Changing role of finance

in FMCG company

21st April 2008

Finance Depts.
Tax
Operational risks
Financial accounting
Transactional finance
Management accounting

Financial vs. Mgnt accounting

financial position of company

support in decision-making

past-oriented

Future-oriented

Financial measures

Non-financial measures as well

Regulated by law & accounting

rules

Not-regulated

for external purposes

Internal use only

Finance role evolution

Business Partnering
50% time
Role

50% time

Collect, transform, analyse & support

Value added BUT at high cost: job attractiveness
and quality issues

SAP BW

Role

Collect & Store

Benefit

Data Quality

Finance Operations

Business Partnering

100% time

100% time

Produce & deliver

Analysis & support

Efficiency

Value added

What is the role

of
modern finance?

External orientation

Growth League
% SALES GROWTH MAT VS MAT LY LEAGUE
ON 2005

DJ 2006

FM 2006

AM 2006

JJ 2006

AS 2006

ON 2006

DJ 2007

FM 2007

1
2
3
4
5
6
7
8
9
10

Unilever

Masterfoods

Bielmar

Heinz

Raisio

Danone

Hochland

Nestle

Kamis

Kraft

AM 2007

Market shares in TCL market

LIQ UID T O ILET C LEA NERS br ands mar ket shar es in T O T A L BA LT IC S

% Market Share

MA 2005

MJ 2005

JA 2005

SO 2005

ND 2005

JF 2006

MA 2006

MJ 2006

JA 2006

SO 2006

ND 2006

JF 2007

MA 2007

DO M EST O S

35.0%

H A RP IC
30.0%

C ILLIT

25.0%

BREF

Y P LO N
20.0%

C ILLIT BA NG

15.0%

DO SIA

KO SLIT A
10.0%

P RIV A T E
LA BEL
5.0%

BLUX

UNILEV ER
0.0%

Market shares - tea

TOP TEA BRANDS SHARES BALTICS - VALUE SHARE

TOP TEA BRANDS SHARES BALTICS - VOLUME SHARE

Simple information

33.5%

32.1%

31.6%

31.2%

32.3%

30.8%

1,569

4.8%

30.5%

-3.0%

4,625

7.7%

31.2%

-2.6%

9,310

7.4%

31.4%

-2.9%

15.4%

13.6%

14.3%

14.2%

16.1%

15.0%

748

8.7%

14.5%

-0.9%

2,253

20.0%

15.2%

0.4%

4,332

19.9%

14.6%

0.3%

7.3%

6.7%

7.9%

7.2%

7.8%

7.9%

497

51.8%

9.7%

2.3%

1,256

43.3%

8.5%

1.6%

2,330

42.2%

7.9%

1.4%

9.1%

8.7%

9.8%

9.2%

11.7%

9.3%

478

17.3%

9.3%

0.2%

1,494

30.4%

10.1%

1.1%

2,863

21.3%

9.7%

0.3%

9.8%

9.4%

8.9%

10.1%

7.9%

10.2%

471

7.4%

9.2%

-0.7%

1,351

11.3%

9.1%

-0.4%

2,757

20.9%

9.3%

0.3%

5.5%

7.5%

8.3%

8.3%

6.8%

8.5%

399

62.3%

7.8%

2.2%

1,142

51.4%

7.7%

1.8%

2,329

55.7%

7.9%

1.9%

5.1%

7.1%

7.8%

7.8%

6.3%

7.9%

373

63.0%

7.3%

2.1%

1,065

51.4%

7.2%

1.6%

2,183

55.8%

7.4%

1.8%

7.4%

8.1%

7.5%

8.5%

7.5%

6.5%

337

1.7%

6.5%

-0.9%

1,012

3.1%

6.8%

-0.9%

2,204

7.3%

7.4%

-0.7%

6.8%

6.6%

6.2%

5.5%

5.8%

5.9%

319

5.7%

6.2%

-0.6%

886

-2.7%

6.0%

-1.2%

1,786

-5.1%

6.0%

-1.4%

3.9%

3.5%

3.9%

3.3%

3.5%

3.9%

229

32.1%

4.4%

0.6%

587

28.5%

4.0%

0.4%

1,115

26.5%

3.8%

0.3%

2.9%

2.6%

3.1%

2.9%

3.3%

3.1%

219

71.1%

4.3%

1.4%

526

51.3%

3.5%

0.8%

950

54.4%

3.2%

0.8%

4.0%

3.5%

3.3%

3.4%

3.2%

4.0%

206

16.8%

4.0%

0.1%

556

19.3%

3.7%

0.1%

1,059

16.6%

3.6%

0.0%

3.2%

3.6%

2.8%

2.5%

2.3%

2.5%

129

-9.9%

2.5%

-0.7%

364

-6.0%

2.5%

-0.6%

801

10.4%

2.7%

-0.2%

2.3%

2.2%

1.6%

1.7%

1.2%

1.3%

67

-33.9%

1.3%

-1.0%

189

-33.0%

1.3%

-0.9%

466

-25.2%

1.6%

-0.9%

1.4%

1.1%

0.9%

0.8%

0.8%

0.7%

32

-50.0%

0.6%

-0.8%

104

-33.5%

0.7%

-0.5%

239

-24.3%

0.8%

-0.4%

11.6%

10.4%

9.6%

11.6%

9.3%

8.6%

209

-9.7%

8.1%

-3.5%

633

42.0%

8.6%

6.0%

5.3%

5.6%

8.0%

6.5%

5.6%

136

13.8%

5.2%

-0.7%

422

82.0%

5.8%

4.7%

4.5%

3.6%

3.2%

2.4%

2.7%

63

-32.9%

2.4%

-2.3%

185

0.4%

2.5%

0.9%

0.5%

0.4%

0.3%

0.4%

0.3%

10

-45.0%

0.4%

-0.5%

26

-12.5%

0.4%

16.8%

16.6%

15.3%

15.6%

12.5%

15.1%

358

7.0%

13.9%

-2.9%

1,011

57.1%

13.8%

11.5%

10.6%

12.5%

11.4%

12.3%

12.4%

376

63.9%

14.5%

3.0%

958

145.4%

13.1%

14.8%

13.3%

13.5%

12.7%

15.2%

12.2%

295

0.0%

11.4%

-3.4%

942

73.9%

12.9%

11.2%

11.6%

10.2%

10.6%

9.4%

9.5%

236

5.5%

9.1%

-2.1%

685

77.3%

9.4%

3.0%

4.2%

5.6%

5.1%

4.7%

5.9%

149

150.3%

5.7%

2.8%

400

212.4%

5.5%

3.8%

3.5%

3.1%

2.1%

2.2%

2.5%

58

-24.0%

2.2%

-1.6%

169

25.6%

2.3%

17.4%

16.1%

17.0%

16.1%

16.0%

17.7%

686

38.1%

20.3%

2.8%

1,555

29.5%

18.2%

1.9%

3,009

23.9%

17.3%

1.2%

14.2%

12.7%

13.6%

13.0%

12.6%

14.3%

579

43.3%

17.1%

2.9%

1,275

33.4%

14.9%

2.0%

2,437

28.7%

14.0%

1.4%

0.7%

0.7%

0.7%

0.6%

0.6%

0.6%

18

-10.2%

0.5%

-0.2%

50

-15.8%

0.6%

-0.2%

109

-33.2%

0.6%

-0.5%
0.3%

2.5%

2.7%

2.7%

2.5%

2.8%

2.7%

89

23.8%

2.6%

0.1%

231

25.9%

2.7%

0.2%

463

31.2%

2.7%

15.7%

16.8%

15.6%

13.8%

15.3%

16.8%

559

24.9%

16.5%

0.8%

1,388

32.9%

16.2%

2.1%

2,753

31.3%

15.8%

1.9%

12.5%

12.0%

11.0%

9.3%

11.0%

11.3%

372

4.1%

11.0%

-1.5%

947

-5.1%

11.1%

-2.4%

1,896

-2.1%

10.9%

-1.9%

10.2%

9.7%

9.4%

9.3%

9.5%

9.5%

340

16.9%

10.0%

-0.2%

831

15.0%

9.7%

-0.1%

1,670

16.5%

9.6%

0.1%

4.2%

4.7%

5.6%

8.0%

5.9%

6.1%

168

41.5%

5.0%

0.8%

477

50.9%

5.6%

1.3%

1,025

59.2%

5.9%

1.6%

22.0%

20.0%

21.9%

22.0%

20.5%

22.2%

522

39.7%

25.6%

3.6%

1,174

31.9%

23.1%

2.8%

2,234

29.4%

22.2%

2.4%

17.8%

15.5%

17.3%

17.2%

15.7%

17.7%

433

43.5%

21.2%

3.4%

944

33.5%

18.5%

2.5%

1,771

29.0%

17.6%

1.9%

4.2%

4.6%

4.6%

4.8%

4.8%

4.5%

89

23.8%

4.4%

0.1%

231

25.9%

4.5%

0.4%

463

31.2%

4.6%

0.6%

21.0%

20.4%

18.9%

17.7%

19.1%

18.7%

372

4.1%

18.2%

-2.8%

947

-5.1%

18.6%

-4.1%

1,896

-2.1%

18.8%

-3.4%

15.4%

17.3%

15.3%

13.9%

15.5%

16.3%

322

22.9%

15.8%

0.3%

807

35.8%

15.9%

2.3%

1,580

38.0%

15.7%

2.6%

13.0%

12.2%

11.8%

12.3%

12.6%

12.5%

272

23.6%

13.3%

0.4%

654

23.1%

12.8%

0.8%

1,257

26.9%

12.5%

1.1%

4.4%

5.5%

5.0%

5.3%

4.6%

5.0%

94

26.4%

4.6%

0.2%

240

0.5%

4.7%

-0.7%

504

-8.0%

5.0%

-1.3%

11.2%

11.0%

10.6%

10.0%

10.3%

11.3%

164

33.3%

12.9%

1.7%

381

22.7%

11.6%

0.8%

775

10.4%

11.0%

-0.4%

1.8%

1.8%

1.8%

1.3%

1.5%

1.6%

18

-10.2%

1.4%

-0.4%

50

-15.8%

1.5%

-0.5%

109

-33.2%

1.6%

-1.1%

17.0%

16.8%

16.8%

14.3%

15.6%

18.4%

237

27.7%

18.8%

1.8%

581

29.2%

17.7%

2.0%

1,174

23.3%

16.7%

1.2%

12.7%

14.7%

13.1%

10.4%

10.6%

12.1%

158

13.1%

12.5%

-0.3%

387

8.6%

11.8%

-0.7%

856

16.2%

12.2%

0.2%

13.3%

11.5%

11.6%

10.0%

10.8%

11.0%

140

-3.8%

11.0%

-2.2%

360

3.2%

11.0%

-1.2%

770

13.5%

11.0%

-0.1%

8.6%

9.2%

10.6%

13.9%

11.4%

10.6%

117

24.7%

9.2%

0.7%

339

34.3%

10.3%

1.5%

770

42.6%

11.0%

2.2%

9.4%

10.4%

10.0%

9.2%

8.6%

8.5%

103

0.2%

8.2%

-1.3%

276

2.7%

8.4%

-1.0%

644

15.0%

9.2%

0.0%

6.5%

6.4%

6.3%

6.2%

5.7%

5.2%

68

-4.0%

5.4%

-1.1%

177

-7.3%

5.4%

-1.3%

413

-6.9%

5.9%

-1.3%

20xx Profit Variance

25

5,5

ToT

Indirects
4,8
20

19,2

Costs

5,5
0,1

-1,5

14.5

CPP
-7,0

15

Vol/Mix
13,1

-1,4

A&P

Price
10

TR '07
TR '06

BL vs. PL
SalesStructure
structure

29%
7%

Deo

6%

16%

HHC
Hair

17%

Skin

26%

Oral

1%

4%
0%
1%

Powders

6%
14%

4%

Dressings
Savoury

5%

Spreads
4%

9%

14%
6% 3%

8%

Ice-Cream
15%

5%

TBB

Media spent

Media spent per category in 20xx-20xx

Medie spent per category in 2004-2006

0 000

0 000

0 000

0 000

0 000

0 000

0 000

TEA

YF

BOULLIONS&SOUPS

SPREADS

DRESSINGS &
SAUCES

6P - Advertising
MAC
max

MAC
min
50
45
40

Awareness

35
30

sharply
diminishing
returns

25
20

diminishing
returns

15
10

increasing
returns

5
0
0

200

400

600

800

GRPs

The awareness percentages are at the agreed frequency, assuming memory decay

1000

Promo evaluation

W01/06

W50/05

W47/05

W44/05

W41/05

W38/05

W35/05

W32/05

W29/05

W26/05

W23/05

W20/05

W17/05

W14/05

W11/05

W8/05

W5/05

W2/05

W52/04

W49/04

W46/04

W43/04

W40/04

W37/04

W34/04

W31/04

W28/04

W25/04

W22/04

W19/04

W16/04

W13/04

W10/04

W7/04

W4/04

W1/04

Promotions

35%

30%

25%

20%

15%

10%

5%

Source of incremental sales???

Cannibalization?

Other UL customers?

Stock loading?

Time phasing?

New consumers?

Loyal consumers?

Increased consumption?

Competition?

Do we want that?

SUPER

Close-to-business

Economic update

Economic update Baltic countries

Innovative tools
for
Innovative Business Partnering

DMUU
Results expectations
calibrated sensibly
Better decision-making

Key success factors

Risk awareness
Focus on key areas

Innovation Tracking

2% Norma

Feb '05

Mar '05

2.5% Norma

Apr '05

3% Norma

May '05

Wynik Marki

Jun '05

Jul '05

Aug '05

6P Brand Growth Model

Profit

Margin

Market Dynamics
and
Financial Return

NPS/Value

Value Market Size

Market growth

Price

Economy, Trends, Development

Volume

Buying Behaviour

6Ps
(Brand Levers)

Value Share

Promotion

Volume Share

Loyalty
Purchase frequency
Pack size bought

Penetration

Proposition

Volume Market Size

Place

Price

Pack

Product

6P - Brand Health
Behavioural Strength

Measured By

Purchasing Behaviour

Executional Strength

Measured By

Operational Factors

Attitudinal Strength

Measured By

Consumer Mind
and Quality

Purchasing Behaviour can be measured by

Value share, penetration, loyalty (behavioural +

attitudinal), total turnover

Operational Factors are

Brand Communication
/Activation

The Brand
Signature
helps
understanding
the brands
strengths and
weaknesses
in comparison
with brands in
the same
category.

Brand Health Check Pyramid, Brand Signature, Brand

typology, Brand Voltage

The Brand Voltage is a

summary measure of
the brands growth
potential. A high
voltage indicate the
brand is likely to
maintain or grow share.
With a low voltage a
brand can still grow, but
will have to work harder
to stand still, and will
over time be more
vulnerable.

Olympic

Defender

Extended
Supply Chain

Innovation

Other

Brand Signature

Distribution, relative price, SOS / SOM, Promotional

pressure

Consumer Mind and Quality are measured by

Customer
Development

Brand Voltage
STRONG AND WEAK PROFILES
Weak

Strong

- |+

- |+

-| +

- |+

Conviction
Advantage
Performance
Relevance
Presence

Classic

Fading

5.2

+3.
1

Tiger

Weak

Specialist

Clean Slate

+9.
3

MMM

Features
and Display

40
30
20

2 500 000

10
0
60
50

Display

40
30
20
10

2 000 000

150

Feature

100

50

Average
Price
Coupon

1 500 000

32
30
28
26
24

150,000

1 000 000

100,000
50,000
0
40,000

Print

30,000

500 000
20,000

10,000

TV
Advertising

1500
1000
500

0
lis 97

maj 98

pa 98

maj 99

pa 99

kwi 00

Value Drivers

Sales

quantify effectiveness of drivers

remove trend and analyse movement around them
distinguish true cause and effect from spurious relationships

pa 00

Marketing Mix model - what is it?

Econometric model to measure the short term impact of
different elements of the marketing mix on sales
40
35
30
25
20

Advanced
econometric
analysis

15
10
5
0
1988

1990

1992

1994

1996

1998

40

2000

35
30

Total Sales

25

TV Advertising

20
15

Works on historical data to

provide a basis for
decisions about the future

Promotion

10
5
0
1988

1990

1992

1994

1996

1998

2000

Marketing Mix Modelling

Price drives growth?

VOLUME
3,500

Real PRICE
3,400

3,000

3,200

2,500

3,000

2,000
2,800
1,500
2,600

1,000

2,400

500
0

1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
VOLUME Real PRICE

Volume
3,500
1977

3,000
2,500

1978
1979

2,000

1980

1,500

1981

1,000

1982

500

1983

0
2,200

2,400

2,600

2,800
Real Price

3,000

3,200

3,400

2,200

Growth drivers quantified

Growth is accounted for by:
- Price

40%

- Sampling

20%

- Distribution

15%

- Habits

15%

- Advertising

10%

Modern finance
Expertise jobs
Financial accounting
Business Partnering
Promo evaluation
Media
Business info
External view
Economy

Close-to-business

The End
Thank you