Unilever Challenge - Brands With Purpose
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Millennials are increasingly health-conscious and concerned about the environment. They prefer water that is conveniently accessible through low-cost, sustainable options like evive's purified water stations and mobile app. evive aims to change consumers' water habits by providing an affordable subscription for unlimited, purified water while reducing plastic waste and supporting non-profits. Financial projections estimate that evive could generate over $150 million in net income in its first year of operations in California by utilizing a membership-based business model supplemented by advertising revenues.
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Unilever Challenge - Brands With Purpose
- 2. 2 Team 8 Asenet Varela Product Owner SW development @Marcura Tiago Silva Finance Manager @brf Pablo Rivera General Services Specialist @US Department of State Adel Qasees Logistics & Supply Chain @aramex Bisher Yousfi Marketing Manager @Volkswagen Strictly Confidential
- 3. 3
- 4. 4 Agenda START How millennials new consumption habits are changing industries A promising market with 65% growth between 2014 and 2020 Millennials’ healthy lifestyle Global Water Market Overview Strictly Confidential An Answer to Unilever Challenge The Unique Selling Proposition of evive Machine’s Features
- 5. 5 Agenda Change the way we consume water The Target Market Strictly Confidential Why evive? Business ModelMembership subscription and Ads revenues California: highest water consumption in US
- 6. 6 Agenda END NI of USD$150m in the first year. Payback: 13 months Financials Strictly Confidential Pricing90% cheaper solution than conventional bottled water
- 7. 7 Millennials’ healthy lifestyle Strictly Confidential
- 9. 9 20% Solely drink bottled water instead of tap water due to safety concerns4. 59% 42% 33% Try to fill up water bottles and/or use a filtered water system on a regular basis5. Plan to drink more bottled water5. Planning to drink less Soda5. Strictly Confidential More Water, less Soda.
- 10. 10 Global Water Market Overview Strictly Confidential
- 11. 11 2014 2015 2016 2017 2018 2019 Bottled Water Market Driven by increased health awareness and changing consumer lifestyle6. Growing CAGR of around 8.5% between 2015 and 2020. In terms of volume6. Worldwide strong demand for clean, flavored and hygienic drinking water6. Water consumption American today drinks 58 gallons of water compared to two decades ago. That’s a 20- gallon increase since 1998.4 Indra Nooyi Focusing solely on carbonated soft drinks is “a thing of the past,”7 2nd most popular beverage in the U.S., likely to overtake carbonated soft drinks' supremacy late 2016 or in 2017.5 2020 $ 170B $ 280B +65% Strictly Confidential A Growing Market with high interest to hygiene and environment friendly products.
- 12. 12 Per Capita in Liters North America 125 Liters8 06 03 02 01 South America 89 Liters8 Europe Asia Africa Antarctica 50 Liters8 123 Liters8 50 Liters8 31 Liters8 03 02 01 04 05 06 Strictly Confidential Worldwide Consumption of Bottled Water
- 13. 13 An Answer to the Unilever Challenge Strictly Confidential
- 14. 14 Aligned to The Unilever Sustainable PlanENVIRONMENTFOOTPRINT • Reduce GHG • Less water use • No plastic waste: Reusable, recyclable • Sustainable sourcing POSITIVESOCIALIMPACT • Provide safe source of drinking water • Access to sanitation • Improve self- esteem • NGO support GROWBUSINESS • Transformational Purpose • Drive Innovation • Improve agricultural practices • Support Young Entrepreneurship Strictly Confidential
- 15. 15 Plastic water bottles consumed per second in the US!9 Water bottle consumption in the U.S. per year10. 50bn Plastic bottles end up in a landfill, even though recycling programs exist9. 80% Spent every year on bottled water globally10. $100bn of water required to package 1 liter of bottled water11. 3 Lt Strictly Confidential Reduce Environmental Footprint The Plastic Bottle Challenge 1500
- 16. 16 Why evive? a brand with purpose Strictly Confidential
- 17. 17 We change the way we consume water: hydrate, embrace health and be environmentally responsible. Strictly Confidential
- 18. 18 Show Innovation: 81% of Millennials are willing to pay more for innovative new products.12 Demonstrate CSR: - 73% of Millennials are willing to pay more for sustainable brands. - 51% check the packaging labels to ensure positive social and environmental impact.12 Share product information: 75% compare prices before shopping.14 Make your marketing transparent: 83% of Millennials want to see the behind-the-scenes story of your product.13 Invest in Influencers How to win Millennials’ Mind, Heart and Loyalty? Strictly Confidential
- 19. 19 Low Price: Payless, get more. Sustainable: Low footprint impact. Healthy: Zero calorie beverages. Trendy: Mobile application for the ease of use, with sharable content Variety: Infused water Socially responsible: evive: The Solution Strictly Confidential Supporting NGOs
- 20. 20 Over 90 % cheaper! 2 bottles of water per day from a vending machine = USD$1,095 per year evive unlimited water = USD$49.99 Get more for less
- 21. 21 13% of bottled water market 11% of bottled water market Same water source as leading water brands Strictly Confidential
- 22. 22 • State-of-the-art water purification • Sub-micron and UV purification technology • Great tasting, chilled, premium water • Infused water flavors Beverage Features
- 23. 23 1 2 Purification System Energy Efficient Flexible Bottle Size Environmental Friendly 3 4 Water Station Features Strictly Confidential
- 24. 24 Mobile App Features Unique user account My Target, My Account, My Saving Save the user’s settings (PH, temperature & flavors) Share my achievement on Social Media Strictly Confidential
- 25. 25 • Minimize consumption of single use products • Protect oceans and aquifers • Conserve Clean Water • Sales proceeds support NGOs A brand with a purpose Strictly Confidential
- 26. 26 Jason and Jackie • Active • Fit-addict • Health conscious • Cares about their water intake and hydration Mike and Maria • Young professionals • High income level • Health conscious • Tech-Savvy • Trendy Customers’ Personas Chris and Celine • Young professionals • High income level • Tech-Savvy • Trying to look cool • Follow the trend
- 29. 29 22% ADVERTISING 73% MEMBERSHIP 5% BOTTLE SALES Strictly Confidential How we’ll make Money
- 30. 30 15 second ads: US 5¢ per impression 30 second ads: US 10¢ per impression 60 seconds to wash & refill = 20¢ in revenue 30 seconds only to refill = 10¢ in revenue Strictly Confidential Advertisement Revenue
- 31. 31 Strictly Confidential 1 month of unlimited washes & refills! Price Comparison One day of buying bottled water:
- 33. 33 Product Life Cycle Strictly Confidential STEPA Use the same machine currently available STEP B Add extra feature to accept used bottles and refund the value STEP C R&D: A smaller machine that can be installed in more laces STEP D A portable machine for home/office use A B C D
- 34. 34 Target Market & Operations Strictly Confidential
- 35. 35 Target Market: California The total population of California (Universe) 39.400.000 Millennials represent 33% of the total market 13.002.000 We are targeting 5% of the Millennials in California in the first year 650.100 As per research in Google Trends, infused water in California is popular amongst Millennials. Pepsi and Coca-Cola have the largest market share in the bottled water market segment in the US Strictly Confidential
- 36. 36 Outsourced industrial units 4 US States Served (3Y) 1Y California 2Y Texas 3Y New York & Florida 1 commercial office 60 direct employees 4 distribution centers 1Y California 2Y Texas 3Y New York & Florida Less transportation OPERATIONS
- 38. 38 Using the Decoy Effect & Consideration Effect to maximize the number of Annual Subscriptions. Monthly @ $7.99 Limited to 6 liters a day $ 7.99/mo. One User Cold and Hot water PH Control 3 flavors Bottle for $10 Extra Yearly @ $49.99 Unlimited quantity – Top Selling $ 5.75/mo. One User Cold and Hot water PH Control 4 flavors One Bottle Free Strictly Confidential Daily @ $1.99 Limited to 6 liters $ 39.80/mo. One User Cold and Hot water PH Control 2 flavors Bottle for $20 Extra
- 40. 40 Sales Analysis 73% 22% 5% 151 405 782 210 539 1,030 Year 1 Year 2 Year 3 Evive 3 Years Plan (USD million) Sales Net Income States Served California States Served California States Served California Texas Texas New York & Florida
- 41. 41 WORLD USD$ 193 million* in Gross Operating Revenue 13 Months, 58.9% MIRR Discounted Payback 20% of Net Profit Revert for CSR* in Net Revenue Sharing with communities USD$ 150 million * in EBIT * Estimated 2018 Financials
- 42. 42 Hosting Profits The Host will have the benefit of USD 0,01 per liter as NeT Income (free of water, meter, electricity, taxes, etc). Year One: this will be around USD $12,000 Year Two: USD $20,000 Year Three: USD $27,000
- 43. 43 Next Steps…
- 44. 44 Next Step - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Environmental Impact Sales Bottels
- 45. 45 THANKS!
- 46. 46 APPENDIX
- 47. 47 APPENDIX: Financial Assumptions Enterprise Value MU$S 40,000 2017 EV EBITDA 10x MIRR (MU$S) 58,9% Disc Payback (Period) 13 Months M&A Premises Investment ('000) CAPEX 124,255MU$S OPEX -MU$S M&A 40,000MU$S Working Capital -MU$S Total Investment 164,255MU$S
- 48. 48 Total USD Year 1 USD Year 2 USD Year 3 (+ ) Sales 209,527,880$ 539,494,179$ 1,029,804,573$ (-) Costs 6,085,053$ 13,768,424$ 25,056,237$ (-) 5% revenue share with owner of the tower 10,476,394$ 26,974,709$ 51,490,229$ (= ) N et Revenue 192,966,433 498,751,046 953,258,107 Expenses Unit USD Unit USD Unit USD Maintenance cost /year 2,500 2,167,500$ 2,553 3,366,748$ 2,586 4,998,124$ Marketing campaign 15% of Revenue 28,944,965$ 74,812,657$ 142,988,716$ Bottles Shipping Costs 2 1,950,300$ 2 5,021,649$ 2 9,585,492$ Internet/App Maintenance 4,000,000$ 4,084,000$ 4,137,092$ Outsourced Vans for replenishment 110 95,370$ 112 148,137$ 114 219,917$ Wages 60,000 3,000,000$ 61,260 3,675,600$ 62,056 4,343,947$ Depreciation 10% of machine total 1,734,000$ 2,693,398$ 3,998,499$ Rental 75,000 75,000$ 100,000 100,000$ 125,000 125,000$ Office Supplies 25,000 25,000$ 25,525 25,525$ 25,857 25,857$ Utilities 30,000 30,000$ 30,630 30,630$ 30,390 30,390$ Telephone 15,000 15,000$ 20,000 20,000$ 25,000 25,000$ Insurance 150,000 150,000$ 200,000 200,000$ 225,000 225,000$ Vehicles 1,000 50,000$ 1,021 61,260$ 1,034 72,399$ 42,237,135 94,239,603 170,775,434 Estimated N et Profit USD 150,729,298 404,511,442 782,482,673 (-) 20% Revenue sharing with Society 30,145,860 80,902,288 156,496,535 N et Profit 120,583,439 323,609,154 625,986,139 YEAR 1 YEAR 2 YEAR 3 YEAR 1 YEAR 2 YEAR 3 APPENDIX: PNL
- 49. 49 REFERENCES
- 51. 51 APPENDIX
- 52. 52 APPENDIX - Business Model • Men are expected to drink 3 liters per day ----> 13 cups (r.1) • Women are expected to drink 2.2 liters per day à 9 cups (r.1) • CDC in the states approved that men and women are drinking water more than what they are supposed to drink, but only 30% of it from pure water the rest is from juices and sodas which will potentially lead to weight gain and extra calories. (r.2) • To connect this to our analysis we are looking forward to increase the intake of plain water to at least double the 30% analysis of CDC. • Average price of water per liter in California is 0.001881 $ (r.3) • Average cost of energy per day is 1 $ . (r.4) • Basic meter fees 31.52$ / Month = 378.24/ Year --> 378.24$/1200L = 0.3152$ / L
- 53. 53 • We make a chart for the top 3 most popular water brands in California: ( r.6) • The Above table shows how much you will spend on buying any of the 4 competitive brands per year to satisfy the body need. • In the United States, 24 percent of bottled water sold is either Pepsi’s Aquafina (13 percent of the market) or Coke’s Dasani (11 percent of the market). Both brands are bottled, purified municipal water. (r.5) Plastic bottle price / L Price per 1200L / year Aquafina $4.17 $5,004.00 Dasani $3.30 $3,960.00 Sam's $2.50 $3,000.00 Nestle $1.50 $1,800.00 APPENDIX - Business Model
- 54. 54 APPENDIX - Supply chain process • Maintenances (r.4) • Due to the high technology used we can remotely resolve any problem before it happens. • the station program is smart and it contains internal sensors that detect any failure that might occur. If its minor it will be fixed remotely if major then a technician will Immediately visit the location and resolve the issue. • The Sensors detect the levels of flavors and validity of the filters and the sanitizer life, if any needs to be renewed again a technician will be spared to change the needed.
- 55. 5572% 2013 69% 1998 Strictly Confidential Do you disapprove of people 18 or older taking one or two drinks nearly every day? B8 APPENDIX – Millennials research
- 56. 56 Do you disapprove of people 18 or older smoking 1 or more packs of cigarettes a day? B8 83% 2013 69% 1998 Strictly Confidential APPENDIX – Millennials research
- 57. 57 Unmet needs Value Added Feature Benefit - Water solution that is environmental conscious. - Access to reliable source of healthy drinks. - Product content transparency of information. - Brand recognition that serves a purpose beyond water benefits. - Lower costs the customer. - Transparency of information/content. - Water stations at easy access and convenience. - Portable, refillable, reusable. - Healthy water infusions APPENDIX: Value Proposition
- 60. 60 Situation • One of the largest generations in history is about move into its prime spending years “Millennials”(1) • Millennials are controlling more than $600 billion in annual purchasing power. (3) • Millennials are poised to reshape the economy; their unique experiences will change the ways we buy and sell, forcing companies to examine how they do business for decades to come.(1) Why?
- 61. 61 77M Baby boomers61M Generation X92 Million Millennials 40% 27% 33% The Millennials generation is the biggest in the US history Even bigger than the Baby Boomers. (1) A large Cohort
- 62. 62 Millennials 50% 27% 15% Play video games Gen X Boomers
- 63. 63 Millennials 50% 27% 15% Play video games Gen X Boomers
- 64. 64 Millennials 45% 30% 10% IM / Chat Gen X Boomers
- 65. 65 Millennials 43% 32% 17% Download Video Games Gen X Boomers
- 66. 66 Millennials 37% 35% 23% Use Social Media Gen X Boomers
- 67. 67 Millennials 38% 25% 18% Watch TV Online Gen X Boomers
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- 71. 71
- 72. 72
- 73. 73 Brand With Purpose Anticipate Future Consumer Trends Increase Brand Loyality Make it count Millenials are constantly bombarded with marketing. Their purchasing habits suggest they buy brands they identify with. Connect with them Be part of their tribe, a movement they support. Where are we headed? Global economy, emerging markets, climate change. How will these changes impact our business and consumers? The (Social) Challenge
- 74. 74 Promote Sustainability Direction Environmental Footprint No other way. Unilever's responsibility to do what is right for the planet, for the people. Continuous Optimization. New techniques that will enable managing production in different ways. Where are we heading to? The (Environmental) Challenge
- 76. 76 Hypothesis Challenge Water Solution Energy Mate- based drinks Healthy beverage Superfood New trend of fruits Establish a new brand Acquire Club Mate Acquire an established company
- 78. 78 Hypothesis #1 - Healthy drink alternative • GOOD: - Trends: green juices, smoothies, detox, cleanse - Growing market USD $5 billion (1) - Top competitors: Tropicana, Del Monte, V8, Minute Maid, and more… are not necessarily perceived as healthy. • BAD: • - Known brands also comply with environmental friendly packages and CSR (2) • - Fresh juice alternatives in every corner, every shop. • - Premium price compared to other juices. Resolution: NO GO. Very competitive market that would require extremely high investment or the acquisition of smaller brands to kill competition in any market. Image: lafinita.com
- 80. 80 Hypothesis #2 - Mate Energy drink •BAD: •- Requires marketing investment and time to trend. •- Similar drinks already available in some markets: Club Mate (Germany). •- Mate only grown in Southern Cone. •- Brisk Mate's PepsiCo. • Resolution: NO GO. We learned that in 2016 Unilever (in partnership with PepsiCo) launched Brisk Mate Energizing Iced Tea in select U.S. markets. •GOOD: • - Few mate RTD products in the market. •- Healthy supply of raw material. •- Extract can be shipped to production plants globally for local bottling Image: pepsicobeveragefacts.com
- 81. 81 SELECTION
- 83. 83
- 84. 84 Hypothesis #3 - Acquire evive • GOOD: •- Reduce plastic bottle waste. •- Reusable bottles (sanitized). •- Less delivery trucks & CO2 emissions. •- Ads matching consumer interests. •- Collect usage data. •- Cashless transactions. •BAD: •- Less attractive if stations aren’t present where consumers spend most time. •- People have access to free drinkable water in places where they spent most of their time (jobs, schools). Resolution: GO! Buying this startup gives Unilever a brand with a purpose, a practical platform for selling water to consumers, and an innovative way to market its products. Image: evivestation.com
- 85. 85
- 86. 86 WHY acquiring evive? • - Reduces environmental footprint of entire bottled water industry supply chain. • - Drink water on the go, for less. • - Breakthrough innovation, potential to disrupt “big water”. • - Drink water the way you want it; choose flavor, temperature, carbonation, (ph level for alkaline water). • - Customized ads relevant to your interests. Brand with a PURPOSE Brand LOYALTY Connection Different Responsible Purpose
- 87. 87 0 20 40 60 80 100 120 6/3/12 8/3/12 10/3/12 12/3/12 2/3/13 4/3/13 6/3/13 8/3/13 10/3/13 12/3/13 2/3/14 4/3/14 6/3/14 8/3/14 10/3/14 12/3/14 2/3/15 4/3/15 6/3/15 8/3/15 10/3/15 12/3/15 2/3/16 4/3/16 6/3/16 8/3/16 10/3/16 12/3/16 2/3/17 4/3/17 Google Search Results (US): Infused water bottle
- 90. 90 Target Market: Year 2
- 93. 93 Financial Assumptions Enterprise Value MU$S 40,000 2017 EV EBITDA 10x MIRR (MU$S) 31,0% Disc Payback (Period) 15 Months M&A Premises
- 94. 94 Thanks Asenet Varela Product Owner SW development @Marcura Tiago Silva Shared Services Manager @brf Bisher Yousfi Marketing Manager @Volkswagen Pablo Rivera General Services Specialist @US Department of State Adel Qasees Logistics & Supply Chain @aramex
- 95. 95 P&L
- 96. 96 References • (1). Goldman Sachs Global Investment research: • http://www.goldmansachs.com/our-thinking/pages/millennials/ • (2). Goldman Sachs Global Investment Research • (3). Nielsen. Global Millennials: The we, more and now generation. 2016 • (4). AIMIA Inc. “Born this Way: US Millennial Loyalty Survey” ©2012 • (5). Nielsen. Global Millennials: The we, more and now generation. 2016 • (6). Nielsen. Millennials in 2015: Retail Deep Dive. 2015 • (7). Nielsen. Global Millennials: The we, more and now generation. 2016 AND Steinmetz, Katy. Help! My Parents are Millennials. TIME. October 26, 2015 • (8). Most Millennials Have Installed Ad Blockers. eMarketer. October 13, 2016