DEVELOPING DEMAND

FORECASTING STRATEGIES

Agenda

Lactalis Group and Parmalat

Demand Forecasting in FMCG

Q & A

Agenda

Lactalis Group and Parmalat

Demand Forecasting in FMCG

Q & A

1933

1955

1968 2015

2000

> André Besnier > 1 employee > 35 litres of Milk collected /day > 17 camemberts produced / day

> Michel Besnier > 50 employee > 20 000 litres milk collected /day

> Camembert Président launch

> Emmanuel Besnier > 16 000 employee > 4th World rank in Milk collection > 66 production sites in France and

15 Outside France

> 75 000 employee > 15,6 billion litre of Milk collected per year > 237 production sites in 42 countries

LACTALIS group more than 80 years of history

2006

> Galbani acquisition > Joint-venture with

Nestlé on yogurts

2011

> Parmalat Acquisition. > Lactalis becomes number 1 in the world for Milk > 54 000 employee > 14,5 billion litre of Milk collected per year > 192 production sites in 34 countries

LACTALIS group TODAY

CA (Bio of €)

FTE

Number of Production sites

Operates in 79 countries

with

237 production sites in 42 countries

AFRICA 9 700

employees

ASIA/OCÉANIA 10 700

employees

AMÉRICAS

19 400 employees

EUROPE 35 300

employees

75 100 employees GLOBALLY

World leader for dairy products

A unique growth model: Covering all dairy professions

Breakdown of turnover by category

Other 7%

Ingredients 13%

Butters & creams 10%

Chilled dairy 12%

Liquid milk 24%

Cheeses 34%

7

Parmalat in Australia

WA

NT - PAL

QLD - PAL

SA - PFP

NSW - PFP

VIC - PAL

TAS

Darwin

Past. Milk & Juices

Bendigo

Fresh Milk, Soy products,

Yoghurts, Desserts, Sour Cream,

ESL & Juices

Melbourne (Rowville)

Past. Milk

Sydney (Lidcombe)

Past. Milk

Brisbane – Milk Ops

Past. Milk & ESL

Yoghurts, Desserts & Sour

Cream

Nambour

Past. Milk

Rockhampton

Past. Milk & Juices

Adelaide

(Clarence Gardens)

Past. Milk

Parmalat Australia Manufacturing Overview

Perth (Harvey Fresh)

Past. Milk + Yog + Juice

Melbourne

(Lemnos / Jindi)

Cheese

Melbourne (Longwarry)

Dry Milk Echuca

200 employees

Yoghurts, Desserts

Tamar

Yoghurts, Desserts

Fresh Milk site

Yogurt site

Agenda

Lactalis Group and Parmalat

Demand Forecasting in FMCG

Q & A

Key Factors

Being able to reply to the question: “ Why Do We Need to Forecast ?” Company alignment

S&OP process

Define Your Market and the Market’s Drivers Market size is different from market share

Understand / analysis macro trends

Understand competition / Pricing impact / Seasonality

Customer Perspective Collaborative planning

Scan sales ..

Population and age group Advertisement Weather... Price / individual Income Consumer’s taste and

preference Competition and Price of

Complementary goods

Short Term v Long Term

Short Term Long Term

Level Product Customer Region / State

Category Brand Technologies

Use for Detailed Plans Service Levels

Strategic Planning Capacity Planning CAPEX Budgeting

Horizon 6 months 1 to 3 years

Capabilities / Tools S&OP(CDP) process Live data Stat Models Customer collaboration

Category Management Macro Economics

Challenges

Accountability Process ownership

Skill’s

Poor Quality Data Or... too many data

New Tech

New Product Development

Forecast accuracy as part of individual performance KPI

Company Target Training Regular process reviews

Source of Data Timeliness of Data refresh Relevance Format

Increasing level of difficulty

Forecasting a New Product

Product Renovation

Line extension Sales Channel

extension Innovation

Forecasting a New Product

New, improved versions of existing products. e.g. recipe change, new labels • No change in the forecast or slight and gradual increase

factored in

• Usually same SKU used

Increasing level of difficulty

Product Renovation

Line extension Sales Channel

extension Innovation

Increasing level of difficulty

Forecasting a New Product

Product Renovation

Line extension Sales Channel

extension Innovation

Incremental innovations added to existing product lines and targeted to the current market. e.g. new yogurt flavour • “look alike” analysis

• Review with Sales of ranging and distribution (national

and store level)

• Cannibalisation can be taken into account

Increasing level of difficulty

Forecasting a New Product

Product Renovation

Line extension Sales Channel

extension Innovation

Existing products to new sales channels. e.g. extension from Grocery to Food service • Field force survey

• “turn-in orders” concept

• “Look alike” analysis

Increasing level of difficulty

Forecasting a New Product

Product Renovation

Line extension Sales Channel

extension Innovation

Radically-different products vs current offerings e.g. Lactose free Milk • Consumer study (Qualitative/Quantitative)

• Customer workshop with majors

Key Take-Away

• Be clear on the “Why”; don’t forget the customer.

• In FMCG, demand forecasting focuses on the short-term due to the nature of the products and type of industry.

• Because of the agility required, clarity on who does what and access to good quality data are key to success.

• New Product Development is a unique process – with the level of difficulties in forecasting corresponds to the availability of information and experience in the market.

Agenda

Lactalis Group and Parmalat

Demand Forecasting in FMCG

Q & A

Thanks