Profitable growth in markets and reliable brands with an excellent value for money relation

crecimiento rentable en los mercados y marcas confiables

PROFITABLE GROWTH IN MARKETS AND RELIABLE BRANDS WITH AN EXCELLENT VALUE FOR MONEY RELATION

G4-DMA

Purpose

Grupo Nutresa offers its clients leading and trustworthy brands with an excellent value for money.

Grupo Nutresa offers its clients leading and trustworthy brands with an excellent value for money.

 

To develop current and new markets by understanding the needs, motivations and intentions of consumers, shoppers and customers, and creating value by capitalizing opportunities.

Also, to understand the new realities of the market, culture and society through our brand and distribution model management, with a portfolio of products that looks to be close to consumers in their pursuit of consumer life quality.

Strategy and Progress 2015

Strategy Progress 2015
Strengthen the brand capital. ico_f_verde

Grupo Nutresa consolidated the differentiation of the main brands generating leadership in these categories, within the strategic region, as well as recognition and preference by consumers.

Strengthen brands and distribution network. ico_f_verdeOscuro

The internationalization of the brand and distribution model allows the company to prioritize, give focus and cover new market segments.

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Innovation and communication strengthened brands, such as Zuko, Lucchetti, Pozuelo, BON, POPS, Zenú, Doria, Colcafé, Jet, Saltín Noel and Crem Helado, among others.

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Spreading the rank of segments and their internationalization (i.e. Tosh, Festival, among others) of the main brands gave new possibilities.

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Mexico, implemented a new pasta production line under the Lucchetti brand as leverage for relevant and differentiated innovation.

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AbiMar Foods, in the United States, launched a cracker production line.

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Grupo Nutresa extended its Colombian main Go to Market model to the other networks and countries.

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The Chocolate Business strengthened its industrial networks in the United States.

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Malaysia consolidated its industrial operation, along with its business development in Asian and European markets.

Boost profitable growth through innovations that increase the value of the categories. ico_f_verdeA

Special products were developed for each segment, which guarantees the value proposition.

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To focus resources on the main brands we removed some product formats from the portfolio.

Develop the pricing management model. ico_f_amarillo

The organization developed strategic price, promotions and innovations management capabilities for consumers. In addition, we implemented analytics tools to capitalize brands’ value.

Risks and Opportunities

Collaborators from Comercial Nutresa assuring product availability for the consumer.

Collaborators from Comercial Nutresa assuring product availability for the consumer.

 

The economic setting presents new risks. Product costs can be impacted due to the strengthening of the US Dollar; increasing prices of some commodities and taxes.

To reduce the chances of these costs being transferred into higher prices for consumers, efforts are focused on productivity, focus on purchase management for commodities with a high impact on costs, package adaptation to ensure shopper accessibility, as well as business and marketing strategies.

Another identified risk is the non–tariff barriers in some countries in the Andean region that affect markets where Grupo Nutresa operates, impacting the ability to reach the distribution channel (accessibility) and the affordability of some product formats in the portfolio. The Organization is working proactively to minimize negative impact and detect new areas of opportunity to boost results.

Changes in health legislation and nutritional profiles in the strategic region require strengthening in research and adjusting brands’ value proposition in packaging, price, formulation and communication. With this, Grupo Nutresa seeks to maintain consumer preference, while obtaining best practices in the rest of the region.

Grupo Nutresa developped different strategies to actively participate in all types of retail formats, specially the new entrants in our region, that targets low prices and private labels.

Future Perspectives

New image of Pops ice cream shops in Central America.

New image of Pops ice cream shops in Central America.

 

The brand and distribution model will continue to leverage business results to meet the objectives by 2020, especially growth, market leadership and international expansion, by developing main brands.

The Organization faces changes related to globalization and its effects on the dynamic of its markets and new businesses. Volatile markets and climatic effects will impact prices of raw materials. Thus, it seeks to offset the impact on profitability, supported by an increase in operations’ efficiency, specialization of the purchase management of raw materials, effectiveness in innovation and internationalization of the main brands and strengthening in consumer loyalty.

Grupo Nutresa is constantly facing new challenges in order to interpret and respond to consumer expectations in relation to changes in population and culture through a new vision of future, sustainable development, a broad life expectancy and healthy aging, among others. Therefore, to achieve the 2020 goals the company plans: international capabilities development in distribution and production processes, focus and internationalizations of brands under the Grupo Nutresa brands and distribution model, and effective innovation through trusted brands with excellent Price–Value Relation.

Remarkable Achievements

Ipsos Napoleón Francoicono estrella calidad

As a result of the effectiveness of the brand and distribution system model, the research firm Ipsos Napoleón Franco showed that Grupo Nutresa brands obtain positions of leadership in Effective Equity and the distribution system achieves levels of excellence in customer satisfaction and loyalty.

Progress 2015

Progreso 2015

THE BRAND MANAGEMENT MODEL

The brand and distribution model is the backbone of Grupo Nutresa’s commercial strategy, connecting it to the current market, culture and society realities.

The model inspires and stimulates commercial activities and has human beings at its center, by understanding that in their role as consumers and buyers, they are connected to brands with emotional closeness, excellent Price–Value Relation and an optimal product portfolio.

2015 was a year of progress in deepening the understanding of consumers and particularly in the role of the buyer.

Grupo Nutresa extended transversally the consumer segmentation model. The needs and drivers of nutrition open spaces to develop and focus on brands offering the consumer a value proposition to improve their quality of life. We advanced in interiorizing buyers’ perspective that begins from the intention of the consumption occasion and proposes a holistic view of the buying–consumption process.

Through productive platforms and the development of business networks, international expansion allowed us to exploit synergies, complement portfolios and become more competitive. In 2015, the brand management model was incorporated into the international context.

From Grupo Nutresa’s industrial operation and that of its partners, commercial development in Asia continued with a 12.8% growth in tons at the end of 2015. Supply chains of coffee products from Malaysia to Colombia and for other strategic markets were developed.

Meanwhile, the Ice Cream Business consolidated the renewal of the image in ice cream parlors in Central America with POPS and in the Dominican Republic with BON, added to innovation in ice cream and the incursion in the category of fruit smoothies. As a result, a 15% increase in sales in POPS and nearly 12% in BON. It is estimated that nearly 20% of the result in growth was generated by the new image and the new environment in ice cream parlors. Sales of smoothies in POPS accounted for nearly 5% of the total.

These advances allowed Grupo Nutresa to expand its range of commercial activity, reduce risk by diversifying markets, understand and interpret the needs of new cultures, generate transversal learning, and generally maximize the use of resources and capital invested, as well as monitor new categories and potential markets, input for the future construction of brands.

During 2015, strategic markets were deepened with a focus on managing the main brands and their performance in the consumer and buyer segments; appropriate segments were identified in which brands deliver their value proposition and create a differentiation from other competitors. The positioning of the main regional and local brands was defined; their relevant elements were identified to enhance brand equity, and synergies were furthered in communication, sales activities and innovations.

Another key element in marketing management was the valuation of brands, which was obtained by continuous, relevant and surprising innovation for consumers and consistent with the adequate price to achieve the massiveness and product distribution required, making brands available in the place that consumers and buyers require.

Market Development in the Channels

VOLATILITY MANAGEMENT OF COMMODITIES

Given the relevance that commodities have in Grupo Nutresa’s sustainability, their administration is organized in working groups for each operation, which are coordinated by a Corporate Commodities Committee that establishes policies, monitors operations, generates best practices, consolidates learning, and ensures the supply and price of these raw materials.

This strategy allowed us to minimize the impact of the stronger Dollar and rising commodity prices.

RELIABLE BRANDS WITH AN EXCELLENT PRICE–VALUE RELATIONG4-4

Nutrition

Alimentación

Beverages

Bebidas

Snacks

Snacks

Ice Cream

Helados

The main brands stand out for maintaining leadership in the markets in which they operate. This is due to building relationships between consumers and brands, which are constantly evaluated to establish their connection and value in people’s lives.

Managing the main brands creates a discipline in reviewing the portfolio to maximize investment and focus innovation. For this purpose, a special portfolio was developed for some segments to ensure the value proposition of the brands and networks; some products that did not generate differentiation were eliminated from the portfolio.

The internal study on brand health carried out in 2015 by the firm Ipsos Napoleón Franco and different studies published in the media highlighted the excellent equity performance of the main brands. The leading brands in foods are Zenú and Noel; Chocolisto and Doria in nutrition; Tosh and Pietrán in healthy lifestyles; as well as Crem Helado, Jet and Festival, which are projected with pleasurable experiences through high–value innovations for consumers.

Innovation as an element of differentiation and sustainability continued to generate outstanding results for Grupo Nutresa:

CremHelado

Innovation sales for the last three years: More than 30% of the total.

Zenú

Sales above COP 30 billion in new products. Featured launches: Practi Sánduche Zenú, Lemon Vienna Sausage and special seasonal developments.

Doria

Sales above COP 2.5 billion. Products adapted to the Colombian environment: Sausage Flavored Spaghetti. Differentiating innovations: Doria Premium and stuffed pastas.

Tosh

Launch of Andean Seeds and Cranberries.

Festival

Minions Special edition.

Lil' Dutch Maid

Launch of crackers in the US.

Pozuelo

Relaunch of the Pozuelo brand in Central America.

Lucchetti

Introduction of pastas and soups in Mexico in advance of the internationalization of the megabrand.

SelloRojo

Launch of Sello Rojo 600 gr. Sales for COP 6,112 million for eight months.

SUCCESS STORIES AND RECOGNITIONS

Lucchetti

· Lucchetti is classified as a mark of excellence in Chile, with consumers ranking it sixth among the 430 most valuable brands, according to the results of the 2015 version of the “Chile 3D” study, carried out by Gfk Adimark. Brand equity leveraged its launch in Mexico in the pasta and soup market, specifically in the development and launch of a pasta range that offers innovative products with the benefit of nutrition at an affordable price. Proper reception by consumers to the Lucchetti brand was evident, with an important position in the Mexican market (the second brand in some regions) and first place with a significant presence throughout the national territory.

Noel

· The Biscuit Business, with its Noel brand, was recognized among the ten most valuable brands in Colombia. Zenú established itself as the number one brand of food in Colombia, allowing it to grow in value and volume over other brands in the categories in which it participates.

Zenú

· Zenu was consolidated as the number one brand of the food industry in Colombia, situation that has allowed it to grow up, in volume and value, over other brands participating in the same categories.

LaEspecial

· La Especial gained 15 points of market share in the Japanese coated segment with the innovation of Mani Kraks, which was supported by a successful communication campaign that won a Gold Effie in 2015.

Jet

· The Jet brand achieved greater closeness with consumers in the different sales channels with the promotion Jet Camps, an activity that was recognized with the Iberoamerican Promotion Festival (Festival Iberoamericano de Promociones) FIP Gold.

ChocoLyne

· The Chocolyne campaign focused on increasing brand awareness, through highlighting its functional attributes in different points of contact with the target group. Since its launch, the brand has achieved a 10% growth in sales; its effective equity reached record levels of 12.1%, an increase of four (4) points.

Doria

· Doria, the leader in its category, was recognized in the Roadmap for Growth study, by Kantar Worldpanel, which analyzes the most successful launches during the year. Doria Sausage Flavored Spaghetti ranked eighth (8) in the Top 10, with a 5.7% penetration in Colombian households.

CremHelado

· Crem Helado was reported within the 25 most valuable mass consumer brands in Colombia (Dinero Magazine, November 2015). It is the dominant leader, swithout participating in the segment of its own ice cream parlors.

SelloRojo

· Sello Rojo was recognized as the first brand in ranking of roasted and ground coffee, according to a report published in the Dinero magazine in April 2015 and Invamer Gallup.

Commercial networks continue to evolve, framed in a corporate model that adapts to the realities of each geography, channel and level of brand leadership. Each country has specific work areas, among which the progress made in Colombia, Central America, Ecuador and the United States stands out.

The value propositions are also specific for each client segment; therefore, brand penetration through networks allows the Organization to have a superior ability to reach consumers in all buying occasions, facilitate the introduction of innovations and balance portfolios.

EVOLUTION OF CUSTOMER SERVICE CHANNELS

Grupo Nutresa gives its clients a value proposition adapted to their needs.

Grupo Nutresa gives its clients a value proposition adapted to their needs.

 

Looking ahead, the brand management model will continue to leverage commercial results to meet the Mega 2020, especially market growth and leadership and international expansion.

Within Grupo Nutresa’s proposal to provide nutrition, wellness and pleasure to consumers, the Organization has a mix of brands and categories that seek to be close to the daily life of people in the search for quality in their life. During 2015, progress was made in the operation of El Corral, Papa John’s, Helados BON and Helados POPS under the Retail Food model.

The Mega 2020 of internationalization indicates that sales abroad represent 45% of the Grupo Nutresa total. For 2015, this proportion was 38,1%; therefore, the development of new markets outside the strategic region and new, high–value business models are proposed. G4-8

ico_ci03_grandesCadenas

Large Chains

  • Positive dynamics for the channel.
  • Increased penetration with formats to get close to buyers, generally with low prices.
  • Review capabilities in training, portfolio and business models in distribution networks.

Convenience and Traditional Stores

  • Accompaniment in developing independent convenience stores and the traditional channel.
  • Adjust the Customer Service model to ensure the value proposition by segment.
  • Specialized advice and training in Client Schools (Consumers).

End Consumer

  • Innovative models and ongoing repurchase.
  • Obtaining more knowledge to understand the impact of new products.

FLAWLESS EXECUTION

In recent years, Grupo Nutresa moved from a sales–management model to a point–of–sale management model, which is evident in the qualification of 80 points in its visibility and availability of the portfolio, placing it at levels of excellence.

We continue to progress in brand visibility. Freezers, for example, remain a key element in developing ice cream sales, and based on this model, learning was generated for other categories.

Chocolate candy, meanwhile, has obtained better performance in brand expression and visibility by launching temperature–controlled exhibition cases, of which 4,500 have already been installed in client stores.

In addition, Grupo Nutresa ventured into the search for sustainable, environmentally friendly materials and elements, including bioplastics and liquid wood. Currently, we have prototypes of durable assets manufactured in these materials, which will be implemented at points of sale in 2016.

MODEL OF INTEGRATION AND MONITORING INTERNATIONAL OPERATIONS

Grupo Nutresa has a method to narrow gaps in expanding capacities for its companies abroad, entitled the Multi–Latin Agenda. In this agenda, strategic issues are prioritized and projects are defined that ensure the internationalization of leading practices among operations that contribute to the 2020 goals and facilitate monitoring at the highest level.

This methodology was strengthened in 2015 by specifically incorporating plans and projects in environmental, social and economic aspects to close the gaps in the material issues that these international platforms face, ensuring the advancement of the goal of sustainable development. At the end of the year, the purpose outlined in this agenda was fulfilled, allowing progress towards best practices in these operations.

Economic Aid Granted by Government Agencies G4-EC4

Tax planning and monitoring are vital to leverage the Group’s growth.

Crecimiento e innovacion_02
(COP million)
2014
16,137
3,880
ND
2015
587,288
3,880
51,152
(COP million)
2014
2015
Tax relief and tax credits
16,137
587,288
Subsidies
3,880
3,880
Tax incentives
ND
51,152

Direct Economic Value Generated and Distributed G4-EC1 SDG 2 SDG 5 SDG 7 SDG 8 SDG 9

Nutresa is convinced that ensuring the balance between economic, social and environmental value can contribute to sustainable development.

Crecimiento e innovacion_03
(COP Million)
2012
5,305,782
47,482
48,111
5,401,375
2,783,363
442,768
321,879
163,873
52,675
221,518
13,801
56,401
4,056,278
1,345,097
2013
5,898,466
52,261
19,094
5,969,821
2,897,124
480,120
342,880
177,201
80,206
213,971
20,523
63,105
4,275,130
1,694,691
2014
6,481,813
55,267
3,247
6,540,327
3,359,372
579,353
354,612
198,476
127,374
206,170
33,737
69,117
4,928,211
1,612,116
2015
7,945,417
56,844
8,339
8,010,600
4,238,042
768,070
413,037
212,588
180,660
290,548
46,651
88,797
6,238,392
1,772,208
(COP Million)
2012
2013
2014
2015
Income from net sales
5,305,782
5,898,466
6,481,813
7,945,417
Income from financial investments
47,482
52,261
55,267
56,844
Income from sales of property, plant and equipment
48,111
19,094
3,247
8,339
Direct economic value generated
5,401,375
5,969,821
6,540,327
8,010,600
Operating expenses
2,783,363
2,897,124
3,359,372
4,238,042
Salaries
442,768
480,120
579,353
768,070
Employee wages
321,879
342,880
354,612
413,037
Dividends to shareholders
163,873
177,201
198,476
212,588
Interest payments to credit providers
52,675
80,206
127,374
180,660
Payments to the Government
221,518
213,971
206,170
290,548
Community investments
13,801
20,523
33,737
46,651
Bonuses
56,401
63,105
69,117
88,797
Direct, distributed economic value
4,056,278
4,275,130
4,928,211
6,238,392
Economic value withheld
1,345,097
1,694,691
1,612,116
1,772,208

Due to the change of reporting under IFRS, 2014 data have been restated to ensure comparability with 2015. 2012 and 2013 data remain without change.

EVOLUTION AND INTERNATIONAL PRESENCE

To know the international presence of Grupo Nutresa and its evolution over time, clic in:

World Presence
Evolution of Grupo Nutresa