Unilever's iLipton Risk management - Revenue, cost drivers identification, Risk identification and Mapping, Risk Analysis, BI solutions and mitigation plans, BI comprehensive technology stack

1. K6221 Business Intelligence
Unilever US – Lipton Risks
Management
Sesagiri Raamkumar Aravind
Mane Shivaji Dilip Kumar
Balasubramaniam Divya
Thangavelu Muthu Kumaar
Selvaraju Nirmala

2. Agenda
• Unilever
– Introduction and Statistics
• Lipton
– Overview and Statistics
• Lipton Supply Chain
• Risks Management
– Risk Map
– Key Risks
– BI Solutions and Mitigations

3. Unilever – Overview
• Multinational Consumer Goods Company started in year 1930.
• World’s third largest Consumer goods
• Products sold in more than 180 countries
• Dual Listed Company ( Unilever NV + Unilever PLC)
• Both Unilever Shares are listed on New York Stock exchange
• More than 400 brands which includes 13 one billion euro brands.
• Lipton is one among them.
Source - http://www.unileverusa.com/Images/ir_Introduction_to_Unilever_March2011_tcm23-226573.pdf
http://en.wikipedia.org/wiki/Unilever#Products

4. Lipton
• Established in 1893 as Thomas J Lipton Co
•Lipton was completely acquired by Unilever in the year 1972.
•Lipton is now the leading tea brand in the world
•1964 - Lipton Iced Tea mix introduced in the US which forms the major share of
their sale today.
•There are more than 11 major varieties of Lipton tea with Iced Tea having 85%
share in US.
•1991 – Unilever created a joint venture with Pepsi Co for the marketing of
Ready to Drink
Source:unilever website
Source - http://www.liptont.com/index.aspx
http://en.wikipedia.org/wiki/Lipton

5. Unilever Global Sales(in million euros)

6. Unilever Divisional Sales

7. Regional, Divisional and Sales vs YOY Growth % vs
Lipton Sales(in mil Euros) Net Profit Margin %
15500 3500 16 48000
14
15000 12.4 46000
3000 12
14500 10 9.6 9.2 44000
2500 8.5
14000 8
6 42000
13500 2000
4
13000 40000
1500 2
12500 0
38000
1000 -2
12000
-4 36000
500 2008 2009 2010 2011
11500
Sales(in mil Euros) 40523 39823 44262 46467
11000 0
2008 2009 2010 2011 Global YOY
Growth% 0.8 -1.7 11.1 4.9
Icecream
2521 2478 2840 2890 US YOY Growth% -2.21 -1.7 14.6 4.4
Beverages in US
Lipton YOY
Approximate 1.4 -1.65 14.5 1.72
1027 1010 1157 1177 Growth%
Revenue of Lipton
Net Profit Margin% 12.4 8.5 9.6 9.2
US 12967 12743 14606 15251
•US zone accounts to 32.82 % of Total Sales of Unilever
•Ice-cream & Beverages accounts to 18.94 % of US Division
•Lipton contributes to 40.72 % of its Food Division
Unilever attributes its dip in 2011 Net Profit Margin % to rise in cost of raw materials - Bloomberg

8. US - Lipton and Competition
Bottled Water is
the fastest growing
beverage
category!!!
79%
3%%4%% 7%% 7%%
Soft Drinks and Alternative Beverages
generate retail sales of over 70$ billion
Lipton has been leading the market by
introducing innovative products such
as dieting and flavored teas backed up
by smart spending on Rainforest
Alliance to gain access to non-
auctioned tea - Teaconomics

9. Lipton vs Competitors in Google Trends

10. Unilever Tea Plantations
Global Tea Plantations 10
4.30% 1.90%
2.20% UV Plantation- Kenya
3.10% UV Plantation- India
2.00% UV Plantation- Tanzania
China
7.90% 30.40%
Taiwan
2.20%
Japan
2.00%
5.20% Srilanka
Korea
Nepal
14.40%
Vietnam
24.40%
India

11. Major Tea Plantation Countries

12. Lipton Supply Chain
Tea
Quality Assurance Packaging
Information Systems
Research & Development
Manufacturing
Suppliers Marketing
Warehouse Suf Distribution
folk
Shipping
Suffolk,
Virginia
Inventory
Sales
UV
Plantations
Manufacturing
Consumers Endpoints

13. Challenges in Tea Industry
•Auctioning & Brokering process is dominated by the big players including
Unilever.
•Deforestation in certain countries for growing new Tea plantations.
Due to the lack of global governance initiatives, there is no international
platform to bring together major global players to improve the
social, environmental and economical conditions of tea producers worldwide.

14. Lipton SWOT Analysis
• Owned by Unilever.
• Long history in tea manufacturing industry.
• Extensive knowledge of local culture and tastes.
• Wider product range with technological superiority, e.g.
Brooke Bond’s hot tea can. Unilever Brand extensions
• Alliance with Rainforest Organisation. Health Benefits
Strengths
• Single point of tea distribution in US from Suffolk.
Geographical distance from
Rainforest Alliance Tea Plantation countries
• Strong financial position.
• Increased health consciousness among US population Strong cash flow Constantly changing
and health benefits of tea such as herbal and green tea is Market Share Consumer needs
another major cause.
• Supply Chain Management.
• Having too many brand extensions can dilute and
confuse consumer perception and give fresh and new
Weaknesses
competitors to seize market share.
Lipton
• Political unrest in certain plantation country
SWOT
• Alliance with Pepsi to access massive distribution
Analysis
network. Presence of big, well known partners drives
demand further.
• Technology advancements in manufacturing.
Opportunities
• Greater awareness of health benefits of tea.
• New varieties of tea drink flavours can be launched Overcrowded market resulting
Alliance with Pepsi
particularly in the Ready to Drink segment. in DEMAND REDUCTION
Greater awareness of health
• Acquisitions of companies in developing markets. Presence of other global
benefits of tea
players
• Overcrowded and small market with about 200 other Newer Tea drink flavours
Increasing Tea Prices
brands which might cause significant demand reduction. Acquisitions
• Presence of other major players such as Coca-Cola and Fluctuating Economy
Nestle leading to tough competition.
Threats • Competition from local competitors
• Indirect completion from other energy drinks like
Redbull which could eat into Lipton’s market share.
• Increasing Tea prices
• Fluctuating Economy

15. Lipton PEST Analysis

16. Lipton Risk Map
Generated using

17. Identified Risk Events/Factors
Business
Rank Risk Event Likelihood Impact
1 Difficulty in Investments, expansions in D & E markets with forex fluctuation High High
2 Market capture by competitors through product changes and new partnerships Medium Very High
3 Change in customer needs and Lack of Process innovation Medium High
Political unrest(Frequent violence, Political Unrest, mass strikes ,rallies and Uncertain worker
4 movement or activities) in plantation country Medium High
5 Disruption in operational capability of production and distribution Low Very High
6 Inflation in labour cotsts Medium Medium
7 Stragetic partnerships and alliances breakdown(Pepsico-Lipton) Low Very High
8 Corruption and collusion among supply chain and plantation country governments Low High
9 Low standards of working and living conditions(ex:exploitation) in tea plantations High Low
10 Uncertainity of weather patterns, water scarcity and natural calamities Low High
11 Decline in beverage consumption during recession periods Low Medium
Inability to meet company's goal to source the tea in all Lipton tea bags from Rainforest Alliance
12 Certified™ estates by 2015 High Low
13 Competitors influence the brokers in the tea auction market to favour their bid. Low Medium
14 Health issues raised by activists based on scientific discoveries Low Medium
15 Failure to realize digital advetising ROI Low Low
16 Inefficient idea-to-market process lifecycle Low Low
17 5-10% of labourers are child labours in Tea Plantations High Very Low
Exaggerated and misleading promotional campaigns - (MISBRANDING) with unproved and
18 questionable health facts Medium Very Low
19 Unexpected downtime with Sirius(SAP based) and Mountain internal info systems Very Low Medium
20 Non-conformance to Sustainability plan Very Low Low

18. Risk Classification
Risk Type Description
Lack of formal procedures, lack of quality
Procedure Risks control system
Bureaucracy, lack of authority, lack of
Decision Risks decision support
Communication Cultural differences, language barriers,
Risks misunderstanding
Knowledge Lack of formal education, lack of training, Very High
Risks unskilled labor
Disruption of supply, inventory and schedules, High
Supply Risks incoming delays
Operational Failure or breakdown of operations, changes Medium
Risks in technology
Demand Risks Variations in demand, changes in technology Low
Theft, counterfeiting, terrorism, piracy,
Security Risks infrastructure breakdown Very Low
Economic shifts, recession, labor costs,
Macro Risks exchange rates, customs
Actions and sanctions of governments, shifts
Policy Risks in legislation
Competition Uncertainty about competitor's moves and
Risks actions
Lack of human resources, capital or
Resource Risks technology
Unclassified
Risks Unclassified

19. Macro Risks

20. Competition
Risks/Demand Risks

21. Demand Risks

22. Supply Risks/Resource
Risks

23. Operational Risks

24. Resource Risks/Macro
Risks

25. Operational Risks

26. Procedure Risks

27. Resource Risks

28. Supply Risks/Operational
Risks

29. Demand Risks

30. Procedure Risks

31. Competitor Risks

32. Knowledge Risks

33. UV Lipton BI Integrated Solution
Non-stop Operations Scability Performance Security
End User Analysis
ETL Operational Alerts & Predictive
Planning Monitoring Analytics
Desktop
Data Integration
Financial Generic Bench-
Management
Reporting Analysis marking Handheld computing
Metadata
devices
What-If
Dashboards
Analysis
Scorecards Mobile devices
Central Datamarts &
Datawarehouse ODS Collaborative
Rolling
Decision Goal Setting
Forecast
Making Enterprise Information
Enterprise Application Integration(EAI) Portal(EIP)
External MIS
Logistics
Agencies
ERP CRM &
Customers Suppliers DSS
SCM
Product
Competitors &
& ESS
Market Other
Marketing Cloud
IS based IS
Data Information Knowledge Action

34. “A man without tea in him is incapable of
understanding truth and beauty”
Okakura Kakuzo, The Book of Tea (1906)
Q&A
Thank You