Nielsen QBN Europe Q1 2018

EUROPE QUARTER BY NUMBERS Q1 2018

SECTION 1 1 THE BIG PICTURE: EUROPE WEST T Message from Olivier Lamare ………………………………………………………………………..…. 4

EUROPE AT A GLANCE E Key economic drivers…………………………………………………………………………………….. 5 Looking through West Europe FMCG Lens………………………………………………………...... 7

COUNTRY SNAPSHOT T Austria……….………………………….………………………………………………………………….. 8 Belgium…………………………………………………………………………………………...... …….. 11 Denmark………………………………………………………………………………………...... 14 Finland…………………………………………………………………………………………………...... 17 France……………………………………………………………………………………………………… 20 Germany…………………………………………………………………………………………………… 23 Ireland…………………………………………………………………………….……………...... …...... 26 Italy……………………………………………………………………………………....……………...... 29 Netherlands………………………………………………………………………………....…………….. 32 Norway………………………………………………………………………………………..………...... 35 Portugal…………………………………………………………………....………………….………...... 38 Spain……………………………………………………………………………………………..………… 41 Sweden………………………………………………………………………………………………...... 44 Switzerland………...……………………………………………………………………………………… 47 United Kingdom…………………………………………………………………………….……………... 50

IN THE INDUSTRY Y What’s Next Starts Now………………………………………………………………………………….. 102

SECTION 2 1 THE BIG PICTURE: EUROPE CENTRAL & EAST T Message from Roberto Pedretti and Daniel Chorbadjian…………………………...... 53

EUROPE AT A GLANCE E Key economic drivers……………..…………………………………………………….…………...... 54 Looking through Central & East Europe FMCG Lens……………………………………………...... 56

COUNTRY SNAPSHOT T Belarus……….………………………….…………………………………………………………………. 57 Bulgaria……….………………………………………….……………………...... 60 Czech Republic…………………………………………………………………………………………… 63 Estonia…………………………………………………………………………………………....……….. 66 Greece…………………………………………………………………………………………………...... 69 Hungary……………………………………………………………………………………………………. 72 Kazakhstan…………………………………………………………………………………………...…… 75 Latvia……………………………………………………………………………………....………………. 78 Lithuania…………………………………………………………………………………………………… 81 Poland……………………………………………………………………………………………………… 84 Romania…………………………………………………………………....……………………………… 87 Russia……………………………………………………………………………………………………… 90 Slovakia……………………………………………………………………………………………………. 93 Turkey……………………………………………………………………………………………………… 96 Ukraine…………………………………………………………………………………………………….. 99

IN THE INDUSTRY Y What’s Next Starts Now………………………………………………………………………………….. 102

NOTE: Croatia, Israel, Serbia and Slovenia are not included in this quarter’s report and will return in Q2 2018

With this Q1 2018 edition of Europe Quarter by Numbers, we are glad to bring you an even fuller picture, as this report now includes 7 new markets (Austria, Denmark, Finland, Ireland, Norway, Sweden and Switzerland). Our ambition does not change, we aim to provide context and insight into how broader macroeconomic factors are influencing consumer sentiment and spending patterns in the retail scene.

After tough times in the last few years, 2017 showed a dynamic economic environment Olivier Lamare across Europe, with positive consumer confidence in the region reaching some of the Retail Services highest levels seen for some time. If Europe remains far below the global average for Developed Markets consumer confidence, early 2018 confirms the positive trend in markets like Germany,

Switzerland and Portugal (+5).

Amongst the national issues of greatest concern, health is high on the list. Some countries like Portugal, Finland and Ireland show notable peaks, but the whole region have it listed as concern, with great opportunities in this field (organic items and stores, free from products, healthy innovations).

European Union (EU28) GDP growth slowed at the start of 2018 after a stronger than expected 2017, in a recovery phase after a decade of financial and economic crises. Most countries see their GDP growing at a slower pace this quarter. The more sluggish economic growth (+0.4%) in Q1 was related to some degree to cold weather but the consensus is that this is that start of a normalization of growth after a number of years of monetary stimulus by the ECB.

After a strong end to 2017, FMCG performance in Q1 weakened slightly with volume growth receding to +0.9% (down from +1.7% in Q4). However this is still close to the underlying trend of the last 12 months. Value sales across Europe increased by +3.7%, down from +4.4% in Q4. There was also a growth upside in Q1 from an early Easter in 2018 (calendar effect). A few markets lead growth in the region, like Germany (+4.4%) and Portugal (+4.1%) with solid growth in value. In every market inflation is feeding growth, but volumes are declining in several countries:

Belgium and Netherlands, France, Denmark, Finland and Switzerland. Putting money into savings is the first priority for the majority of markets and consumers continue to navigate the retail environment with a savings mindset, seeking the best deals when shopping, in terms of price and promotions, but also brands and channels.

Private Label and Discounters are on the rise in many markets (France and Portugal being exceptions), pushing hard and gaining share. Many retailers across the region have revamped their own brands, upgrading ranges and investing in communication. In a significant number of markets, FMCG leaders are also threatened by small brands and local champions who are capitalizing on revived “local pride”, leveraging an appeal from consumers toward local consumption and a push from retailers.

Inflationary pressures continue with unit value growth of +2.8%. At the moment there is no indication across most of the bigger European economies, that FMCG spend is being impacted by the continuation of moderate inflation. Looking ahead, Q2 will be better indication of both consumer sentiment and shopper behaviour for the rest of the year.

*European Growth Reporter Q1 2018 4

ECONOMIC PULSE OF CONSUMERS AROUND EUROPE

The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen measures perceptions of local job prospects, personal finances and immediate spending intentions. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively

CONSUMER CONFIDENCE INDEX

GDP GDP Q1 2018 vs Q1 2018 vs Q1 2018 (annual % Inflation (annual % Inflation Q1 2018 Q4 2017 Q4 2017 growth) growth) Spain 91 -2 2.9 0.9 2.0 0.8 Portugal 90 5 Denmark 114 -2 -0.8 0.7 2.3 1.3 Germany 108 5 Austria 100 -2 3.1 1.9 - 0.7 Switzerland 104 5 Italy 66 -2 1.4 0.8 1.6 1.5 Belgium 88 3 - - Sweden 99 2 2.1 2.0 Norway 89 2 2.7 0.8 Finland 82 2 3.1 1.2 Netherlands 101 1 1.2 2.4 UK 96 0 2.1 1.5 France 79 0 7.0 0.5 Ireland 103 0 CONSUMER CONFIDENCE INDEX

Consumer sentiment improves across most of Western Europe’s key markets

GDP and Inflation reflect % change per annum to Q1 or (-) indicates not available at time of publication Source: Economist Intelligence Unit (EIU)/OECD/local government sources 5 The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen.

CONSUMER SENTIMENTS IN EUROPE WHAT ARE THE TOP 2 CONCERNS IN THE NEXT SIX MONTHS? Type of concern

35 30 30 28 28 29 30 26 25 22 21 21 19 20 20 20 18 17 18 17 18 17 20 15 16 15 16 13 13 15 12 11 11 8 8 9 10 6 5 0 EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE Health Job security

EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE Health 0 3 3 5 3 -1 0 3 3 1 4 -3 1 -2 3 4 Job security 0 -3 2 0 1 0 2 1 0 1 1 0 -3 2 1 -4

Bars reflect Q1 2018. Table shows comparison to Q4 2017

WHO’S SPENDING, SAVING AND INVESTING?

After living expenses, how is spare money spent

55 60 51 52 53 52 52 50 48 48 49 48 48 48 47 45 46 50 43 43 44 42 43 40 39 3737 37 3736 37 38 40 35 34 35 35 33 33 35 29 28 28 29 30 28 28 25 25 30 24 22 20 10 0 EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE Putting into savings Holidays / vacations New clothes

EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE Putting into savings 2 0 2 1 1 -2 4 6 0 7 4 8 3 5 1 5 Holidays / vacations 1 -1 3 3 6 5 -1 2 6 5 1 -4 0 -1 5 3 New clothes 0 -2 0 2 -3 3 0 4 8 2 2 -2 0 -3 0 1

Bars reflect Q1 2018. Table shows comparison to Q4 2017

Saving remains a key priority for majority, with an increasing focus for consumers in Italy and the UK.

6 The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen. Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. LOOKING THROUGH EUROPE WEST FMCG LENS

FAST MOVING CONSUMER GOODS MARKET DYNAMICS – Q1 2018 Weighted average – WEST EUROPE – 15 countries

AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

4.4% 4.1% 0.8% 0.2% 3.3% 1.1% 3.1% 3.1% 3.2% 3.0% 2.9% 2.6% 2.8% 0.6% 1.0% 1.8% 3.6% 0.8% 3.0% 2.9% 2.4% 3.4% 1.8% 2.0% 2.6% 1.4% 1.9% 2.6% 2.0% 1.0% 2.0% 0.8% 1.5% 2.1% 0.7% 0.6% 0.7% 0.3% -0.8% -0.7% -1.0% -0.6% -1.3% -1.3% -1.0%

Unit value change Volume change Nominal growth

WHERE ARE THE FMCG GROWTH OPPORTUNITIES? Average volume growth Q4 2017 & Q1 2018

NORWAY (+0.7%) FINLAND (-0.2%) SWEDEN (+0.6%)

DENMARK (-0.8%) UK (+0.9%) IRELAND (+2.1%) NETHERLANDS (-0.2%) GERMANY (+0.8%) BELGIUM (-0.5%) FRANCE (+0.3%) AUSTRIA (+1.4%) SWITZERLAND (-0.1%)

ITALY (+2%) PORTUGAL (+1.9%) SPAIN (+1.6%)

Avg. volume growth decreasing versus last period Colour coding indicates growth or declining trend compared to same 6 month period year ago Avg. volume growth increasing versus last period 7 Average volume growth of Q3’17 & Q4’17 vs Q3’16 & Q4’16.

The Austrian economy is enjoying positive times, with all macroeconomic indicators pointing in the right direction. In 2017 we saw a GDP growth rate of 2.9%—the best in several years. According to the Central Bureau of Statistics, we can expect this rate to improve even more in 2018. Whilst still considered a strong export country, current economic growth is also supported by solid domestic consumption. The ongoing low Eurozone interest rates, as well as an income tax changes, appear to Judith Kuiper have enticed consumers to spend more. Market Leader Alpine The FMCG industry in Austria recorded a strong first quarter due to an earlier Easter season. It saw a 5.1% rise in value delivered alongside record high consumer confidence levels in late 2017 and in the first quarter of 2018. Hypermarkets led the charge on this value growth with high single digit numbers at the cost of a slow down in growth numbers for Hard Discounters. However, there were other drivers in the trend, primarily in Dairy where a butter shortage drove significant price inflation within the category.

We expect continued positive growth through 2018 as retailers push aggressively on further promotions, sometimes offering discount levels of up to 30% amidst a broader scenario of price deflation, particularly for larger brands. This will bring opportunities to experiment with price tiers, to be innovative and to take advantage of improved purchasing power with expanded premium offerings.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.5 3.6 3.1 102 100 2.9 94 94 2.6 85 88 85 87 87 86 2.4 81 81 2.2 2.2 2.2 1.9 1.7 1.4

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU AT Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 8 Source Economist Intelligence Unit (EIU) Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

6.3%

5.2% 4.3% 3.9% 3.6% 3.7% 3.4% 3.3% 2.6% 2.4% 1.1% 2.7% 2.5% 3.2% 3.1% 0.6% 1.8% 2.3% 2.6% 1.7% 1.2% 0.2% 2.3% 1.4% 1.5% 0.6% 1.1% 0.4% 0.2% 0.5%

Unit Value Growth Volume Growth Nominal Value Growth Austria

The positive economic climate drove solid volume growth for FMCG.

TOTAL AUSTRIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

4.3%

8% 5.0% 23% 24% 4.7% 5.5%

15% 3.9% 4% 2% 0.5% 8% -3.0% 6.1% 40% 2.1%

Total FMCG Hypermarkets > 1000 m² Hypermarkets 1000 - 2499 m² Hypermarkets > 2500 m² Supermarkets 400 - 999 m² Large Food 250 - 399 m² Small Food Up To 250 m² Discounters Drug Stores Discounter growth was driven by new store openings.

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.3%

Fresh Food Perishable 32.9% 3.0%

Culinary Shelf-Stable & Other 16.9% 4.9%

Dairy 11.5% 7.1%

Alcoholic Beverages 8.3% 5.8%

Confectionery 7.2% 8.6%

Non-Alcoholic Beverages 7.1% 4.1%

Homecare/Pet Care 6.9% 0.4%

Personal Care 6.1% 1.6%

Hot Beverages 2.4% 5.3%

Baby Care 0.7% 2.4%

Dairy growth was led by price inflation on Butter and premiumisation within Cheese. Coffee pods are driving Hot Beverage growth.

TOTAL AUSTRIA – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.3%

Top 1-5 7.9% 5.3%

Top 6-10 4.6% 1.6%

Top 11-30 9.9% 5.9%

Top 31-100 11.9% 3.5%

100+ 44.9% 3.6%

Private Label 20.8% 5.6%

Top 5 growth is linked to the earlier Easter season while innovation drove most of Top 11-30 growth and new “free from” ranges are feeding Private Label dynamism. 10

Similar to the trends we saw last quarter, the Belgian economy is doing well, but still has some room for improvement. All economic indicators, including employment, disposable household income, and confidence levels are growing in the right direction, yet the growth of the Belgian economy still remains slower than its neighbours. As we know from the Consumer Confidence Index figures, Belgium is a country of savers, with consumers often conservatively putting savings aside, which can Pedro Lima Managing Director, have an impact on domestic demand and GDP. Benelux and Alpine In the first quarter of 2018, we saw a nominal growth rate for the FMCG market Regions. of 1.4%, which was again driven by price (2.1%) rather than an increase in volumes of products sold (-0.7%). Growth was largely driven by Large Supermarkets (5.3%), but Small Supermarkets (-9.1%) saw a considerable contraction when Superettes, which focus on proximity and convenience, grew 8.5%, and Discounters, with a focus on Fresh Products, grew 2.9%. The biggest nominal value growth was seen in the Confectionary and Bakery & Toast categories, with the former traditionally growing due to the Easter holiday. Dairy was also up, but this was in part due to price increases of milk and butter. In our recently released Shopper Trends report, we see that loyalty is decreasing amongst shoppers, with the amount of traditionally loyal consumers down by almost 15% within one year. Based on these figures, we suggest retailers and manufacturers should capitalise on these disloyalty trends by enticing shoppers to switch to their product, or their store. How? Play local. Play to local nuance, such as locally sourced ingredients. There is a lot of growth to be gained for players that use all the datasets they have at their fingertips to really personalise their products for consumers.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.0 95

2.0 2.0 2.0 89 88 1.9 1.9 87 87 1.8 85 86 1.6 1.6 84 85 1.4 1.5 1.5 81 81 81

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU BE

The Conference Board® Global Consumer Confidence 11 Source Economist Intelligence Unit (EIU) Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

2.8% 1.4% 2.0% 1.5% 2.9% 1.8% 1.5% 1.7% 1.2% 1.4% 0.8% 0.9% 2.1% 1.7% 2.3% 0.6% 1.4% 2.1% 0.0% 0.4% -0.8% 0.0% -0.8% -0.3% -1.2% -0.2% -1.1% -0.9% -0.7% -2.9%

Unit Value Growth Volume Growth Nominal Value Growth Belgium

Price continues to be main driver of growth.

TOTAL BELGIUM – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

3% 1.5% 12% 17% 0.5%

5.3%

18% -9.1% 50% 2.9%

8.5%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Discounters Superettes

Convenience & Fresh drove growth for Superettes and Discounters.

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 1.5%

Alcoholic Beverages 14.5% -0.5%

Dairy 13.4% 3.6%

Fresh Products 12.1% 4.1%

Grocery 11.9% 0.0%

Non Alcoholic Beverages 11.4% 3.2%

Health & Beauty 8.4% -1.4%

Housekeeping 5.8% -0.9%

Frozen 5.0% 0.6%

Confectionery 4.8% 4.7%

Sweet Snacks 3.7% 0.2%

Hot Beverages 2.9% 2.1%

Salted Snacks 2.3% 3.1% Pet Product 2.0% 0.4% Bakery & Toast 1.8% 6.0% Bakery & Toast grew due to the convenience trend as consumers went one-stop shopping rather than going to the bakery.

TOTAL BELGIUM – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 1.5%

Top 1-5 26.9% 2.7%

Top 6-10 9.8% -0.6%

Top 11-30 14.2% -0.2%

31-100 10.7% 0.2%

100+ 1.2% -2.3%

Private Label 37.3% 2.5%

Top 5 growth was boosted by Easter confectionery sales.

The Danes have left the financial crisis behind them and their consumer confidence remains the highest in Europe, but they are not yet in the same spending mode as they were before. But the macroeconomic climate is ripe—low unemployment, high spending power, increases in disposable income, increasing real estate prices and low interest rates. What the Danes are hungry for is change. Not as a revolution, but rather as an Cecilie Westh evolution resultant of generational change. Generation X and the Millennials have Managing Director new and different expectations and needs than their parents had when they were in Nordics the same life stage. At the same time, the Boomers have left, or will leave, the job market within the next few years. This will open up free time for different kinds of shopping and perhaps eating out more frequently and for different meals. The demand and interest around health will also increase among the Boomers, which leads to further opportunities within product offerings. As Danish retailers have upgraded their banners and concepts over the past five years, we have seen increased demand for convenience, premium, indulgence and healthy solutions. At the same time we see manufacturers seeking new shopper touchpoints. It seems that many Danes want it all, and at a value-for-money price point, requiring the perfect mix of shelf and promotional pricing across channels. This leaves both retailers and manufacturers with an increasing pricing and promotion challenge that they have to face. This challenge is gaining momentum as the market is becoming more and more transparent due to the access to things like price comparisons or outright purchase on digital platforms.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

115 115 116 114 107 107 4.2 87 87 86 81 81 85 2.9 2.4

1.5 1.3 1.3 0.4 0.9 0.9 1.1 0.7

-0.8 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU DK

GDP growth (% change pa)

Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 14 Source Economist Intelligence Unit (EIU) OECD Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT TY Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

2.2% 2.1% 2.3% 2.6% 1.9% 1.2% 1.1% 0.7% 0.9% 0.0% 1.2% 0.6% -0.6% -0.3% -0.4% -0.9% -0.4% -0.5% -0.1% -0.7% -1.3% -0.2% -1.4% -1.5%

Unit Value Growth Volume Growth Nominal Value Growth Denmark

Premiumisation and slightly decreased promotion pressure resulted in increased prices and higher value sales.

TOTAL DENMARK– CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

7% 1.2%

1.3%

0.5% 93%

Total FMCG Grocery Trade Convenience

The grocery aspect of the Convenience channel only grew 0.5% as shoppers switch to more food on-the-go. 15

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 1.2%

Packed Food 28.0% 0.0%

Beverages 21.6% 1.3%

Dairy Products 15.5% 7.1%

Fresh Food 12.3% 0.8%

Confectionery 6.7% 3.3%

Frozen Food 6.0% -1.6%

Household Products 5.9% -3.4%

Health & Beauty 3.9% -3.1%

Dairy categories drive growth thanks to premiumisation and increased assortment. Health and Beauty and Household categories declined in value despite very high promotion pressure, mostly due to channel switching.

TOTAL DENMARK – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 1.2%

Top 1-5 20.3% 3.0%

Top 6-10 7.0% 0.8%

Top 11-30 13.8% -0.9%

Top 31+ 58.9% 1.1%

Nordic manufactures are driving the growth based on assortment development and price optimization vs. the multinational counterparts

2017 was the turnaround year for Finland after several years of economic decline. GDP growth of 2.6% was the best since 2011, mainly fuelled by growth in investments and increased exports. However GDP is not expected to overcome its 2008 level before next year. Though consumer confidence is moving in the right direction, the index of 82 still remains below the rest of the Nordics and the European average of 87—but Cecilie Westh personal finances and consumer spending intentions are at their highest in seven Managing Director years. With inflation and interest rates at low levels, economists are predicting that Nordics growth this year and next will be based primarily on private consumption as well as investment. Following the general climate, the FMCG market has been sluggish for several years. Retailers have been luring cautious consumers with price reductions and various ad campaigns. As a result, growth prevails in channels offering the best value for money, like Hard Discounters and Hypermarkets. Finland remains predominantly a country of big stores, with value share of online grocery still below 1%. Two interesting target groups in Finland are single households and ageing consumers. In 2017, 43% of Finnish households had only a single occupant. On the other hand, the biggest share of FMCG spend, nearly a third (31%), was delivered by couples over 55 years old.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.1 87 87 86 2.8 85 82 2.7 81 81 81 80 2.5 2.4 68 70 2.2 64

1.1 0.8 0.9 0.8 0.7 0.7

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU FI Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 17 Source Economist Intelligence Unit (EIU) GDP estimate or Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

2.1% 1.9% 1.6% 1.4% 1.6% 1.8% 1.3% 1.2% 1.4% 3.2% 2.6% 0.5% 1.1% 2.1% 0.6% 0.8% 1.5% 2.1% 1.7% 1.1% 1.8% 1.0%

-0.2% -0.7% -0.3% -0.9% -0.8% -0.7% -1.1% -1.0%

Unit Value Growth Volume Growth Nominal Value Growth Finland

Rising food prices drove nominal growth this quarter.

TOTAL FINLAND – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

1.6% 6% 8% 4.0%

11% 38% 0.0%

-0.8%

10% 4.6%

1.2%

27% -4.4%

Total FMCG Hypermarket Supermarket Superettes Hard Discounter Low Price Stores Other Shop Types

Continued strong growth in Hypermarkets and Hard Discounters due to a focus on price and promotion. 18

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 1.6%

Fresh Foods 35.8% 3.3%

Dairy 15.6% 0.3%

Shelf Stable Foods 14.1% 0.0%

Beverage 10.3% 2.6%

Others 10.0% 2.0%

Household Products 5.4% -0.8%

Hygiene 4.8% -3.0%

Frozen Foods 3.9% 2.0%

Fresh Food drove value growth; especially popular were ready-to-eat meals and fruits & fresh berries.

TOTAL FINLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 1.6%

Top 1-5 15.6% -0.2%

Top 6-10 7.3% -1.6%

Top 11-30 14.9% 2.0%

Top 31-100 12.1% 4.2%

100+ 26.2% 1.1%

Private Label 23.8% 2.9%

Companies outside the Top 10 drove market growth.

At a time when France celebrates its 20th anniversary of its victory in the 1998 Football World Cup, the current climate should also be bright for consumption. Consumer confidence remains at an all-time high this quarter despite ongoing social tensions and strikes and broader challenges to the country’s economic health. In other words, consumers are signalling they have confidence in spending a little more or spending differently. The FMCG market saw a 1% rise in value this quarter. However, high volume losses at the beginning of the year have not been compensated for and the quarter stands Laurent Zeller negative in terms of volumes. Where there has been growth, it has mostly been in Managing Director premium products. Sweet Grocery accounted for more than a third of total FMCG France growth this quarter, largely explained by a calendar impact, due to the timing of

Easter this year. By contrast, Homecare and Personal care suffered from an even higher structural decline as promotional activity was shifted to the week following Easter. Beyond these mechanical trends driven by timing on the quarter, the French FMCG market continues to see longer term trends towards premiumisation and a growing demand for Fresh Non-Dairy and Dairy, organic and sustainable products, small brands, “click-and-drive” services and urban convenience stores. Proposed new food legislation includes regulations for capping promotion levels. This would obviously have a significant impact on how manufacturers and retailers can drive both volume and value, but it remains unclear what the detail of the changes might entail when fully implemented. Meanwhile, we continue to see an ageing population, a concern for the FMCG industry as the 65+ age group is expected to grow 2.7 million people by 2025.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

2.6 85 87 87 86 2.3 81 81 79 79 75 2.1 71 2.0 69 66

1.5 1.5 1.2 1.2 1.2 1.0 1.0 0.7

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU FR

The Conference Board® Global Consumer Confidence 20 Source Economist Intelligence Unit (EIU) OECD Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

3.2% 2.9% 0.1% 2.0% 1.7% 3.3% 2.0% 0.2% 0.2% 0.8% 1.1% 1.9% 0.3% 0.3% 1.0% 0.1% 0.5% 0.6% 0.5% 1.2% 0.0% 1.3% 0.0% -0.2% -0.1% -0.2% -0.1% -1.0% -0.7% -0.7%

Unit Value Growth Volume Growth Nominal Value Growth France

Value growth slowed slightly due to volume decline.

TOTAL FRANCE – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

2.0% 11% 0.6% 5% 8% 41% 2.2%

3.1%

8.5% 34% 3.1%

Total FMCG Hypermarkets Supermarkets Convenience Drive (E-Commerce) Smpl / Discounters

SMPL (discounters) strengthened their growth, fed by communication and investment in stores. 21

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.0%

Sweet Grocery 17.9% 3.5%

Fresh Non-Dairy 17.0% 4.0%

Dairy 16.1% 2.5%

Savoury Grocery 12.2% 1.2%

Alcoholic Drinks 9.7% 2.6%

Soft Drinks 7.1% 1.8%

Homecare 5.9% 0.1%

Personal Care 5.9% -3.0%

Paper Products 3.6% -0.7%

Savoury Frozen Food 3.4% -0.9%

Sweet Frozen Food 1.2% 3.8%

Sweet grocery over contributed to value gains thanks to a calendar effect, while fresh products (both Non-Dairy and Dairy) remain the driving force behind FMCG industry.

TOTAL FRANCE – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.0%

Top 1-5 11.9% 0.3%

Top 6-10 7.4% -0.5%

Top 11-30 16.4% 1.4%

31-100 16.6% 4.1%

100+ 15.4% 6.9%

Private Label 32.4% 0.2%

Local brands, and small and medium companies are still growing.

With GDP growth at 2.3%, the upswing of the German economy continued in Q1 2018. Growth was driven by a strong global demand, increasing investments and continuously solid domestic consumption. The high demand for labour in large parts of the economy ensures record employment levels. Current economic indicators suggest that the long-lasting positive trend will continue, although some risks remain. Consumer confidence remains high and far above the European average (108 versus 86 for Q1 2018).

Ingo Schier The FMCG market was able to take its strong 2017 momentum into Q1 2018 Managing Director and achieved a significant increase in sales of 3.8% compared to the previous Germany year, mainly driven by the early Easter business in March.

E-commerce still represents an approximate 1% share of Total FMCG. In categories where online is important, the market is still dominated by pure e- players. Online business remains more important for near-food than for food categories. Taking a closer look at the German FMCG market, food increasingly becomes a lifestyle: 84% of consumers are considered conscious eaters. Individual attitudes and habits thereby determine which food is bought where and at what price. This complexity of today´s eating preferences impacts beyond the kitchen not only to supermarket shelves but also regarding product innovation and raw material production. As a significant change in the economic developments is not expected in the short term and similarly consumer confidence is likely to remain at a high level, the current outlook continues to be positive. With the World Cup coming up in June, the food and sporting goods sectors can especially expect a boost in business.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

108 2.9 101 103 102 103 2.7 100 85 87 87 86 2.3 2.3 81 81 2.1 1.9 1.9 1.7 1.6 1.6 1.3 1.0

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU DE The Conference Board® Global Consumer Confidence 23 Source Economist Intelligence Unit (EIU) OECD GDP for Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

4.4% 0.1% 4.0% 0.8% 3.3% 0.9% 2.8% 1.7% 1.9% 1.2% 1.0% 3.2% 3.6% 1.4% 2.9% 3.1% 3.2% 0.9% 1.3% 0.7% 0.4% -0.2% -0.5% -0.3% 0.0% -0.6% -0.1% -0.8% -1.1% -2.1%

Unit Value Growth Volume Growth Nominal Value Growth Germany

Recent market growth has been mainly driven by price increases the earlier Easter season.

TOTAL GERMANY – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

3.3% 10% 4.6% 41% -3.5%

42% 3.5%

8% 3.6%

Total FMCG Hypermarkets Supermarkets Discounters Drug Stores

Hypermarkets benefited the most from the early Easter season, while Small Supermarkets suffered from shop closings.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL GERMANY – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.3%

Food Ambient 17.3% 4.9%

Dairy 11.9% 9.7%

Non Alcoholic Beverages 11.6% 1.5%

Confectionery 10.4% 6.8%

Alcoholic Beverages 10.3% 0.8%

Fresh Food Selfservice 9.2% 2.5%

Household Care 6.8% -0.3%

Personal Care 6.8% 1.7%

Tobacco 6.0% -1.5%

Frozen Food 5.5% 2.4%

Baby 1.6% 2.7%

Pet Food 1.6% 0.3%

Health Care 1.0% 3.3%

Dairy price increase is still a driver, while Easter generated seasonal peaks for chocolate confectionery and traditional coffee sales.

TOTAL GERMANY – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.3%

Top 1-5 8.2% 0.7%

Top 6-10 5.2% 3.3%

Top 11-30 9.7% 5.5%

Top 31-100 14.0% 1.8%

100+ 22.5% 3.3%

Private Label 40.5% 3.9%

Private Label growth slowed while chocolate manufacturers profited from Easter.

Price deflation was the overriding trend in 2017, driven by the supermarkets’ focus on value messaging and own label to drive volume growth and defend against the discounters. In the first quarter of the this year, we saw this price deflation stabilise with volume growth accelerating to +2.6% and value growth to +2.9%. This is thanks, in part, to the lowest unemployment level in a decade and high consumer confidence.

This year has already brought a more buoyant economy and a more buoyant retail sector; and we expect both value and volume growths to continue. Brands are also Paul Walker recovering, performing equally as well as own label at the total market level with value Managing Director growths of +2.1%. And, while the Discounters are still in growth, this has slowed United Kingdom & Ireland somewhat as result of last year’s retailer defense strategy.

For Irish shoppers, health and wellness is the number one concern as 70% now actively seek healthier food and drink products and 56% seek healthier snacks . We see retailers and manufacturers responding by introducing healthier products, with a focus on NPD, including dedicated spaces in store such as free-from aisles. The sustainability trend is also growing and we expect this to be an important influence on shopper behavior. Retailers and manufacturers will need to work together to meet these new shopper demands as they have done with the health trend.

In terms of retail channels, we should see some interesting developments in both online and convenience. Although online makes up less than 1% of the total retail market, it is growing and we expect a continued focus on further developing this channel. Similarly, convenience retailers already have a well developed urban trade but there is a big opportunity to better meet the shopper needs for healthy and convenient food on-the-go. Getting this right will help when it comes to competition from the many healthy food franchises that cater to this specific shopper need.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

10.9 100 100 102 103 103 103 85 87 87 86 8.8 81 81 7.8 6.8 7.0 5.8

0.4 0.0 0.1 0.5 0.5

-0.3 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU IE GDP growth (% change pa) Inflation, consumer prices (% change pa)

The Conference Board® Global Consumer Confidence 26 Source Economist Intelligence Unit (EIU) GDP estimate or Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

4.3%

2.9% 2.9% 2.6% 1.2% 2.1% 4.9% 2.0% 2.2% 0.8% 1.3% 1.5% 2.6% 2.6% 1.5% 2.2% 2.4% 1.6% 0.8% 1.3% 0.6% 0.3% 0.3% 0.3% 0.1% 0.6% 0.0% -0.6% -0.4% -2.1%

Unit Value Growth Volume Growth Nominal Value Growth Ireland

Volume growth shows no sign of slowing in 2018. Small positive price changes drove value growth just ahead of volume.

TOTAL IRELAND – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

2.9% 20%

3.2% 47%

1.7% 33%

4.2%

Total FMCG Multiples Convenience Discounters A sustained recovery in grocery multiples sector drove the positive market performance and accounted for almost 50% market share. 27 *Multiples = Multiples & Dunnes

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.9%

Confectionery 22.1% 5.5%

Alcohol 17.2% 4.7%

Chilled 16.9% 2.4%

Tobacco/Sundries 13.1% 2.8%

Ambient 10.4% -0.2%

Household 5.5% -0.1%

Bakery 5.2% 0.9%

Health & Beauty 4.7% -1.1%

Frozen Food 3.3% 3.2%

Pet Food 1.6% 4.0%

Indulgent sectors performed best but growth is enjoyed by almost all categories due to high consumer confidence and the positive economic environment.

In the first quarter of 2018, Italy’s national GDP increased by 0.3% in comparison with the previous three months and, according to the Bank of Italy, we should expect it to grow on a full year basis by 1.4%. However, uncertainty after the last national election that left Italy with an interim government until new elections later in the year will mean ongoing disquiet in the marketplace. On the FMCG front, we are seeing growing sales volumes whilst unit value growth has slowed. In simple terms, we are seeing consumers continue to fill their baskets but they are opting for somewhat cheaper products, perhaps to counterbalance inflation (1.2% in March). As far as retail channels are

Giovanni Fantasia concerned, all formats except so-called “traditional” stores (usually more Managing Director expensive) have grown. Meanwhile, e-commerce is delivering a slowly growing Italy 1.5% of total FMCG sales.

Italy is still at the bottom of the Digital Economy and Society Index, a composite index produced yearly by the European Commission to track the evolution of member states in digital competitiveness. At the same time, the country is seeing birth rates fall and people 65+ years old now make up 22% of the population.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

1.8 1.6 85 87 87 86 1.6 1.6 81 81 1.4 1.4 1.3 1.3 65 68 66 1.1 1.1 57 58 58

0.8

0.2

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU IT

The Conference Board® Global Consumer Confidence 29 Source Economist Intelligence Unit (EIU) OECD for Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

4.0% 3.3% 3.1% 3.1% 3.1% 3.1% 2.4% 1.7% 2.4% 2.1% 1.6% 2.6% 1.2% 1.4% 0.7% 1.3% 0.9% 2.1% 0.9% 0.6% 0.3% 0.2% 0.7% -1.0% -0.5% -0.9% -0.5%

Unit Value Growth Volume Growth Nominal Value Growth Italy

The earlier Easter season boosted FMCG growth in Q1.

TOTAL ITALY – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

3.3%

5%4% 3.4% 26% 17% 5.1% -1.4%

10% 4.3% 7.7% 37% -7.5%

Total FMCG Hypermarkets Supermarkets Convenience Discounters Drug Stores Others Drug Stores outstanding growth was boosted by St. Valentine’s Day and Carnival (makeup, perfumes, etc.) activities.

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.3%

Packaged Food 30.9% 3.8%

All Fresh 28.2% 4.8%

Beverages 14.4% 4.5%

Personal Care 9.8% 0.7%

Home Care 7.7% -0.7%

Frozen 5.3% 3.5%

Pets 2.0% 2.3%

Light Bazaar 1.3% -3.7%

Heavy Bazaar 0.2% -0.5%

Textile 0.1% -3.4%

Food (especially fresh food) is driving growth. The latest change is the loss of traditional “basic” ingredients like pasta and rice vs. ready-to-eat (yet healthy) products.

TOTAL ITALY – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.3%

Top 1-5 9.7% 2.8%

Top 6-10 5.5% -1.3%

Top 11-30 12.7% 0.6%

Top 31-100 14.2% 2.7%

100+ 31.9% 4.7%

Private Label 26.0% 4.6%

More and more diverse consumption trends are leading to fragmentation: Younger and smaller companies (more flexible) are growing three times faster than leaders. 31

The Dutch economy is still going strong, but some analysts believe it can do even better. Analysts forecast a 2.8% expansion of GDP in 2018, which means that the Netherlands would grow for the fifth consecutive year above the Eurozone average. Though Q1 growth was a bit slower than expected, analysts believe this is most likely due to geopolitical tensions and cautiousness, rather than a real softening of the economy. Wages were up in the first quarter, due to a very competitive labour market and Pedro Lima shrinking unemployment. As the job market is forecast to stay strong, we Managing Director, Benelux and Alpine anticipate this may impact consumer spending—alleviating some of the cautious Regions. spending apparent in recent years. The Dutch FMCG market experienced nominal growth of 2.6% during the first quarter. Again, this growth is largely due to price increases (measured at 3.4% during the first quarter) rather than volumes sales, which declined by -0.8%. With the accelerating growth of e-commerce in the Netherlands, it is not surprising that Dutch consumers spent €1.5 billion in online storefronts in other European countries last year, according to Statistics Netherlands. Though the Netherlands has its own strong players in e-commerce, borderless shopping is on the rise, raising the competitive bar even further. This trend is still primarily in non-FMCG products, but demonstrates growing confidence levels in online shopping that is likely to increase demand for online in the FMCG space. Additionally, with the rise of disposable income, the decrease in unemployment, and the ever growing market for out-of-home dining and home delivery, retailers and manufacturers are looking toward meal kits as a great way to engage consumers. These are helping create propositions that make daily life healthier, easier, faster and more convenient. .

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.8 100 102 101 101 101 96 3.4 3.3 3.1 85 87 87 86 81 81 2.8 2.7

1.3 1.5 1.3 1.0 1.2 0.4

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU NL Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 32 Source Economist Intelligence Unit (EIU) OECD Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

1.3% 0.3% 3.6% 3.8% 3.2% 2.8% 2.6% 0.5% 3.3% 1.6% 3.3% 0.8% 1.0% 3.5% 3.4% 2.3% 1.1% 0.6% 0.4% 1.0% -0.1% -0.3% -0.6% -0.5% -0.5% -0.8% -1.5%

Unit Value Growth Volume Growth Nominal Value Growth Netherlands

Price continued to dictate the growth of the FMCG market, while volume sales were down.

TOTAL NETHERLANDS – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

3.2% 4% 11% 3.5%

1.8%

85% 0.0%

Total FMCG Food Drug-Perfumery Petrol

Price and premium products drove growth within Supermarkets.

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.2%

Beverages 23.9% 2.5%

Other Shelf Stable Food 18.2% 3.3%

Personal Care 13.6% 1.3%

Confectionery 11.5% 4.4%

Dairy 11.3% 8.9%

Tobacco 11.2% -0.2%

Frozen 5.0% 2.8%

Home Care 3.5% 2.0%

Margarine/Butter/Fat 2.0% 7.5%

Confectionery sales were up due to the Easter holiday, but the real growth was seen in Dairy (especially butter) due to rising prices of milk.

TOTAL NETHERLANDS – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.2%

Top 1-5 15.8% 1.4%

Top 6-10 7.3% 3.0%

Top 11-30 14.0% 2.5%

Top 31-100 16.5% 2.7%

100+ 26.8% 3.3%

Private Label 19.6% 5.4%

Think small to grow: smaller manufacturers with niche products continue to lead the way in product innovation and growth.

After a year of historically low growth for groceries in 2017, the Norwegian market experienced a return to higher growth rates in the first three months of the year. Growth came in at 2.4%, partially helped by the calendar effect of an earlier Easter this year that boosted some categories. Official figures from Statistics Norway (2017 data) say the total border trade rose by 9.1%, reaching NOK 15.1 billion in sales. However, the growth in cross-border trade

Cecilie Westh was lower than expected, with a decline in the fourth quarter of 2017 of about -6%. Managing Director Nevertheless, we estimate that about NOK 9.8 billion worth of groceries were Nordics purchased abroad in 2017. Six out of 10 Norwegians purchased groceries in one of the neighbouring countries during the last 12 months; fresh meat, chocolate/confectionery and mineral water topped the list of products put into the shopping cart. According to Nielsen’s Shopper Trends 2018 report, approximately 11% of Norwegian consumers have tried online grocery shopping but most of that was through wholesale or pure online players. Traditional grocery stores also met competition from other players, and we see a particular pressure from the so called "dollar stores" including Rusta on certain categories within nonfood, packed food and non alcoholic beverages. New stores seems to be an important part of their strategy. Food and online food solutions continue to give the grocery chains fierce competition, but we have also seen consolidation with some of the niche online providers.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.6 3.6 90 89 87 87 87 2.6 86 86 86 85 2.1 2.1 2.1 2.0 1.8 82 1.5 1.6 81 1.3 81 0.8

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU NO Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 35 Source Economist Intelligence Unit (EIU) OECD GDP Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

4.3%

1.6% 2.9% 0.4% 3.6% 2.8% 2.6% 2.7% 0.5% 2.4% 0.8% 2.0% 2.7% 2.0% 2.9% 0.6% 3.2% 3.1% 1.4% 1.5% 2.0% 1.6% 1.8% 1.9% 0.9% -0.5% -0.4% -0.6% -0.2% -1.6%

Unit Value Growth Volume Growth Nominal Value Growth Norway

The overall inflation and premiumization is driving the nominal value growth.

TOTAL NORWAY – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

2.0% 11% 6%

0.9% 29% 1.5%

1.4% 55%

7.1%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes

Smaller stores drives growth, benefiting from extended hours on

holiday periods, with Easter in Q1 this year , versus Q2 last year. 36

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.0%

Fresh Food 29.2% 2.4%

Beverages 15.7% 3.1%

Packed Food 14.4% 2.3%

Chilled Wares And Oils 13.0% 1.6%

Tobacco 7.3% 0.9%

Frozen Food 5.8% 3.3%

Chocolate And Confectionery 5.0% 6.4% Wash And Housekeeping 4.2% -4.8% Products

Health And Beauty 3.8% -2.3%

Other nonfood products 1.1% 3.1%

Pet Food / Pet Articles 0.6% 1.2%

Chocolate, confectionery & beverages growing mostly due to higher taxes on sugar since January 1st.

TOTAL NORWAY – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.0%

Top 1-5 24.1% 2.0%

Top 6-10 10.0% 0.5%

Top 11-30 19.2% 1.8%

Top 31-100 15.7% 1.1%

100+ 3.7% -3.4%

Private Label 27.2% 4.1%

A handful of mainly local manufacturers are driving the market and has a high value contribution share.

In Portugal, the FMCG market began 2018 with a very positive performance, recording nominal growth of 4.1%. Portuguese consumption shows signs of post-crisis recovery and, in response, consumer behaviour is clearly changing. Despite sometimes being culturally pessimistic, Portuguese people are more and more confident, with a significant improvement this quarter. They believe in improvements for their personal finances and job prospects, and increasingly consider that now is a good time to buy what they want or need.

Gustavo Nuñez In this context, there is greater consumption both in-home and out-of-home. The Managing Director shopper looks for more leisure time, more quality, more innovation, and more Iberia convenience. We have seen sharp growth in the more "premium" segments of each category, proving that the consumer is willing to pay a higher price for products that bring more satisfaction. It is these higher priced segments that add value to categories. On the other hand, being one of the few countries in which the balance between personal and professional life is one of the main concerns, Portugal has a very positive trend regarding convenience. Small formats occupy the largest share of the market and are the ones with the highest growth. Consumers look for quick and easy shopping, as well as more convenient products that make their lives easier, and are willing to pay more for it. In fact, this quarter’s nominal growth was especially driven by the price effect with a growth rate of 3% compared to the same period last year. Consumers are trading up on their purchases by making more expensive choices and adding value to their shopping baskets. By volume, consumption remains relatively stable, with an increase of 1.1%. In this positive context, Portuguese FMCG brands and retailers must invest in the quality and constant innovation of products and services. And do this by keeping in mind key trends, such as health, wellness and convenience.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.0 90 2.9 85 87 85 87 84 86 81 81 82 74 2.4 2.4 2.4 70 2.0 1.8 1.6 1.5 1.3

0.8 0.8

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU PT

The Conference Board® Global Consumer Confidence 38 Source Economist Intelligence Unit (EIU) OECD Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

6.7% 6.1% 2.9% 4.8% 4.0% 3.7% 4.1% 1.6% 3.1% 3.0% 1.1% 0.3% 2.0% 3.4% 0.2% 2.7% 1.6% 2.8% 3.8% 3.0% 1.4% 3.2% 2.4% 0.6% 0.3% 0.4% 0.6% 1.2% 1.2% -0.9% Unit Value Growth Volume Growth Nominal Value Growth Portugal

FMCG grew in volume, boosted by the price effect as consumers traded up to higher price tiers.

TOTAL PORTUGAL – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

8% 26% 4.8%

3.0%

5.4% 66% 5.6%

Total FMCG Hypermarkets Supermarkets Superettes+Traditionals

Consumers are moving to smaller and convenient formats 39

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.8%

Grocery Products 38.4% 5.1%

Dairy Products 18.0% 2.9%

Personal Care 11.1% 2.7%

Alcohol Drinks 10.7% 7.7%

Household Care 8.0% 2.8%

Non Alcohol Drinks 6.9% 9.9%

Frozen Products 6.8% 5.0%

The recent sugar tax continues to drive Non Alcoholic drinks growth, along with mineral water’s dynamism.

TOTAL PORTUGAL – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.8%

Top 1-5 16.2% 3.0%

Top 6-10 7.9% 1.4%

Top 11-30 14.2% 5.5%

Top 31-100 12.4% 5.2%

100+ 20.1% 6.3%

Private Label 29.1% 4.1%

Private Label continued to grow in Q1 following retailer investment and innovation.

Spain’s economic recovery is still a work in progress. The Government recently raising the expected GDP growth rate in 2018 to 2.7% and forecasting a drop in the unemployment rate, from 16.5% at the end of 2017 to 15% expected by the end of 2018. Once again, tourism has played an important role in supporting the economic recovery. At the end of the first quarter, Spain registered an increase of 6% in international tourists who spent 7.7% more than in the same period of last year. These visitors remain an ongoing opportunity for retailers operating in heavily visited Gustavo Nuñez Managing Director areas. That said, it will be important to keep on eye on increasing petrol prices as it Iberia will be a challenge for the economic recovery and could have a negative impact on family budgets. Price tends to be the key factor in FMCG. Whereas in 2017, demand was the main driver, now inflation is supporting growth this quarter (whereas inflation last year was very low) with obvious negative consequences for volume growth. Population dynamics are not going to help FMCG market growth moving forward, tourism has become a partial substitute and the FMCG industry has to innovate. This requires understanding evolving consumer needs (aging, health, convenience, etc.) and focusing on all the market niches that are growing in this context such as organic food and on-the-go solutions. As households are getting smaller and smaller, the industry has to satisfy specific needs arising in this new demographic reality, and in terms of retail, small stores have become a must but the physical experience is changing. Square meters dedicated to newer categories such as ready-to-eat provide pathways to grow. We also expect FMCG e-commerce to grow, albeit not at a rapid rate.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

91 91 93 91 3.0 3.1 3.1 3.1 86 85 87 87 86 3.0 2.9 81 81 2.8 77

1.9 1.9 1.5

0.9 0.8

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU ES Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 41 Source Economist Intelligence Unit (EIU) OECD GDP Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

5.3%

4.1% 4.3% 3.9% 3.7% 3.7% 3.2% 3.1% 3.1% 1.9% 1.5% 2.3% 2.4% 0.2% 1.4% 2.3% 2.4% 2.8% 0.9% 2.7% 2.2% 2.4% 1.7% 1.6% 1.3% 1.5% 2.1% 2.9% 1.0% -0.1%

Unit Value Growth Volume Growth Nominal Value Growth Spain

Inflation boosted Spanish FMCG value growth while volume growth was flat.

TOTAL SPAIN – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

5% 4.1% 15%

0.3%

5.0%

2.9% 79%

Total FMCG Hypermarkets Supermarkets Drug Stores

Supermarkets still drive growth, especially formats over 1,000 square meters. 42

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.1%

Packaged food 25.4% 4.1%

Drinks 15.3% 5.4%

Health & Beauty 12.1% 2.6%

Household 8.4% 2.4%

Cooked meats 8.2% 5.3%

Canned food 6.4% 5.0%

Frozen food 5.5% 6.0%

Dairy 5.3% 0.5%

Milk and shakes 4.9% 1.1%

Cheese 4.5% 4.4%

Ready meal 4.0% 10.5%

Categories related to convenience such as Ready Meals, Frozen or Canned Food and Prepared Meals, are the most dynamic as consumers seek time saving and ease.

TOTAL SPAIN – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.1%

Top 1-5 10.8% -0.6%

Top 6-10 5.4% 2.0%

Top 11-30 11.9% 2.4%

Top 31-100 9.9% 3.0%

100+ 21.4% 8.8%

Private Label 40.5% 4.2%

Smaller manufacturer brands grew fast as they are more agile while Private Label also enjoyed strong grow.

The Swedish FMCG market has provided strong, positive trends in recent years, with both value and volume growth. But in 2017 the landscape changed and consumption didn’t follow the norm—the growth only came from higher prices and/or premiumisation of categories. Swedish consumers have demonstrated mostly stable confidence levels over time. There was a small drop in the Consumer Confidence Index after the terror attack in Cecilie Westh Stockholm in April last year. But the country has recovered well and in Q1 2018 our Managing Director index ended at 99, above the European average of 87. Nordics 2018 has started well for the retail market with total FMCG nominal value growth of 3.2% (unit value growth 2.6%) with consumption on the rise. We should note that the early timing of Easter offered a sales boost. We are seeing most of the growth coming from price-driven opportunities in the Hypermarkets and Discounter formats. All categories except Household Products grew, with the strongest growth coming in Dairy, Beverages, Frozen Food and Confectionary. Private Label continues to power up the Swedish grocery market (up 5.2% this quarter), along with organic food, albeit at a slower pace. Meanwhile, we expect further interest to come from shoppers on organic products and a desire for more environmentally-friendly “green” products.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.3 2.9 2.6 2.6 95 98 97 99 91 94 85 87 87 86 2.2 81 81 1.9 1.8 1.8 1.8 1.4 1.5 1.0

Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU SE Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 44 Source Economist Intelligence Unit (EIU) Q1 2018 not available Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

0.4% 4.0% 3.4% 0.7% 3.3% 3.1% 3.2% 0.6% 1.6% 2.6% 1.0% 2.9% 1.1% 3.0% 3.3% 1.2% 3.6% 2.6% 1.2% 1.1% 0.9% 1.8% 0.2% 0.1% 0.7% -0.4% -0.4% -0.6% -0.4% -1.2%

Unit Value Growth Volume Growth Nominal Value Growth Sweden

The earlier Easter season boosted FMCG growth in Q1.

TOTAL SWEDEN – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

6% 3.3% 6% 5.6% 37% 20% 2.0%

1.3%

0.1% 31% 5.4%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes Discounters

Growth was mainly driven mainly by Hypermarkets and

Discounters due to new store expansion. 45

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.3%

Packaged Food 24.5% 2.2%

Fresh Food 20.6% 2.8%

Dairy Products 20.0% 6.2%

Beverages 10.1% 5.1%

Frozen Food 8.9% 4.8%

Household Products 7.0% -2.2%

Health And Beauty 5.0% 0.0%

Confectionery 3.8% 4.6%

Dairy and Beverages growth was mostly due to price increases and premiumisation.

TOTAL SWEDEN – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.3%

Top 1-5 15.0% 2.4%

Top 6-10 6.9% 2.3%

Top 11-30 15.5% 1.5%

Top 31-100 20.5% 3.9%

100+ 16.9% 2.5%

Private Label 25.2% 5.2%

Private Label had the highest nominal value growth due to expanding product range. Smaller manufacturers continue to move faster to change and benefit from consumer desire to buy local products. 46

The Swiss economy continues to perform well in early 2018. GDP is growing, the inflation rate is low (0.6% in February) and the labour market is in good health (unemployment rate of 2.9% in March). The industrial and service sectors contributed equally to the overall positive report card for the country. On the expenditure side, consumption and construction investment supported growth. Additionally, the Swiss Consumer Confidence Index reached 104 this quarter, significantly above the European average. Judith Kuiper Market Leader The Swiss FMCG sector has seen similar trends this quarter to those experienced in Alpine 2017. There was some slight growth in average price levels amidst declines in volume. Growth in value is largely coming from Food, and more specifically, Beverages. But fresh food and convenience categories have also been strong contributors. Headwinds have continued to hit Household and Health and Beauty departments, mostly due to price pressures. The good news is that price pressures are easing and cross-border shopping in physical stores is declining for the first time since the financial crisis of 2008. But purchasing FMCG products abroad will not cease as it is now an established habit. Nielsen numbers show that about 2.2% of FMCG expenditures are now spent abroad. More than a third of Swiss households bought FMCG products at least once outside the country during the past 12 months. Meanwhile, affinity and adoption rates of new retail technologies are very advanced. Switzerland ranks second in Europe when it comes to using digital shopping technologies such as handheld scanners. Swiss households are buying FMCG products online 10 times per year. We expect connected shopping to further grow and become a regular habit for most households across the country. With 2.1% online share, e- commerce in FMCG is starting to reach an advanced level but the journey has just begun.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

102 104 97 98 97 99 1.9 85 87 87 86 81 81

1.2 0.9 0.7 0.8 0.7 0.5 0.5 0.4 0.5 0.0

-0.2 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU CH GDP growth (% change pa) Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 47 Source Economist Intelligence Unit (EIU) GDP not available Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

1.8% 1.4% 1.5% 0.7% 0.1% 1.3% 1.4% 1.2% 1.0% 0.6% 0.7% 1.1% 1.0% 0.7% 0.4% 0.5% -0.3% -0.7% -0.4% -0.7% -0.4% -0.3% -0.7% -0.6% -0.6% -0.2% -0.7% -1.3% -0.4% -1.3%

Unit Value Growth Volume Growth Nominal Value Growth

Switzerland

The overall FMCG market remains flat, with slight value growth and volume sales under pressure.

TOTAL SWITZERLAND – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

4% -0.3% 13% 25% -1.0%

-1.0%

24% 1.7%

0.3% 33% -4.2%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Supermarkets Department Store

Convenience trends and high frequency locations boosted small format stores, while Department Stores are declining. 48

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% -0.3%

Culinary Shelf-Stable & Other 18.6% 1.2%

Butchery 16.4% -1.7%

Dairy 13.4% 0.3%

Fruits And Vegetables 12.5% -0.9%

Alcoholic Beverages 7.4% 1.8%

Confectionery 7.3% -0.8%

Bakery 6.6% -1.1%

Homecare/Pet Care 5.5% -0.2%

Cosmetics 5.1% -2.7%

Non-Alcoholic Beverages 5.0% 1.3%

Sanitary 2.2% -2.3%

Food growth was driven by Beverages and convenience categories, while price pressures see Homecare and Health & Beauty categories growth decline.

TOTAL SWITZERLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% -0.3%

Top 1-5 6.5% -2.3%

Top 6-10 3.2% -0.6%

Top 11-30 7.0% -0.2%

Top 31-100 8.1% -1.1%

100+ 19.1% 0.3%

Private Label 56.2% -0.1%

The FMCG market is increasingly fragmented as small players (local giants) grow and big manufacturers decline.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. UK SNAPSHOT The unseasonably cold weather in February and March held back spend, but with the benefit of the early Easter trade reflected in Q1, growth remained strong at +3% with a flat volume growth of +1%.

The discounters saw channel growth of 14% thanks to their continued store openings whereas the grocery multiples, helped by inflation, achieved +2.3% sales growth, with sales at larger stores continuing to improve. The impulse channel lags further behind, however, with just 0.5% growth.

Paul Walker The continued interest in health, convenience and private label carried on strong through Managing Director the first quarter with almost one in four shoppers intending to buy natural or healthier United Kingdom & Ireland products, and premium private label growing by +5% over the last 12 months.

This is generally the time of year when personal finances are under the microscope. In Q1, shoppers tend to batten down the hatches as they pay off Christmas debt, put extra aside in anticipation of higher utility bills while some even start to save for summer holidays. Although inflation peaked during the quarter with CPI at +2.9%, this hasn’t yet translated into FMCG volume increases as shoppers remain cautious about discretionary spend. Q1 was a watershed but with inflation having slowed, summer on the horizon, and Q2 bringing extra bank holidays and a royal wedding, we anticipate that shoppers will get back into the swing.

The retail industry is seeing some major structural changes in response to changing shopper behaviours. The major supermarkets are now focused on improving the overall shopping experience and making shopping more convenient to better defend against the discounters and the online disruptors. The two most recent examples being the Tesco/Booker merger and the announcement of the Sainsbury’s/Asda merger, with further consolidation likely on the horizon.

Manufacturers need to look closely at their relationships with retailers. The path to sustainable growth is to work effectively together and to ensure a solid understanding of their shoppers so they can be well prepared for the opportunities of tomorrow.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

2.7 2.8 2.6 106 2.4 102 99 99 96 96 2.2 2.1 85 87 87 86 2.0 81 81 1.9 1.8 1.5 1.4 1.2

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU GB

The Conference Board® Global Consumer Confidence 50 Source Economist Intelligence Unit (EIU) OECD GDP Q1 2018 Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

0.4% 3.7% 2.9% 2.8% 3.0% 0.4% 1.0% 3.3% 2.1% 0.9% 2.2% 2.9% 1.4% 2.4% 1.3% 1.4% 1.8% 2.0% 0.6% 0.7% 1.7% 0.5% 0.1% -0.3% -0.4% -0.4% -0.9% -0.8% -1.6% -1.9%

Unit Value Growth Volume Growth Nominal Value Growth UK

The FMCG market had balanced volume and unit value growth in Q1

TOTAL UK– CHANNEL PERFORMANCE

DETAILS NOT AVAILABLE

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.9%

Fresh Food 35.5% 4.0%

Impulse 11.3% 5.1%

Beer, Wine & Spirits 11.2% 5.1%

Non Food 8.7% -1.5%

Tobacco 8.2% -1.4%

Ambient Grocery 8.1% 3.4%

Health Beauty Toiletries & Baby 7.8% 0.5%

Household & Pet 5.4% 1.3%

Frozen 3.8% 5.5%

Best performing categories in Q1 were Frozen, Impulse and Alcohol, illustrating the overarching trend of shoppers looking to save while still treating themselves.

TOTAL UK – MANUFACTURER PERFORMANCE - FMCG

DETAILS NOT AVAILABLE

As you will read in this quarter’s reports, all across Eastern and Central Europe a myriad of factors are influencing consumer sentiment and the performance of FMCG markets. Political unrest, new laws and government policies, inflation rates, Easter dates and even weather conditions are among the many mentioned by our market leaders in Q1.

Understanding how these impact FMCG market performance can be challenging at times, especially when multiple drivers are often at play in the one market. While our QBN indicators provide strong clues to what is going on, sometimes to really understand the story we need to dig deeper and look at the relationships between the different factors.

Daniel Chorbadjian Managing Director In Q1, we see many such examples at the macro level. For instance; the Czech Republic, Eastern Europe Hungary, Latvia and Slovakia all have growing GDP, relatively low inflation rates and increasing consumer confidence. However, while FMCG growth in the first three countries is relatively strong and balanced, in Slovakia retail spend slowed. Meanwhile, Kazakhstan, Turkey and Ukraine are also enjoying strong GDP growth, but high inflation and other factors in these markets have dampened consumer confidence and led to different FMCG results. In Kazakhstan inflation rises pushed people into a savings mode and slowed FMCG growth while in the Ukraine wage increases offset inflation and led to accelerating FMCG growth. Many influencing factors are even more specific and unique to a country. In this quarter alone we see the impact of minimum wage increases in Latvia, reduced Sunday trading in Poland, and voluntary food labelling changes in Russia, to name just a few.

Roberto Pedretti Each quarter, our Nielsen market leaders help reveal the story behind the numbers in all our Group Managing focus countries. However, it is more important than ever for FMCG companies to also closely Director Turkey and track the various dynamics at play in each country where they operate. By doing so FMCG Central Eastern players will have clearer insights into how the market will evolve in the coming quarters and Europe be better positioned to develop the strategies needed to manage risks and seize opportunities.

Despite the unique context of each market, regional trends are still apparent. One clear insight from the recent QBNs for Eastern and Central Europe is that smaller players in both the retailing and manufacturing space are winning market share as they prove more agile to adapt to short-term market cycles. With that said, it is also important to keep an eye on the future and build longer-term strategies and capabilities. In the appendix of this QBN edition, we have visualised a few macroeconomic forecasts by country to help guide FMCG thinking on forward-focused strategies and decision making. Some of the general takeaways when we look across Eastern and Central Europe are as follows:

● Many countries will experience population decline to 2025. ● All countries will become more urbanised but many Central and Eastern European countries will have large populations residing in smaller urban centres. ● There will be a significant ageing in most countries. ● More of the population will be connected through technology.

Although these will not be new insights for most readers, how FMCG companies are integrating these factors into their planning and development varies considerably. For example, some players are looking to develop age-focused health products while others are intent on expanding their retail outlets into smaller towns.

We hope our insights on the future macroeconomic environment and “What’s Next” in the evolving consumer, retail and packaged goods environment can help inform your strategies. 53

CONSUMER CONFIDENCE INDEX

GDP GDP Q1 2018 vs Q1 2018 vs Q1 2018 (annual % Inflation (annual % Inflation Q1 2018 Q4 2017 Q4 2017 growth) growth) TURKEY 89 -23 5.6 10.3 5.2 2.0 LATVIA 86 13 BULGARIA 81 -8 3.5 2.0 4.4 1.9 CZECH REP. 108 4 UKRAINE 58 -3 3.1 13.8 4.4 2.0 HUNGARY 78 4 KAZAKHSTAN 79 -3 4.1 6.8 3.6 2.4 SLOVAKIA 90 4 LITHUANIA 77 -2 3.5 3.4 1.5 0.3 GREECE 61 2 RUSSIA 68 -1 1.0 2.4 4.0 4.7 ROMANIA 91 1 5.1 6.0 BELARUS 60 0 5.1 1.5 POLAND 103 0 3.6 3.1 ESTONIA 81 0

CONSUMER CONFIDENCE INDEX

A mixture of regional tensions and improving economic conditions have been the main reasons for Consumer Confidence Index movement

GDP and Inflation reflect % change per annum to Q1 2017 /latest available data Source: Economist Intelligence Unit (EIU)/local government sources The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen. 54

CopyrightCopyright © 2018© 2017 The The Nielsen Nielsen Company Company (US), LLC. Confidential and proprietary. Do not distribute. EUROPE CENTRAL & EAST MARKETS AT A GLANCE CONSUMER SENTIMENTS IN EUROPE

WHAT ARE THE TOP 2 CONCERNS IN THE NEXT SIX MONTHS?

40 Type of concern 37 34 33 33 29 28 27 27 28 27 30 24 25 24 22 22 22 23 22 21 20 20 20 20 1918 19 20 14 14 10 11 6 10 4

0 EU BG BL CZ EE GR HU KZ LT LV PL RO RU SK TR UA Health Job security

EU BG BL CZ EE GR HU KZ LT LV PL RO RU SK TR UA Health 0 2 6 3 1 0 2 4 -2 -4 3 -4 -1 0 -6 1 Job security 0 -5 -1 1 -5 0 0 4 3 -8 2 -2 -1 4 1 -3

Bars reflect Q1 2018. Table shows comparison to Q4 2017

WHO’S SPENDING, SAVING AND INVESTING?

After living expenses, how is spare money spent

60 54 48 47 48 50 45 40 37 38 40 38 39 40 37 36 36 37 37 40 31 30 34 33 32 32 30 33 29 25 29 30 29 27 31 27 26 25 26 27 25 30 24 22 23 23 21 21 17 19 18 20 15 10 0 EU BG BL CZ EE GR HU KZ LT LV PL RO RU SK TR UA Putting into savings Holidays / vacations New clothes

EU BG BL CZ EE GR HU KZ LT LV PL RO RU SK TR UA Putting into savings 2 5 1 5 3 6 1 -2 2 -7 2 -2 -1 3 0 -2 Holidays / vacations 1 4 -4 8 -1 5 2 0 2 -3 4 2 -4 2 -2 -4 New clothes 0 -2 -9 -1 -5 5 2 -3 -1 -4 6 0 -1 -3 4 -6

Bars reflect Q1 2018. Table shows comparison to Q4 2017 Putting money into savings is a leading response and highlights a cautious mindset across Europe. 55 The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen.

FAST MOVING CONSUMER GOODS MARKET DYNAMICS EUROPE EAST & CENTRAL – 15 countries

BG BL CZ EE GR HU KZ LT LV PL RO RU SK TR UA

20.8%

2.3% 15.6% 10.5%

13.3% 8.0% 8.3% 8.6% 0.9% 4.7% 5.1% 4.9% 5.7% 4.4% 1.6% 10.4% 4.6% 4.6% 5.8% 4.7% 4.8% 1.2% 2.6% 3.5% 3.0% 2.7% 4.7% 2.8% 2.6% 3.9% 3.0% 3.1% 3.1% 3.7% 3.8% 3.6% 1.9% 0.9% 1.8% 1.2% -0.1% -1.8% -1.9% -3.1% -2.1%

Unit value change Volume change Nominal growth

*BL = Belarus WHERE ARE THE FMCG GROWTH OPPORTUNITIES? Average volume growth Q4 2017 & Q1 2018

RUSSIA (+2.1%)

CZECH REP. (+0.5%) ESTONIA (-2.9%) LATVIA (+1.1%) LITHUANIA (-2.3%) BELARUS (+3.7%) KAZAKHSTAN (-3.2%) POLAND (+3.8%) SLOVAKIA (+1.2%) UKRAINE (+9.8%) HUNGARY (+4%) ROMANIA (+3.7%) BULGARIA (+5.8%) TURKEY (+3.3%) GREECE (+5.2%)

Avg. volume growth decreasing versus last period Avg. volume growth increasing versus last period Colour coding indicates growth or declining trend compared to same 6 month period year ago. 56 Average volume growth of Q4’17 & Q1’18 vs Q4’16 & Q1’17. CopyrightCopyright © 2018© 2017 The The Nielsen Nielsen Company Company (US), LLC. Confidential and proprietary. Do not distribute. BELARUS SNAPSHOT

President Lukashenko emphasised the improving economic situation in Belarus during his recent annual message to Parliament, saying the country had moved on from the economic troubles of 2016 and can look forward to consistent and steady GDP growth. Despite political speeches usually giving an overly positive outlook, current macroeconomic indicators support his observation. Economic growth accelerated this quarter with GDP up 5.1% compared to Q1 2017. This was largely driven by increased industrial exports, especially to non- Russian countries. In 2017, Russia accounted for only a quarter of export growth and now more than half of export growth is generated from sales to countries Vaios Dimoragas outside the Commonwealth of Independent States. This is a positive indicator Managing Director Ukraine and Belarus that highlights the ongoing diversification of Belarus’ economy. Although building on a low base in early 2017, the retail market continues to improve. FMCG consumption was up in Q1 2018, as indicated by positive volume growth for the third quarter in a row. This signals that Belarusians are starting to feel that they have more purchasing power for their grocery shopping. Flat or marginal growth has long been the success indicator for Belarusian retailers and manufacturers, but this should no longer be the benchmark. In this more positive retail environment, FMCG companies should switch focus from survival tactics and instead look to capitalise on opportunities by developing short- and long- term growth strategies. To do this, FMCG players need to leverage tools to improve the quality of dialogue and insights in the shopper- retailer-manufacturer nexus. This can lead to new ideas and appealing value propositions for consumers, which will drive success in Belarus’ growing, but still cautious, retail environment.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

87 87 86 79 81 81 11.0 63 60 60 55 55 55 7.6 6.3 6.0 5.4 4.9 5.1 4.3 2.9 0.4 1.7

-1.7 Q2 2016 Q3 2016 Q4 2016 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU BL

GDP growth (% change pa) Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 57 Source: GDP and Inflation; & National Statistics Committee of Belarus Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

19.3% 16.5% 17.8% 0.5% 6.0% 15.0% 2.0% 4.5% 13.8%

1.5% 14.8% 9.7% 7.8% 8.9% 0.2% 14.4% 13.3% 14.5% 6.9% 4.9% 13.3% 5.7% 9.1% 6.3% 6.7% 2.6% 4.9% 3.1% -1.0% -0.2% Unit Value Growth Volume Growth Nominal Value Growth Belarus

The FMCG market continued its recovery with positive sales volume growth for the third consecutive quarter as the improving economy led to increased consumer demand.

TOTAL BELARUS – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

7.8% 7% 3% 7% 6.2%

12.5% 52% 3.7% 31% 18.7%

-0.7%

Total FMCG Hyper/Supermarket (Food Categories) Groceries Modern Trade (Food Categories)

Groceries Traditional Trade (Food Cat) Kiosks + Other Markets (Food Categories) Drug Categories

Increased offerings of coffee and chocolate led to excellent growth for Kiosks and Other Markets. 58

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 7.8%

Dairy 23.8% 10.6%

Beer 22.4% 3.0%

Beverages 17.4% 5.9%

Chocolate 10.8% 14.7%

Coffee 8.5% 9.6%

Personal Care 4.8% 1.9%

Snacks 4.7% 11.6%

Candies 4.3% 13.3%

Home Care 1.8% -7.1%

Grocery 1.5% 20.7%

Promotions helped drive Food growth while Home Care experienced negative growth and is in a discount dependent promotion spiral.

TOTAL BELARUS – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 7.8%

Top 1-5 29.0% 8.5%

Top 6-10 14.0% 2.2%

Top 11-30 27.3% 6.1%

Top 31-100 19.3% 16.7%

100+ 5.3% -4.5%

Private Label 5.1% 12.4%

Top 1-5 manufacturers continue to dominate the market, but smaller manufacturers and Private Label are growing quickly because of competitive price points. 59

Increased industrial activity helped the Bulgarian economy continue its robust growth trajectory with GDP up 3.5% in Q1 (based on preliminary figures). Despite the positive macroeconomic environment, consumer confidence dropped 8 points to 81 due to growing concern over job prospects and the state of personal finances for the next 12 months.

Encouragingly for the FMCG market, consumption remained strong with 8% value growth in Q1 despite declining consumer sentiment and rising prices in retail categories. All major channels performed well although large formats and chain drugstores again led growth. Expansion in the large format was the main growth driver with 10 new super/hyper markets opening during the period. Aggressive marketing campaigns also contributed. In Bulgaria, Svyatoslava Svyst the three largest supermarket chains (Kaufland, Lidl and Billa) were among the top 20 Managing Director advertisers on television each month this quarter. Bulgaria / RV Leader Eastern Europe All super categories grew at least 4% this quarter, with sales boosted by better than expected weather in January and February. Fresh Fruit and Vegetable categories managed to absorb the effects of producer price inflation and displayed strong growth. Private Label maintained its modest market share of 3%, but the outlook for increasing demand is bright. Growth is accelerating as companies in this space launch premium products. Meanwhile, Nielsen’s Shopper Trends 2018 study found that 6% more shoppers this year are comparing Private Label prices with those of equivalent brands.

Looking ahead, the economic forecast remains positive with GDP expected to grow by 3.6% this year and inflation to stabilise at around 2%. Considering that wages are increasing steadily, we expect the FMCG market to maintain its robust growth in the upcoming quarters. The summer months are fast approaching and this year they include the FIFA World Cup, which begins in mid-June. With a busy FMCG period ahead, companies need to ensure good strategies are in place to outperform competitors, especially in hotly contested seasonal categories such as Beer, Soft drinks and Meat for Barbecues. FMCG players need to ensure store execution by tracking key performance indicators relating to stock management, shelf visibility, the effectiveness of promotions, and more. Hitting or exceeding such targets can prove a game changer for both retailers and manufacturers. COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX 89 87 88 87 86 85 85 4.3 84 3.9 3.8 81 81 3.6 3.5 81 3.0 2.7 2.3 75 2.0 1.7 1.6

-0.3 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU BG GDP growth (% change pa) Inflation, consumer prices (% change pa)

The Conference Board® Global Consumer Confidence 60 Source EIU IMF Forecast 2018 & National Statistical Institute (NSI) Survey is conducted in collaboration with Nielsen.

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

9.9%

8.0% 7.8% 8.0%

6.2% 6.7% 5.0% 4.6% 4.9% 3.9% 4.0% 3.9% 3.2% 0.5% 2.8% 2.6% 1.7% 1.9% 3.1% 3.2% 3.0% 0.9% 2.3% 3.1% 3.1% 1.5% 1.4% 1.8% 1.4% 0.8% Unit Value Growth Volume Growth Nominal Value Growth Bulgaria

Consumers’ extra disposable income offset retail price increases, enabling strong FMCG growth to continue in Q1.

TOTAL BULGARIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

8.0% 4% 9.2% 24% 41% 9.3%

6.9%

19% 5.6% 13% 11.0%

Total FMCG Supermarkets/Hypermarkets Extra Large Food Stores Large Food Stores Traditional Trade Drug Stores

Traditional Trade enjoyed solid growth due to strong sales in focus categories such as Tobacco, Beverages and Confectionery. 61

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 8.0%

Chilled Products 25.4% 9.4%

Alcoholic Drinks 18.6% 7.6%

Confectionery 15.1% 7.8%

Non Alcoholic Beverages 11.7% 6.9%

Personal Care 7.1% 5.7%

Household 6.9% 4.4%

Salty Snacks 5.2% 12.8%

Hot Beverages 4.4% 8.4%

Shelf Stable Food 3.0% 7.0%

Baby Categories 1.3% 4.5%

Petfood 1.2% 19.5%

All super categories grew at least 4% in Q1, with Fresh Fruit and Vegetable sales offsetting lower growth in more processed product groups.

TOTAL BULGARIA – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 8.0%

Top 1-5 17.0% 9.1%

Top 6-10 10.9% 3.6%

Top 11-30 20.5% 8.4%

Top 31-100 22.9% 13.0%

100+ 25.7% 5.2%

Private Label 3.0% 3.2%

Private Label has good growth prospects on the back of recent launches of premium products.

Despite slowing slightly in Q1 2018, the Czech economy is still doing well with GDP up 4.4%. Encouragingly for the retail market, local consumption is a major driver of this growth. Reflecting the positive economic situation, the Consumer Confidence Index lifted to 108 this quarter and Czech consumers are now among the most confident in Europe. With one of the lowest unemployment rates in the European Union, Czech consumers are very positive about their job prospects and the booming labour market is pushing wages up. However, growing labour cost are starting to concern many Karel Tyra manufacturers and retailers. Managing Director, Czech Republic FMCG total value growth was up 4.6% in Q1 2018 and although price inflation continues to be the main driver, its impact is lessening as inflation continues to ease. At the end of Q1, the inflation rate had dropped to 1.9%, almost hitting the Czech National Bank’s target. FMCG volume sales bounced backed to positive growth the past two quarters following three quarters of year-on-year contraction.

With higher incomes, it is no surprise that consumers surveyed by Nielsen increasingly think now is a good time to buy the things they need or want. This has translated to shoppers “up-trading”, which is boosting sales of premium products across all categories. With this trend set to continue, FMCG companies have a great opportunity to launch new products and brands or to reposition their current portfolios. Across retail channels, FMCG growth in recent quarters has been driven by smaller players as they innovate and adapt to seize opportunities more quickly than bigger companies. As a result, smaller companies are gaining market share. They averaged more than 6% growth the past 12 months while Top 1-5 manufacturers managed only 2.3% growth over that period.

Despite the good market conditions, price and promotions still dominate and the promotional spiral is still a big factor for many players. But conditions are now ripe for both retailers and manufacturers to shift their strategies away from price-focused activities. Some players are already doing this by focusing on innovation. . COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

5.5 108 5.2 104 99 103 101 101 4.6 4.4 85 87 87 86 81 81

3.0 2.4 2.5 2.6 2.2 1.8 1.9 1.5

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU CZ Inflation, consumer prices (% change pa)

The Conference Board® Global Consumer Confidence Source Economist Intelligence Unit (EIU) & Czech statistical office 63 Survey is conducted in collaboration with Nielsen. Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

0.2% 5.5% 4.7% 4.6% 4.3% 4.4% 3.9% 0.9% 4.8% 6.0% 2.4% 5.3% 2.8% 2.1% 4.7% 1.8% 1.7% 1.8% 3.7% 1.1% 3.4% 0.6% 2.9% 2.1% -0.4% -0.3% -0.1% -1.1% -1.3% -1.6% Unit Value Growth Volume Growth Nominal Value Growth Czech Rep. NB: 2016 and 2017 updates due to product enhancements, universe update, implementation of new chains and new categories with full history

Despite slowing, price increases are still driving value growth, but premiumisation is gaining traction.

TOTAL CZECH REPUBLIC – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

4.7% 8% 3.1% 13% 40% 8.8%

9.7% 21% -3.1% 17% 7.5%

Total FMCG Hypermarkets Supermarkets Discounters Traditional Trade Drugstores

Modern Trade small formats are gaining market share through better assortments and by satisfying increasing consumer demand for convenience.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL CZECH REPUBLIC – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.7%

Dairy 19.1% 6.5%

Beverages Alcohol 16.6% 7.5%

Sweets & Treats 14.7% 6.9%

Health & Beauty 11.9% 3.5%

Culinary - Shelf Stable 9.9% 1.5%

Beverages Non Alco 8.5% 4.6%

Beverages Hot 4.1% 1.9%

Home Care excl. Laundry 3.1% 2.0%

Home Care - Laundry 2.3% -0.1%

Pet Care 2.3% 2.6%

Infant Care 2.0% -0.3%

Culinary - Frozen 1.9% 2.5% 2.5% Frozen 1.8% 4.7% Baking - Shelf Stable 1.6% 7.0% Culinary - Refridgerated 0.2% The earlier Easter dates this year boosted March sales of seasonal categories such as Alcoholic Beverages and Sweets and Treats. TOTAL CZECH REPUBLIC – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.7%

Top 1-5 15.9% 2.3%

Top 6-10 8.1% 3.7%

Top 11-30 17.9% 4.3%

Top 31-100 20.5% 6.3%

100+ 18.6% 6.9%

Private Label 19.0% 4.3%

Small players are faster to respond and innovate to meet consumer demand and are gaining market share at the expense of the top manufacturers.

The Estonian economy continues to perform strongly and the outlook for 2018 is positive. The Ministry of Finance forecasts 4% GDP growth in 2018, driven by exports. In the first quarter of 2018, exports increased by 6% while imports were up 2% compared to Q1 2017. The improving labour market, better wages, and lower inflation are supporting consumer spending. Estonia’s employment rate in Q1 was 67%, slightly higher than a year ago while average salaries rose 6.5% in 2017, exceeding inflation for the seventh consecutive year.

Estonia’s recent excise taxes saw significant price increases in alcohol and tobacco, which along with food price increases, contributed to inflation. Despite these factors, the Ilona Lepp inflation rate eased slightly in Q1 to 3.1% and forecasts estimate it will end the year at Managing Director 2.9%. Meanwhile, salaries are expected to increase 7% in 2018 and many consumers Baltics should look forward to having more discretionary spending power this year.

The FMCG market had a moderate 2.7% total value growth in Q1 compared to year ago, but volume growth contracted -1.9%. Volume decline was mostly due to the impact of the alcohol excise taxes as it led to increased alcohol trade on the Latvian border and reduced tourist spend. Unit value growth in Q1 was up 4.7% as busier lifestyles and increased incomes boosted growth in categories related to convenience and indulgence such as Chilled and Frozen Food, Snacks, Pet Care, Baby Food and Confectionery.

Across retail channels, Large Supermarkets was the fastest growing, up 8.3% on the back of new store openings. Consumer demand for convenience increased sales in Convenience/Petrol Station formats as well as Health and Wellness categories in the Drug Stores/Pharmacies channel.

Expectations of increased spending power needs to be a focus for FMCG players and meeting demand outside of essentials may be an opportunity for manufacturers and retailers tuned into this change.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

5.3 5.3 87 84 85 87 86 81 81 83 81 81 81 4.5 72 3.9 3.7 3.8 3.6 3.2 3.0 3.1 3.1

1.3

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU EE

The Conference Board® Global Consumer Confidence Source: OECD & Statistics Estonia Survey is conducted in collaboration with Nielsen 66

MAT TY Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

7.0% 6.1% 4.9% 5.7% 6.6% 4.7% 2.9% 3.3% 2.6% 2.9% 2.6% 2.7%

-2.3% -2.7% -1.9% -3.7% -3.2% -4.0%

Unit Value Growth Volume Growth Nominal Value Growth Estonia * Backdata not available due to Universe Update

An improving labour market, better wages, and lowering inflation should see consumers have more discretionary spending power this year.

TOTAL ESTONIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

2.9% 2% -0.2% 11% 1% 23% 8.3%

1.4%

30% -1.6%

33% 5.1% 4.5%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations Drug Stores+Pharmacies Large Supermarkets lead with store openings while convenience categories support Petrol and health trends help Pharmacy related stores.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL ESTONIA – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.9%

Chilled and Frozen products 38.8% 6.7%

Alcoholic Drinks 18.9% -3.0%

Shelf Stable Food 9.2% 1.8%

Personal Care 7.3% 0.0%

Confectionery 6.4% 3.0%

Non Alcoholic Beverages 6.2% 2.9%

Household products 3.9% 1.6%

Hot Beverages 3.3% 2.4%

Snacks 3.2% 6.5%

Pet Care 2.3% 3.5%

Baby Food 0.7% 7.3%

Alcohol sales continued to slump as another round of excise duties took effect in February.

TOTAL ESTONIA – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 2.9%

Top 1-5 23.2% 3.2%

Top 6-10 12.1% 5.3%

Top 11-30 21.9% 2.1%

Top 31-100 16.9% 2.6%

100+ 18.1% 2.4%

Private Label 7.8% 2.5%

Larger players lead growth given their bigger share of inflationary increases.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. GREECE SNAPSHOT Greece’s economy continued its moderate growth trajectory this quarter with GDP up 1.8% and major indicators point to signs of an economic recovery this year. Consumer sentiment is gradually improving, although Greeks remain among the most pessimistic Europeans.

Reflecting the more encouraging macroeconomic situation, the retail market is also performing well. FMCG total value was up 4.7% year-on-year in Q1 and was the fourth consecutive quarter of positive growth. Volume sales Vicky Grigoriadou continue to drive growth. We need to be mindful when assessing this year- Managing Director on-year growth however, that we are comparing to a low baseline in a time of Greece decline.

Food and beverage-related categories were the fastest growing in the FMCG market, especially Confectionery and Non Alcoholic Drinks due to the timing of Easter falling in the first quarter. Non-food categories grew more slowly than the market average as suppliers in that space were under intense pressure from retailers to offer more and deeper promotions. These big discounts eroded sales value and may be training consumers to expect and buy on promotion.

Greece’s retail landscape is evolving and the market dynamics are rather unstable, certainly far from “normality” and the current “promotional spiral” is impacting many players. Looking ahead, retailers and manufacturers must seek ways to effectively cooperate on their promotional strategies and expand total sales while maintaining some volume growth.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

85 87 87 86 81 81

1.9 60 60 61 56 53 52 1.5 1.5 1.5 1.3 1.4

0.8 0.8 0.3 0.4 0.3

Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 -0.9

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU GR

GDP growth (% change pa) Inflation, consumer prices (% change pa)

The Conference Board® Global Consumer Confidence 69 Source Economist Intelligence Unit (EIU). Q12018 estimate Survey is conducted in collaboration with Nielsen

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

5.0% 5.8% 6.4% 4.5% 2.4% 5.0% 4.6% 4.5% 2.5% 5.9% 1.2% 1.9% 0.6% 4.7% -0.3% -8.0% -8.7% -1.1% -0.5% -0.1% -0.5% -2.9% -0.8% -15.3% -6.2% -6.8% -2.6% -6.4% -5.3% -10.7%

Unit Value Growth Volume Growth Nominal Value Growth Greece

Volume sales drove FMCG growth while a promotional spiral impacted value gains.

TOTAL GREECE – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

4.5% 15% 10% 27.2%

2.7% 39% 36% 2.6%

1.0%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes Double-digit growth for Hypermarkets was due to the newly formed retailer network (EYS) building momentum.

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.5%

Dairy & Refrigerator Cat. 23.6% 4.0%

Grocery 23.2% 5.2%

Non Alcoholic Drinks 12.1% 7.6%

Health & Beauty 11.7% 1.6%

Confectionery 9.1% 7.0%

Alcoholic Drinks 6.3% 4.1%

Household 6.3% 3.6%

Detergents 4.4% 2.1%

Paper Products 3.4% 1.4%

Extensive discount promotions led to slower than market average growth for non-food categories.

TOTAL GREECE – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.5%

Top 1-5 21.6% 1.1%

Top 6-10 10.0% 3.7%

Top 11-30 21.4% 4.3%

31+ 32.1% 9.1%

Private Label 15.0% 0.8%

Private Label faced more challenges in the growing FMCG market as the price gap between branded and private label offerings reduced.

The Hungarian economy continued its positive momentum in early 2018 with GDP growth of 4.4% year-on-year in Q1. Increased private consumption, exports and tourism were the main drivers. Due to the high GDP growth baseline set during 2017, the pace of economic growth is likely to slow slightly in the second half of this year. Consumer sentiment in Hungary further improved this quarter and at 78 points on the Nielsen Consumer Confidence Index, is at its highest level in more than seven years.

Hungary’s retail market continues to thrive and growth exceeded even the most Kateryna optimistic forecasts. According to the Hungarian Central Statistical Office, total retail Edelshtein growth was an impressive 8.5% in Q1 while the Nielsen FMCG-specific measurement Hungary Market registered 8.3% total value growth. There were a number of contributing factors to the Leader Buy & Watch impressive FMCG performance. They include longer-term drivers such as the improving macroeconomic situation and real wage growth, as well as quarterly-specific drivers such as the earlier Easter date this year and the government issue of one-off grocery vouchers for pensioners.

Solid growth was experienced across all major categories, but was especially strong in those that feature food and drug products with the early Easter boosting food sales. Within the Modern Trade channel, Drugstores and Discounters were the growth leaders. Drugstore formats reaped the benefits of new store openings, big promotions and competitive price points. All FMCG players in Hungary should be seeking ways to make the most of the current uplift. Many already are, for example retailers have been opening new stores and manufacturers have been innovating with new product offerings across many categories. According to the latest Nielsen Shopper Trends analysis, Hungarian shoppers want more convenience, an enhanced shopping experience and lower prices—and all of these at the same time.

With stable economic growth, rising wages and strong consumer confidence, the rest of 2018 promises to be an exciting time for the country’s FMCG market.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

4.9 85 87 87 86 81 81 4.3 4.4 76 78 4.0 74 3.8 70 64 64

2.6 2.4 2.3 2.1 2.1 2.0 1.3

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU HU Inflation, consumer prices (% change pa)

The Conference Board® Global Consumer Confidence Source Economist Intelligence Unit (EIU) & 72 Hungarian Central statistical office Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS OFFLINE (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

8.2% 8.3%

7.0% 6.5% 3.6% 4.4% 2.5% 5.3% 4.8% 3.7% 0.2% 3.6% 3.6% 3.2% 4.5% 2.8% 3.4% 1.5% 2.2% 5.1% 4.6% 2.4% 2.1% 2.8% 3.8% 1.5% 2.1% 1.4% 0.8% 0.7%

Unit Value Growth Volume Growth Nominal Value Growth Hungary

FMCG growth continued to accelerate with high value and volume gains exceeding expectations.

TOTAL HUNGARY – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

7.0% 12% 4.4% 25% 8% 4.2% 15.5% 17% 15% 2.9%

23% 11.1% 4.7%

Total FMCG Hypermarkets Large Organized Discounters Small Organized Drug Stores Independent Stores

Growth for Hypermarkets and Large- and Small- Organized formats stagnated as Drugstores proved formidable competitors 73

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL HUNGARY – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 7.0%

Dairy Products 15.4% 8.6%

Processed Meat 12.9% 8.5%

Non Alcoholic Beverages 11.3% 8.9%

Alcoholic Beverages 9.7% 7.9%

Personal Care 9.0% 6.8%

Dry Grocery 8.3% 3.1%

Cleaning / Household 6.1% 4.1%

Confectionery 5.6% 8.8%

Hot Beverages 3.7% 3.9%

Frozen Foods 3.5% 3.5%

Snacks 3.0% 9.8%

Household Paper 2.9% 4.9%

Petfood 2.8% 8.7%

Biscuits/Wafers 2.7% 4.6%

Breakfast 2.0% 7.6%

Baby Care 1.3% 5.1%

Growth across the board, but the strong performance of the biggest super categories reflects the growth potential of the entire FMCG market.

TOTAL HUNGARY – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 7.0%

Top 1-5 20.2% 4.1%

Top 6-10 11.7% 4.5%

Top 11-30 20.9% 5.8%

Top 31-100 23.0% 5.1%

100+ 24.4% 9.8%

Top 6-10 manufacturers outpaced medium players due to seasonality.

74 Total FMCG includes Private label but Private label is not included in manufacturer tiers

Kazakhstan’s economic recovery continued in Q1 with GDP growth estimated at 4.1% and inflation dipping under 7% for the first time since 2015. The growth and stabilisation of crude oil prices over the past year has resulted in better exchange rates as well as improved conditions for international trade. However, it is not all good news. The devaluation of the tenge dramatically impacted prices for consumer goods, utilities, clothing, property and more. Although nominal salaries in Kazakhstan grew 8% year-on- year in Q1, real income declined -2.5% this quarter. This in turn is forcing shoppers into a savings mindset.

Despite this situation, according to Government statistics, total retail sales were up 13% Ilona Lepp in Q1 compared to a year ago. This inconsistency between increased spend versus a Managing Director real wage decline can be explained by the increasing popularity of small fast loans and Baltics credit card debt, especially among lower income households. Nielsen FMCG measurements reveal slowing quarterly growth over the past year. Price increases have been the main driver of growth as volume sales have been contracting. In this quarter, Tobacco and Beer were the lead growth categories, however for Tobacco, most of this was due to Government regulations setting new minimum retail prices.

In Kazakhstan, according to a recent Nielsen study, 60% of shoppers say they face budget limitations when shopping. Given the current economic situation and price increases, almost 38% of shoppers today are looking for promotions to save some money (compared to 25% in 2016). Some categories are already reliant on promotions, especially in the non-food segment. Despite the growth of promotion-oriented shoppers, a similar percentage of shoppers claim the store environment and customer service are important considerations when shopping.

Looking ahead there are some positive signs for the FMCG market in the coming months. An improving macroeconomic situation should start to flow into the retail environment. In addition, there are expectations that there will be salary increases for government workers this year, including doctors and teachers and this should have a positive effect on consumer spending. Finally, the growing popularity of credit card and small loans represents an opportunity for many retailers to leverage such services. This has already shown great results in the apparel business, even for low price brands.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

11.7 87 87 86 85

83 7.7 7.5 7.5 81 81 7.1 6.8 81 81 79 5.3 79 4.2 4.1 78 3.1 3.1 2.5

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU KZ Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 75 Source Local government source. Minister of National Economy Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

1.2% 19.0% 0.3% 15.6% 3.4% 14.2% 12.7% 14.5% 13.2% 9.6% 8.6% 7.3% 13.9% 7.6% 15.6% 7.3% 5.8% 11.5% 4.6% 3.8% 4.0% 3.8% -0.5% 2.8% -3.8% -3.5% -3.1% -1.9% -4.1% -3.3%

Unit Value Growth Volume Growth Nominal Value Growth Kazakhstan

The FMCG market grew by 2.8% this quarter, but volume sales continued to be negative.

TOTAL KAZAKHSTAN – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

3% 1% 2% 3.8% 3% 3% 3.8%

6.8%

-4.2%

-4.0%

85% -4.5%

0.4%

Total FMCG Supermarkets Open markets Kiosks & Pavilions Pharmacies Perfumeries Others

Modern Trade formats such as Supermarkets and Large Mixed Stores performed better due to expansion, assortment and promotional activity. 76

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.8%

Tobacco 33.5% 2.9%

Beverages 23.1% 1.9%

Personal Care 11.4% 1.0%

Dairy 9.4% 12.0%

Food 7.5% 5.6%

Alcohol 6.1% 5.9%

Confectionery 5.0% 1.7%

Home Care 2.8% 7.7%

Baby Food 0.7% 11.7%

Pet Food 0.3% 26.1%

Baby Care 0.1% 13.4%

Baby categories are performing well due to Kazakhstan’s growing population, which is projected to be more than 18 million by 2025.

TOTAL KAZAKHSTAN – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.8%

Top 1-5 39.2% 3.4%

Top 6-10 12.3% 2.7%

Top 11-30 23.4% 1.2%

Top 31-100 16.8% 9.7%

100+ 8.3% 3.8%

Smaller manufacturers were the fastest growing as they are quicker to innovate and offer new products in response to evolving consumer demand.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. LATVIA SNAPSHOT Latvia’s impressive economic momentum continued in early 2018 with GDP up 5.2% in Q1 on the back of increased industrial output, a rise in construction and buoyant consumer spending. Nearly all major sectors performed well with the exceptions of agriculture, which is still recovering from floods in late 2017, and the financial services sector, which was impacted by tighter regulations. The labour market was boosted by a 13% minimum wage increase in January as well as by recent labour tax cuts. Meanwhile, inflation eased slightly to 2% by the end of the quarter. The improved economic situation saw consumer sentiment leap 13 points to reach 86 points on the Consumer Confidence Index, Latvia’s highest level in more than seven years. The positive economic situation and improved consumer sentiment was reflected by strong demand in the FMCG market. Total value growth was up Ilona Lepp 3.5% in Q1 compared to the same period a year ago. Growth was quite balanced with Managing Director volume up 1.9% and unit value 1.6%. Baltics A number of FMCG trends have emerged recently. Consumers are increasingly upgrading their basket selections with non-basic categories. This is reflected by the biggest total value growth gains over the latest 12 months happening in the Baby Food, Snacks, Pet Food and Confectionary categories. Meanwhile, price increases for dairy products are driving growth in the Chilled and Frozen Products category. The Alcoholic Drinks category is benefiting from increased demand from Estonian and Lithuanian consumers due to new alcohol excise taxes in those two countries. The healthy lifestyle trend continues to gather momentum and has motivated consumers to increase their spend on products in the Health and Wellness category. This has led to booming sales of Personal Care products in the Pharmacy channel. Consumers also continue to demand convenience and this trend is helping Convenience/Petrol Stations outpace other formats.

Overall, it has been a very positive start for the market in 2018 and a solid foundation is in place from which to accelerate FMCG growth for the rest of the year. To realise their growth potential, FMCG players need to focus on deepening their understanding of consumers’ decision-making touch points. And to fully tap into health, convenience and other trends, companies will need to develop innovative product offerings and roll out effective marketing and promotional campaigns.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

6.2 85 87 87 86 86 81 81 5.2 78 78 74 73 4.9 4.7 69 4.2

3.2 3.1 2.9 2.7 2.6 2.0 1.5

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU LV

The Conference Board® Global Consumer Confidence 78 Source: OECD Survey is conducted in collaboration with Nielsen

MAT TY Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

5.1% 0.6% 4.1% 4.0% 4.0% 3.8% 0.5% 0.5% 3.5% 1.9% 4.3% 4.6% 4.3% 3.6% 3.3% 1.6%

-0.3% -0.3% Unit Value Growth Volume Growth Nominal Value Growth Latvia * Backdata not available due to Universe Update The positive macroeconomic situation boosted the FMCG market with strong Q1 growth in both volume and unit value.

TOTAL LATVIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

1% 3% 4.1%

20% 4.1%

42% 4.3%

2.7%

8.9%

35% 16.4%

Total FMCG Hypermarket/Large Supermarkets+Drugstores Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations Pharmacies

The convenience and healthy living trends increased consumer demand in Convenience/Petrol Stations and Pharmacy formats.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL LATVIA – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.1%

Chilled and Frozen products 32.9% 6.2%

Alcoholic Drinks 19.4% 2.8%

Shelf Stable Food 11.8% 0.8%

Personal Care 7.8% 3.3%

Non Alcoholic Beverages 7.0% 3.0%

Confectionery 6.4% 6.2%

Hot Beverages 4.2% 1.4%

Household products 4.1% 1.5%

Snacks 3.4% 7.6%

Pet Care 2.2% 7.2%

Baby Food 0.9% 8.0%

Chilled and Frozen Product growth is being driven by price increases for dairy products while sales in Alcoholic Drinks are up due to recent excise taxes in neighbouring countries.

TOTAL LATVIA – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.1%

Top 1-5 18.5% 0.7%

Top 6-10 9.3% 2.0%

Top 11-30 19.2% 4.3%

Top 31-100 21.3% 6.8%

100+ 21.9% 5.2%

Private Label 9.8% 4.3%

Smaller players are thriving as they can react more quickly than bigger players to innovate and offer new products in response to evolving consumer demand. 80

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. LITHUANIA SNAPSHOT Lithuania’s economic momentum slowed slightly in Q1 2018 with year-on-year GDP growth of 3.5%. After record highs in previous quarters, export growth was weaker in the first three months of the year while industrial production rebounded only in March. Despite inflation easing throughout the quarter, consumer prices continued to rise, which weakened retail sales.

FMCG total value growth in Q1 was 4.7% year-on-year, a drop from recent quarters as unit value growth slowed compared to the worrying inflation-driven levels apparent much of last year. The market continues to struggle to generate volume growth, although the - 2.1% contraction this quarter was an improvement from recent performance. Ilona Lepp

Managing Director Baltics Consumer lifestyle changes and rising demand for convenience are driving growth opportunities for some major categories. Snacks gained 7.2% nominal value growth over the latest 12 months while Confectionary grew 4.9% in that period. Across retail channels, Convenience/Petrol Stations continue to perform, with impressive growth of 9.8% over the past year. New tastes, innovations and promotions are boosting sales of Non-Alcoholic Beverages, while growth in Chilled and Frozen Products and Alcoholic Drinks has been driven by inflation. The Shelf Stable Food category still has negative growth for the past 12 months while in contrast the Pharmacy channel is thriving, up 9.6% as shoppers continue to focus on wellness and health products. Across retail channels, new openings of Large Supermarket formats last year and changing shopper preferences have impacted the performance of Hypermarkets, with growth contracting -0.5% in this format over the past 12 months.

Although the year has started on a slower than expected pace for the FMCG market, the evolving preferences of consumers due to convenience and health trends should mean there are better growth prospects for the remainder of the year. To generate positive momentum and seize opportunities, companies should look to innovate and differentiate their offerings as well as ramp up their marketing campaigns. Now is the time to focus on deepening understanding of consumers’ decision making processes and seek effectiveness in trade spending rather than pour money into some of the ineffective discounting campaigns in the market

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

4.4 87 87 4.2 86 4.0 4.1 85 3.8 3.6 3.5 3.5 3.4 3.2 81 81 2.8 79 77 76 77 74 73 1.2

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) Inflation, consumer prices (% change pa) EU LT

The Conference Board® Global Consumer Confidence 81 Source: OECD Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS (weighted average)

MAT TY Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

7.5% 6.9% 7.2% 7.2% 4.8% 4.7% 3.6% 4.6% 4.4% 2.5% 2.6%

-4.7% -2.7% -3.3% -2.6% -2.1% -3.2% -7.6%

Unit Value Growth Volume Growth Nominal Value Growth

Lithuania * Backdata not available due to Universe Update Although easing, high inflation continued to drive FMCG unit value growth, but volume contraction slowed in Q1.

TOTAL LITHUANIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

3.6% 2% 1% -0.5% 3% 10% 22% 8.5%

2.9%

3.7%

9.8% 38% 24% 1.8%

9.6%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations Drug Stores Pharmacies

Growing consumer preference for convenience and health boosted sales in Convenience/Petrol Stations and Pharmacy formats. 82

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL LITHUANIA – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.6%

Chilled and Frozen products 28.5% 4.8%

Alcoholic Drinks 24.4% 4.4%

Shelf Stable Food 10.7% -0.9%

Personal Care 10.0% 2.3%

Non Alcoholic Beverages 6.5% 5.0%

Confectionery 5.8% 4.9%

Hot Beverages 4.3% 2.4% .

Household products 4.1% 0.8%

Snacks 3.1% 7.2%

Pet Care 1.8% 6.9%

Baby Food 0.7% 2.2%

Chilled and Frozen Food and Alcohol growth was driven by inflation while Snacks and Confectionary were influenced by new tastes and innovation.

TOTAL LITHUANIA – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 3.6%

Top 1-5 18.1% 4.1%

Top 6-10 9.1% 5.9%

Top 11-30 21.6% 3.5%

Top 31-100 22.3% 2.7%

100+ 19.4% 1.9%

Private Label 9.5% 7.0%

Although still less than 10% market share, Private Label is growing fast due to new product lines in different price ranges that offer both competitive prices and good quality. 83

The Polish economy continued its solid momentum early in 2018 with the Government making an initial estimate that GDP grew 5.1% in Q1. Private consumption and investment are on the rise, which should help accelerate economic growth in the coming months. However, analysts warn that economic growth may slow down in Q4 due to external factors. The current rate of GDP growth in Poland has not yet put pressure on inflation, which remained low at 1.5% in April 2018, but rising petrol prices may soon have an impact.

The FMCG market continued to perform well on the back of strong consumption. Szymon Mordasiewicz Total value growth was 4.8% this quarter compared to a year ago and mostly due Managing Director, to strong volume growth. Interestingly, FMCG growth in Q1 was less than that of Poland some non-FMCG goods, including cars and electronics. As consumers are

showing willingness to spend on big ticket items, then there will still be unrealised growth potential within the FMCG space. An earlier Easter this year (April 1) helped boost food category sales in March, which were up 10.1% compared to a year ago, but will dampen April growth figures in that category space.

In March, Poland’s new Sunday trading ban took effect and is being applied on two Sundays each month. There are big question marks about how this will impact the market and so far it is too early to draw conclusions. However, there are some initial signs showing that the market is adapting. For example, petrol station formats recorded 20% growth in March, compared to a year ago. A positive impact was expected, but the final number is impressive based on the assumption that consumers will fulfil outstanding needs in this format. The next few months will begin to tell a more comprehensive story across market channels and categories.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

5.2 5.1 104 104 103 4.4 4.3 4.3 91 87 88 87 87 86 79 81 81 3.2

2.2 1.9 1.8 1.9 1.5 0.2

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q2 2016 Q3 2016 Q4 2016 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU PL Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen. 84 Source Economist Intelligence Unit (EIU) & Central statistics office CCI not available for Q1 and Q2 2017

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

5.9% 5.4% 5.4% 4.8% 4.6% 4.8% 4.3% 1.6% 3.7% 3.0% 3.4% 3.2% 2.8% 2.8% 1.7% 3.9% 1.6% 2.4% 4.2% 1.9% 2.0% 1.5% 1.1% 2.0%1.1% 3.0% 2.2% 0.1% 0.9% -0.9%

Unit Value Growth Volume Growth Nominal Value Growth Poland FMCG growth was strong helped by Easter being earlier than last year.

TOTAL POLAND – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

5.4% 11% 2.0% 36% 15% 6.1%

9.4%

7.1% 7% 32% 2.5%

Total FMCG Hypermarkets Supermarkets Discounters Drugstores Small Format

All channels performed well in Q1 but the impact of the Sunday trade ban introduced in March is yet to be known.

MAT Q1-2018 MAT Q1-2018

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 5.4%

Alcoholic Beverages 23.2% 2.2%

Culinary 16.8% 4.9%

Non-Alcoholic Beverages 14.2% 5.0%

Dairy 13.8% 10.1%

Confectionery 11.7% 10.4%

Cosmetics Categories 8.4% 4.9%

Paper Sanitary Hygiene & Other 4.6% 4.4%

Home Categories 4.3% 3.3%

Frozen Products 3.0% 3.4%

Major categories performed well this quarter and Food growth was boosted by strong Easter sales.

TOTAL POLAND – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 5.4%

Top 1-5 16.2% 2.7%

Top 6-10 10.9% 4.5%

Top 11-30 20.1% 6.3%

Top 31-100 17.1% 7.2%

100+ 16.4% 8.0%

Private Label 19.3% 3.9%

Most manufacturers involved in Confectionery and Dairy categories enjoyed double digit growth this quarter due to the timing of Easter.

Romania's economic growth eased slightly as GDP grew 4% year-on-year in Q1 2018 compared to the 6.9% gain made the previous quarter. Inflation climbed at an accelerated rate and reached 4.7% by the end of the quarter, with higher energy costs a major contributor. Meanwhile, the country’s political and social turmoil continued, stirred up by fiscal and social legislative changes and ongoing tense political relationships between major state institutions. Luca De Nard Managing Director FMCG market value grew 8.6% in Q1, however only 3.6% of this was volume Romania growth, while the remainder was due to inflation-driven price increases. Fresh Food registered the highest growth of major categories over the latest 12 months, surpassing Beverages, while Non-Food sales lagged behind. Across retail channels, although Hypermarkets continue to be the main driver of growth in the Organized Trade channel, Supermarkets are gaining ground through rapid store expansion. Growth in Traditional Trade remains flat as most formats just keep pace with inflation. Increasing consumer appetite for convenience is driving sales for “proximity” channels despite premium prices in these formats. For example, Supermarkets recorded 17.8% value growth for the latest 12 months while Petrol Stations and Convenience formats registered a 13% value increase despite no store expansion.

Looking ahead, the National Bank of Romania forecasts that economic growth will gradually slow for the rest of the year with personal consumption and real income levels likely to decrease. However, with current consumer trends for premium products and convenience gathering momentum, there are still opportunities for FMCG players. 2018 has the potential to be a very interesting year in Romania.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

101 98 90 91 8.8 87 85 85 87 87 86 81 81 6.7 6.1 5.7 4.8 4.7 4.0 3.1 0.2 0.7 1.5

-0.5 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU RO GDP growth (% change pa) Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 87 Source EIU/ & INS Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

11.2% 9.1% 9.4% 8.9% 8.6% 8.6% 7.9% 6.4% 6.5% 6.9% 3.8% 3.1% 3.6% 8.9% 2.4% 13.1% 8.4% 5.3% 4.8% 10.9% 4.6% 5.5% 4.8% 1.1% 5.1% 0.2% 1.7% 0.4% -0.1% -4.1%

Unit Value Growth Volume Growth Nominal Value Growth Romania

Consumption continues to be the economic growth trigger, which is resulting in higher inflation.

TOTAL ROMANIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

1% 7.9% 1% 6.7% 28% 17.8% 40% 7.8%

4.9%

18% -1.8% 11% 13.0%

Total FMCG Hypermarkets Super/Minimarkets Discounters Traditional Trade Pharma/Cosmetics Petrol Stations/Convenience

Proximity channels are growing driven by supermarket store expansion and premiumisation in Petrol and Convenience formats.

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 7.9%

Dry Grocery 29.4% 7.1%

Fresh Food 23.1% 12.5%

Beverages - Alcoholic 14.3% 6.2%

Beverages - Non Alcoholic 13.2% 8.4%

Personal Hygiene/Cosmetics 8.4% 6.6%

Household Care 7.6% 4.7%

Frozen Food 3.0% 3.9%

Non Food 1.0% -4.2%

Fresh food and Beverages are the major growth categories while sales in Household and Non-Food lag behind.

TOTAL ROMANIA – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 7.9%

Top 1-5 16.3% 6.4%

Top 6-10 9.5% 6.3%

Top 11-30 18.5% 11.5%

Top 31-100 21.1% 8.9%

100+ 22.2% 6.5%

Private Label 12.3% 6.5%

Smaller manufacturers are benefiting from focusing on premium products and healthier offerings.

Russia’s GDP grew 1.3% quarter-on-quarter in Q1 2018 according to preliminary figures from the Government. Despite inflation remaining stable (2.2%) and real wages growing a record 9-10% in the first four months of the year, retail growth was moderate, up 2.2% this quarter. And as bank deposits have not increased noticeably, economic experts conclude that most of the salary growth is being absorbed by consumers paying off credit card and other debts incurred during the 2015/16 economic downturn.

FMCG volume growth was up 1.2% this quarter compared to the same period a year ago, meaning there has now been four consecutive quarters of volume growth. Meanwhile, unit Alexander Kotsuba, value growth was up 1.8% this quarter. These numbers indicate the emergence of a new Managing Director trend where there is very low volume sales movement and minimal price rises. In this low- Nielsen Russia inflation environment with low consumer confidence and conservative attitudes, retailers and manufacturers must proactively seek out and pursue growth opportunities.

Summer promises to be an exciting time with the country hosting the 2018 FIFA World Cup, which begins in mid-June. Brands and retailers across the FMCG spectrum should benefit from the event, and especially those that have strategies in place to capture the spend from the million plus tourists expected. To help companies track the impact of the World Cup on category and brand sales, Nielsen Russia recently launched new retail measurement services in all 11 host cities.

Also this summer, voluntary food labelling regulations will be rolled out to mark packaging with “traffic light” colours to indicate levels of salt, sugar, fatty acids etc. Russian consumers are already very attentive to freshness and natural ingredients in food with 89% of shoppers reading packaging information before buying products. Although this new labelling might not seem ground-breaking, it will help consumers to more easily assess food products and should lead to increased sales of healthier food choices.

Finally, seasonal categories like carbonated soft drinks, ice-cream and ice tea should bounce back mid-year from sluggish sales recorded during last year’s especially cold summer. But to maximise growth, players in this space still need to ensure they have the right combination of relevant product offerings, targeted distribution and well thought out pricing strategies.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

5.7 85 87 87 86 81 81 4.7 67 70 70 69 68 4.3 63 3.3 2.5 2.3 2.3 2.4

0.5 1.0 1.0

-0.1 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 EU RU GDP growth (% change pa) Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 90 Source Economist Intelligence Unit (EIU) Q1 18 forecast Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

0.5% 8.2% 7.1% 6.0% 5.0% 0.2% 4.1% 3.7% 4.4% 1.2% 7.1% 7.4% 7.7% 7.1% 3.6% 0.4% 3.0% 2.0% 6.0% 2.3% 3.0% 2.1% 3.4% 1.9% 1.4% 1.8% -1.1% -0.3% -2.1% -2.3% Unit Value Growth Volume Growth Nominal Value Growth Russia Wage increases did not translate to FCMG spend as consumers instead looked to pay off debts.

TOTAL RUSSIA – CHANNEL PERFORMANCE VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

4.1% 25%

7.2%

75% -4.2%

Total FMCG Modern Trade Traditional Trade

Modern Trade retailers continue to reinvent business models, enhance shopper experience and introduce proximity formats making it difficult for Traditional Trade to compete. 91

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.1%

Other Food & Drinks 27.7% 3.0%

Tobacco 14.6% 6.4%

Dairy 12.7% 5.3%

Beer 8.7% -0.3%

Personal Care & Make-Up 7.0% 4.0%

Vodka 6.4% 2.3%

Premium Alcohol 5.1% 15.5%

Sauces & Grocery 4.7% -1.2%

Home Care 3.2% 0.8%

Pet 2.8% 9.4%

Baby Food & Infant Formula 2.3% 6.9%

Ice Cream 1.8% 3.2%

Frozen Food & Fish 1.6% 10.0%

Baby Care 1.3% 1.8%

Low inflation is keeping category growth to single digits while conservative consumer sentiment sees unit volume sales remain weak.

TOTAL RUSSIA – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 4.1%

Top 1-5 20.2% 5.6%

Top 6-10 12.3% -1.0%

Top 11-30 16.7% 3.0%

Top 31-100 16.8% 6.6%

100+ 30.0% 4.8%

Private Label 4.0% 3.5%

Top 5 manufacturers growth is helped by their established relationships with retailers and more capacity for promotions. 92

Slovakia’s stable economic growth continued in Q1 2018 with GDP up 3.7%. With a positive economic outlook, recent wage increases and record low unemployment, the Consumer Confidence Index was up 4 points to 90 this quarter, its highest rating since at least 2011 and back above the European average.

Despite the improved sentiment, FMCG growth slowed considerably this quarter, up just 1.2% compared to the same period last year. Although consumers are Karel Tyra Managing Director, more upbeat about their overall situation, there is speculation that they are less Slovakia inclined to translate this into retail spending due to price rises. When asked whether they had changed their spending patterns to save on household expenses compared to this time last year, 46% of Slovakians said yes, although this has been a prevailing mindset for some time.

After a positive 2017 for FMCG, Q1 witnessed a volume decline despite Easter shopping being in March (in 2017 it was in April). Following price increases of approximately 3%, volume sales for food basket and drug baskets contracted around -2%. All major food product groups have increased nominal value sales for the latest 12 months, but when comparing only Q1 2018, we see a significant slowdown in revenue growth. Within major categories, Non-Alcoholic Beverages and Hot Beverages showed declining revenue indicating that Slovakian consumers may be increasingly sensitive to ongoing inflation increases. This Q1 softening was steadied slightly by growth in the Sweets and Treats category due to the seasonal push in the Easter period.

Striking a balance between volume and value growth when there is prolonged rising inflation is a challenge for the FMCG market. Companies need to monitor these first signs of a consumption slowdown carefully and be prepared to respond if they continue.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

3.6 3.4 3.5 3.5 90 3.0 3.1 87 87 87 86 86 2.4 85 85 2.0 1.6 82 81 81 81 1.0 1.0

-0.1 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018

GDP growth (% change pa) EU SK Inflation, consumer prices (% change pa) The Conference Board® Global Consumer Confidence 93 Source Economist Intelligence Unit (EIU) Slovak Statistics Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS* (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 9.4%

7.5% 6.2% 5.6% 4.2% 4.3% 4.2% 2.4% 3.0% 2.5% 2.2% 2.7% 2.6% 2.0% 4.8% 3.2% 3.2% 3.3% 2.6% 4.4% 2.9% 2.4% 1.2% 0.4% -0.3% -0.1% -1.9% -1.7% -0.6% -1.8%

Unit Value Growth Volume Growth Nominal Value Growth Slovakia NB: 2016 and 2017 updates due to product enhancements, universe update, implementation of new chains and new categories with full history

Consumers are tightening their belts due to rising inflation and FMCG growth has dropped to 2015 and 2016 levels.

TOTAL SLOVAKIA – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

5.6% 7% 6% 6.0%

4.8% 27% 61% -1.0%

11.5%

Total FMCG Hyper/Supermarkets Organized Groceries Non Organized Groceries SK Organized Drug

Drug chains are performing well as consumer demand increases for Personal Care and Cosmetic products. 94

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 5.6%

Dairy 18.5% 9.0%

Sweets & Treats 17.3% 6.2%

Beverages Alcohol 16.6% 6.1%

Health & Beauty 11.0% 5.3%

Culinary - Shelf Stable 9.8% 3.4%

Beverages Non Alco 9.0% 4.1%

Beverages Hot 4.7% 2.3%

Frozen 3.1% 4.5%

Home Care excl. Laundry 2.4% 5.5%

Home Care - Laundry 2.2% 0.6%

Baking - Shelf Stable 2.1% 3.6%

Infant Care 1.8% 3.4%

Pet Care 1.5% 5.3%

Categories that were able to trade on Easter seasonality benefitted as the Easter sales period was in Q1 this year.

TOTAL SLOVAKIA – MANUFACTURER PERFORMANCE - FMCG MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 5.6%

Top 1-5 14.3% 6.4%

Top 6-10 10.0% 5.1%

Top 11-30 17.0% 6.3%

Top 31-100 19.0% 7.3%

100+ 17.9% 5.2%

Private Label 21.9% 3.7%

Private Label struggled to gain inroads on branded offerings as the price differential was not low enough to compel consumers to switch.

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TURKEY SNAPSHOT Turkey’s economy expanded at its fastest rate in four years in 2017, with GDP annual growth of 7.4% thanks to strong industrial output, domestic demand, construction and foreign trade. Not announced yet, Q1 2018 GDP growth is expected to be around 5.1%. Considering global financial conditions, exchange rate volatility and geographical tensions that would be a good result.

The trend of double-digit inflation increases continued in Q1, with the Consumer Price Index up 10.3% as the cost of imported goods soared due to the devaluing lira and the rise of global oil prices. Price inflation continues to be a major factor in retail performance, as Didem Sekerel Erdogan reflected by 13.3% of the 15.6% FMCG total growth in Q1 being from unit value increases. General Manager Encouragingly, volume growth continued to be positive, gaining 2.3% in Q1 against a year Nielsen Turkey, Buy. ago. Overall, the FMCG market is in relatively good shape.

Body Care, Hair Care and Oral Care were among the best performing categories in Q1 with both value and volume gains. These Personal Care categories benefited from growing penetration, store expansions and successful promotions in the Perfumery and Discounter formats. Ice Cream and Dairy categories also did well, mainly due to the scarcity of raw milk driving price increases and boosting value growth. Confectionery enjoyed strong growth due to high demand for healthier products such as dried fruits and nuts. Meanwhile volume sales in the Non-Alcoholic Drinks category were boosted by the relatively mild winter.

Looking forward, health and convenience trends are of growing importance in the Turkish FMCG market and reflect the evolving needs of consumers here. To meet this demand, manufacturers should look to innovate and must also ensure they have effective pricing and promotion strategies in place to maximise profitable growth. FMCG players should also look to go digital to engage with Turkey’s young and urban consumers. This segment of the population has very high rates of mobile and internet penetration and digital media spending has the best rate-of-return among all advertising channels.

COUNTRY HIGHLIGHTS

ECONOMY WATCH CONSUMER CONFIDENCE INDEX

12.3 113 112 11.5 107 10.9 10.5 10.3 94 10.2 90 85 87 87 86 89 81 81 7.6 7.1 6.1 5.3 5.6 3.9

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU TR Inflation, consumer prices (% change pa)

Source EIU GDP Q1 2018 estimate The Conference Board® Global Consumer Confidence 96 Survey is conducted in collaboration with Nielsen Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. FMCG MARKET DYNAMICS (weighted average)

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

16.8% 15.6% 15.4% 15.0% 14.3% 4.5% 2.3% 4.3% 11.8% 5.7% 10.8% 10.8% 4.7% 10.5% 10.1% 5.7% 4.9% 3.7% 4.5% 6.1% 11.1% 12.3% 13.3% 10.3% 8.6% 5.9% 6.9% 6.1% 5.7% 4.7%

Unit Value Growth Volume Growth Nominal Value Growth Turkey Inflation has driven much of the recent double-digit FMCG growth, but ongoing volume growth indicates the retail market is in good shape.

TOTAL TURKEY – CHANNEL PERFORMANCE VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

15.4% 5% 26% -2.8% 22% 11.2%

3% 11.2% 11% 30.7%

33% 33.6% 7.3%

Total FMCG Hypermarkets Large & Medium Supermarkets Small Supermarkets Discounters (A101 BIM SOK) Perfumery Traditional Trade

Discounters and Perfumery formats performed well due to store expansion and promotions. 97 FMCG: excluding Tobacco/Alcohol

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. TOTAL TURKEY – SUPER CATEGORIES PERFORMANCE MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 15.4%

Confectionery 21.6% 16.8%

Non Alcoholic Drinks 21.3% 12.7%

Dairy 12.9% 18.7%

Grocery 12.2% 13.4%

Housekeeping 7.8% 15.4%

Paper Products 6.1% 13.3%

Fats And Oils 5.5% 12.5%

Body Care 3.8% 22.4%

Ice Cream 3.2% 17.1%

Hair Care 2.8% 20.6%

Oral Care 1.4% 17.1%

Grooming 0.8% 11.4%

Other 0.6% 14.0%

Body Care, Hair Care, Oral Care, Confectionery, Ice Cream and Dairy categories showed strong growth due to additional price increases above inflation.

TOTAL TURKEY – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 15.4%

Top 1-5 24.3% 11.6%

Top 6-10 11.4% 11.4%

Top 11-30 17.9% 14.6%

Top 31-100 15.0% 13.2%

100+ 31.3% 21.9%

Smaller manufacturers, as well as Private Label, are growing fastest as consumers seek value offerings in the face of increasing prices.

FMCG: excluding Tobacco/Alcohol 98 *100+ includes private label brands

The year started positively for the Ukrainian market with the Government’s preliminary estimate of 3.1% GDP growth in Q1 the fastest quarterly growth in just over a year. The improving economy was reflected by rapid growth in the FMCG market, which grew 20.8% year-on-year this quarter. Although high inflation continues to be a major influence, this is the first quarter in which volume growth hit double-digits, up 10.5%. Consumer prices were 14% more than compared to Q1 2017, due mostly to higher prices for food and energy and despite predictions late last year that inflation would slow. Meanwhile, lower-tier wage increases have accelerated over the past year and boosted consumer purchasing as reflected by FMCG volume growth picking up speed each quarter since early 2017. Vaios Dimoragas Managing Director Although Ukrainians’ disposable income is increasing and FMCG growth is strong, it still Ukraine and Belarus needs to be largely benchmarked against the dire economic situation of 2014 and 2015. This is clearly apparent in the mindset of the country’s consumers as they remain cautious and consumer confidence is the lowest in Europe. Likewise, business sentiment remains low, but there are encouraging signs of improvement as indicated by a recent survey conducted by the National Bank of Ukraine. As the economic situation continues to improve, FMCG companies should be looking to move away from survival tactics and instead start focusing on longer-term opportunities to outgrow their competition.

Opportunities are already emerging. As is happening globally, healthy living is an emerging trend in Ukraine and will continue to drive evolving consumption patterns. From essentials such as milk and cheese to beauty category products like shampoo and face creams, consumers increasingly seek more authentic and healthier products. Ukrainians are no longer passive consumers when it comes to purchasing food. For example, 74% of Ukrainian consumers are willing to pay more for food and drinks that do not contain undesirable ingredients and 80% of them wish to see more “all natural” products on store shelves.

Looking ahead for the remainder of 2018, controlled inflation will be essential for sustained economic growth and strengthened FMCG market performance. If this happens, Ukrainian consumers will be able to indulge in new, premium, and more exciting products and engage in an escalated “dialogue” with brands to build emotional connections with them.

COUNTRY HIGHLIGHTS ECONOMY WATCH CONSUMER CONFIDENCE INDEX

16.2 85 87 87 86 81 81 13.9 13.8 13.9 13.8 12.3 61 57 58 58 50 52

4.6 2.8 3.1 2.6 2.4 2.3

Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018 Q3 2016 Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018

GDP growth (% change pa) EU UA Inflation, consumer prices (% change pa)

The Conference Board® Global Consumer Confidence Source Economist Intelligence Unit (EIU) Q1 Trading Economics Survey is conducted in collaboration with Nielsen 99

MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

20.8% 19.8% 17.4% 3.6% 3.7% 15.9% 10.5% 0.8% 13.4% 13.4% 9.2% 7.2% 12.4% 0.1% 0.3% 11.2% 6.0% 10.0% 8.9% 12.6% 10.3% 9.7% 9.8% 10.6% 10.4% 8.8% 9.7% 9.9% 10.4%

-0.1% Unit Value Growth Volume Growth Nominal Value Growth Ukraine FMCG volume growth was up 10.5%, outstripping unit value growth for the first time since Ukraine’s economic crisis.

TOTAL UKRAINE – CHANNEL PERFORMANCE

VALUE CONTRIBUTION AND GROWTH – MAT Q1-2018

17.4%

29% 21.9%

23.1% 53%

6% 25.5% 12% 6.9%

Total FMCG Hypermarkets/Supermarkets MT Minimarkets MT Perfumeries MT Traditional Trade

Modern Trade growth was boosted by 190 new Perfumery outlets, which lead channel growth for the latest 12 months.

100

MAT Q1-2018 MAT Q1-2018 SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 17.4%

Beverages - Alcoholic 21.6% 14.9% Beverages - Non Alcoholic Rtd & 20.7% 13.7% Not Rtd Confectionery & Snacks 18.4% 24.1%

Dairy Products 12.7% 21.1%

Personal Cleaning & Hygiene 9.1% 15.8%

Household 4.9% 15.9%

Seasoning & Sauce 4.1% 15.6%

Meals/Meal Mixes Shelf Stable 2.2% 22.4%

Baby Care 2.1% 11.3%

Pet Food 1.9% 19.1%

Baby Food & Drinks 1.7% 22.8%

Desserts/Cakes/Sweet Products 0.6% 14.5%

Strong growth in Baby Food & Drinks was due to the expansion of top players while growth in Confectionery & Snacks was driven by promotions.

TOTAL UKRAINE – MANUFACTURER PERFORMANCE - FMCG

MAT Q1-2018 MAT Q1-2018 MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0% 17.4%

Top 1-5 23.6% 16.3%

Top 6-10 13.5% 14.5%

Top 11-30 23.1% 19.7%

Top 31-100 21.1% 19.4%

100+ 13.0% 16.9%

Private Label 5.7% 15.0%

Top-10 big non-food manufacturers have experienced an inflationary cycle compared to food-based manufacturers.

101

102

To understand the overarching factors at play in shaping today’s and tomorrow’s business and consumer landscape, it is important to understand the broader macroeconomic environment while detecting emerging signals of change.

Understanding how these elements may combine to alter the consumer, retail and business environment can give companies a more informed and considered base to make decisions about the future.

DOWNLOAD REPORT For deeper insights on what the future might hold for your business, download the What’s Next Starts Now whitepaper.

WEBINAR PLAYBACK Click any of the regions below to view webinar playback for local insights.

East Europe

Middle East

Asia Pacific Latin America Africa

The following pages highlights some of the major drivers of change in each market for you to consider the implications on your future business strategy.

103 North America and West Europe webinars not available

POPULATION

2015 +0.31M (+3.7%) 2025 8.56 MILLION 8.87 MILLION RURAL RURAL 34.0% 32.8% 2.91M 2.91M

URBAN URBAN 66.0% 67.2% 5.65M 5.96M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.23M 0.46M 1.72M 1.86M 1.78M 1.64M

14.1% 5.3% 19.8% 21.5% 20.5% 18.8%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 14.4% 4.6% 17.0% 19.9% 22.2% 21.9%

1.28M 0.41M 1.51M 1.76M 1.97M 1.95M +0.05M -0.05M -0.21M -0.10M +0.19M +0.31M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 182 96 151 84

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

104

POPULATION

2015 +0.34M (+3.1%) 2025 11.18 MILLION 11.53 MILLION RURAL RURAL 2.1% 1.8% 0.24M 0.21M

URBAN URBAN 97.9% 98.2% 10.94M 11.32M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.92M 0.63M 2.15M 2.30M 2.24M 2.05M

17.0% 5.6% 19.0% 20.4% 19.8% 18.1%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 17.0% 5.8% 17.5% 19.2% 19.7% 20.9%

2.01M 0.68M 2.07M 2.27M 2.32M 2.47M +87.24K +50.28K -77.81K -34.61K +84.18K +422.26K

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 167 96 128 85

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

105

POPULATION

2015 +0.23M (+4.1%) 2025 5.66 MILLION 5.89 MILLION RURAL RURAL 12.3% 10.8% 0.70M 0.63M

URBAN URBAN 87.7% 89.2% 4.96M 5.26M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.96M 0.36M 1.05M 1.16M 1.08M 1.08M

16.8% 6.3% 18.4% 20.4% 18.9% 19.0%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 16.0% 5.8% 19.5% 17.6% 19.7% 21.4%

0.94M 0.35M 1.15M 1.04M 1.17M 1.26M -0.01M -0.01M +0.10M -0.12M +0.09M +0.18M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 98 152 96 130

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

106

POPULATION

2015 +0.15M (+2.7%) 2025 5.46 MILLION 5.61 MILLION RURAL RURAL 15.8% 14.4% 0.86M 0.81M

URBAN URBAN 84.2% 85.6% 4.60M 4.80M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.90M 0.30M 1.04M 1.01M 1.12M 1.11M

16.4% 5.5% 19.0% 18.4% 20.4% 20.3%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 16.3% 5.6% 17.6% 18.7% 17.9% 23.9%

0.93M 0.32M 1.00M 1.06M 1.02M 1.35M +0.03M +0.01M -0.04M +0.05M -0.10M +0.24M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 97 212 198 93

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

107

POPULATION

2015 +2.98M (+4.6%) 2025 64.98 MILLION 67.97 MILLION RURAL RURAL 20.5% 18.3% 13.31M 12.42M

URBAN URBAN 79.5% 81.7% 51.67M 55.55M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 11.77M 3.80M 11.67M 12.68M 12.33M 12.21M

18.3% 5.9% 18.1% 19.7% 19.1% 18.9%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 17.2% 6.0% 17.6% 18.0% 18.9% 22.3%

11.49M 4.01M 11.76M 12.03M 12.65M 14.90M -0.28M +0.21M +0.09M -0.65M +0.32M +2.69M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 143 95 85 121

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

108

POPULATION

2015 -1.69M (-2.1%) 2025 82.56 MILLION 80.87 MILLION RURAL RURAL 24.7% 22.5% 20.39M 18.21M

URBAN URBAN 75.3% 77.5% 62.17M 62.65M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 10.72M 4.10M 14.84M 16.78M 18.01M 17.25M

13.1% 5.0% 18.2% 20.5% 22.0% 21.1%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 13.5% 4.4% 16.5% 19.2% 22.4% 24.1%

11.10M 3.61M 13.58M 15.83M 18.49M 19.84M +0.38M -0.49M -1.26M -0.95M +0.48M +2.58M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 97 170 149 88

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

109

POPULATION

2015 +0.44M (+9.3%) 2025 4.73 MILLION 5.17 MILLION RURAL RURAL 36.8% 33.6% 1.74M 1.74M

URBAN URBAN 63.2% 66.4% 2.99M 3.43M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.02M 0.27M 0.91M 1.06M 0.81M 0.62M

21.7% 5.7% 19.4% 22.6% 17.2% 13.2%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 19.3% 7.1% 17.2% 20.9% 19.1% 16.5%

0.98M 0.36M 0.87M 1.06M 0.96M 0.84M -0.04M +0.09M -0.04M -0.01M +0.16M +0.22M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people

128 99 124 80

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

110

POPULATION

2015 +0.19M (+0.3%) 2025 61.14 MILLION 61.33 MILLION RURAL RURAL 31.0% 29.1% 18.98M 17.88M

URBAN URBAN 69.0% 70.9% 42.17M 43.46M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 8.17M 2.79M 9.31M 13.45M 12.48M 13.31M

13.7% 4.7% 15.6% 22.6% 21.0% 22.4%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 12.6% 4.8% 15.0% 17.9% 23.7% 25.9%

7.38M 2.84M 8.82M 10.50M 13.92M 15.16M -0.79M +0.05M -0.49M -2.95M +1.44M +1.86M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 91 178 66 160

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

111

POPULATION

2015 +0.34M (+2.0%) 2025 16.84 MILLION 17.18 MILLION RURAL RURAL 9.5% 5.8% 1.60M 0.99M

URBAN URBAN 90.5% 94.2% 15.24M 16.19M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 2.84M 1.01M 3.14M 3.44M 3.48M 3.04M

16.8% 6.0% 18.6% 20.3% 20.5% 17.9%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 15.7% 5.4% 18.1% 17.9% 20.8% 22.1%

2.73M 0.94M 3.16M 3.12M 3.62M 3.85M -0.11M -0.07M +0.02M -0.32M +0.14M +0.82M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 98 152 93 136

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

112

POPULATION

2015 +0.48M (+9.4%) 2025 5.14 MILLION 5.63 MILLION RURAL RURAL 19.5% 17.1% 1.00M 0.96M

URBAN URBAN 80.5% 82.9% 4.14M 4.66M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.93M 0.33M 1.06M 1.09M 0.94M 0.85M

18.0% 6.3% 20.3% 21.0% 18.1% 16.3%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 17.3% 5.9% 19.6% 19.4% 18.9% 18.8%

0.99M 0.34M 1.12M 1.11M 1.08M 1.07M +0.05M +0.01M +0.06M +0.02M +0.14M +0.23M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 99 143 143 97

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

113

POPULATION

2015 -0.10M (-0.9%) 2025 10.61 MILLION 10.51 MILLION RURAL RURAL 36.5% 31.5% 3.88M 3.31M

URBAN URBAN 63.5% 68.5% 6.73M 7.20M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.47M 0.55M 1.78M 2.35M 2.11M 2.16M

14.1% 5.3% 17.1% 22.6% 20.3% 20.7%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 11.9% 4.9% 16.2% 19.8% 22.5% 24.8%

1.19M 0.50M 1.62M 1.99M 2.26M 2.49M -0.28M -0.05M -0.15M -0.37M +0.15M +0.33M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 197 89 69 162

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

114

POPULATION

2015 +0.88M (+1.9%) 2025 47.20 MILLION 48.08 MILLION RURAL RURAL 20.4% 18.3% 9.64M 8.78M

URBAN URBAN 79.6% 81.7% 37.56M 39.30M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 6.92M 2.10M 7.78M 11.59M 9.25M 8.76M

14.9% 4.5% 16.8% 25.0% 19.9% 18.9%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 13.0% 5.3% 14.7% 20.5% 23.7% 22.8%

6.00M 2.48M 6.82M 9.51M 10.96M 10.54M -0.91M +0.38M -0.97M -2.09M +1.71M +1.78M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 93 133 79 120

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

115

POPULATION

2015 +0.68M (+7.1%) 2025 9.69 MILLION 10.38 MILLION RURAL RURAL 14.2% 12.7% 1.38M 1.32M

URBAN URBAN 85.8% 87.3% 8.32M 9.06M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.69M 0.51M 1.98M 1.93M 1.75M 1.91M

17.3% 5.2% 20.2% 19.8% 17.9% 19.6%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 17.7% 5.8% 18.1% 18.7% 18.5% 21.1%

1.85M 0.60M 1.89M 1.95M 1.93M 2.21M +0.16M +0.10M -0.08M +0.02M +0.18M +0.29M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people

156 97 91 146

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

116

POPULATION

2015 +0.83M (+10.1%) 2025 8.24 MILLION 9.07 MILLION RURAL RURAL 26.1% 24.9% 2.15M 2.26M

URBAN URBAN 73.9% 75.1% 6.09M 6.81M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.23M 0.44M 1.67M 1.82M 1.66M 1.50M

14.8% 5.2% 20.1% 21.9% 19.9% 18.0%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 15.1% 4.8% 17.5% 20.4% 21.3% 20.9%

1.36M 0.43M 1.56M 1.82M 1.90M 1.87M +0.12M -3.00K -0.11M 0.00M +0.25M +0.38M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 98 137 88 134

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

117

POPULATION

2015 +3.37M (+5.3%) 2025 63.84 MILLION 67.21 MILLION RURAL RURAL 17.4% 15.2% 11.11M 10.21M

URBAN URBAN 82.6% 84.8% 52.73M 57.00M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 11.50M 3.78M 13.04M 13.10M 12.13M 11.85M

17.6% 5.8% 19.9% 20.0% 18.6% 18.1%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 17.6% 5.8% 17.8% 19.4% 19.1% 20.2%

12.19M 4.03M 12.30M 13.37M 13.23M 13.95M +0.69M +0.25M -0.73M +0.27M +1.09M +2.10M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people

152 96 143 92

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

118

POPULATION

2015 -0.49M (-5.3%) 2025 9.26 MILLION 8.77 MILLION RURAL RURAL 23.3% 20.0% 2.16M 1.75M

URBAN URBAN 76.7% 80.0% 7.10M 7.02M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.53M 0.46M 2.13M 1.97M 2.03M 1.36M

16.1% 4.9% 22.5% 20.8% 21.4% 14.3%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 17.6% 5.5% 16.3% 23.0% 19.8% 17.8%

1.64M 0.51M 1.51M 2.14M 1.84M 1.66M +0.11M +0.05M -0.62M +0.17M -0.19M +0.30M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Internet Users per 100 people 82 62

2015 2025

Source: Demand Institute

119

POPULATION

2015 -0.59M (-8.2%) 2025 7.11 MILLION 6.53 MILLION RURAL RURAL 26.1% 23.0% 1.85M 1.50M

URBAN URBAN 73.9% 77.0% 5.26M 5.02M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.01M 0.30M 1.36M 1.57M 1.49M 1.44M

14.0% 4.2% 19.0% 21.9% 20.8% 20.1%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 14.3% 5.2% 14.7% 22.0% 21.1% 22.6%

0.96M 0.35M 0.99M 1.47M 1.41M 1.52M -0.05M +0.05M -0.38M -0.10M -0.08M +0.08M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 84 162 57 151

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

120

POPULATION

2015 +0.24M (+2.2%) 2025 10.78 MILLION 11.02 MILLION RURAL RURAL 27.0% 26.5% 2.91M 2.92M

URBAN URBAN 73.0% 73.5% 7.87M 8.10M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.60M 0.46M 2.07M 2.50M 2.07M 1.91M

15.1% 4.3% 19.5% 23.6% 19.5% 18.0%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 15.1% 5.4% 15.1% 22.5% 20.4% 21.5%

1.60M 0.58M 1.60M 2.39M 2.16M 2.28M 0.0M +0.12M -0.47M -0.11M +0.09M +0.38M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 93 143 81 139

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

121

POPULATION

2015 -0.04M (-3.3%) 2025 1.28 MILLION 1.24 MILLION RURAL RURAL 32.5% 32.5% 0.42M 0.40M

URBAN URBAN 67.5% 67.5% 0.86M 0.84M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.21M 0.06M 0.27M 0.27M 0.26M 0.25M

16.1% 4.4% 20.4% 20.2% 20.0% 18.8%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 15.9% 6.0% 15.0% 21.5% 19.6% 22.0%

0.20M 0.08M 0.19M 0.27M 0.25M 0.28M -0.01M +0.02M -0.08M +0.01M -0.01M +0.03M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Internet Users per 100 people 95 88

2015 2025

Source: Demand Institute

122

POPULATION

2015 -0.09M (-0.08%) 2025 11.13 MILLION 11.04 MILLION RURAL RURAL 22.0% 19.1% 2.45M 2.11M

URBAN URBAN 78.0% 80.9% 8.68M 8.93M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.63M 0.56M 1.97M 2.61M 2.20M 2.24M

14.5% 5.0% 17.6% 23.3% 19.6% 19.9%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 12.4% 5.3% 15.7% 20.9% 22.6% 23.2%

1.35M 0.58M 1.71M 2.28M 2.48M 2.54M -0.28M +0.02M -0.26M -0.33M +0.27M +0.30M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 87 126 67 116

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 -0.24M (-2.4%) 2025 9.91 MILLION 9.67 MILLION RURAL RURAL 28.8% 24.7% 2.85M 2.39M

URBAN URBAN 71.2% 75.3% 7.06M 7.28M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 1.41M 0.51M 1.88M 2.26M 2.00M 1.71M

14.4% 5.2% 19.3% 23.1% 20.4% 17.5%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 13.9% 5.2% 17.5% 21.8% 20.0% 21.7%

1.31M 0.49M 1.65M 2.06M 1.89M 2.05M -0.10M -0.03M -0.23M -0.21M -0.11M +0.34M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 89 73 119 122

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 +1.35M (+8.0%) 2025 16.77 MILLION 18.12 MILLION RURAL RURAL 46.8% 45.7% 7.84M 8.28M

URBAN URBAN 53.2% 54.3% 8.93M 9.83M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 4.75M 1.13M 4.59M 3.38M 2.71M 1.20M

26.8% 6.4% 25.8% 19.0% 15.2% 6.8%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 27.7% 8.2% 19.1% 21.1% 15.2% 8.7%

5.44M 1.62M 3.74M 4.14M 2.97M 1.71M +0.68M +0.49M -0.85M +0.76M +0.27M +0.51M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 88 148 73 138

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 -0.12M (-5.9%) 2025 2.03 MILLION 1.91 MILLION RURAL RURAL 32.6% 32.1% 0.66M 0.61M

URBAN URBAN 67.4% 67.9% 1.37M 1.30M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.30M 0.09M 0.41M 0.40M 0.41M 0.38M

15.1% 4.4% 20.5% 20.1% 20.6% 19.3%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 15.3% 5.7% 14.7% 21.2% 21.0% 22.2%

0.28M 0.10M 0.27M 0.38M 0.38M 0.40M -0.02M +0.02M -0.14M -0.02M -0.03M +0.02M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Internet Users per 100 people 92 79

2015 2025

Source: Demand Institute

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POPULATION

2015 -0.12M (-3.9%) 2025 3.00 MILLION 2.88 MILLION RURAL RURAL 33.5% 32.7% 1.00M 0.94M

URBAN URBAN 66.5% 67.3% 1.99M 1.94M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.43M 0.17M 0.58M 0.59M 0.62M 0.55M

14.6% 5.8% 19.8% 20.1% 21.0% 18.7%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 16.2% 4.9% 17.7% 19.0% 21.0% 21.2%

0.45M 0.14M 0.49M 0.53M 0.59M 0.59M +0.02M -0.03M -0.09M -0.06M -0.03M +0.04M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Internet Users per 100 people 92 71

2015 2025

Source: Demand Institute

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POPULATION

2015 -0.30M (-0.08%) 2025 38.22 MILLION 37.92 MILLION RURAL RURAL 39.5% 38.6% 15.08M 14.64M

URBAN URBAN 60.5% 61.4% 23.14M 23.29M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 5.70M 2.02M 8.56M 8.01M 8.00M 5.97M

14.9% 5.3% 22.4% 20.9% 20.9% 15.6%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 13.8% 5.3% 16.7% 23.9% 18.7% 21.6%

5.15M 1.99M 6.23M 8.94M 6.99M 8.06M -0.54M -0.03M -2.33M +0.93M -1.01M +2.09M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 89 68 150 145

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 -0.81M (-3.7%) 2025 21.58 MILLION 20.77 MILLION RURAL RURAL 45.4% 43.0% 9.80M 8.93M

URBAN URBAN 54.6% 57.0% 11.77M 11.84M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 3.06M 1.09M 3.85M 4.66M 3.84M 3.38M

15.4% 5.5% 19.3% 23.4% 19.3% 17.0%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 14.6% 5.5% 16.7% 21.7% 20.6% 20.8%

2.76M 1.04M 3.16M 4.11M 3.90M 3.94M -0.30M -0.05M -0.68M -0.54M +0.06M +0.56M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 143 85 128 56

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 -5.13M (-3.6%) 2025 142.10 MILLION 136.97 MILLION RURAL RURAL 26.0% 24.7% 36.93M 33.77M

URBAN URBAN 74.0% 75.3% 105.16M 103.20M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 24.22M 6.33M 33.43M 29.16M 31.33M 19.41M

16.8% 4.4% 23.2% 20.3% 21.8% 13.5%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 18.5% 5.6% 15.7% 23.9% 18.7% 17.5%

26.36M 7.99M 22.44M 34.08M 26.72M 25.03M +2.14M +1.66M -10.99M +4.92M -4.62M +5.62M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people

188 73 89 172

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 -0.01M (-0.1%) 2025 5.46 MILLION 5.45 MILLION RURAL RURAL 46.4% 46.4% 2.53M 2.53M

URBAN URBAN 53.6% 53.6% 2.93M 2.92M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 0.83M 0.29M 1.21M 1.22M 1.12M 0.76M

15.3% 5.3% 22.3% 22.5% 20.5% 14.1%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 15.3% 5.2% 16.9% 23.9% 19.7% 19.0%

0.83M 0.28M 0.92M 1.30M 1.07M 1.03M 0.00M -0.01M -0.30M +0.08M -0.04M +0.27M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Internet Users per 100 people 95 85

2015 2025

Source: Demand Institute

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POPULATION

2015 +7.02M (+9.2%) 2025 76.69 MILLION 83.71 MILLION RURAL RURAL 26.6% 22.3% 20.40M 18.70M

URBAN URBAN 73.4% 77.7% 56.29M 65.01M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 20.2M 6.67M 18.93M 16.01M 10.53M 6.11M

25.6% 8.5% 24.2% 20.5% 13.5% 7.8%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 22.2% 7.6% 22.6% 21.3% 15.9% 10.4%

19.08M 6.57M 19.50M 18.33M 13.73M 8.92M -0.95M -0.10M +0.57M +2.31M +3.20M +2.82M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 85 104 54 96

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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POPULATION

2015 -3.09M (-6.9%) 2025 44.65 MILLION 41.56 MILLION RURAL RURAL 30.3% 27.9% 13.53M 11.59M

URBAN URBAN 69.7% 72.1% 31.12M 29.97M

Source: United Nations, Urbanization Prospects (2014)

AGE GROUP MILLIONS 2015 6.73M 2.11M 9.94M 9.41M 9.37M 7.09M

15.1% 4.7% 22.3% 21.1% 21.0% 15.9%

0-14 15-19 years 20-34 years 35-49 years 50-64 years 65+ years Share of years (Gen-Z) (Gen-Y) (Gen-X) (Baby Boomers) (Silver Gen) Population 2025 16.0% 5.5% 15.7% 21.4% 19.9% 18.8%

6.77M 2.35M 6.67M 10.22M 8.44M 8.00M +0.05M +0.24M -3.27M +0.81M -0.93M +0.90M

Source: United Nations, Population Prospects (2017) TECHNOLOGY Mobile Subscribers Internet Users per 100 people per 100 people 72 144 49 139

2015 2021 2015 2025

Source: Economist Intelligence Unit Source: Demand Institute

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Economy Watch % GDP per annum growth sourced from Economist Intelligence Unit (EIU) Inflation, consumer prices % change per annum sourced from Economist Intelligence Unit (EIU) or from local government statistics offices where unavailable.

The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen. - Survey is based on respondents with Internet access. Index levels above and below 100 indicate degrees of optimism/pessimism. Q1 2017 CCI results are unavailable this quarter due to a Nielsen global survey service enhancement.

FMCG Market Dynamics - compares overall market dynamics (value and unit growth) in the Fast Moving Consumer Goods sector based on the sales tracking Nielsen performs in the mentioned markets. The FMCG definition is based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels.

Nominal value growth: Percentage change in value sales (expenditures) as measured by the total basket of reported product categories Unit value growth (≈ ‘price’ change): • The change in average price per unit may result from: • Price changes of individual products • Change in the mix of purchased products; more or less expensive products, more or less promotions, etc. • Channel switching; more or less purchases in discount stores, or hypermarkets, or convenience outlets, etc. • Product or channel mix changes may be induced by price change or may just be the result of market dynamics. • The unit value growth reflects how consumers experience ‘cost of living’ in their actual grocery shopping behaviour. Volume growth: Percentage change in purchased volume (quantity) of products

Super Category Performance – definition of Super Categories are based on local market definitions

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