Australasian industry: Backwater, Behemoth or Beachhead

Appendix 1: Australasian supermarket retailing review 2008

August 2008 PROJECT OBJECTIVES & SCOPE

− Coriolis regularly reviews the results and strategies of all the key Australasian supermarket retailers as part of our ongoing knowledge building activities. From this, and other research, Coriolis publishes an overview of the key Australasian supermarket retailers on a semi-regular basis (see www.coriolisresearch.com for past editions).

− We are not sharebrokers. We have no axe to grind. With this document, we are trying to provide a single source of basic overview data of all the key Australasian supermarket retailers that is useful to retailers and manufacturers alike.

− Comments from our clients and other industry participants, as well as the log files from our website, indicates this review is of significant use to a wide range of people and companies. We hope it is of use to you and your company.

− For the 2008 edition, we put more effort into developing the “so what?” element of our research; this was published as “Australasian supermarket industry: Backwater, Behemoth or Beachhead?” as presented at The Leading Edge’s Future Australasia conference May 2008. This document acts as an appendix to that document and should be read in conjunction with that document.

2 SUMMARY The major retailer vary widely in size, scope and growth rates

Major Australasian retailers: by the numbers (2007)

Total sales Food and liquor 5 year # of (A$; b) sales (A$;b) sales CAGR*

$42.3 $36.51,4 13.3% 766

$44.4 $26.21 10.8% 7483

1,2092 4 $9.7 $9.7 10.9% +2,500 (independents)

$1.357 $1.35 n/a 710

NZ$7.24 NZ$7.2 6.1%5 6286

$0.8 $0.8 20.5% 82

*Food and Liquor CAGR (Compound Annual Growth Rate); 1. includes petrol and convenience sales; 2. excludes AUR/; 3. excludes liquor and petrol stores; 4. includes 3 sales to wholesale; 5. CAGR on total group sales 6. includes convenience stores 7. Included in Metcash wholesale sales above STRATEGY Australasian retailers are increasingly diversifying their businesses

Major Australasian retailers by strategy (2007)

Non- Metro Private Banking Hyper- Asian Pharm- Internet Fuel foods stores Liquor Hotels label & credit markets growth acy Services1 Tesco 0 0 0 0 0 - 0 0 0 0 0 0 Woolworths 0 0 0 5 0 0 0 0 - - 5 -

Wesfarmers 0 0 0 5 0 0 0 5 - - 5 0

Metcash - - - - 0 - 0 - 5 - - -

Foodstuffs - f - 5 f - 0 5 5 - - - Pick ‘n Pay ------5 - - - - -

1. For example travel or optical 4 5 WOOLWORTHS CORPORATE STRUCTURE Food & Liquor accounts for $32 billion (75%) of Woolworths $42 billion turnover

Woolworths Corporate Structure (A$;b; FY07)

Sales: $42.3B

Food & Liquor Petrol Hotels Consumer Wholesale2 Electronics Sales: $31.6B Sales: $4.8B Sales: $1.0B Sales: $3.5B Sales: $1.3B Sales: $0.1B Caltex joint venture Woolworths/Safeway1 Sales: $23.6B

Liquor Sales: $4.1B

Progressive NZ Sales: $3.9B

Note: Food and Liquor includes online shopping via Greengrocer, HomeShop, online; 1. stores in only 2. Wholesale is 60% ownership of Overview 6 Statewide Independent Wholesalers (SIW) operating in ; Source:: Corporate Annual Reports STORE FORMATS Woolworth’s have broadly similar businesses across Australia and , with the current lack of a liquor offer in New Zealand as the major stand-out portfolio gap Woolworths food and liquor store formats (2007)

Format Australia # of stores New Zealand # of stores Supermarkets Conventional 774 33 supermarket 64

57

Urban -

Independent F 31 41 supermarket V 41 FG 35 Petrol Petrol 361 +135 22

Liquor Liquor Store & 436 (ALH) wine shop 68 (DM’s) - 1,039 Total

Liquor store Integrated attached to Beer & wine supermarket Wholesale Cash & Carry 3 C&C Progressive (Tas) 2 DC’s exited Rattrays C&C * Includes 4 agreements signed in 2008; 1. 60% ownership of SIW which operates in Tasmania and supplies both Woolworths and IGA stores; Note: Excludes clothing and 7 hardware stores; Source:: Company annual report and website WOOLWORTHS STORES Woolworth’s has operations in both Australia and New Zealand

Woolworths supermarkets by region (2008)

10

168

79

62 237 199

183

TOTAL = 766

27

Source:: Corporate Annual Reports 8 WOOLWORTHS STORE NUMBERS BY Woolworths is increasing store numbers across all its Absolute Change Woolworths store number by brand (93-07) (units, actual, FY1993 - FY2007) 3,302 +2,390 3,205 263 Hotels 250

2,748 400 Electronics +298 366 169 129 142 Big W +84 342 2,187 505 Petrol +493 31 120 491 2,009 330 456 348 111

1,533 104 359 1,027 Liquor +1000 1,358 287 1,015 1,282 366 1,186 1,098 1,114 369 938 1,031 258 96 947 966 257 129 679 912 252 123 576 246 135 90 256 198 221 117 117 Rockmans 186 114 87 166 107 101 85 139 102 108 107 86 82 98 137 130 Crazy Prices 71 81 74 75 78 49 41 60 63 71 3812 38 42 58 27 954 965 Supermarkets +470 723 603 676 694 708 495 500 501 505 518 542 559 585

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: various Woolworths annual reports; Coriolis analysis 9 WOOLWORTHS SALES The majority of WWX sales are through Australian food and liquor; however Woolworths is successfully entering new markets and sectors (petrol, hotels and NZ)

Woolworths sales by division1 CAGR (A$m; 1997-2007) (97-07) $42,477 11.1% Hotels $1,032$148 Wholesale -0.2% $1,310 Electronics 19.4% $37,734 $3,465 8.6% $850 BigW $1,167$145 $3,119 $4,837 Petrol 40.6%2 $31,352 $416 $142 $4,390 $27,934 $1,007 $3,940 Food & Liquor (NZ) $2,909 $26,321 $886$137 $24,473 $280 $2,605 $791 $2,718 $3,308 $819 $2,500 $20,915 $659 $2,195 $2,281 $1,711 $18,989 $210 $418$698 $1,119 $17,527 $675$338 $2,070 $16,001 $357 $338 $747 $14,800 $299$521 $1,914 $389$351 $1,788 $473 Disc. $325 $242 $223$152 $1,645 $316 $27,745 Food & Liquor (Au) 8.2% $1,517 $25,458 $23,570 $21,039 $21,998 $19,595 $16,772 $14,247 $15,251 $12,584 $13,375

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1. Sales only excludes rebates, discounts, and intersegment revenue; 2. CAGR 1999- 2007; Source: Company annual report; Coriolis analysis 10 WOOLWORTHS PROFIT INCREASING Woolworths is showing double digit profit growth in all sectors except wholesaling

Woolworths trading profit by division (A$m; 1997-2007) CAGR (97-07) $2,227 11.1%

$184 Hotels $3 Wholesale -0.2% $67 Electronics 16.4% $139 $1,788 BigW 11.2% $83 Petrol 61.9%1 $151 $155 Food & Liquor (NZ) $64$2 $123 $1,341 $53 $55 $109 $52$2 $1,122 $118 $2 $996 $44 $36 $0 $116 $876 $37 $19 $104 $28$7 $30 $733 $94 $1,597 Food & Liquor (Au) 14.9% $647 $31$5 $13 $83 $528 $547 $11$26$3 $5 $1,286 $479 $74 $16 $17$21 $1,077 $23$15 $56 $62 $942 $48 $825 $735 $614 $534 $398 $453 $452

$(4) $(10)$(4) $(2)$(3) $(1) $(5) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1. Petrol from 1998-2000 made a loss so CAGR 2001-2007; Source: Company annual report; Coriolis analysis 11 WOOLWORTHS SHARE PRICE Woolworths share price has shown substantial growth; particularly since 2000

Woolworths share price (AU:WOW; A$; 04/1994-04/2008)

CAGR (00-04/2008) +25% 8 years

Source:: BigCharts.com 12 WOOLWORTHS ACQUISITIONS Woolworths has made a number of ‘bolt-on’ acquisitions to expand existing businesses

Woolworths Group acquisitions (A$m; FY1998-FY2007)

Date Category Acquisition # of Stores Sales Acquisition Price Location

Jun 2000 Liquor Booze Brothers 16 ~$64m $12m

Jul 2000 Liquor Toohey Bros 9 ~$40m

Jul 2000 Supermarkets Advantage Supermarkets 5 $21.2m West Australia

2001+ Liquor MGW Hotels (jv with Bruce Mathieson) 85 $350m1 QLD

2001 Electronics 222 ~$200m $112.6m National

2001 Liquor Liberty Liquor 43 ~$180m $71.7m

2001 Supermarkets Part of Supermarkets 72 $1.5b $268.1m East Coast

2001 Petrol Lease Liberty Oil outlets 69 ~$100m +

2001 2002 Internet 38.1% of GreenGrocer.com.au (additional) - $18.3m

2003 Liquor Le Grog $7.3m South Australia

2003 Liquor Super Cellars $15.2m South Australia

2004 Liquor Baily & Baily $10.7m

Oct 2004 Liquor Australian Leisure & Hospitality 263 $465m $1.32b QLD; other

Jul 2005 Hotel Bruce Mathieson Group 26+8 199.2m cash

Nov 2005 Supermarkets Progressive Enterprises 198 $959m cash & 82m shares

Jan 2005 Hotel MGW Hotels $11.7m

Feb 2006 Hotel Taverner Hotel Group 33 $85m $377.1m

Jan 2005 Hotel MGW Hotels $11.7m

Aug 2007 Hotels Saturno Group $118m South Australia

May 2008 Hotels ALE Property Gp from Hedley Leisure & 105 pubs $57m Gaming Property Fund (20% stake)

1. Total acquisitions by jv 01-04; Note: Smaller unlisted acquisitions include Figtree Cellars (liquor), Park Cellars (liquor), Andi’s, Caltex Liquor as well as single supermarket “creeping 13 acquisition”; Source: various Woolworths annual reports; Coriolis analysis WOOLWORTHS DIVESTITURES Woolworths has disposed of underperforming or non-core businesses

Woolworths Group divestitures (A$m; FY1998-FY2007)

Annual Sale Date Category Divestiture # of stores sales price Location Feb 2000 Apparel Rockmans 258 $169m $11m1 National Jun 2000 Printing Chisholm Printing - - $7.4m Oct 2000 Meat Mnfg Chisholm Smallgoods Mnfg. - - $34.1+ Jun 2001 Variety Crazy Prices 135 $516m N/A National Apr 2002 Wholesale AIW

1. Gain on disposal; Source: various Woolworths annual reports; Coriolis analysis 14 WOOLWORTHS – ACHIEVEMENTS Woolworths has been making substantial investments in supermarkets and petrol

− On November 2005, Woolworths entered the NZ market by purchasing Progressive Enterprises and all of its NZ supermarket operations from FAL

− Supply chain transformation initiatives undertaken; StockSmart (DC forecast based replenishment), AutoStockR (store forecast based replenishment), Warehouse Management Systems and Transport Management Systems

− During the year [2007] Woolworths established a buying office in Hong Kong to directly source products from suppliers for distribution in Australia

− Supermarket DCs are being reduced from 31 DCs to nine Regional Distribution Centres (RDCs) and two National Distribution Centres (NDCs)

− “Roll back” price campaign in place to reduce supermarket prices

− Petrol business achieved milestone target of 500 canopies in 2007

− Agreement with HSBC for a Woolworth’s branded credit card

Source: Corporate website 15 WOOLWORTHS – GROWTH STRATEGIES Woolworths is looking to increase store numbers and share both in Australia and internationally

− Continue space rollout - reinvestment in the store will accelerate, both through the level of new store openings and level of refurbishment activity. 15-25 new supermarkets each year, 150 Dan Murphy’s in five years etc

− Leverage scale and store distribution - Woolworths considers that there are further opportunities to branch into new formats, new services and new categories, whilst continuing to expand the existing business

− Increased emphasis on private label – Introduce increased amount of Woolworths “Select” and Homebrand

Source: Corporate website 16 WOOLWORTHS – EXITS WHOLESALING Woolworths exited wholesaling when it lost a major contract

− Woolworths lost its contract for major wholesale customer FoodWorks Supermarket Group (22 units) to Metcash Trading

− Decided to sell Australian Independent Wholesalers (AIW) (see later section)

− purchased AIW and during 2006

Source: Corporate website 17 18 CORPORATE STRUCTURE Coles is now a division of Wesfarmers, a conglomerate with a broad range of businesses

Wesfarmers Corporate Structure (A$;b; FY07)

Wesfarmers

Sales: $44.4B*

Food & Liquor General Merch. Home Improv. & Resources & Insurance Industrial & Chemicals & & Apparel Office Supplies Energy Safety Fertilisers Sales: $26.2B Sales: $7.2B Sales: $6.2B Sales: $1.6B Sales: $1.4B Sales: $1.2B Sales: $0.6B

• Coles • Kmart $3.3b • Bunnings $4.9b • Curragh • WFI • Blackwoods • CSBP • Bi-Lo • Target $3.9b • House Works • Premier Coal • Lumley • Bullivants • Australian Vinyls • • $1.3b • Bengalia • OAMPS • Motion Industries • QLD Nitrates • Coles Liquor • Kleenheat • Crombie Lockwood • Mullins Fasteners • AU Gold Reagents • • Wesfarmers LPG • Koukia • Protector Alsafe • • Coregas • New Zealand • 1st Choice • Air Liquide WA • Pharmacy Direct Former • Energy Generation

* Coles sales integrated into Wesfarmers structure; Source: Corporate Annual Reports; Corporate Website s; Coriolis analysis 19 WESFARMERS SALES & PROFIT While Coles contributes to significantly to group revenue, Wesfarmers existing businesses are much more profitable Wesfarmers sales by division Wesfarmers profit by division (A$b; 2007) (EBIT; A$m; 2007)

Industrial and Chemicals and Chemicals and safety, $1.21 fertiliser, $0.59 fertiliser, $100.6 Other, $0.01 Other, $94.8 Insurance, $1.41 Industrial and Energy, $0.46 safety, $114.6 Resources, $1.13 Insurance, $120.3

Energy, $75.4 Food, liquor & Home improv. & fuel, $773.2 office supplies, $6.20 Resources, $338.0 Food, liquor & GM & apparel, fuel, $26.23 $7.20 GM & apparel, $386.8 Home improv. & office supplies, $613.8

Total = $44.4B Total = $2,617.5B

Source: Company annual reports; Coriolis analysis 20 COLES STORE FORMATS Coles operates two supermarket brands (Coles and Bi-Lo), petrol outlets and liquor stores

Coles food and liquor store formats (FY2007)

Format # of stores Conventional 677 supermarket

Discount supermarket 71

Hypermarket 2

Petrol 621

Liquor Store & 632 wine shop 39

90

Total 761

Source: Company annual report and website 21 COLES STORES Coles has national coverage in both food and liquor stores

Coles food and liquor stores by region (Coles + Bi-Lo; Dec 2007)

Supermarkets (748)

Convenience (621)

11 10 Liquor* (761)

8 116 152

228 68 77 91

44 66

31 208 236

248

158 193

155

16 14

* Excludes hotels; Source: Corporate website; Wesfarmers analyst presentation 22 COLES STORE NUMBERS BY BRAND Coles Myer appears to be slowly simplifying its business through an evolutionary process of shedding its underperforming store brands (e.g. Bi-Lo and Myer) Change in Coles Myer store numbers by brand (units; actual; FY 1986-2007)

Coles Express 3 Guys Foodtown Norgen-Vaaz Holly's Restaurant Dynamite Chili's Texas Grill Direct Fulfilment Group Ezywalkin Fays Shoes Megamart 621 Coles Express Myer Grace Bros Country Road Katies 599 Fosseys/Target Country Target World 4 Kids Harris Technology Officeworks Coles Variety Kmart Tyre & Auto Super Kmart Kmart 597 112 Target Country/Fosseys Red Rooster Hotels Liquor (also Quaffers, Theos) 112 Pick 'n Pay Foodmarket Bi-Lo 259 Target Coles 584 598 255 9 9 Harris Tech 11 112 8 107 Officeworks Foodtown 10 68 95 3 Guys 69 69 105 9 152 211 68 6489 61 8 267 Kmart tire & auto Georgie Pie 69 210 125 87 275 2 71 228 5 114 112 237 70 132 67 27 72 226 235 136 137 140 141 195 183 Kmart 1810 97 257 268 72 144 3 122 185 Norgen-Vaaz 97 97 7 30 31 76 222 133 51 78 81 2924 79 77 193 209 127 6 53 137 76 50 85 Hotels Eziwalkin 84 86 78 149 148 126 7 47 50 180 69 81 172 179 184 149 10 36 50 168 59 Myer-Grace Bros 92 85 158 113 2838 44 49 172 175 31 Country Road 48 157 164 159 107 164 151 99 2311 152024 163 Katies 140 203 190 180 85 90 17104 16 163 243 164 218 111 14101 154 158 Fosseys 142 236 80 163 231 240 761 Liquor 138 794 795 8 158 161 222 673 735 Target 73 77 147 626 72 773 344 140 141 212 219 217 619 Coles Variety 106 33 206 204 526 109 283 99 100 139 509 Kmart tire & auto 203 96 133 134 Kmart 92 122 123 410 421 430 Pick ‘n Pay 2 2 712 Bi-Lo Red Rooster 100 121 319 352 376 377 2 2 119 283 282 294 309 2 2 200 261 268 1 2 2 196 200 209 Liquor 261 245 11 10 5 1 1 1 155 163 165 12 11 116 118 122 120 121 113 120 132 148 Foodmarket 15 1425 82 96 600 677 Coles 441 455 484 489 519 Coles 354 358 346 339 375 375 374 380 376 383 389 382 407 416 425

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Notes: excludes numerous small concepts (e.g. mycar, let’s eat, etc); Source: various annual reports; various published articles; Coriolis analysis 23 COLES SALES Coles have been showing steady growth over the last 10 years; with Food and Liquor being the growth standout

Coles sales by division CAGR (A$m; FY1997-2007) $36,698 (97-07) $36,185 6.1% $34,688

$32,268 $5,262 $5,229 General e.colesmyer $266 $5,152 4.6% Merchandise (Kmart $4,681 $3,102 $3,170 & Office Works) $27,050 $3,306 Apparel & Home 3.4% $25,468 $254 $2,486* $3,151 (Target) $239 $2,852 $23,748 $4,370 $22,440 $22,396 $292 $3,852 $237 $3,322 $20,588 $3,553 $2,647 $19,220 $3,564 $3,420 $2,422 $3,350 $2,328 $3,240 $3,271 $2,546 $2,143 $3,243 $2,449 $3,106 $2,377 $3,333 $3,261 Myer $3,229 $25,813 $26,230 Food, Liquor & Fuel 9.7% Grace $3,144 $24,670 Bros $21,146

$15,711 $16,539 $14,469 $12,997 $13,335 $10,429 $11,559

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

* Discontinued operations; Source: Company annual report; Coriolis analysis 24 COLES PROFIT Coles had a bad year in 2006 with GM and Food; management point to poor execution from Bi-Lo to Coles Coles trading profit by division CAGR (97-07) (EBIT; A$m; FY1997-2007)

$1,478 $136

$234 $1,131 5.8% General $935 $182 12.2% Merchandise $991 $163 $290 Apparel & Home 8.0% $841 $136 $813 $626* $776 $223 $721 $133 $104 $151 $37 Myer Grace Bros -10.2% $642 $99 $637 $79 $88 $92 $47 $548 $62 $58 $127 $52 $25 $131 $162 $66 $134 $122 $16 $116 $108 $750 $773 Food, Liquor & Fuel 8.5% $678 $603 $582 $497 $558 $427 $471 $342 $395

$(15) $(22) $(11) $(19) e.colesmyer $(14) $(16) $(14) $(79) $(100) $(152) Unallocated $(122)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

* Discontinued operations of Myer/Megamart; Source: Company annual report; Coriolis analysis 25 COLES SHARE PRICE After a long period of minimal share price growth, various acquisitions attempts and the final sale of Coles drove up the share price Coles share price (AU:CGJ; A$; 1989-11/2007)

+224% 3.5 year

0% 5.5 years +67% 1 year

Source:: BigCharts.com 26 COLES – ACQUISITIONS Coles Myer have made a number of major acquisitions over the past decade, primarily as fill ins for existing divisions (e.g. liquor) Coles Myer Acquisitions (A$m; 1993-2007)

Date Category Acquisition # of Stores Sales Acquisition Price Location

Dec 2006 Hotel Talbot Hotel Group $55.8m QLD

Dec 2006 Hotel/Liquor Pippos Hotels Group/Mr Corks 5+13 $58.2 QLD

Jun 2006 Hotel/Liquor Hedley Hotel Group 35+102 $325m $320m QLD

Mar 2006 Pharmacy Pharmacy Direct 1 $44m $56.2m NSW & online

Jan 2006 Autoservice Shell autoserv & Auto Care 92 $14.8m National

Jan 2005 Liquor Chancellor Village Tavern ? n/a ~$15m

2004 Petrol Shell petrol stations 585 $103.7m National

May 2003 Liquor Theo’s NSW (Pallis/ALW Newco) 53 $179.8m1 NSW

- May 2003 Online Shopfast Online Groceries - n/a ?

Jan 2003 Office Products Viking Office Products/Direct Pty. - $38.7m1 National

Oct 2001 Supermarkets Part of Franklins 35 $59.3m East Coast

Jul 2001 Liquor Leda Hotel Group 31 $63.6m QLD

Apr 2001 Liquor Australian Liquor Group $55.1m

Apr 1999 Online Harris Technology

Feb 1998 Supermarkets Charlie Carters 18 WA

Jan 1998 Supermarkets ? 3 NT

Sep 1997 Liquor G&P Hotels Group 17 QLD

1995 Discount 20% of Coles Myer held by Kmart - $1.2b -

1993 Restaurant Big Rooster 98 - - QLD

1993 Liquor Vintage Cellars 18 n/a ? SA

Source: Corporate website, Annual reports, select articles; Coriolis analysis 27 COLES – DIVESTITURES Coles Myer have made a number of divestitures of non-core or underperforming businesses

Coles Myer Divestitures (A$m; FY1995-2007)

Annual Sale Date Category Divestiture # of stores sales price Location Jun 2006 Department Myer $1.4b National store Nov 2005 Electrical Megamart 9 2004 Supermarket Newmart 5 WA 2004 Office Products Sands and McDougall 7 Mar 2003 Property Sydney Central Plaza - $372.8m1 NSW Feb 2002 Online Myer Direct - ? National May 2002 Foodservice Red Rooster 243 $65.0m National Nov 2000 Apparel Katies 211 $20.4m AU & NZ 1995 Credit Card Credit card business $100.5m

Source: Corporate website, Annual reports, select articles; Coriolis analysis 28 COLES – NEW CONCEPTS Coles Myer went through a period of developing numerous new store formats in an attempt to be all things to all people, most of which failed… Coles Myer new store concepts (1998-2007)

Launch Concept Brand Details 2006 Liquor Vintage Cellars Liquor store 2005 Liquor 1st Choice Large format liquor store to address Woolworths Dan Murphy’s 2000 Clearance Dirt Cheap Warehouse Clearance outlet for Kmart end of season and discontinued stock 1999 Apparel Target Country Rebranding Fossey’s stores with localised offer for smaller, rural locations 1999 Liquor Liquorland Express Reduced beer, wine and spirits offer in convenient location 1999 Automotive Mycar Automotive superstore 1999 Online Online purchasing of groceries 1999 Garden Kmart Garden Garden supplies superstore Supercentre 1999 Liquor Local Hero Smaller local liquor outlets for smaller catchments 1998 Housewares Target Home Expanded housewares range 1998 Entertainment Megamart Electrical and furniture 1998 Gourmet Food let’s eat Food and wine emporium offering high quality produce, liquor and gourmet chef-prepared meals 1998 HBC Essentially Me Health and beauty lifestyle store 1998 Convenience fast & fresh JV with Mobil to develop enlarged

Source: Corporate website, Annual reports, select articles; Coriolis analysis 29 COLES – NEW CONCEPTS … continued

Coles Myer new store concepts (1993-1997)

Launch Concept Brand Details 1997 Outdoor Jackeroo Fishing tackle, camping equipment, outdoor clothing, BBQ, and accessories 1997 Kids Cartoonworks Licensed merchandise (Disney, Warner, etc) party goods, cards, wrapping, paper, confectionery 1997 Auto Motorpro Oils, coolants, filters, car electrical, batteries, jacks and tools 1997 Apparel Myer BIB Women's apparel for sizes 16-24 1997 Housewares Myer Home Dining, cookware, utensils, rugs and clocks 1997 Children's Baby Target Childrens apparel, maternity wear, nursery furniture, accessories and toys 1997 Convenience Coles Express Reduced range offer for metro locations and inner city customers 1997 Supermarket Bi-Lo Mega Frrresh Bi-Lo with expanded fresh foods offer 1997 Liquor Quaffers Discount liquor 1997 Sporting Goods Myer Sport 6,000m2 destination sporting goods 1997 Electrical Myer Electric Electrical superstore 1997 Clearance GoodBuys Warehouse Clearance outlet for Myer end of season and discontinued stock 1994 Restaurant Chili’s Bar & Grill JV with Brinker International to launch US casual dining chain in AU 1994 Office Supplies Officeworks Office supplies superstore 1993 Toys World 4 Kids Toy and leisure superstore

Source: Corporate website, Annual reports, select articles; Coriolis analysis 30 COLES – GROWTH OPPORTUNTIES Wesfarmers have identified a number of key ways to add value to the Coles operations…

200 jobs cut to May 2008 with an additional 800 administrative jobs to go

New management team led by Ian McLeod (ex ASDA) will drive turnaround

Source: Wesfarmers Presentation to analysts 31 COLES – STRATEGY …in particular the food and beverage sectors

Source: Wesfarmers Presentation to analysts 32 33 PICK ’N PAY CORPORATE STRUCTURE Pick ‘n Pay is a South African chain that has expanded into Australia through the purchase of part of Franklins, when this chain was sold in pieces by Dairy Farm of Hong Kong Pick ‘n Pay corporate structure (SAR,b; A$m; FY2008) Pick ’n Pay Holdings (PWK)

Pick ’n Pay Stores (PIK) Sales: R45.4B

Retail Group Enterprises Franklin

Sales: ~A$820m

Hypermarkets TM Supermarkets Supermarkets Score Supermarkets Family Stores Boxer Superstores Mini Markets

Boardmans Home Shopping

Hardware Go Banking

Clothing HealthPharm

Source: Pick ’n Pay Annual Reports; Coriolis analysis 34 PICK ’N PAY STORE FORMATS Pick ‘n Pay have a range of company owned and franchised store formats

Pick ‘n Pay store formats (2008)

Format Southern Africa Australia # of stores

Hypermarket 18

Conventional 162 Supermarket

Convenience N/A store

Discount 118 Supermarket

Franchised 206 Supermarket

Boxer 64 Supermarkets

74 (Co owned) Discount Supermarket/ 6* (franchised) Franchised

Pick ‘n Pay 36 Liquor

* Includes 4 agreements signed in 2008; Note: Excludes clothing and hardware stores; Source:: Company annual report and website 35 PICK ’N PAY SALES Pick ‘n Pay have shown constant double digit growth over the last 9 years

Pick ‘n Pay sales by region (SAR; millions; 1998-2008) CAGR (98-08) R45.381 15.3%

R 4,967 Australia 19.8% (02-08) R39.337

R35,078 R 4,269

R31,794 R 3,935 R29,276 R 3,896 R26,194 R 4,208

R 4,559 South R18,818 R 40,413 Africa 13.9% R 1,680 R 35,068 R 31,144 R 27,898 R 25,069 R 21,635 R 17,138 R 13,791 R 15,126 R 10,971 R 12,503

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source:: Company annual report; Coriolis analysis 36 PICK ’N PAY PROFIT INCREASING Pick ‘n Pay achieved a small trading profit in Australia in FY08 after years of losses

Pick ‘n Pay trading profit by region (SAR; millions; 1998-2008) CAGR (98-08)

R1,534 23.3% R 14 Australia

R1,287

Sold 2 stores; New R1,047 warehousing and distribution capabilities R969 increased efficiencies

R789 R681 South 23.4% R 1,520 Africa R555 R 1,334 R 1,140 R 1,028 R 830 R 765 R 589 R 404 R 344 R 188 R 237 -R 34 -R 84 R -41 R -60 R -93 R -46 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source:: Company annual report; Coriolis analysis 37 PICK ’N PAY SHARE PRICE Pick ‘n Pay had been trending up in the last decade until recently

Pick ‘n Pay stores share price (SAR; 04/1998-04/2008)

Source:: BigCharts.com 38 FRANKLINS BY REGION Pick ‘n Pay now operate a total of 80 Franklins stores in , 6 of which are now franchised Franklins supermarket by region (2008)

Company owned

Franchised

74

6

Source: Pick ’n Pay Annual Report; Coriolis analysis 39 FRANKLINS UNITS Franklins have shown minimal total unit growth since coming under PnP ownership

Franklins stores by type (units; 2001-2008)

PNP bought 87 stores (Franklins and Fresco) from the break up of Dairy Farm International’s 287 stores. Fresco were later branded to Franklins 287

CAGR (02-08) 78 80 2.3% 70 2 6 Franchised Fresco 20

74 78 78 79 76 74 Franklins 50

2001 2002 2003 2004 2005 2006 2007 2008

Source:: Company annual report; Coriolis analysis 40 FRANKLINS – STRATEGY Franklins starts to franchise in Australia as part of its strategy of competing with the giant chains

− In 2005 Franklins started setting up franchise opportunities under the "Franklins Family Supermarkets" brand. On 30th January 2006, Franklins opened a purchased store in NSW to show potential franchisees the benefits of changing from IGA to Franklins.

− “Pick 'n Pay has pinned its hope on franchising in Australia and, according to Badminton, things are looking good. He said the group had recently confirmed two new franchise conversions from IGA, one of whom was the winner of IGA's best store award last year. “ Nick Badminton, CEO Pick ‘n Pay, AGM June 2007

− “The franchisees have access to extensive back-office systems, including inventory and retail management the aim is to help franchisees overheads and improve profitability.” Aubrey Zelinsky, MD Franklins

− “In Australia there are six franchised stores within Franklins. The plan is to have 10 operating by February next year, and add 10 franchises a year.” Aubrey Zelinsky, MD Franklins

41 FRANKLINS – AUSTRALIA Franklins has been struggling in the competitive Australian market

− “Mr Zelinski said that when the major grocery chains introduced the petrol-shopper dockets, it immediately undercut their sales by around 13 per cent. Franklins, which now operates 80 stores around NSW, had only recently obtained the critical mass to begin operating at a profit.” The Australian, April 1, 2008

− “Mr Zelinski said the way Woolworths and Coles exercised their market muscle made it difficult for other businesses to break into the market. He said that at one point his company had considered selling its Australian business as it struggled to make a profit.” The Australian, April 2, 2008

− "In order to survive, Franklins established its own warehouse and distribution capabilities in 2005 and terminated its relationship with Metcash…It became apparent to Franklins that various discounts and allowances that should have been passed on to Franklins by Metcash were in fact not passed on to Franklins.” The Australian, April 2, 2008

− “Results [Feb 2008] were helped by a $7.9m profit on the sale of two stores, but the second half generated a profit of $1.2m without the benefit of one-off items…The three-year, $50m store refurbishment programme begun in 2007 had resulted in sales growth of over 15 percent at the upgraded stores…We've now reached critical mass in our business, and we're starting to see the benefits of investing in our own distribution and supply chain.” Aubrey Zelinsky, MD, Franklins, Results presentation release

42 AUSTRALIAN INDEPENDENT SECTOR

43 KEY WHOLESALE BANNER GROUPS There are four key wholesale supermarket banner group entities supplying independent supermarkets in Australia Structure of Australian independent wholesale banner group supermarkets (2007/08)

Group # of stores Geography Banners Wholesaler Notes/comments 1,288 Metcash Foodland only in South Australia

707 Metcash Created in 2004 through merger of Foodworks and Australian United Retailers (AUR)

232 Australian Formerly Australian Independent Retail Wholesale (AIW) owned by Logistics Woolworths; licenses SPAR IP from global parent 107 Statewide SIR is 50% owned by Woolworths Independent Wholesalers

44 45 METCASH CORPORATE STRUCTURE Metcash is a wholesaler with grocery distribution, cash and carry and liquor distribution activities Metcash Corporate Structure (A$;b; FY08)

Metcash Ltd

Sales: $10.1B

Metcash Trading

Sales: $10.1B

Australia Liquor Food Distribution Marketers Sales: $2.5B Sales: $7.6B

Campbells IGA Distribution Wholesale Sales: $1.6 Sales: $6.1

Campbells Campbells Campbells Foodlink* IGA/SupaIGA/ Other Cash & Carry Wholesale Conv. Store IGA Xpress** independents*** Distribution Distribution Stores: 1,288 Stores: 1,300+ Stores: 22 DC’s: 18 DC’s: 8 DC: 1

* Specialist foodservice operation ** IGA stores are all independently owned and operated under the IGA banner; *** Other independents includes 700 Overview 46 Foodworks/AUR stores (detailed in their own section); Source: Corporate Annual Reports METCASH STORE FORMATS Metcash’s aim is to be “the champion of the independent retailer” in both grocery and liquor

Metcash store formats (2008)

Format Business Locations # of units # of lines # of customers Grocery NSW - 717 IGA 21,000 skus 2,500 retail wholesale VIC - 418 SupaIGA1,3 customers QLD - 153 Xpress (independent SA - 6 DC’s store ownership) WA

Cash & Carry NSW -18 country DC’s 12,000 skus 80,000+ business VIC -22 metropolitan CCC customers (company owned QLD stores stores) SA -120 Lucky 7 c-stores WA -400 7 Eleven stores NT -4 stockless DC’s +4 CSD DC’s Liquor wholesale Australia - IBA2 14,500 hotels, NZ 467 = Cellarbrations liquor stores, etc. (independent 595 = ‘Bottle-O’ store ownership) 465 = IGA Plus Liquor 7,400 electronic 890 = Liquor Force ordering 2,417 = Total stores

-Liquor Alliance 410 ‘Thirsty camel’ hotels - 18 DC’s

1. Includes Fisher IGA stores in Victoria only (1 store in SA) 2. Independent Brands Australia; 3. Includes 102 Foodland IGA storesSource: Company annual report and website 47 METCASH STORES Metcash have distribution across all major states

Metcash independent retailer stores by region (2008)

IGA bannered stores (1,288)

Other independents (1,300)

291

400 213

200 215

100 244

300

325

300 TOTAL = 2,588

Source: various Metcash reports and documents 48 METCASH SALES All three divisions; grocery distribution, liquor wholesale and cash and carry are delivering on sales growth

Metcash sales by division CAGR (A$m; 1997-2008) (97-08) $10,116 6.8% $9,695 $1,551 Cash & Carry 8.3% (02-08) $1,417 $8,214

$1,147 $7,174 $7,012 $2,499 Liquor 7.3% (00-08) $6,696 $2,453 $1,005 $990 $5,768 $947 $5,458 $2,408 $5,148 $964 $4,887 $2,208 $4,556 $481 $2,158 $1,735 $2,016 Retail $1,373 $1,244 $3,372 $1,418 $1,830

$745 $5,824 $6,066 Grocery 5.1% $4,659 $3,723 $3,732 $3,961 $3,864 $3,514 $3,323 $3,249 $2,975 $2,627

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

1999 = 10 months; Source: Company annual report; Coriolis analysis 49 METCASH PROFIT INCREASING Metcash has shown steady profit growth

Metcash trading profit (EBITA; A$m; 1997-2008) CAGR (98-08) $341.3 24.4% $309.9

$223.7 $183.8 $194.5 $152.7 $117.5 $91.0 $74.6 $48.8* $34.8

-$226.2

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

* 10 months; Source: Company statistics and annual report; Coriolis analysis 50 METCASH TRADING SHARE PRICE* After a decline during the late 90s, Metcash then substantially increased its share value

Metcash Trading share price (AU:MTT; A$; 04/1994-04/2008)

CAGR (01-04/2005) +70% CAGR 4 years CAGR (06/1994-2001) (04/2005- -17% 04/2008) 7 years +11% 3 years

* Changed from Metcash Trading to Metcash Ltd in April 2005 ; Source:: BigCharts.com 51 METCASH – ACQUISITIONS Metcash’s acquisitions focus on gaining distribution in grocery, liquor and confectionery; all retail stores acquired are sold to independent retailers Metcash Acquisitions (Significant; A$m; 2000-2007)

Acquisition Date Category Acquisition # of Stores Sales Price Location 2006 Liquor Magees Liquor Wholesalers North QLD Jan 2006 Supermarket retailer 26% Dramet Pty – supermarkets QLD/SA 2006 Liquor Giants Group (adding to “Cellarbrations”) 100 QLD

Nov 2005 Grocery wholesaler/ FAL wholesale business, retail stores (Action)* 61 ~$750 $1,007.3m WA retailer and food service business Apr 2005 Grocery wholesaler Metoz Holdings Ltd (former owner) – capital $1,097.5m reorganisation Apr 2005 Confectionery wholesaler CD’s Confectionery Wholesalers $6.3m WA

Apr 2005 Liquor Novocastrian (ALM) $7.7m NSW Jul 2004 Grocery wholesaler Independent Grocers, Alice Springs $6.3m NT Jul 2003 Carringtons $9.0m Aug 2003 Confectionery wholesaler Amalgamated Confectionery $12.7 QLD

Mar 2003 Grocery wholesaler Independent Grocers, Darwin $8.9m NT Nov 2002 Liquor wholesaler Creedys Group $3.1m QLD Jun 2002 Liquor wholesaler Allied Liquor $2.7m NZ Jun 2002 Confectionery wholesaler Jorgensen Confectionery $2.5m NSW

Aug 2000 Wholesaler Top End Wholesalers $3.5m

* Retail (Action) stores have been sold to independent retailers; Source: Corporate website, Annual reports, select articles; Coriolis analysis 52 METCASH – ACHIEVEMENTS Metcash’s most recent significant achievement was its reorganisation and purchasing and assimilating the majority of FAL’s Australian operations

− Seeking bolt-on opportunities in wholesale pharmacy – looking at JV with Sigma and Metcash

− 2008 Campbells introduced new banner Lucky 7, branded 120 c-stores – will convert many of current 147 stores to brand (aim for 400 by 2010)

− 2007 fully integrated and converted all FAL businesses acquired in 2005 from Action, retained 12 as SupaIGA; addional Dewsons, and Supa Valu also converted to IGA or SupaIGA

− Acquisition of the Giants group adding additional 100 stores to the “Cellarbrations” banner

− 2005 Metcash acquired its former parent company Metoz Holdings in a capital reorganisation and Metcash Trading is now owned by holding company Metcash Ltd and is fully Australian owned public company

− In November 2005 purchased all assets of FAL in Australia; 60 Action stores (excluding 19 Action stores and 3 Action sites acquired by Woolworths, along with the FAL NZ operations)

Source: Metcash corporate website 53 METCASH – GROWTH STRATEGY- IGA IGA plans to strengthen and grow its independent stores

− Continue to grow ‘like for like’ retail sales growth in real terms

− Develop 60 new stores, complete 63 extensions and 69 store refurbishments during the 2008 financial year

− Double fresh sales through IGA>F (IGA Fresh), geographically expand the program and increase ‘grower direct’ purchases

− Continue to develop the community image of the IGA brand and the strong IGA ‘Family/Village/Tribe’ culture

Source: Metcash corporate website, annual reports 54 METCASH – GROWTH STRATEGY- ALM ALM continue to gain scale and efficiencies in the liquor business

− Continue to reduce the cost of doing business through warehouse productivity gains, warehouse rationalisation and increased customer use of electronic ordering and invoicing

− Growth of Liquor Alliance and rebranding of pubs under the new ‘Thirsty Camel’ banner – brand consolidation

− Combining Liquor Alliance and IBA to be the largest customer in Australia for the top five suppliers

Source: Metcash corporate website, annual reports 55 METCASH – GROWTH STRATEGY– CAMPBELLS WHOLESALE Metcash has successfully restructured its business to focus on its key customer segments

− Providing a total supply chain solution to the modern petrol and convenience channel

− Growth of Independent convenience sector through the ‘Lucky 7’ convenience banner

− Expanding the Foodservice offer

− Continued growth in confectionery markets

− Continued sales growth through the Campbells web portal

Source: Metcash corporate website, annual reports 56 57 AUSTRALIAN UNITED RFTAILERS STRUCTURE AUR trading as FoodWorks is the second largest independent banner group in Australia

AUR Structure (A$;b; 2008)

AUR Stores: 707 Sales: $1.4B

AUR/other FoodWorks

Stores: 300 Stores: 407

Source:: Select articles; corporate website; corporate interviews Overview 58 FOODWORKS STORES BY STATE FoodWorks is now a national brand with over 700 stores

FoodWorks supermarkets by region (2008)

Foodworks branded (407)

Non-branded stores (300) 5 145

181 20

8 4

80

16

150

TOTAL = 707 89

8

1

Source:: Corporate report 59 FOODWORKS SALES GROWTH FoodWorks have shown steady sales growth over the past three years

FoodWorks sales (units actual; FY2006-2008)

CAGR (06-08) $1,600 15.5%

$1,400

$1,200

2006 2007 2008

Source: FoodWorks website; select articles 60 FOODWORKS STORE GROWTH FoodWorks strategy is to rebrand many stores to the FoodWorks brand

FoodWorks store numbers (units actual; 2005-2008)

Actual (05-08)

707 225

300 unbranded

703 703

482 407 Foodworks branded

2005 2006 2007 2008

Note: 2005-2007 stores combine, Foodwise, AUR stores and other non branded stores; Source: FoodWorks website; select articles, interviews 61 FOODWORKS – EVENTS FoodWorks is an independent supermarket group supplied by Metcash

− Created from the Merger of the FoodWorks Supermarket Group Ltd (FSG) and Australian United Retailers (AUR) in November 2004 in response to rapid industry consolidation and increased competition, Australian United Retailers Limited (AURL) is an independent retail supermarket group trading under the "FoodWorks" brand.

− Foundation members of FoodWorks were originally AUR, Foodstore, FoodWorks, Buy Rite, Cut Price, 727, Rite-Way, Food-Rite, Tuckerbag and Food-Way proprietors.

− Spent A$5.5m rebranding AUR stores to FoodWorks banner

Source: FoodWorks website 62 FOODWORKS – ACHIEVEMENTS FoodWorks is focused on continued growth

− National Coverage - Expansion into SA is a significant event in the growth of the FoodWorks brand nationally, allowing the group to officially operate in all eight Australian states and territories, providing a genuinely formidable opponent to the major chains and follows on from last year's announcement of the establishment of 23 supermarkets in Western Australia. FoodWorks National Business Development Manager Simon Thompson said that “In many ways entering the South Australian market was the final remaining frontier”.

− New Concept - The launch of their first “Perfect Store” concept store in Bradbury, NSW in December, with another 20 stores secured to open over the next three months.

− “With FoodWorks’ aiming to double the size of their retail business over the next three years, having identified over 900 potential suburbs nationally where new stores could be located, and now having commenced launching their “Perfect Store” concept supermarkets, the Group is no longer prepared to play second fiddle in the competitive, dynamic retail marketplace.” Press release, Dec 2007

− Private Label - The significant extension of their private label offering now in full swing with around 250 new category specific product lines in the final design and branding phase for launch in-store soon

Source: FoodWorks website 63 Overview 64 SPAR STRUCTURE Spar consists of two main banner groups Spar and 5 Star

SPAR Structure (A$;b; 05/2008)

SPAR Australia

Stores: 232 Sales: ~$130m1

SPAR 5 Star Affiliate stores

Stores: 69 Stores: 73 Stores: 90

1. Sales are 2007 Estimate based on 55% increase since 2006 from E55.8m ; Source:: Select articles; corporate website Overview 65 SPAR STORE FORMATS SPAR operates two banners SPAR and 5 Star in addition to supplying affiliated stores

SPARS store formats (2007)

Format # of stores Conventional 29 supermarket

Discount 37 supermarket

Convenience 40

36

Affiliates 90

Source: Company reports 66 SPAR STORES BY STATE The supermarkets are located primarily in and New South Wales

SPAR supermarkets by region (2008)

SPAR

5 Star 4 Affiliates 4 19

19

52

10 34 14

TOTAL = 156

Note: Excludes the Convenience formats of Spar Express and Star Handimarkets; Source:: Corporate Reports 67 SPAR TIME LINE SPAR developed out of the Woolworths former AIW wholesaling business

− United Star Supermarkets formed Australian Retail Logistix Limited when it began operating the former AIW warehouse

− SPAR Australia Limited was established in December 2002, then under the name Australian Retail Logistix Limited.

− Set up by independent retailers to acquire and operate the former Woolworths owned AIW distribution business in Brisbane supplying 240 5 Star stores, 21 SPAR stores and several unbannered stores).

− SPAR Australia Limited is the Licensor holder for SPAR in the Australian region.

− In 2006 Amalgamated with United Star Supermarkets Limited (USSL) and many stores rebranded to SPAR

− Spar brand expanded into Sunshine Coast in Feb 2007

− In May 2007 renewed a 15 year franchise deal with SPAR International

− Operates a large 40,000 sq mtrs DC

Source: Corporate website 68 SPAR STRATEGY SPAR is strengthening its brand and position as an independent in Australia

− Developed a three point plan 1. Integration of United Star Supermarkets Limited 2. Strong focus on providing a world class retail offer (growth of SPAR brand) 3. The introduction of a new warehouse and cost management regime

− “Plans to grow the chain’s national presence through an expanded network of distribution centres was proceeding. The proposed network would allow Spar to offer warehousing support to all independent retailers around Australia.” Leigh Carson, Press Article, Oct 2007

− ”We employed a property development manager and we have developed new store format plans for 500sqm, 1000sqm and 1500sqm formats.” Leigh Carson, CEO SPAR, Oct 2007

− “Mr Wasmuht said that with SPAR’s growing presence in Asia Pacific, the company would soon be able to maximise the synergies and economies of scale associated with being a major player in the region. For example, the Australian market will definitely benefit from our new buying group based in Shanghai, China. It will provide a range of products ideally suited to this market and ultimately it will make our retail offer more competitive. Given our independent structure, we are ideally suited to clearly segment our offer according to each store’s local social-economics and demographics.” Tobias Wasmuht, MD China, Spar Feb 2008

Source: Corporate website 69 70 FOODSTUFFS CORPORATE STRUCTURE Foodstuffs is made up of three legally separate supermarket owner-operator owned cooperatives

Foodstuffs Corporate Structure (NZ$;b; FY07)

Foodstuffs New Zealand Sales: $7.2B

Auckland Wellington South Island

Sales: $3.2B Sales: $2.0B Sales: $2.0B

New World New World New World

Stores: 47 Stores: 45 Stores: 39

Pak’N Save Pak’N Save Pak’N Save

Stores: 20 Stores: 14 Stores: 9

Four Square Write Price Four Square

Stores: 104 Stores: 3 Stores: 84

Four Square

Stores: 91

Source: Corporate Annual Reports; Corporate Websites; Coriolis analysis 71 FOODSTUFFS STORES Foodstuffs operates supermarkets throughout New Zealand

Foodstuffs food stores by region (Dec 2007)

131 New World

47 43 PAK ’n SAVE

20 104 3 Write Price

451 Four Square/On the Spot

45 3

14 91

39

9 256

TOTAL = 628

Source: Corporate website 72 FOODSTUFFS STORE FORMATS Foodstuffs operates the mid-market New World banner, the price driven PAK’nSAVE and Write Price banners and the Four Square, On the Spot convenience banner Foodstuffs food and liquor store formats (2007)

Format # of stores Conventional 131 supermarket

Warehouse supermarket 43

Discount supermarket 3

Convenience store 279

172

Liquor store Henrys Beer, Wine and Spirits 10 Duffy and Finns 2

Cash & Carry wholesale 22

Source: Company annual report and website 73 FOODSTUFFS SUPERMARKET GROWTH PAK’nSAVE has driven unit growth over the last 15 years

Foodstuffs store number growth (actual units; 1992-2007) Change (92-07)

5 3 Write Price -10 7 7 6 4 8 8 9 8 8 13 10 10 9 8 38 43 PAK’nSAVE +25 35 35 36 38 26 31 32 33 18 20 21 27 29 30

128 128 128 130 133 129 131 New World +3 126 126 126 122 120 121 123 123 124

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Company annual reports; Coriolis analysis 74 FOODSTUFFS GROUP SALES Foodstuffs collectively represent retail supermarket sales of over NZ$6.9 billion

Foodstuffs Group, Wholesale and Retail Sales (NZ$;b; 2007)

Market Share Based Estimated

Wholesale & Wholesale Sales Retail Subsidary to Members Supermarket Cooperative Sales Sales1

Auckland $3.2b $2.4b $3.0b

Wellington $2.0b $1.6b $1.9b

South Island $2.0b $1.8b $1.8b

Group $7.2b $4.9b 6.9b

1. Does not include Four Square or On The Spot convenience store sales; stores buy significant volumes direct so the difference between these two numbers does 75 not necessarily represent margin; Source: Annual Reports; Coriolis Research FOODSTUFFS SALES All three Foodstuffs groups have shown consistent organic sales growth

Foodstuffs consolidated sales by region CAGR (NZ$m; 1999-2007) 99-07 $7,212 7.5% $6,757 $6,365 South $6,085 $1,992 6.7% $5,767 Island $1,867 • Includes: $5,363 $1,774 $1,706 • Wholesale sales to member $4,839 $1,607 supermarkets & grocers $4,400 $1,473 • 22 Cash & Carry outlets $4,052 $1,326 $1,979 Wellington 7.8% • Wholesale FMCG sales to $1,832 petrol chains $1,243 $1,717 $1,649 $1,185 $1,564 • Bell Tea (NZ #1 tea brand) $1,438 • Dairy and cheese business $1,324 (Wellington) $1,202 $1,083 • Other manufacturing • Excludes other income $3,058 $3,241 Auckland 7.7% $2,733 $2,891 • Not a measure of retail sales $2,452 $2,596 $2,189 $1,784 $1,955

1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Company annual reports; Coriolis analysis 76 FOODSTUFFS EARNINGS All three Foodstuffs groups have grown profits slower than sales, though too much should not be read into this, given the cooperative structure Foodstuffs consolidated earnings by region (EBT; NZ$m; 1999-2007)

$379

CAGR (99-07) $116 $296 6.2% $277 $278 $175 $272 $166

$152 South $138 $91 $107 $113 Island 11.0% $85 $114 $123 $70 $163

$60 $56 $56 $67 3.2% $46 $64 $60 $53 Wellington

$41

$111 $119 $106 $104 $100 $98 $100 $105 Auckland 3.2% $82

1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Company annual reports; Coriolis analysis 77 FOODSTUFFS – ACHIEVEMENTS Foodstuffs are extending and entering new retail concepts and strengthening their buying power

− Formed two new retail liquor store brands; Duffy and Finns and Henry’s Beer, Wine and Spirits

− Acquired of a 10% stake in The Warehouse Group Limited

− Added to fuel offer with the joint venture agreement with BP allowing selected supermarket sites to sell fuel. Twenty five fuel sites now in operation

− A national trans-Tasman joint venture involving Foodstuffs Own Brands Limited and Australian Metcash Trading Limited, was put in place during the year with the joint venture company, Metfoods Pty Limited, to develop strategic procurement of private label product. To date Metfoods has provided significant savings for both joint venture partners.

− During 2007 Foodstuffs Wellington formed AFL, a freight and transport operation, operating from the new temperature controlled distribution facility opened. Foodstuffs Wellington’s distribution fleet increased from 37 to 94 trucks with the AFL initiative.

− Opened new fresh distribution centre in Auckland

− In February 2007, Foodstuffs South Island commissioned a new 13,000m2, high stud ambient temperature distribution centre at Hornby in adjacent to their existing Chilled and Frozen Hornby Distribution Centre

Source: Corporate website 78