P2P and Look of Success in Traditional Trade

1. P2P and Look of Success in Traditional Trade Efrain Rosario Global Director, Shopper Marketing, Commercial Leadership infoshoppermarketing@coca-cola.com

2. Traditional Trade Performance Drivers How to increase KO share in the Traditional Trade – a summary of commercial best practices

3. Background and Objectives • The traditional trade is characterized by a wide variety of size, layout, product offerings, merchandising and customer service. • After reviewing over 20 traditional trade studies spanning 13 countries, we have compiled the most important “killer facts” that lead to an increase in Coke share or sales within this channel. • Note: Countries where data was obtained is noted in the upper right-hand corner of each slide.

4. We started our investigation into Traditional Trade drivers with the results of a robust quantitative study in Mexico

5. In Mexico, four items emerged as the top driving factors of sales, resulting in a 12% increase Mexico COOLERS (5.3%) In first position 1 SALES INCREASE OF 2 SOVI (4.3%) Share of Visual Inventory 12% • HOT SPOTS (1.2%) • Top locations in store 3 PRICE (1.2%) Communication 4 Rex Briggs Mexico, 2009

6. Based on global learnings, we have identified five key commercial drivers for the traditional trade 1 Coolers 2 SOVI 3 Shoppability 4 Price communication 5 Shopkeeper satisfaction

7. 1 • Coolers are the single most important driver for growth • Presence, placement and equipment style are critical 7

8. The greater the cooler penetration, the greater the market performance … Correlation of Coolers per 10,000 and KO per Capita Mexico is the strongest market, with the highest number of coolers per 10,000 Mexico Coolers Per 10,000 KO Per Capita

9. … as nearly all beverage transactions come from coolers in best practice markets Mexico > 90%of all (non-alcoholic) traditional trade beverage transactions are from coolers TT Hot Spot Study, Mexico, 2010

10. Higher chilled availability leads to higher market share Philippines 60%+SOCVI* 55% share 40-60%SOCVI* 43% share < 40%SOCVI* 24% 19% share share There is a significant loss of share in stores with less than 40% chilled stock • No Coolers * Share of Chilled Visual Inventory MOTOR Philippines, 2008

11. KO Cooler exclusivity further increases share Sri Lanka • TCCS & CompetitiveCoolers • Only TCCS Coolers 54%Coke share 70%Coke share POS Observations and High Level Driver Buckets, 2009

12. Coolers in “1st position” drive volume growth, and even more profit growth … Mexico 5.3% volume increase 8.2% profit increase Branded coolers trigger purchases because they are the first place shoppers look for beverages –cold is sold Rex Briggs Mexico, 2009

13. … and placing coolers outdoors creates a beacon that captures incremental share Pacific 25-30% growth in transactions including share gains when placed outdoors Teen Recruitment CCL Considerations, Pacific 2009

14. Improving our visual identity, as in the Showcase cooler, drives share gain Mexico Brazil +8-12%Share Gain Original Cooler Showcase Cooler Showcase Cooler and 3D VIS Latam Test Results, 2010

15. Showcase coolers create more stopping power and are more appealing Which cooler gets shopper’s attention? Driven by … Lighting LED is more efficient and effective 1 Design 2 • Coke assets, curves & modern look Handle 3 • Dynamic ribbon invites touch 27% 68% Mexico 34% 55% Brazil Showcase Cooler and 3D VIS Latam Test Results, 2010

16. In summary, when working with coolers we should consider the following: Chilled availability is most important, followed by exclusivity of Coke And first position placement is key - placing them outside is even better Finally, coolers that leverage our visual identity garner the most attention

17. 2 SOVI & SOCVI* are essential to growing share Not only do we need to have the right OBPPC, but also the correct space on shelf and in coolers * Share of Chilled Visual Inventory 17

18. First, we need to optimize the OBPPC*… * Occasion Brand Pack Price Category

19. When the desired brand / pack is unavailable, shoppers switch brands… India Shopper Reaction if Packis Unavailable 37%bought a differentpack of the same brand 57%bought the same pack of a different brand 6% didn’t buya beverage Traditional Trade Power Principles – Page 2

20. …and we lose out on 63%of shoppers India Shopper Reaction if Packis Unavailable 57%bought the same pack of a different brand 6% didn’t buya beverage Traditional Trade Power Principles – Page 2

21. Getting the OBPPC* correct requires SKU discipline and optimizing SKU mix across categories * Occasion Brand Pack Price Category

22. Optimizing category mix and SKU reduction drove incremental revenue growth Mexico To: From: Water Water Stills Stills Sparkling Sparkling • 139 SKUs • 4 Door Cooler • 75 SKUs • 4 Door Cooler -45% +3% Reduction in SKUs with Improvement in Revenue

23. Once we have the optimal OBPPC*, we then need to ensure we have the correct space to sales ratio * Occasion Brand Pack Price Category

24. There is a direct correlation between increasing SOVI and increasing share Japan Russia Correlation Between Share and SOVI When TCCS inventory is increased, there are more brand and package options – allowing for shoppers to fulfill their needs and make Coke top of mind SHARE R2 = 0.9218 SOVI TCCS Competitors DATA: Aeon POS/RED Tested at 7 stores, 2010

25. As a guiding principle, our percent of SOVI should be at least equal to our volume share % SOVI Volume Share Winning In-Store By Focusing on the Most Important Elements (v 2.0) – page 1

26. This requires having the correct amount of cooler doors to support SOCVI needed Australia Mexico By increasing doors we create additional chilled space showcasing the extended portfolio, reaching more shopper occasions with greater package differentiation and prevents out of stocks Gold Customers +12%-14% volume & +18%NSR From 3 doors to 4 doors Silver Customers From 2 doors to 3 doors Australia IC Best Practice, Customer Portal; Mexico Double the Bet, 2011

27. To summarize, when working with SOVI and SOCVI, we should consider the following: It is important to optimize SKUs by having the right OBPPC and balancing SKUs properly across categories Increasing SOVI directly increases share and it should equal volume share in the area Need to have the correct amount of cooler doors, especially in top customers

28. 3 Shoppability plays a critical role in driving traditional trade sales Merchandising coolers, hot spots, and communicating effectively are key for turning shoppers into buyers 28

29. Shoppers are making quick decisions in-store … requiring a high impact store environment Less than one minute spent shopping for beverages 59% choose brands while in-store Purchased Brand on List Chose Brand In-Store General POS Observations and High Level Driver Buckets – Slide 8

30. We must create an efficient shopping experience with effective merchandising – starting with the coolers

31. Poor merchandising erodes the competitive advantage that coolers bring Lack of merchandising Camouflage to the brain

32. Optimized cooler merchandising adds up to +19% in growth Colombia Control What didn’t work Optimized What did work • Straight Lines • Vertically Merchandised • 3 facings per brand • 9 Brands Total 1-4 facings per brand Varied Lines Horizontally Merchandised 10 Brands < Effective Cooler Merchandising, 2008

33. Placement within the cooler makes a big difference! Colombia Coolers have specific high-to-low priority zones to utilize when designing planograms Opening Side Highest Impact for high margin, high impulse products Medium Impact for routine, frequency packages Low Impact for destination, loyalty packages Effective Cooler Merchandising 2008;

34. As a reminder, three facings per SKU creates higher visibility, and higher share Thailand Colombia This applies to cooler merchandising, as well as ambient merchandising 3 Facings per SKU 19-28% Share increase 89share index Effective Cooler Merchandising, 2008; POS Observations and High Level Driver Buckets – Slide 4

35. Once coolers are merchandised correctly, we must focus on effectively utilizing hot spots

36. In addition to the cooler, we’ve learned there are three other critical hot spots in the store Colombia Cooler Counter Ambient Entrance NeuroFrocus Retail Design Impact Charter Test, Colombia 2011

37. But, less is more - focus on 3-6 merchandising elements to optimize impact Colombia Value wall element has the greatest impact on purchase intent 3-6 elements = purchase intent of 88% 7+ elements = no beneficial impact on purchase intent 1-3 elements = purchase intent of 15% * Elements are individual materials placed in hot spots NeuroFrocus Retail Design Impact Charter Test, Colombia 2011

38. By utilizing purposeful, occasion-driven shopper marketing techniques, we are transforming stores… Argentina Colombia Retail Design Impact Charter Ecuador • Before After

39. ... resulting in higher presence, effectiveness and most importantly, volume! Colombia INCREMENTALVOLUME Pre Post +28.6% SSD Juices Water Brand Awareness Execution Quality Index CDE Purchase Transactions Share of Cold Inventory Share of Visible Inventory PRE POST + 8 6.6 7.9 Effectiveness + 8 8.6 8.5 Attention 6.2 8.0 Emotional Inv. 6.2 7.2 Memory Neuromarketing Total Effectiveness NeuroFrocus Retail Design Impact Charter Test, Colombia 2011

40. While merchandising and utilizing multiple hot spots is foundational, the temporary POP materials must be effective

41. The presence of Point of Purchase Materials (POPM) strongly impacts Coke share India POPM Present Absent Sri Lanka POPM Present Absent UAE POPM Present Absent POS Observations and High Level Driver Buckets, 2009

42. But often we miss the mark with our shopper! What shoppers say about POPM… “There are so many that I don’t always notice them” “They make it hard to find basic products” “They are placed over other brands” “They can be worn, dirty or torn” “Sometimes they’re for products or promotions that are out of date or out of stock” Traditional Trade Video – “The Shop Space”

43. To summarize, we should consider the following to make stores more shoppable: Since shoppers are shopping quickly, its important to stay top of mind and create an efficient shopping experience However, less is more – focus on 3-6 elements to avoid over saturating the shop’s space While POPM presence strongly impacts Coke share, we must strive to produce more effective POPM

44. 4 Prices must be clearly communicated …and SRP* must be complied with * Suggested Retail Price 44

45. Clear, consistent price communication in-store is driving sales Mexico 1.2%incremental volume 3%incremental system profit Clear pricing makes the purchase decision easier for shoppers Rex Briggs Mexico, 2009

46. Price communication is a crucial part of shoppability, as it helps guide choice … Argentina Price Communication is One Factor that Leads to More TCCS Sales* 5x Top selling stores perform significantly higher than bottom performing stores *Than low selling stores Improving Shoppability in the Traditional Trade, Argentina 2010

47. … while cluttered price communication reduces effectiveness Colombia 8%Increase inTotal Effectiveness Organized price communication Cluttered price communication NeuroFrocus Retail Design Impact Charter Test, Colombia 2011

48. We can increase volume by ensuring that shopkeepers comply with the Suggested Retail Price Philippines SRP compliancedrives sales uplift by 21% …and it’s historically weak in the traditional trade Picture of Success Drivers, Neilsen, 2009

49. To summarize, when working with pricing, we should consider the following: Along with focusing on coolers and SOVI, by communicating prices, we see a lift in volume But, be careful to avoid over-communicating prices, as this can lower effectiveness Finally, ensure the SRP is complied with to increase volume

50. 5 It’s important to keep the shopkeeper involved Assisting them increases Coke share 50