreurope.com
ECR Europe
• Phil Humphreys, phil.humphreys@diageo.com
Diageo
• Sarah Bradbury, sarah.bradbury@uk.tesco.com
Tesco
• Jens Weng, jens_weng@mckinsey.com
McKinsey&Company
• Jean-Albert Nyssens, Jean-albert_nyssens@mckinsey.com
McKinsey&Company
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18. Acknowledgements
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