How to add value to a commodity category

The milk example

05 December 2013

… with clear brand positioning

HOW TO PLAY

To develop an effective portfolio of brands and

products …

WHERE TO PLAY

… organized in a clear architecture

HOW TO ORGANISE

Before innovating, you need to know where to play…

… innovation !

The Market Map

In order to help us in this journey, we have developed critical tools that were used as a basis for our decisions

The Typologies The Needstates

Typologies Helps us understand who the people in the market are in terms of attitudes to life and food. This brings an emotional layer to respond to the growth platforms

Needstates

Detailing the needs people want dairy and broader food and drink products to satisfy. Hints at the consumption context.

Opportunity Areas

Identify potential profit pools our brands can tap into. Opportunity areas are the intersection between Needstates and typologies

22 May 2013 4

We have developped a global dairy map that helps us defining brand and innovation territories

1. Rooted in a consumer insight

2. Differentiated from competition

3. Builds off any current equity that exists

4. Exciting and feels right for the team

We then proceeded in finding the right positioning for our milk brands, and uncovered the secret of great brand positioning:

How to deliver true differentiation with no / few functional points of difference

+ How to build value back into milk

How to build unique propositions that pull apart Laerkevang from Harmonie to counteract switching

+

We were faced with three challenges

From “nature centered” to “people centered”

There was a category norm that was ripe for disruption

Insight:

Buying organic is a simple little choice towards a better lifestyle and a better

future

Benefit: It’s easy to make a difference, everyday

Reason To Believe:

100% organic Zero Waste

Insight:

Freshness is the number 1 criteria when I buy milk

Benefit: The pleasure of the freshest milk

Reason To Believe: 24 hours from farm to shop

We have developped 2 distinctive positionings that pull our brands apart. This is innovation as well !

05 December 2013 9

The new communication….

05 December 2013 10

The new communication….

… with clear brand positioning

HOW TO PLAY

To develop an effective portfolio of brands and

products …

WHERE TO PLAY

… organized in a clear architecture

HOW TO ORGANISE

Before innovating, you need to know where to play…

… ready to innovate !

We were then ready to bring innovations to the danish consumers, and to make milk more relevant to new occasions and consumers

12

Nye occasions og salgskanaler Nye behov og nye drikkevarer

Manglende differentiering ......faldende værdi (kilde: Nielsen)

2.906.655

-9%

2.638.514

2012 2008

Mælk - Værdi Mælk - Volume

404.460

2012 2008

+1% 400.435

Starting with a segmentation that, historically, did not reflect the pivotal role of milk in society

“ideel” mælk segmentering

Health & Wellbeing

Kids Fun & Nutrition

Everyday Goodness

Coffee Moments

Cereals/ porridge

Cooking & Baking

Andel af mælke forbrug

Antal SKUs

40 % 15 % 15 % 10 % 10 % 10 %

261 0 0 9 33 20

FEDT %

STØRRELSE

GENLUK

MÆRKE

KONVENTIONEL ØKO

MÆLK LACTOSE FREE

Hence we developped a vision that aims at growing the milk category by 6,4% in the next 5 years

14

“Gør mælk essentielt i et moderne liv” ---------------------

1 ekstra glas hver 2. uge (+DKK 207 mio DKK)

15 MILK Category Strategy 2012

We have identified 6 growth drivers...

Kids and young adults

4 DKK mio

A good start to the day

51 DKK mio

Health and nutrition

53 DKK mio

Time-out 23 DKK mio

Milk through the day

26 DKK mio

Organic 50 DKK mio

Make milk essential to modern life...

Health and nutrition... some examples

Kids and young adults....some examples

A good start to the day....an example

19

Time out + health and nutrition...... some examples

THANK YOU…

Kantar Retail 2012 P\Arla\Yoghurts WS 7\(IM-ss) 20