INVESTOR AND ANALYST DAY FRIDAY 18TH MAY 2012 - Bakkavor
INVESTOR AND ANALYST DAY FRIDAY 18TH MAY 2012 - Bakkavor
INVESTOR AND ANALYST DAY FRIDAY 18TH MAY 2012 - Bakkavor
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<strong>INVESTOR</strong> <strong>AND</strong> <strong>ANALYST</strong> <strong>DAY</strong><br />
FRI<strong>DAY</strong> 18 TH <strong>MAY</strong> <strong>2012</strong><br />
1
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
2
OUR MANAGEMENT BOARD<br />
Agust Gudmundsson<br />
Group CEO<br />
Peter Gates<br />
CFO<br />
Ann Savage<br />
Group Technical<br />
Director<br />
Gordon Pates<br />
CEO<br />
UK & Europe<br />
John Gorman<br />
President<br />
<strong>Bakkavor</strong> USA<br />
Einar Gustafsson<br />
Managing Director<br />
<strong>Bakkavor</strong> Asia<br />
Ivan Clingan<br />
Managing Director<br />
Prepared Produce<br />
Mike Edwards<br />
Managing Director<br />
Meals Solutions<br />
Steve Broadbent<br />
Managing Director<br />
Convenience Foods<br />
3
WHAT MAKE US DIFFERENT<br />
The quality and experience of our<br />
people<br />
Our scale and expertise in the<br />
fresh prepared market<br />
Our market insight and constant<br />
innovation<br />
Our mix of customers and<br />
long-term relationships<br />
Outstanding technical standards<br />
International spread<br />
A relentless focus on quality in<br />
everything we do…<br />
4
KEY PRIORITIES FOR <strong>2012</strong><br />
Exert our leadership in key<br />
markets<br />
Drive our customers’ growth plans<br />
with innovation<br />
Targeted capex for higher returns<br />
Invest in our people<br />
Always get the basics right!<br />
5
PROJECT NEW<br />
Early conversion<br />
– Removes uncertainty for <strong>Bakkavor</strong> regarding refinancing or conversion by June 2014<br />
– Removes uncertainty for note holders and provides them with a potentially more marketable<br />
asset<br />
– Repayment before 2014 was unlikely, so holders start to benefit from equity upside now<br />
Redomicile holding company<br />
– Aligns to underlying composition of business<br />
– Allows access to wider capital markets<br />
– Simplifies compliance with single jurisdiction<br />
Covenant reset<br />
– Leverage headroom much tighter than forecast due to unprecedented external factors in<br />
2011<br />
– Compliance still achievable, but would have required short-term measures<br />
– Allows better long-term focus for management<br />
Equity injection<br />
– Demonstrates strong support from founders<br />
– Facilitates decision-making process for other interested parties<br />
More details to follow AGM on May 23rd<br />
6
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
7
UK TEAM<br />
Gordon Pates<br />
CEO<br />
UK & Europe<br />
Ivan Clingan<br />
Managing Director<br />
Prepared Produce<br />
Mike Edwards<br />
Managing Director<br />
Meals Solutions<br />
Steve Broadbent<br />
Managing Director<br />
Convenience Foods<br />
8
GUIDING PRINCIPLES<br />
Customers<br />
Consumers<br />
Convenience<br />
Pipelines<br />
Excellence<br />
Innovation<br />
9
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
11:35<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
10
INNOVATION – making it STICK<br />
Trends<br />
Market Insight<br />
Consumer Insight<br />
Brainstorm Selection Develop Test Refine<br />
LAUNCH !<br />
Understanding Creating Reviewing<br />
To deliver winning innovation we must ensure STICKABILITY<br />
through investment in understanding the consumer (their needs), market and trends<br />
11
INNOVATION – SOUPS & SAUCES<br />
LAUNCHED<br />
PIPELINE<br />
RATIONALE:<br />
Compete with New<br />
Covent Garden<br />
Launching “Skinny’s” &<br />
“Loaded” extensions<br />
RATIONALE:<br />
Deconstructed – clear<br />
visible veg (healthy soup)<br />
RATIONALE:<br />
Premium offer with shopper<br />
interactive (freshness)<br />
RATIONALE:<br />
Capitalising on consumer<br />
trend – SLOW COOKING<br />
RATIONALE:<br />
Premiumisation<br />
RATIONALE:<br />
Driving brands<br />
12
INNOVATION – DESSERTS<br />
LAUNCHED<br />
PIPELINE<br />
RATIONALE:<br />
Premium offer in Cake<br />
Shop - (driving trade<br />
up)<br />
RATIONALE:<br />
Extend range on<br />
informal snacking trend<br />
RATIONALE:<br />
American inspired<br />
flavours & formats to<br />
drive younger<br />
shoppers<br />
RATIONALE:<br />
Addressing guilt factor<br />
INNOVATION – DIPS / SALADS<br />
LAUNCHED<br />
PIPELINE<br />
4 Consumer Platforms:<br />
RATIONALE:<br />
Improved product visibility & less<br />
packaging<br />
RATIONALE:<br />
Topped & visual dips<br />
– drive variety<br />
Food on the Go<br />
Party Offers<br />
Premiumisation<br />
Kids<br />
RATIONALE:<br />
Driving interest in a<br />
basic category<br />
Consumer research groups<br />
May <strong>2012</strong> to review & develop<br />
new innovation platforms<br />
14
4 POINT PLAN<br />
1. Protect Core Business<br />
– Strong category plans that delight our customers<br />
– Clear Market Experts<br />
2. Deliver Efficiencies<br />
– Drive efficiencies through factory performance<br />
– Deliver the Basics Well – Right First time<br />
3. Launch Innovation that Sticks<br />
– Understand – Create – Review<br />
– Ensuring consumer insight is at the heart of our development<br />
4. Share Gaining Key Markets<br />
15
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
11:35<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
16
BUSINESS OVERVIEW<br />
Prepared Produce<br />
17
WHAT IS PREPARED PRODUCE<br />
Prepared Salads<br />
Prepared Fruit<br />
Prepared Veg<br />
Sauces/Dressings<br />
18
GROWTH DRIVERS FOR PREPARED PRODUCE<br />
Fresh & Healthy<br />
– Naturally healthy<br />
– Easy way to help achieve 5 a Day<br />
Convenience<br />
– UK consumers increasingly “time fussy”<br />
– Prepared continuing to show growth above Wholehead<br />
No Waste<br />
– Consumers increasingly concerned about Food Waste<br />
– Prepared delivers the right portion size and no waste<br />
Choice<br />
– Offering varieties unavailable anywhere else (eg Rocket, Watercress)<br />
Value For Money<br />
– Appropriate portion sizes = zero waste<br />
– No need to purchase Wholehead equivalents (eg a whole Watermelon, a whole Mango)<br />
19
Prepared Salads<br />
20
WHAT ARE PREPARED SALADS<br />
Bagged Salads<br />
Trays & Bowls<br />
Meal Salads<br />
21
PREPARED SALADS PROCUREMENT<br />
Bakkavör source Salads from 13 different<br />
countries<br />
35% sourced from UK<br />
97% of all Salads sourced from within Europe<br />
Long established partnerships with world class<br />
growers<br />
– Agreed year round programmes<br />
– People on the ground, walking the fields every day<br />
US contingency (California & Florida)<br />
– During Feb 12 Spinach crisis, <strong>Bakkavor</strong> were the<br />
only company bringing Spinach into the UK<br />
Bakkavör buy & process 55 different types of<br />
Lettuce and 20 different Herbs<br />
We buy the equivalent of 25 football fields worth<br />
of Iceberg per week<br />
We operate around 100 trucks per week from<br />
Spain in the Winter<br />
22
Prepared Veg<br />
23
WHAT ARE PREPARED VEGETABLES<br />
Prepared Veg<br />
Prepared Potatoes<br />
Stir Fry<br />
24
PREPARED VEG PROCUREMENT<br />
Bakkavör source Veg from 12 different countries<br />
Much higher proportion from the UK than Salads – 79%<br />
Wherever possible we source locally – most of our Stir Fry ingredients are grown in Lincolnshire<br />
Non UK is a combination of risk management & geographical expertise (eg Ginger from China)<br />
80% of our Cabbage comes from Lincolnshire<br />
We pack 40m units of Mashed Potato per year including 1m in the week before Christmas<br />
We buy more Potatoes than M&S and Waitrose sell between them<br />
If we grew our Onions in Hyde Park, we would need 4 of them!<br />
We grow Beansprouts as part of our Bourne Stir Fry operation<br />
25
Prepared Fruit<br />
26
WHAT IS PREPARED FRUIT<br />
27
PREPARED FRUIT PROCUREMENT<br />
• Over 70% of Fruit comes from 3 countries<br />
• To ensure consistency of supply, we currently source from 30<br />
different countries<br />
Spain 22%<br />
Costa Rica 32%<br />
Brazil 17%<br />
28
PREPARATION AT SOURCE<br />
Geographical spread ensures consistent supply of ‘best in market’ quality<br />
Spring Valley (South Africa) allows us to pick, pack and then fly to UK within 24 hours<br />
– Utilises high quality locally grown produce in its peak season<br />
– Low cost/highly skilled labour-force<br />
– Products air-freighted to UK within 24hrs of produce being picked (on scheduled<br />
flights)<br />
– Avoids shipping waste<br />
Spring Valley also supply Woolworths SA<br />
Tropical Fresh (Brazil)<br />
– Operates in a similar way to Spring Valley<br />
– Optimising locally grown crops when they’re at their best quality/taste<br />
29
PREPARED PRODUCE: KEY INNOVATIONS<br />
Salads<br />
Fruit<br />
Veg<br />
Water Only Washing initiatives at Alresford, Tilmanstone & Wingland<br />
Investment behind contaminant removal (eg Raytec)<br />
New washing technology at Wingland (heat shock)<br />
New nut handling facility at Caledonian<br />
Geographical spread ensures consistent supply of ‘best in market’ quality<br />
– Sun Ripened Melon grown, packed and supplied from South Africa for M&S<br />
– Tree Ripened Mango grown, packed and supplied from Brazil for M&S<br />
– Prepared Banana was a technical first to market for M&S from Tropical Fresh<br />
Our Mung Bean sourcing & Beansprout growing is market leading<br />
Bakkavör connections with China allow us to procure differently<br />
– Best quality, risk management, UK standards<br />
Local sourcing where possible to guarantee better quality/freshness<br />
30
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
11:35<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
31
SECTOR PRIORITIES<br />
1<br />
Relentless focus on the basics (pace & passion)<br />
Getting the day job right<br />
2<br />
Define & develop core competencies (reasons for being)<br />
Invest in process & quality leadership<br />
3<br />
Optimise model (in the broadest sense)<br />
Drive efficiency & maximise value<br />
4<br />
Aggressively drive sale & share (plan to be full)<br />
Be bold, be busy & leverage investments<br />
5<br />
Lead with product (all about great food)<br />
Never lose on product!<br />
32
CUSTOMER MODEL…(BEING FAMOUS FOR!)<br />
Category Outperformance<br />
………To be the supplier of choice with products that delight<br />
Putting<br />
Customers<br />
First<br />
Structure for<br />
delivery &<br />
execution<br />
Driving<br />
Quality &<br />
Freshness<br />
Foundations<br />
Audit Status<br />
Insight &<br />
Thought<br />
Leadership<br />
Driving an Innovation Pipeline<br />
Win in Core<br />
Better Products<br />
Newness<br />
Proper<br />
Innovation<br />
(1 st s)<br />
Best People<br />
Focussed &<br />
rigorous<br />
Business Process<br />
Control<br />
Benchmarking<br />
Complaints<br />
Withdrawals<br />
Investment<br />
Plant<br />
People<br />
Pipeline<br />
Leverage<br />
Occasions<br />
Product<br />
Presentation<br />
Formats<br />
Pace, Passion & Step Change Mentality<br />
Clarity, Focus & Rigor<br />
33
<strong>2012</strong> PIPELINE FOR GROWTH<br />
Tesco Pizza<br />
win<br />
Leverage<br />
Frying<br />
Material Pizza<br />
Share Gain<br />
Stretch Bread<br />
ISB/Ambient<br />
Jan ‘12 Dec ‘12<br />
Strong<br />
Promotional<br />
Calendar<br />
Leverage<br />
Italian Meals<br />
Step Change<br />
Indian Re-<br />
Launch<br />
34
OUR AMBITION<br />
1<br />
To be better at what we do<br />
2<br />
To get even closer to our customers<br />
3<br />
To grow our share, be winners not losers!<br />
35
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
11:35<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Prepared Produce<br />
Convenience Foods<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Gordon Pates, UK & Europe CEO<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
36
GOVERNANCE<br />
Structure of the Quality Management System<br />
Continuous<br />
Improvement<br />
Policy<br />
&<br />
Standards<br />
Quality<br />
Management System<br />
WHAT WE NEED TO<br />
ACHIEVE –<br />
Customer, Legal etc<br />
WHAT WE DO<br />
Procedures<br />
HOW WE DO IT<br />
e.g. processes and training records,<br />
GMP checks, start-up checks,<br />
hygiene records, audits , corrective and<br />
preventative action, management review<br />
VALIDATION WE DO<br />
WHAT WE SAY<br />
WE DO<br />
37
GOVERNANCE – BAKKAVOR ST<strong>AND</strong>ARDS<br />
Support the business to deliver Regulatory and<br />
Customer requirements<br />
Consistency “all Bakkavör sites”<br />
Support Due Diligence<br />
Give clarity for Audit purpose<br />
38
GOVERNANCE - PEOPLE<br />
Recruitment<br />
Training<br />
DAS<br />
Expertise - microbiology, thermal processing, agronomy<br />
etc.<br />
39
GOVERNANCE - AUDITS<br />
Food Safety<br />
– Announced and unannounced<br />
– Systems and compliance<br />
– Verification of food safety controls by food safety experts<br />
Health & Safety<br />
– Annual business unit inspections with system review<br />
– Verification of Health & Safety management<br />
Resolution of non-conformances through agreed action<br />
plans<br />
40
GOVERNANCE – KPIs<br />
Monthly reporting of KPIs<br />
Radar summary by business<br />
Agreed actions to address any significant trends<br />
41
GOVERNANCE – COMMUNICATION<br />
Shared learnings and Best Practice<br />
Newsletters<br />
Annual conferences<br />
Forums<br />
Boundary scanning activities<br />
42
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
11:35<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to UK Management Team<br />
Business Overviews<br />
Prepared Produce<br />
Convenience Foods<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Gordon Pates, UK & Europe CEO<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO<br />
43
DISCLAIMER<br />
The issue and distribution of this Presentation and the corresponding Bakkavör Finance (2) plc report on which it is based is restricted by law. This<br />
Presentation and the report are not being distributed by, nor have they been approved for the purposes of section 21 of the Financial Services and Markets Act<br />
2000 (the “FSMA”) by, a person authorised under the FSMA. This Presentation and the report are for distribution only to persons who (i) investment<br />
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial<br />
Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc.”) of the Financial<br />
Promotion Order, or (iii) are outside the United Kingdom (all such persons together being referred to as “relevant persons”). This Presentation and the<br />
report are directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment<br />
activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons. No part of this Presentation or<br />
the report should be published, reproduced, distributed or otherwise made available in whole or in part to any other person. Any person who is not a relevant<br />
person should not act or rely on this document.<br />
This Presentation and the report do not constitute a prospectus in whole or part. This Presentation and the report does not constitute or form part of and should<br />
not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities in any jurisdiction or an inducement to enter into<br />
investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or<br />
commitment or investment decision whatsoever. The information contained in this document has not been independently verified and no representation or<br />
warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or<br />
opinions contained herein. None of Bakkavör Finance (2) plc, any of its parent companies or subsidiaries, or any of its affiliates, advisers or representatives<br />
shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or report or its contents or<br />
otherwise arising in connection with this Presentation or report.<br />
This Presentation and the report include “forward-looking statements” within the meaning of the U.S. securities laws and certain other jurisdictions, based on<br />
our current expectations and projections about future events. All statements other than statements of historical facts included in this Presentation and the report<br />
including, without limitation, statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures,<br />
projected costs and our plans and objectives for future operations, may be deemed to be forward-looking statements. These forward-looking statements are<br />
subject to a number of risks and uncertainties. Words such as “aim”, “anticipate”, “assume”, “believe”, “continue”, “could”, “estimate”, “expect”, “forced”,<br />
“guidance”, “intend”, “may”, “plan”, “potential”, “predict”, “projected”, “risk”, “should”, “will” and similar expressions or the negatives of these expressions are<br />
intended to identify forward-looking statements. In addition, from time to time we or our representatives, acting in respect of information provided by us, have<br />
made or may make forward-looking statements orally or in writing and these forward-looking statements may be included in but are not limited to press<br />
releases (including on our website), reports to our security holders and other communications. By their nature, forward-looking statements involve known and<br />
unknown risks, uncertainties and other factors because they relate to events and depend upon circumstances that may or may not occur in the future. Although<br />
we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be<br />
correct and that such statements are not guarantees of future performance because they are based on numerous assumptions. Any forward-looking statement<br />
speaks only as at the date on which it is made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result<br />
of new information, future events or otherwise. The information contained in this Presentation and the report is provided as at the date of this document and is<br />
subject to change without notice.<br />
44
<strong>INVESTOR</strong> <strong>AND</strong> <strong>ANALYST</strong> <strong>DAY</strong><br />
FRI<strong>DAY</strong> 18 TH <strong>MAY</strong> <strong>2012</strong>
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to Senior Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to Senior Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO
Market Strategy<br />
‘Winning In A Challenging Market’<br />
Investor Day May <strong>2012</strong><br />
Guy Hayden<br />
Head of Group Marketing
Content<br />
1. Economic & Consumer Trends<br />
2. Impact on our Markets<br />
Content<br />
1. 3. Economic Bakkavör & Consumer Marketing Trends Strategy<br />
4. Outlook for Chilled Convenience<br />
5. How <strong>Bakkavor</strong> will Win
MARKET ENVIRONMENT<br />
Consumer confidence – All Time low<br />
Unemployment at a 15 year high<br />
Inflation (Utilities / Fuel / Food)<br />
No real wage increases<br />
Static or falling benefits<br />
Rising cost of borrowing (base rate)<br />
Falling value of Assets – House prices<br />
Consumers squeezed = UK Food consumption Declining
HOW DO CONSUMERS FEEL<br />
How will your spending over next 12 months<br />
change compared with last year<br />
Increase<br />
a lot<br />
Increase<br />
a little<br />
39%<br />
agree<br />
23%<br />
disagree<br />
38%<br />
Stay about<br />
the same<br />
I was generally a happier person before the<br />
current economic downturn<br />
43% of Household believe the economic situation will get worse!
CONSUMER COPING STRATEGIES<br />
Economising for the year ahead<br />
– 46% of shoppers plan to save money the next six months<br />
Selective Down Trading and Savvy tactics<br />
– A quarter of all shoppers say they will shop for the best deals<br />
Demanding promotional expectations<br />
– 70% shoppers say promo’s determine where they shop<br />
Little ‘n often<br />
– More frequent shops + different channels e.g. convenience stores<br />
– Pay day focus<br />
Planned spontaneity<br />
– 67% now pre plan their food shopping before they even get to a store<br />
Online & Mobile shopping<br />
– 56% of shoppers say they are interested in using a smart phone to shop food<br />
– Online food shopping expected to reach £11.2bn by 2016 (c.15% of all grocery)<br />
Consumer behaviour changing more rapidly than at any time in last 10 yrs
Content<br />
1. Economic & Consumer Trends<br />
2. Impact on our Markets<br />
Content<br />
1. 3. Economic Bakkavör & Consumer Marketing Trends Strategy<br />
4. Outlook for Chilled Convenience<br />
5. How <strong>Bakkavor</strong> will Win
WHY OUR MARKETS OUTPERFORM<br />
Lifestyle – Consumers not prepared to sacrifice convenience<br />
New generation of convenience buyers – lack of guilt<br />
Lack of cooking skills<br />
Affordability – Promotions have driven penetration<br />
Eating out at Home<br />
Innovation & Newness<br />
Importance to retailers – cash generative / high Value<br />
Convenience Markets are discretionary<br />
We must continue to give consumers a ‘reason’ to shop
Content<br />
1. Economic & Consumer Trends<br />
2. Impact on our Markets<br />
Content<br />
1. 3. Economic Bakkavör & Consumer Marketing Trends Strategy<br />
4. Outlook for Chilled Convenience<br />
5. How <strong>Bakkavor</strong> will Win
5P’S FOR CONNECTING WITH CONSUMERS<br />
Opportunities for Brands & Companies<br />
P<br />
PROTECTION:<br />
Protecting consumers from uncertainty and risk<br />
Quality<br />
VFM<br />
Trust = Brands<br />
P<br />
PRACTICAL:<br />
Helping consumers to plan and to be more self-reliant<br />
Meal Solutions<br />
Meal Deals<br />
P<br />
PERMISSION:<br />
Encouraging people to make connections and see the positives<br />
of a life with less<br />
Right Promo’s<br />
Clear Tiering<br />
Indulgence<br />
Treats<br />
P<br />
PURPOSE:<br />
Giving people new meaning and purpose to their lives<br />
Reward Loyalty<br />
Time savers<br />
Newness<br />
P<br />
PRIDE:<br />
Re-building a sense of pride and achievement<br />
Ethical<br />
(computers for schools)<br />
Engage<br />
(feedback/involvement)
INVESTING IN INSIGHT – RIGHT TOOLS<br />
The Customer is at the heart of everything we do<br />
Quantified data<br />
Research & Insight<br />
‘In House’<br />
Consumer Panel<br />
Critical to our success<br />
With Tesco<br />
Advanced shop<br />
New Initiatives<br />
Investing in the<br />
Most accurate data<br />
Promoflag – all cats<br />
Filling the gaps<br />
More robust analysis<br />
Wide range of Insight<br />
Beyond normal<br />
Qual & Quant<br />
e.g. Futures co<br />
Agencies that bring<br />
New insight<br />
BV is Unique<br />
In having its own<br />
‘On Line’<br />
Research community<br />
Upgraded to<br />
3000 respondents<br />
Integrate Supershopper<br />
with talking Food<br />
Shelf review build into<br />
std contract all categories<br />
Trialist for scan data
THE WORLD OF OWN LABEL IS CHANGING..<br />
More complex environment<br />
Consumer Targeting<br />
Loyalty<br />
Inspiration<br />
Need to<br />
understand what<br />
the consumer and<br />
retailer want in the<br />
short term -<br />
Deliver!<br />
Communication/PR<br />
[<br />
Investment<br />
In<br />
Growth<br />
Diversification<br />
We are<br />
adapting &<br />
responding<br />
to those<br />
Challenges<br />
Formats/Channels<br />
Technology<br />
1<br />
Consumer Driven<br />
Innovation
Content<br />
1. Economic & Consumer Trends<br />
2. Impact on our Markets<br />
Content<br />
1. 3. Economic Bakkavör & Consumer Marketing Trends Strategy<br />
4. Outlook for Chilled Convenience<br />
5. How <strong>Bakkavor</strong> will Win
MACRO TRENDS – IMPACT ON £ GROWTH<br />
Smart<br />
shopping<br />
Ethical<br />
consumption<br />
Wellbeing<br />
Food<br />
confidence<br />
Enjoyment &<br />
indulgence<br />
Convenience<br />
Promo’s<br />
Substitution<br />
Substitution<br />
Fresh<br />
Foods<br />
Meal deals<br />
Solutions<br />
Time<br />
Pressure<br />
<strong>Bakkavor</strong> WELL positioned to leverage growth drivers<br />
Breadth/Scale/Market leading position
Content<br />
1. Economic & Consumer Trends<br />
2. Impact on our Markets<br />
Content<br />
1. 3. Economic Bakkavör & Consumer Marketing Trends Strategy<br />
4. Outlook for Chilled Convenience<br />
5. How <strong>Bakkavor</strong> will Win
WINNING IN A CHALLENGING<br />
ENVIRONMENT<br />
1<br />
Connecting with the needs of our shoppers / consumers<br />
– Consumer Led Innovation – it works!<br />
– Brands to engender trust (where appropriate)<br />
2<br />
Thought leadership – where next / what are the big trends<br />
3<br />
Providing complete retailer solutions – Category leadership<br />
– Loyalty / formats / internet / Tiering<br />
– Support – Promo’s / PR / last 5 yards<br />
4<br />
Understanding & beating our competition<br />
5<br />
Best at what we do!
SUMMARY<br />
Leveraging our insight to<br />
deliver<br />
sustainable<br />
&<br />
profitable growth<br />
‘Well Known’<br />
Cake Shop<br />
NYSC<br />
Restaurant Brand
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to Senior Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO
Chilled Soups – Introducing a new brand
THE ISSUE<br />
– in store activity simply moving customers between the brands,<br />
not growing the category<br />
Promotional activity driving substitutions<br />
not growth<br />
Role of the brand unclear
WHAT WE DID: THE NEW YORK SOUP CO<br />
“A range of exciting new flavours inspired by the fresh deli’s and soup bars of New York”<br />
Independent<br />
Sensory Testing<br />
•After tasting 92% said they would buy from the range.<br />
Talking Food Online<br />
Community<br />
Very likely<br />
39%<br />
46%<br />
85% of respondents very likely / likely to<br />
purchase.<br />
Very unlikely<br />
Focus Groups<br />
•The NYSC has “high retrospective recognition” with consumers<br />
instantly expressing familiarity and trust for the brand.
WHAT WE DID: SUPPORT PLAN<br />
Clubcard<br />
•Targeting premium & upmarket shoppers<br />
•Utilising Supershopper database<br />
Promotions<br />
•Strategy designed to limit customer<br />
switching<br />
•Rotate mechanics to drive all consumer<br />
measures - Penetration / AWP<br />
Marketing / PR<br />
•NYSC - POS / PR & Press Drop<br />
•NYSC - Real Food<br />
Dot Com<br />
•Establish on favourites list<br />
Tesco.com
THE RESULTS<br />
Winning on market share<br />
Winning with customers<br />
• 55% of customers buying NYSC<br />
hadn't purchased into the soups<br />
category in the previous 20 weeks<br />
Winning with our Retailer<br />
• <strong>Bakkavor</strong> delivered +£3.1m<br />
incremental sales over last 13 weeks<br />
• 20% branded soup sales coming from<br />
NYSC with further commitment on<br />
developing the brand further<br />
Source: BV Market Matrix
THE NEW YORK SOUP CO <strong>2012</strong> & BEYOND<br />
Year 1 NYSC sales on target<br />
to deliver £5m<br />
Introducing 3 New<br />
York Co Skinny<br />
soups – May <strong>2012</strong>
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to Senior Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO
Cake Shop<br />
Driving the CREAM CAKES<br />
category forward
CREAM CAKES: THE ISSUES…<br />
Bought by older shoppers<br />
77% of spend is from shoppers over 45 years<br />
32% of these are over 65 yrs<br />
Need to attract<br />
younger shoppers<br />
NPD is hard to stick<br />
Deliver what<br />
shoppers WANT<br />
High inflation on cream but<br />
retail prices are LOW<br />
Need to increase<br />
retail prices<br />
(£/kg is dropping – now £1.05/kg was £1.88/kg )
CREAM CAKES: THE ISSUES…<br />
Patisseries / Bakers:<br />
Specialists<br />
Supermarkets:<br />
£2.40<br />
for 1<br />
98p<br />
for 1<br />
£1.25<br />
1.25-£1.60<br />
1.60<br />
For 1<br />
£1<br />
for 2<br />
Price per cake:<br />
98p - £2.40<br />
Price per cake:<br />
£1.25 - £1.60<br />
Price per cake:<br />
50p
CREAM CAKES: THE ISSUES…<br />
50p<br />
each<br />
54p<br />
Supermarket Cream Cakes is parable in price<br />
to a Mars Bar!<br />
Commodity based market – need to drive the value
CURRENTLY NO PREMIUM OFFERING<br />
Opportunity to drive premium offering in cream cakes<br />
– Higher retail prices<br />
Total Desserts:<br />
Cream Cakes:<br />
Premium<br />
18%<br />
Premium<br />
1%<br />
Standard<br />
80%<br />
Standard<br />
99%<br />
Value<br />
2%<br />
Value<br />
0%
THE PROCESS<br />
Stages<br />
Discover<br />
Discover: Competitive Context<br />
Assumption workshop<br />
Review competitors (Bakers/Patisseries)<br />
Explore Ideas<br />
Creativity workshops<br />
Consumer diaries<br />
Accompanied shops<br />
In store Inceptions<br />
(Establish wish list)<br />
Develop Concepts<br />
Develop propositions, Mood Board<br />
Packaging Ideas<br />
Test<br />
Focus Group Discussions<br />
Test ideas with shoppers<br />
Re-develop Offer<br />
Test again with shoppers
WHAT DID WE LEARN…<br />
Existing shoppers (Traditionalists) and younger shoppers<br />
loved the concepts<br />
Bridge the gap between deli/patisserie & supermarkets<br />
(Driving the emotion through the offer)<br />
Driving new younger<br />
shoppers & current<br />
shoppers trading up<br />
Ability to charge higher<br />
prices<br />
But, the products have to deliver ………<br />
Deli Style Products Core Products Different Packaging<br />
OOZing<br />
with<br />
CREAM<br />
Hand finished<br />
Deliver the classics<br />
Paper cases<br />
let the products do the<br />
talking……
HOW WE DEVELOPED THE RANGE…<br />
Current offering<br />
Deli Style Products<br />
Oozing with cream<br />
Hand finished<br />
Strong visuals<br />
Different Packaging<br />
Paper cases<br />
Clear packs<br />
New design
SUPPORT PACKAGE…<br />
Journalist launch - Jan <strong>2012</strong><br />
drive awareness in-store …..<br />
Point of Sale<br />
In-store Sampling<br />
Intro offer<br />
Branded Cool bag &<br />
Samples – Tesco<br />
Directors
LAUNCHED 19 TH MARCH…<br />
19 th March in TESCO (No 1 Cream Cake Retailer)<br />
NPD that works<br />
Estimated<br />
Annual £<br />
£5m<br />
(RSV)<br />
Attract Younger shoppers<br />
Increase shoppers
TO<strong>DAY</strong>’S AGENDA<br />
09:00<br />
09:15<br />
09:30<br />
10:30<br />
10:50<br />
11:10<br />
11:15<br />
12:05<br />
12:30<br />
13:25<br />
16:00<br />
Welcome<br />
Introduction to Senior Management Team<br />
Business Overviews<br />
Convenience Foods<br />
Prepared Produce<br />
Meal Solutions<br />
Technical and Health & Safety<br />
Coffee Break<br />
Investing for a sustainable future<br />
Marketing strategy<br />
Innovation Case Studies<br />
New York Soup Company<br />
Tesco Cake Shop<br />
Wrap Up and Q&A<br />
Product Lunch<br />
Depart for Factory Tours<br />
Depart for Paddington<br />
Agust Gudmundsson, CEO<br />
Gordon Pates, UK & Europe CEO<br />
Gordon Pates, UK & Europe CEO<br />
Ivan Clingan, MD<br />
Mike Edwards, MD<br />
Ann Savage, Group Technical Director<br />
Gordon Pates, UK & Europe CEO<br />
Guy Hayden, Head of Group Marketing<br />
Claire Smith, Marketing Manager<br />
Kim Burgess, Marketing Manager<br />
Agust Gudmundsson, CEO
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