Market growth and leadership img_t_429

Highlights

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Grupo Nutresa commercial system 2020

Brand management G4-4

The brand management model is the guiding principle of the commercial strategy; it is centered on consumers, implying a market orientation to satisfy consumer needs with contributions to their wellness, nutrition and pleasure. It is determined by consumer segmentation and understanding the buyer, the value proposals and the flawless execution in the point of sale to ensure the preference, satisfaction, loyalty and, consequently, the leadership of the brands in the categories in which they participate.

The overwhelming presence in the macro–categories of food, beverages and snacks evidence the appropriate attention to consumers. In 2014, the principal Grupo Nutresa brands in these macro–categories obtained growths of 16,0% in food, 3,5% in beverages, 20,0% in snacks and 6,6% in ice cream. The brand–architecture strategy has as its pillar the Nutresa, Zenú, Pietrán, Festival, Tosh, Noel, Chocolisto, Jet, Doria, Colcafé, and Crem Helado mega brands, which, together, grew 14,4% in total sales (domestic plus international). The Tresmontes Lucchetti international brands Kryzpo and Livean grew 19,8% and 18,4%, respectively.

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logo_innovacion Effective innovation

Innovations, especially in ice cream, candy, nuts, biscuits and cold cuts, boosted the growth in sales, with a participation of 17.7% in 2014.

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Network management

The model of reaching clients is aimed at highlighting the brands at the point of sale; it obtained achievement indicators of excellence during the year. In Colombia, the commercial network of Cárnicos Nutresa consolidated the distribution of the ice cream and juice businesses for the modern channel and independent convenience stores, representing an increase in sales of 23,2%, compared to 11,8% of the business total. In the international field, thanks to the synergies among the Grupo Nutresa companies, we have deepened sales in the traditional Mexican channel, with attention to nearly 250.000 points of sale through the Tresmontes Lucchetti dealer network, as well as a 13,2% growth in the traditional channel (stores) in Chile.

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Grupo Nutresa brings the best value proposal to its consumers.

 

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Client satisfaction G4-PR5

The loyalty of Grupo Nutresa clients was measured with a result of 87,7% in satisfaction and 70,4% in loyalty for national clients; among international clients, satisfaction was 87,8% and loyalty, 59%. These results, according to the methodology used by the Ipsos research agency, mean a degree of excellence in both indicators.

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CHALLENGES

Risks in the competitive environment

Due to its economic dynamism, the strategic region defined by Grupo Nutresa represents an attraction for big players in the food industry that have differentiated, relevant strengths (global products or local products among other features), enabling them to reach some segments of the population with innovative value propositions.

This requires superior performance by Grupo Nutresa to remain leaders and maintain and increase the preference, satisfaction and loyalty of consumers, buyers and clients.

In that sense, the Organization continues to strengthen its distribution networks with a focus on strategic brands, effective innovation and portfolio segmentation to address the effect of competition focused on prices and promotions. Likewise, in Mexico, Guatemala, El Salvador, Costa Rica, Panama, Peru and Chile, we have been implementing the model of brand management and a deep understanding of the buyer and consumer, which enhances their recognition and leadership.

Moreover, in developing channels and new ways of reaching consumers, we highlight the following in the environment:

  • In the strategic region, channels and options to which consumers and buyers have access are increased. In this situation, marketing networks specialize and develop to continue as leaders of brands and distribution.
  • The modern channel, in line with consumer needs and especially in the formats of convenience or proximity, is in the consolidation phase. For this, we generated client development strategies in the independent and traditional channels, and the management capabilities of the modern channel are also strengthened.
  • In this same channel, there is evidence of the evolution of generic products, which compete with low prices and wide display in the points of sale. Additionally, some client formats import products of recognized brands at more affordable prices. Against this, Grupo Nutresa works to strengthen the capital of its brands and the development of differentiated portfolios. In turn, the basis for the model of excellence has been developed in prices to capture the greater value of the brands.

The international market represents a substantial part of the Organization’s income generation and shows high growth rates for the businesses. Likewise, raw materials play a key role in the competitiveness of the Grupo Nutresa products, such as coco and coffee, which presented the greatest negative impact in 2014, unlike wheat, sugar and fats.

 


 

Opportunities and strategy

 

Grupo Nutresa Trading System 2020

A deep, integrated understanding of the market

 

 

 

Grupo Nutresa’s commercial management is centered on the strategy of brands (mega brands) and sales networks (omni channel), which are based on the deep, integrated understanding of the market.

 

Brand management

With the map of consumer brands, the Organization works on developing the portfolio adapted to some identified segments of consumers, which is complemented with the mainstreaming and targeting of the mega brands. Likewise, the Organization incorporates knowledge of the client buyer in the different categories and segments into the design of commercial initiatives. This is done to understand their purchase missions to be more assertive.

Purchase missions are understood as consumption occasions that generate a purchase attitude and the behavior that occurs at the point of sale.

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Chilean storekeeper (grocer).

Network management

The model to reach the market, through distribution networks, evolves in order to adapt to the new reality of clients and their purchasers to strengthen the display elements and visibility at the point of sale and attend the multi–channel behavior of consumers.

To strengthen brand visibility, there are nearly 177.000 commercial assets, of which more than 100.000 are cold and frozen products. Additionally, chocolate candy has 2.500 freezer exhibitors that improve the presence of the portfolio in warm climates.

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Progress

 

The brand–management system

To ensure the preference, satisfaction, loyalty and leadership in the markets in which Grupo Nutresa participates and to better understand the needs of consumers, shoppers and clients, the commercial system that builds and strengthens the value propositions of brands and networks was consolidated.

The integral implementation of the brand– and network–management model obtained the results expected based on excellent implementation:

- We defined the brand architecture and the strategic role of the mega brands, which, thanks to their positioning and achievements, constitute icons for Grupo Nutresa and are projected as pillars to support the patrimony of the Organization and contribute to the internationalization process.

- In turn, their strength, ability to relate and expansion potential into new markets, segments or categories, allows us to:

• Maximize market coverage to seize potential opportunities.

• Minimize the overlapping of brands to avoid having more competition in the same market segment.

- Strengthening the cash equity reflects performance as a measure to determine attitudes toward the brand in the market, the level of proximity, the barriers to consumption and maintaining leadership in each category.

 

Maintaining leadership in each category

From the deep understanding of consumers, buyers and clients, Grupo Nutresa works to develop the main drivers of growth, to strengthen its brands and efficiently expand its networks.

Mainstreaming powerful brands applied to products developed on any productive platform has allowed Grupo Nutresa to further the consolidation of a portfolio in line with market needs, with the development of products according to low disbursement currency fractions, mainly for the traditional channel, which allows low–income consumers to access products and brands.

The assets of platform brands and products become an opportunity and will continue to be a priority to progress in the markets.

The model of reaching customers is aimed at highlighting the brands at the point of sale. To do this, we work on product presence and visibility, both in refrigerators and freezers as well as on the shelving for groceries and candies.

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Long life • Prepared food Refrigerated and frozen food • Cold cuts

 

Enhancing international networks and distribution

International expansion is a strategic priority of Grupo Nutresa; therefore, it relies on several fronts to consolidate its development. One is distribution, a differentiating potential in regions such as Central America and countries like Chile, Mexico, Peru and Ecuador, where last year initiatives to strengthen sales fundamentals (market share, numeric and weighted distribution, average order, active inventory, number of references and percentage of depleted products) were secured, both quantitatively as well as the quality of the product reaching the different channels. The extension of the numeric distribution, the consolidation of the portfolios distributed and the development of strategic brands were key to improve this objective.

Grupo Nutresa maintains its presence in 71 countries, 14 of which have their own production plants or distribution. According to the potential and deepening in each market, a specific plan has been defined for the commercial development of the territories to strengthen the positioning of the brands and increase participation in each category.

The synergies that have been developed are concentrated in the use of platforms for new Grupo Nutresa categories, the consolidation of the distribution networks, knowledge of consumers and buyers and multi–category promotional activities, among others. This offers greater speed in commercial development since, if we have powerful and complementary portfolios, we can penetrate markets with greater force.

Commercial development in the Southeast Asian market continues to be one of the objectives of sustainable growth, mainly in the coffee category. Aligned with this goal, we have strengthened strategic alliances with global players, with whom we develop activities of market knowledge, implementation of marketing models and creation of supply and production networks that leverage the growth targets.

The implementation of these synergies has allowed the commercial growth of Grupo Nutresa and has also improved the level of globalization of knowledge and mentality of its companies and employees, which promotes and facilitates the achievement of long–term, sustainable goals.

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Client satisfaction and loyalty are a priority for the Organization.

 

Leveraging platforms

One of the strengths of the Organization in the region is the strategic location of its productive platforms and their capabilities, both in their marketing vehicles and production plants.

Countries such as Costa Rica, Peru and Mexico have strengthened their distribution with the Tresmontes Lucchetti portfolio, making it feasible to reach new grocer channels and deepen the modern and traditional channels.

The new portfolios reinforce the presence of the brands and support synergies in promotional and distribution activities that allow faster progress in commercial development.

On the other hand, such diverse capabilities of these productive platforms complement the inter–company portfolios, allowing an exchange of products, giving Grupo Nutresa competitiveness and flexibility and expanding its portfolio options in the different markets.

 

Our internationalization model

Since 2000, international–market development has been part of the Grupo Nutresa strategic plan as a key to sustainable, profitable growth.

For this, we ensure the transfer of knowledge and good practices among the platforms through the Multi–Latina Agenda, which allows optimizing resources, capitalizing on experiences, creating joint activities, unifying criteria and developing a team that values cultural differences with the ability to act locally with a global vision, with openness to face challenges.

During 2014, we progressed in consolidating our internationalization model, adjusted to the needs of each market and each category. Thus, we incorporated the distribution–matrix tool into the Multi–Latina Agenda, to accompany and monitor key sales and distribution of the international operations.

Through the continuous evaluation of variables, such as market share, numeric and weighted distribution, average order, active inventory, number of references and percentage of depleted products, we seek to lead international operations to continuous optimization.

 

Sales in emerging countries
COP billions

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Summary of sales in emerging countries
% Sales in emerging countries

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Evolution of Grupo Nutresa’s International Presence G4-8
International Presence

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Evolution of Grupo Nutresa’s G4-9
Acquisitions / Mergers

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How has Grupo Nutresa internationalization been consolidated?

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logo_innovacion Innovation in the business model

Innovation is key for Grupo Nutresa’s international development. The markets in the strategic region present dynamics that demand being agile and effective in the innovation that is taken to the market; for this reason, the brand–management model consolidates this development.

From a clear understanding of the consumer, while managing innovation and accompanying the communication and positioning of new products, we become more effective in the market.

The prioritized, targeted allocation of investment resources in the leading brands has also permitted strengthening their presence in international markets with increases in participation, improvements in the value for consumers, loyalty and household penetration, which maintains the leadership in biscuits in Costa Rica (a 62,2% share), cold instant beverages in Chile (63,2%), soluble coffee and mixes in Panama (a share of nearly 50% by volume), and cocoas in Peru and Costa Rica (shares of 27,8% and 63,9%, respectively).

A work model was developed to achieve high standards of operation in the ice cream parlors and to empower the basis of the operation of the franchise system. Today we have Point of Sale (POS) in the majority of the ice cream parlors in the Dominican Republic, which allows a better reading of sales and know what our consumers buy every day and at every hour in the stores.

Leadership in:

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Integration of the sustainability strategy in the operations in the strategic region

In order to advance in the consolidation of the Grupo Nutresa sustainability strategy, during 2014 we advanced in understanding operations outside of Colombia; noteworthy is the disclosure of the Materiality Matrix, which allows companies to focus their management on the material issues of Grupo Nutresa. Likewise, we deepened the sustainability strategy in the strategic objectives of the Organization, as well as the internalization of the sustainability goals for 2020; we also established the work plans with each one of the operations to close the gaps in sustainability.

 


 

Future vision

One of the principal challenges is the cultural evolution toward micro–segmentation. Noteworthy are the following aspects:

  • Structural changes in the population in terms of demographics (more adult, productive populations) and geographics (from rural to urban), among other changes.
  • Social mobility and improved quality of life (by 2025, it is expected that the middle class will represent 75% of Latin America). This transforms the framework of decisions, which pass from restriction to economic availability and the large range of options.
  • The effect of technology on the new consumer and buyer.
  • The growing awareness of nutrition in health, wellness, and the new requirements that this implies.

 

Generalities about today’s consumer

  • Faced with the need to achieve a modern standard of living, consumers are looking for value propositions that are tuned to this cause.
  • The consumer has understood that innovation, above all, has allowed him to gain access to other perceived high–value assets, such as mobile phones, televisions, and energy, among others.

 

International market growth G4-8

To reach the Mega 2020, which seeks a level of sales double the 2013 sales and an EBITDA margin between 12% and 14%, market share outside Colombia is critical; we expect that 45% of the total 2020 sales will come from markets outside Colombia.

That’s why the growth strategy in the region will be aimed at seeking new business opportunities that help the minimum growth of 11% annually in each country with a Grupo Nutresa focus. Also, an integrated vision of a country with leveraged businesses, which promotes a cross–opening to incorporate a competitive portfolio and better business practices between the operations in Colombia and abroad will continue.

The focus will be on developing more productive export platforms, both inter–company as well as toward other markets, and in capturing opportunities in high–potential markets.

To be more competitive, we will continue working on the knowledge of buyers and consumers, to offer them products that meet their expectations, through a broad portfolio that satisfies their needs of wellness, pleasure and nutrition.

In the United States, under the scheme of multi–channel distribution, we will continue to increase attention to the Anglo and Hispanic markets with our brands, as well as develop high–potential clients in private and industrial brands for the Chocolate, Biscuit and Coffee Businesses.

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Some initiatives

 

Focusing on the strategic definition of brand architecture

The Grupo Nutresa mega brand model permitted a growth of 14,4% between 2013 and 2014.

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Cold Cuts Business logistics employees at the Ibague distribution center

 

innovacion Marketer Model / Cold Cut Business

 The Cold Cut Business implemented a marketer model that works like a mirror of the attention scheme for the direct traditional channel, and allows taking the commercial, logistics and administrative practices of the Business to 45 Marketers, ensuring an economically sustainable model over time for both parties. Noteworthy are: Compliance of the 2014 budget: 105,4% with growth of 12,2%; 160.000 effective clients monthly, equal to 12.000 more than at the beginning of the project; numeric distribution of 73%, five points above the beginning of the project, as measured by Nielsen; and 1.650 direct employees in the marketers.

 

Architecture of the distribution networks

The architecture of the Grupo Nutresa sales and distribution networks is comprised of massive, specialized and international networks. In this sense, the initiatives to highlight are the following:

 

Massive networks

The marketer model

The Grupo Nutresa arrival model seeks to maximize the presence of our brands in clients, which ensures the delivery of a unique value proposition. For some types of clients or geographies, we have developed the marketer model with exclusive sales networks to complement distribution, consistent with the point–of–sale management model.

Nearly 60 businessmen, with a sales force of more than 1.250 vendors, are accompanied in the integral development of their business by defining the management and administrative parameters with them, while Grupo Nutresa conserves the control of the territory, the client and his information. This has been a key element to efficiently increase the numeric distribution of the categories, which is evidenced, for example, in Chocolate Candy, + 3 points; Nuts: + 7 points; and Pasta: + 3 points.

 

The massification strategy

This is a model that seeks to develop clients as the differentiating element of the value proposal that has a specialized commercial figure in its point of sale. This commercial developer guides the redesign of the businesses to maximize their market opportunities and keep them valid over time. The integral advice offered focuses on the work of the categories and, additionally, on the universe of the store or convenience store.

 

 

Specialized networks

Entrepreneur mothers

This is a direct sale through an inclusive business proposal, the sales of which grew 25,1% with a network of 98.700 Entrepreneur Mothers, who reach 1.500.000 Colombian households every three weeks, with a portfolio classified by categories according to consumer needs.

Each product offered in the catalogue seeks to generate greater value and service to consumers to bring the best quality products and leading brands of not only food but also a comprehensive supplementary portfolio to their homes. Novaventa finances the business of the Entrepreneur Mothers, with the possibility of building a credit history that serves as a commercial reference.

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Business Mother visiting the Novaventa operations center in Carmen de Viboral

 

International networks

Empowerment of international platformsand networks

During 2014, work began on the mounting, expansion and remodeling of productive capacities in different countries and operations:

  • The project to manufacture crackers in Texas, in the United States, will offer the possibility of competing in a high–potential market, with growth exceeding the total of the category and a temporary shortage situation by current manufacturers.
  • The Tresmontes Lucchetti baked snacks line in Chile was culminated, allowing it to begin participating in new categories in the Chilean market. Likewise, the production project in Mexico for pastas and Cold Instant Beverages (CIB), led by Tresmontes Lucchetti, will endow competitive capabilities and proximity to a high–consumption market.
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BON ice cream shop in Santo Domingo, Dominican Republic.

 

logo_innovacionCommercial synergies among platforms

Learnings in innovation, development and activation of channels and brand building have allowed synergies to transcend commercial aspects and impact the understanding of the markets and channels where Grupo Nutresa companies participate. The entrance into the channel in local market places in Peru, supported by Zuko, allows products – such as Chocolisto, Cocoa Winter’s, Colcafé Familiar and Ducales – to participate with presence in this type of client.

The distribution achieved through Tresmontes Lucchetti in Mexico strengthens the presence of the brands in the Chocolate platform in this country (Nutresa Mexico), to further sales in the traditional channel with attention to nearly 250.000 stores through the Tresmontes Lucchetti distributor network, as well as strengthen the performance in the wholesale grocer and supermarket channel.

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Zuko brand sales promoter in a supermarket in Santiago de Chile

 

Development of international industrial channels

The Chocolate and Coffee Businesses achieved outstanding advances in the international development of the industrial channel, consolidating and strengthening attention to relevant international companies. The proximity and joint work between client and supplier permitted innovating and developing specialized products for each one, to deliver products that meet the technical specifications required, accompanied by a supply network with a high level of service.