Leading change– Kalev caseOrkla Top Management Summit

Kalev in a nutshell1806 The Estonian confectionery industry was established by

pastry chef, Swiss Lorenz Cavietzel

1864 The confectionery came into the possession G.J.Stude1940 Predecessors of Kalev: Kawe, Ginovker, Brandmann and

Klausson were nationalized.

1948 Company Kawe was named to Kalev

1991 The State Enterprise of Kalev established

1995 The privatizations of the State Enterprise Kalev and f foundation of public limited company Kalev AS

2003 Kalev new factory complex at Põrguvälja, near Tallinn

2010 May 27th Kalev becomes a member of Orkla Group

2012 Market leader in confectionary (MS42%) in Estonia NSV €35m, EBITA €2,6m 350 employees

Where did we start from?

• Starting point– Lossmaking company without clear strategy and structure– Several unpolished diamonds in the portfolio– Employees anxious for the new beginning– Very high expectations from stakeholders

• Main drivers– Capture the market growth & lost positions– Realize the hidden potential of a great company– Personal ambitions

• Kalev was and is the most recognized brand in Estonia

Step 1- Build Organisation and clarify strategy

• Right people on right seats – example sales director

• Company target setting - 3 years

• Function priorities setting for 1 year• Years have titles

• 2012 Quality • 2013 Innovation

Kalev management team

Step 2- Understand the product portfolio and brands

Emotional portfolio segments Brands

1. We divided all assortment into emotional target group based segments

2. From each segment we took a sub-brand with good awareness and growth potential ...

... AND WE JUST MADE THEM BIGGER

What did we do to achieve better results?

Kalev

Kalev Nostalgic

Kalev Classic

Kalev Desiree

Kalev Finest

Kalev Vilma

Kalev Season

Kalev Tourist

Leaders define the future business potential

Old type wafer candy Modern and attractive family range

MESIKÄPP

DRAAKON

Old type chewing candy Cute children range

Step 3- Improve productivity & build systems

Lead the way in changing company’s culture “Leadership by example”

• Demonstrate the “burning platform“

• Set the ambitious targets

• Communicate

• Fast implementation

• Measurements “Deliver day after day“

• Celebrate short-term wins

Implement new systemsOFSS, Work Safety, Contingency plans, 24h loop, reporting structures

Kalev delivered substantial growth in all KPIs

*

25000

28089

34877

38090

5867

6265

8106

8940

5000

6000

7000

8000

9000

10000

0

5000

10000

15000

20000

25000

30000

35000

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2010 2011 2012 2013

NSV k€Volume th.t

*NSV +40%, Volume + 38% CM+38%, EBITA + 8,6X

EVA change +2,05m€Productivity +25%Market share from 38 to 42%

Step 4- Invest in the future

Once the basis has been established invest in the future both:

Physically Mentally

Kalev vision and mission statements

VISION Kalev is a quality and category leader, a recognized sweets expert in Baltics.

MISSIONWe offer taste enjoyments that make your day sweeter. Kalev is the proof of living traditions that last for centuries.

CORE VALUESPERSISTANCE PASSION PRECISION CARE

SLOGANSweet moments of life!

Kalev 2012-2015 ambitious targets

GOOD

GREAT

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Delivered

Other learnings

• Do not underestimate the importance of MOMENTUM („Tipping Point“ M.Gladwell).

• Strong combination of a good ideas (direction/strategy) and good execution, then You are likely to be a winner!

• Fish goes rotten head Try to stay healthy shark

Say what you do.

Do what you say.M. Aru

Thank you!