Ekaterina Monakhova
Regional Business development manager
Nielsen Retail Measurement service
22nd of April, 2009
Confidential & Proprietary • Copyright © 2009 The Nielsen Company

Consumer Place of purchase
CONSUMER
PROFILE
CONSUMER
BEHAVIOUR
DICTRIBUTION
ATTITUDE TO
ADVERTIZING
INTEGRATED
INSIGHTS
ASSORTMENT
MODELLING &
FORECASTING
PRICE
CATEGORY
INSIGHTS
INNOVATIONS
Trends Product
Topic of Presentation April 27, 2009 Page 2 Confidential & Proprietary
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Global Average – 77(March 2009)
112
99
105 107 104 103 106 104
88
82
75
1st Half
05
2nd Half
05
1st Half
06
Change% ▼ 12 ▲ 6
2nd Half
06
▲ 2
1st Half
07
▼ 3
2nd Half
07
▼ 1
1st Half
08
▲ 3
Sep. 08 Nov. 08 Feb 09 1st Half
09
▼ 2 ▼ 16
(March)
▼ 6 ▼ 7
Source: Nielsen С onsumer Confidence Index Study
Topic of Presentation April 27, 2009 Page 3 Confidential & Proprietary
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Loosing Job
Loosing the source of income
Changes in consumption habits
Changes in life style
Source: “Russia through crisis” Nielsen consumer research, 1 st wave November-December 2008
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Q5: Which of the following statements best describes your family income changes (in rubles) over the last 3 months?
1%
No answer
14%
My family income has decreased appreciably over the last 3 months
My family income has slightly decreased over the last 3 months
My family income has not changed
21%
44%
My family income has slightly increased over the last 3 months
My family income has increased appreciably over the last 3 months
18%
1%
Total: all respondents, 524
Source: “Russia through crisis” Nielsen consumer research, 1 st wave November-December 2008
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В 13: In your opinion, have FMCG prices changed over the last 3 months?
В 14: In your opinion, what has been the average increase in FMCG prices over the last 3 months?
The prices have not changed over the last
3 months
The prices increased slightly over the last 3 months
5%
49%
5% increase and less
11%-15% increase
13%
28%
16%
20%
21%-25% increase 6%
The prices on average increased considerably over the last 3 months
45%
31% increase and more
9%
8%
Total: all respondents, 524
Source: “Russia through crisis” Nielsen consumer research, 1 st
Total: respondents who noted a price growth of FMCG products, 497 wave November-December 2008
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Consumption is shifting towards more economy channels like Hypermarkets, Discounters and Cash & Carry
В 19: Has the amount of FMCG that you personally buy from the following types of stores changed; i.e., have you started to buy more from them, less, or the same amount over the last 3 months ?
Get to buy less now than 3 months ago
Buy the same amount now as 3 months ago
Get to buy more now than 3 months ago
In hypermarkets [n=426]
In discounters [n=406]
In kiosks/ pavillions [n=273]
In minimarkets [n=373]
19
20
22
24
7
16
6
22
71
70
59
64
In marketplaces [n=346]
In supermarkets [n=380]
In Cash&Carry stores [n=166]
25
26
27
14
10
14
61
64
60
In food stores [n=340] 28
Total: respondents who generally shop in these channels
Source: “Russia through crisis” Nielsen consumer research, 1 st
7 wave November-December 2008
65
Topic of Presentation April 27, 2009 Page 7 Confidential & Proprietary
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Volume Share
Nielsen Key Account Index, Moscow & S.-Petersburg
31,5 31,2 31,5 29,6 28,7 28,7
19,7 19,7 19,7 27,5 24,7 23,0 18,1 18,4 18,4 32,3 34,4 36,0 20,1 20,7 20,7 16,7 18,4 15,1 22,0 22,7
37,2 36,6 35,1 36,9 37,8 37,8 57,1 57,5 57,5 43,7 48,1 49,0
45,7 46,1 46,1 25,3
30,3 29,0
39,7 42,6 42,6
35,8 31,5 32,3
55,6 56,4
31,2 32,2 33,4 33,5 33,5 33,5 23,2 22,7 22,7 28,8 27,2 28,0 36,2 35,5 35,5
42,4 35,3 35,0 40,2 36,7 36,7 47,5 50,1
52,6
22,4 20,9
Dec
08
Jan
09
Feb
09
Dec
08
Jan
09
Feb
09
Dec
08
Jan
09
Feb
09
Dec
08
Jan
09
Feb
09
Dec
08
Jan
09
Feb
09
Dec
08
Jan
09
Feb
09
Dec
08
Jan
09
Drinkable
Yoghurt
Mineral Water
*Milk including pasteurized & sterilized
Vodka Beer Tea Packed chocolate
Chocolate tablets pralines
Hypermarkets Discounters Supermarkets
Feb
09
Dec
08
Jan
09
Coffee
Feb
09
Dec
08
Milk
Jan
09
Source: Nielsen Retail Index
Topic of Presentation April 27, 2009 Page 8 Confidential & Proprietary
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В 8: Which of the following statements best describes how your FMCG purchase volume has changed over the last 3 months?
В 9: Could you please estimate (in per cent) how much less FMCG you buy now than 3 months ago?
I/my family buy more FMCG now than 3 months ago
I/my family buy less FMCG products now than 3 months ago
I/my family buy the same amount of FMCG products now as
3 months ago
10%
Cut down by 5-15%
Cut down by 20%
Cut down by 25% and more
33%
29%
21%
69% 38%
Total: all respondents, 524
Total: respondents that buy less FMCG now than 3 months ago, 111
Source: “Russia through crisis” Nielsen consumer research, 1 st wave November-December 2008
Topic of Presentation April 27, 2009 Page 9 Confidential & Proprietary
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В 20: Did you personally become more thrifty when buying FMCG now than 3 months ago?
Surely not
5%
23%
Most likely not
47%
Most likely yes
Surely yes
26%
Total: all respondents, 524
Source: “Russia through crisis” Nielsen consumer research, 1 st wave November-December 2008
Topic of Presentation April 27, 2009 Page 10 Confidential & Proprietary
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Consumers in Russia are not reluctant to switch from brands they got used to in order not loose in quality
В 18: For each of the following products please tell us, if you buy the same brands as 3 months ago, or you started to buy more expensive or cheaper brands?
I buy cheaper brands I buy more expensive brands I buy the same brands as 3 months ago
Drinking/mineral water [n=395]
Cigarettes [n=279]
Tea [n=512]
Face cream [n=386]
9%
10%
6%
11%
12%
7%
11%
16%
85%
83%
78%
72%
Vodka [n=216]
Chocolate (tablets/bars) [n=448]
Beer [n=311]
Milk [n=478]
13%
13%
8%
8%
13% 7%
13% 6%
79%
80%
80%
81%
Coffee [n=431]
Drinkable yogurt [n=372]
13%
14%
9%
8%
78%
77%
Shampoo [n=502]
Cakes [n=380]
14%
17%
14%
4%
72%
78%
Laundry detergents [n=505] 18% 5% 77%
Total: respondents who purchased goods from these categories 3 months ago and continue to buy them now
Source: “Russia through crisis” Nielsen consumer research, 1 st wave November-December 2008
Topic of Presentation April 27, 2009 Page 11 Confidential & Proprietary
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Private Label Share did not change in comparison to
September 2008 and Remains at low level
12
10
8
6
4
51
Nielsen Key Account Index, Moscow& S.-Petersburg,
67
51
73
Private Labe Trends
32
73
55
38
76
2
2,3 2,3 2,1 1,8 3,9 3,6
4,7 4,9
3,0
3,1
7,6 6,9 4,2 4,7 0,3 0,3 0,1 0,4
0
Tea Instant
Coffee
CSD Juice
PL Volume Share, Sept08
Price Index, Dec08 (%)
Source: Nielsen Retail Index
Mineral
Water
Soft
Cakes
Sweet
Buisquit
Drinkable
Yoghurt
Gum
PL Volume Share, Dec08
30
10
-10
110
90
70
50
Topic of Presentation April 27, 2009 Page 12 Confidential & Proprietary
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В 15: In your opinion, has the FMCG changed over the last 3 months? assortment in stores where you usually shop
The FMCG assortment has narrowed significantly over the last 3 months
2%
19%
The FMCG assortment has somewhat narrowed over the last 3 months
The FMCG assortment has not changed over the last 3 months
The FMCG assortment has somewhat widened over the last 3 months
68%
The FMCG assortment has widened significantly over the last 3 months
10%
Total: all respondents, 524
Source: “Russia through crisis” Nielsen consumer research, 1 st wave November-December 2008
Topic of Presentation April 27, 2009 Page 13 Confidential & Proprietary
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Nearly half of outlet owners/representatives have faced with the issue of Purchases Prices Change over last 3 months, and one quarter of the respondents have suffered from the restrictions in the payment terms
What problems have you faced in the last 3 months?
45
29
24
9 9 8
Purchasing prices changed
Nothin g o f ab ove listed
Paymen t terms chan ged
Necessary assort.del.
problems
Don t know/Difficult to an swer
Delivery p ostponemen
Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009
Delivery volume p roblems
Topic of Presentation April 27, 2009 Page 14 Confidential & Proprietary
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Assortment Change: The Assortment was less affected than stock volume by Crisis Environment - only 19% of respondents have claimed that they have reduced the variety of products on shelves.
However the reduction seem not to be very significant– mainly not more than 15%.
Have you reduced assortment in the last 3 months?
How have assortment changed in the last 3 months ?
Reduced by not more than
15%
58
No
81%
Reduced by
15% -30%
24
Yes
19% Reduced by more than
30%
8
Dont know/Difficult to answer
Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009
10
Topic of Presentation April 27, 2009 Page 15 Confidential & Proprietary
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The Assortment Change Scale: The most significant decrease in assortment was recognized in Mini/Supermarkets
How have assortment changed in the last 3 months ?
Total 58 24
HoReCa
OM
Households
Drug Specials
Kiosks/Pavilions
Food Stores
Mini / Supers 36
58
52
63
60
71
86
48
17
29
19
20
11
19
8
6
7
8 10
14
13
13
12
3 6
12
16 0
Reduced by not more than 15% Reduced by 15%-30%
Reduced by more than 30% Dont know /Difficult to answ er
Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009
Topic of Presentation April 27, 2009 Page 16 Confidential & Proprietary
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In case of assortment decreasing, importance merchandising is increasing: example of Nielsen
Merchandising service project
•
Recommendations for energy drinks in supermarkets X
Proposed Plan A Proposed Plan B
Plan А
Calculations
Projected Sales
Projected Lost Sales
Projected Units
Projected Lost Units
Sales/Section Mtr
Target Actual
£947.36
% +/-
£984.98 4.0%
£49.86
1,373
72
£388.26
£12.24
1,428 4.0%
17
£403.68 4.0%
Calculations
Projected Sales
Projected Lost Sales
Projected Units
Projected Lost Units
Sales/Section Mtr
Target Actual
£940.52
% +/-
£990.02 5.3%
£49.50
1,351
71
£385.46
£0.00
1,422 5.3%
0
£405.74 5.3%
31
0
31
2
29
0
29
2
Allocated Products
Zero Movement
Per store with this plan:
Incremental Sales / Week
Incremental Sales / Year
If in 460 stores:
Incremental Sales / Year
£45.59
£2,370.68
£1,090,512.80
Allocated Products
Zero Movement
Per store with this plan:
Incremental Sales / Week
Incremental Sales / Year
If in 460 stores:
Incremental Sales / Year
£50.63
£2,632.76
£1,211,069.60
Plan B
Plan’s analyzing
Both plans promise rising sales of energy drinks up to 1 mln £
Plan B is recommended (sales increase according to plan B is higher than according to plan A)
Source: Nielsen Merchandising Service data
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In Moscow, ~25% of consumers claim that like trying new products and always look for new brand and product offers.
I seldom try new things - I find it is far better to know what you want rather than risk buying something that may not work out
20%
I love trying new things - I'm always on the lookout for new brands and products
26% I sometimes buy new brands or products - but usually stick to my favourites
54%
Source: Nielsen BASES data
Topic of Presentation April 27, 2009 Page 18 Confidential & Proprietary
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80
70
60
50
40
30
20
10
0
Median Year 1 distribution build - Russia vs. Europe
RUSSIA*
France
UK
Italy
Spain
Germany
1 2 3 4 5 6 7 8
Year 1 periods
9 10 11 12 13
Source: Nielsen BASES data
Topic of Presentation April 27, 2009 Page 19 Confidential & Proprietary
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Nielsen global data: how do consumers react on inflation?
What Shoppers ‘say’ they do to limit impact of Inflation
What Shoppers ‘do’ to limit impact of
Inflation across
Europe
What could be happening in
Russia?
1.
Try Not to change 1.
Go Less in Stores
1.
Reduce their
Basket
2.
Look for easy
Alternatives 2.
Reduce their
Basket
2.
Switch
Channels
3.
Switch
3.
Switch
Channels ?
3.
Switch brands?
Source: Nielsen Europe CPS data
Topic of Presentation April 27, 2009 Page 20 Confidential & Proprietary
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High share
«Observers»
¾ Wait-and-see position
¾ Gathering and studying information for defining further strategies
«Panic-stricken»
«I do not know what will happen further on, that is why I do not make fuss.».
¾ Preventive activities
¾ Withdraw cash from bank deposits and cards so as to avoid losses in case of devaluation or denomination
¾ Attempt to save their assets: diversify deposits and change the currency of their deposits
«Pessimists»
«Devaluation may occur tomorrow, that is why we cashed all our accounts to invest the money in purchasing.»
¾ Getting prepared for the worst
¾ Cutting on consumption
¾ Getting thrifty
Low share
«I remember queuing up for foods and fearing to have nothing to feed my kid with. Now I have stocked up some food: sugar, condensed milk, cereals. Just in case. You never know ....»
Source: Quality research “Current Economic Situation Perception and Influences”, November – December 2008
Topic of Presentation April 27, 2009 Page 21 Confidential & Proprietary
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In the initial crisis period, consumption frequency decrease without brand change
Initial crisis
Consumption will not change
Consumption frequency will decrease without brand change
• Milk
• Poultry
• Sausages
• Butter/ oil
• Vegetables
• Tea
• Children’s goods
• Manufactured pet food
• Going to the theater
• Fitness/ wellness centers (e.g. water pool, solarium)
• Chocolate
• Cheese
• Meat and fish specialties
• Fruit
• Coffee
• Wine
• Cosmetics and personal care products
• Household detergents
(washing and cleansing detergents)
Switch to cheaper products/ brands
• Milk, kefir
• Premium sausage
• Fish
• Clothes and shoes
• Domestic necessity
Deeper crisis
Abstention from category
• Specialties
• Juices and bottled water
• Cakes, pastries, biscuits
• Salty snacks and chewing gum
• Jewelry
• Computers
• Holiday trips abroad
• Restaurants/ bars
• Beauty salons
• Renewal of clothes
• Renewal of domestic appliances & electronics
Source: Quality research “Current Economic Situation Perception and Influences”, November – December 2008
Topic of Presentation April 27, 2009 Page 22 Confidential & Proprietary
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Consumers switch from nice to have to basic need to have categories: during last 2 periods sales of milk were growing and sales of other dairy categories were stable/decreasing
National Urban Russia – Sales volume 1000L/kg
Source: Nielsen Retail Index
Topic of Presentation April 27, 2009 Page 23 Confidential & Proprietary
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IN-STORE PRE-STORE
Advertising
Notice new brands
/ variants
Price comparison
Merchandizing Packaging
Buzz
Family preference
Source: Shopper Modality Customized research (fieldwork in September 2008)
Topic of Presentation April 27, 2009
Product
Browsing
Promotions
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Thousands of brands in their heads
Auto-pilot
No time to think about them
Omega Ω rules
= habit
Source: Shopper Modality Customized research (fieldwork in September 2008)
Topic of Presentation April 27, 2009
Delta
Moments
Delta Moments = new information, promo, advertising etc.
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omega shoppers
Consumers who shop on habitual auto-pilot mode
•
Average
•
Omega shoppers
• 54 delta shoppers
Open to new information, word of mouth, advertising, engage in scrutiny mode shopping .
•
Delta shoppers
• 46
•
Chocolate
•
Juice
•
Yoghurt spoonable
•
Beer
•
Mayonnaise
•
Sweet biscuits
•
Energy drinks
•
Cereals
•
Chewing Gum
• 31
• 36
•
40
•
42
•
64
•
64
•
65
•
69
•
72
• 69
• 65
•
60
•
58
Source: Shopper Modality Customized research (fieldwork in September 2008)
•
36
•
36
•
36
•
32
•
28
Topic of Presentation April 27, 2009 Page 26 Confidential & Proprietary
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In-store browsers
Advertising activated
Bargain hunters
Buzz activated
Family preference activated
Variety
Seekers
Chocolate
Juice
Yogurt spoon
Beer
Mayonnaise
Sweet biscuits
Energy drinks
Cereals
Chewing Gum
33%
35%
32%
38%
33%
35%
28%
28%
36%
44%
51%
49%
59%
47%
24%
57%
29%
40%
20%
26%
23%
26%
26%
16%
22%
19%
16%
Source: Shopper Modality Customized research (fieldwork in September 2008)
Topic of Presentation April 27, 2009
19%
19%
21%
30%
21%
17%
28%
18%
19%
4%
5%
6%
1%
2%
3%
2%
5%
2%
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3%
1%
1%
4%
2%
4%
3%
3%
3%

Dominating trends
Topic of Presentation April 27, 2009 Page 28 Confidential & Proprietary
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Quantity researches
Census data
Quality researches
On line studies
Analyze of consumers: integrated approach
In store observation
New launch analysis-
BASES
Retail measurement service
Analytical consulting
Topic of Presentation April 27, 2009 Page 29 Confidential & Proprietary
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Please feel free to contact in case of any questions:
Tel: + 7 495 6633683
E-mail: ekaterina.monakhova@nielsen.com
Topic of Presentation April 27, 2009 Page 30 Confidential & Proprietary
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