1. RUSSIA
TINE BA, OSLO, NORWAY
15 OCTOBER 2010

2. AGENDA
INTRODUCTION
1. Arla Foods Artis llc background
2. Cheese & Retail market in Russia
TINE development 2006-2010
3. TINE sales overview
4. Jarlsberg & Snofrisk historical growth
JARLSBERG GLOBAL MARKETING STRATEGY
5. Marketing strategy in Russia
6. “Secret Recipe from Norway” adaptation on Russian market
Sources :
1. ACNielsen database (Moscow & St-Petersburg)
2. RosBusinessConsulting Retail research-2010 2
3 InfoLine reseach “Cheese market in Russia – 2009”

3. ARLA FOOD ARTIS LLC
Multi brand strong Product Portfolio
z
Professional expertise both in HoReCa & Retail
3

4. TODAY AFA IS
 Murmansk
 St-Petersburg
 Moscow  Petrozavodsk
 Nizhny Novgorod
 Rostov-on-Don  Samara z Petropavlovsk-
Kamchatsky
 Yekaterinburg
Krasnodar
 Chelyabinsk  Tumen
 Astrakhan  Omsk  Krasnoyarsk
 Novosibirsk  Habarovsk
Irkutsk
 Vladivostok
• Distribution in all cities with population more
• More than 17-years experienced team
than 1 mln. people
• 1 of the TOP-5 branded cheese importer in
• Head office in St-Petersburg, full scale subsidiary
Russia
in Moscow, 5 offices in key region cities
4

5. CHEESE MARKET
• Population = 142 million
• Consumption per capita = 4,74 kg (+3% to 2009)
• Cheese market 2010 (F) = 674 ths. tons (+3% to
2009)
• Local Production vs. Import – 2009 :
8%
z
8% Import share is tent to increase in 2010
4%
66%
12% Ukrain
Germany
1% Lithuania
Outher Countries
Premium Yellow Cheese Other Countries
Local Production
* Source 3 + Custom Statistic 5

6. RUSSIA IS A BIG COUNTRY …
…WITH A LOT OF REGIONAL DIFFERENCES
• Markets are different...
• Moscow major channel is supermarkets
• St.Petersburg major channel is hypermarkets and discounters
z
• Though modern retail formats develop very fast in Russia, in a lot of Regional centers
traditional trade/independent shops still dominate
• St.Petersburg and Regional sales are much more dependent on trade promotions with
deep discounts than Moscow
• Cheese consumption culture is weakly developed, but we see positive development in
Moscow & St-Petersburg
• In each city competitive situation and market leaders are different
6

7. RETAIL MARKET
1H 2009 2H 2009 – 1H 2010
• Consumers panic from economic crisis • More confident consumers, especially in
Moscow
• Major trend – back to basic consumption
• Major trend – slowly back to pre-crisis
• Retailers and distributors faced huge consumer behavior
problems with liquidity
z • Payments from retailers and distributors
• Focus on low-end cheese and deep under control
discounts
• Chains announced interest in high-end
• FMCG premium segment development = cheese again
– 11-15% (Vol)
• Overall less trade campaigns with deep
discounts
• FMCG premium segment development =
+10 +12 % (Vol)
7

8. TOP-10 RETAIL CHAINS 2009/2010
Share in total food
Main TINE POS quantity Rate of Turnover $ mlrd Rate of
Rank Chain retail
format presence growth growth
2009 2010 2009 2010 (F) 2009 2010
S.market
Perekrestok
X5 Retail Discount
1 1372 1630 19 % 8.67 11.4 32 % 4 % 5 %
Group Pyaterochka
Hypermarket
Karusel
Hypermarket
2 AUCHAN supermarket
38 48 26 % 6.62 7.6 15 % 3 % 3 %
3 MAGNIT Discounter,
hypermarket
3 228 3 693 z 14% 5,35 7,0 31 % 3 % 3 %
4 METRO cash&carry 52 58 12% 3,61 3,8 5 % 2 % 2 %
5 OKEY supermarket 46 52 13% 2,11 2,3 9 % 1 % 1 %
cash&carry
6 LENTA hypermarket 36 37 3% 1,75 1,9 9 % 1 % 1 %
7 KOPEIKA Hard discounter 586 591 1% 1,79 1,9 6 % 1 % 1 %
8 DIXI Hard discounter 537 590 10% 1,71 3,0 75 % 1 % 1 %
7 multiformat,
9 discounters 208 208 0,5% 1,04 1,2 3 % 1 % 0.5 %
KONTINENT
10 VIKTORIA multiformat, 208 208 0,5% 1,04 1,2 1 % 0.5 %
TOTAL 6 245 7 050 13% 34,2 42 22% 17,5% 18,8%
The leading X5 Retail Group takes only 5% in total food retail!
8
But Consolidation process runs quite fast.Top-10 retail chains take 19% vs 11% in 2007

9. TINE
HISTORICAL DEVELOPMENT
IN RUSSIA

10. IN THE BEGINNING …
RUSSIA 2005 - 2006
z
•5th of May 2005 – TINE first delivery
•2006 Artis-Distribution became an exclusive distributor of
TINE in RUSSIA from 2007 TINE Sales
10

11. IN THE BEGINNING …
RUSSIA 2005 - 2006
400 tons
300 tons
z 200 tons
315 tons
100 tons
13.2 tons
•5th of May 2005 – TINE first delivery
2005
2010 0 tons
•2006 Artis-Distribution became an exclusive distributor of
TINE in RUSSIA from 2007 TINE Sales
10

12. TINE HISTORICAL DEVELOPMENT
2005 - 2011
1,000 tons
Our Forecast‘2010 = 455 tons
750 tons
+10% z
+13%
+30% 1,000 500 tons
+66%
+112%
318.2 414.7 433 515
13.2 90 191.4 250 tons
2005 2006
2007 2008
2009
2010 budget 0 tons
2011 (Est.)
2015
ARTIS Snofrisk #1 brand in Final adaptation of
TINE 1st delivery to Expansion in Full-scale BTL- 1st Jarlsberg ATL
- exclusive TINE Fresh Goat Market “Secret recipe from
Russia Regions campaign campaign
distributor Segment in Russia Norway”
11

13. CHEESE MARKET
2008,YTD 2010,YTD
6% 11%
7% 38%
9% 4%
28% OUR KEY BRANDS 15%
22%
z 17%
20%
23%
Jarlsberg wheel, 48 tons Jarlsberg wheel, 82 tons
Jarlsberg light, 40 tons Other Jarlsberg, 34 tons
Other Jarlsberg, 38 tons Jarlsberg light, 45 tons
Snofrisk fresh, 16 tons Snofrisk fresh , 31,4 tons
Snofrisk hard, 10 tons Snofrisk hard,8,4 tons
Others, 19 tons Others, 13,2 tons
JARLSBERG WHEEL share increased from 29% to 37%
12

14. JARLSBERG COMPETITION ARENA
• Competition arena-2010 is taughter than 2009, when competitors didn’t have clear policy and strong support.
• Jarlsberg main competitors have more aggressive price-fighting policy this year (President, Frico)…
…as well as NPD & product line extension (President)
z
13

15. BRAND FOCUS
SALES 2006-2011, VOL.
400 tons
300 tons
z
389.6 200 tons
322.6 325.8
238.7
132.4
63.8 100 tons
2006 2007
2008
2009
2010 (B) 0 tons
2011 (F)
14

16. JARLSBERG SALES VS. COMPETITORS,
AC NIELSEN*, VOL.
Jarlsberg
President Maasdam/Lactalis
President Madrigal/Lactalis
President Emmental/Lactalis 460
Maasdam/Frico
Fol Epi/Bongrain
409
358
307
tons
256
z
204
153
102
51
0
DJ 2009
FM 2009
AM 2009
JJ 2009
AS 2009
ON 2009
DJ 2010
FM 2010
AM 2010
JJ 2010
* Source 1 (AC Nielsen / St-Petersburg and Moscow) 15

17. JARLSBERG SALES VS. COMPETITORS,
AC NIELSEN*, VOL.
Так наверное всё же
понятние
460
Jarlsberg
President Maasdam/Lactalis
President Madrigal/Lactalis
President Emmental/Lactalis
409 Maasdam/Frico
Fol Epi/Bongrain
358
307
z
256
tons
204
153
102
51
0
DJ 2009 FM 2009 AM 2009 JJ 2009 AS 2009 ON 2009 DJ 2010 FM 2010 AM 2010 JJ 2010
* Source 1 (AC Nielsen / St-Petersburg and Moscow) 16

18. 2009
NORWAY – COUNTRY OF ORIGIN
YEAR OF NORWEGIAN CELEBRITIES

19. 2009 PROMOTION KEY ELEMENTS
• Norwegian Pure Nature – one of key visual
brand values
• Joint campaigns with Innovation Norway
• Series of campaigns “Win trip to Norway!”z
• First & successful flight of Out-Of-Home –
campaign
• 1st experience of joint ATL-promotion with
major Retail chains
• 1st implementation of “Secret Recipe from
Norway” (on printed materials)
18

20. 2009 PROMOTIONS
Joint TV
spot with Joint OOH
HNY with
№1 Win trip to promotion
Strongest BTL + ATL Ulinissen in
Retailer Norway Collect –and- get consumers with #1
consumers campaign Moscow
X5! consumers Campaign Retail
ever and St-
Sales campaign Group in
Petersburg
increasing Russia
– 390% z
Feb Mar Jun Jul Aug Sept Oct Nov Dec
19

21. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

22. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

23. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

24. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

25. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

26. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

27. “WIN TRIP TO NORWAY!”
IN-STORE CAMPAIGN
z
Promo girls consultations
Stickers “Win trip to Norway!”on sliced Jarlsberg wheel
Big posters at the shopping space
A4 poster at shelves Текст
20

28. COLLECT-&-GET CAMPAIGN
MAIN COMMUNICATION = Sticker on
cheese with action mechanism z
Leaflet for direct-mail Side B
Leaflet for direct-mail Side A Extra ads at Extra ads at chains’ leaflets
Leaflet for direct-mail Side B
chains’ leaflets
21

29. COLLECT-&-GET CAMPAIGN
MAIN COMMUNICATION = Sticker on
cheese with action mechanism z
Leaflet for direct-mail Side B
Leaflet for direct-mail Side A Extra ads at Extra ads at chains’ leaflets
Leaflet for direct-mail Side B
chains’ leaflets
21

30. AUTUMN 2009
- THE STRONGEST BTL + ATL
z
JARLSBERG BRAND-BUILDING
CAMPAIGN EVER!
22

31. “WIN TRIP TO NORWAY WITH JARLSBERG!”
WAY-TO-PURCHASE
OOH IH OOS IS OS OP
Magazines Audio-/Video
Checkpoints spots Campaign
Jarlsberg
Billboards TINE Recipes & coupons Stickers on
dummies
book boxes Printed cheese
z materials
Out –
Out-Of-Home In-Home In-Stores On-Shelves On-Product
Of-Stores
23

32. WIN TRIP TO NORWAY
WITH JARLSBERG!
300 joint (Innovation
Norway) billboards in
St-Petersburg
z
The same image at all PoSM,
incl.stickers on sliced cheese
24

33. WIN TRIP TO NORWAY
WITH JARLSBERG!
z
25

34. WIN TRIP TO NORWAY
WITH JARLSBERG!
A1 posters on Entrance Doors
z
A1 posters in store
Checkpoints
A4 & A1 posters at shelves
Checkpoints
A4 posters at InfoPunkt
26

35. WIN TRIP TO NORWAY
WITH JARLSBERG!
200 Billboards on main
roads of Moscow during 1
month
z
TINE Sales increasing at X5 GROUP - 545%
From 3,9 tons in August to 21 tons in September
But Consolidation process runs quite fast.Top-10 retail
chains take 19% vs 11% in 2007
27

36. MARKETING STRATEGY
&
GLOBAL POSITIONING PLATFORM
IMPLEMENTATION
2010-2015

37. MARKETING STRATEGY 2015
• To continue brand-building policy with “Secret Recipe from Norway”
• To become a leader of Premium (specialty) Yellow Cheese segment
with Jarlsberg
z
• To increase sales & market share in the premium cheese segment
throw joint campaigns with major Retailers
• To expand Jarlsberg and Snofrisk brand awareness among target
audience throw PR activities & joint campaigns with Innovation Norway
• To make Snofrisk #1 position in Fresh Goat cheese segment
sustainable throw BTL & trade support
29

38. ADAPTATION OF GLOBAL
POSITIONING
Norwegian Nature already incorporated as a successful
association in Marketing Communication in Russia
доделать
Secret Recipe should not be communicated alone to establish the
positioning foundation as it is planned in other countries
z
30

39. SECRET RECIPE ADAPTATION
z
31

40. SECRET RECIPE ADAPTATION
z
31

41. SECRET RECIPE ADAPTATION
z
31

42. RUSSIA
TINE HQ, OSLO, NORWAY
15 OCTOBER 2010
32

43. RUSSIA
TINE HQ, OSLO, NORWAY
15 OCTOBER 2010
32

44. • Markets are different...
• Moscow major channel is supermarkets
• St.Petersburg major channel is hypermarkets and discounters
• Though modern retail formats develop very fast in Russia, in a lot of Regional centers
traditional trade/independent shops still dominate
• St.Petersburg and Regional sales are much more dependent on trade promotions with deep
discounts than Moscow
• Cheese consumption culture is weakly developed, but we see positive development in
Moscow & St-Petersburg
• In each city competitive situation and market leaders are different
33