Anuga_K_Baumann_15-10-07

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MUC-90007-233-16-01-E.ppt 1

TRENDS IN THE CONVENIENCE MARKET

ANUGA

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MUC-90007-233-16-01-E.ppt 2

A look on the market shows that there is significant growthin different areas of the convenience market

1) German top 100 food service system companies 2003-2006 2) European convenience market 2003-2006

3) German retail convenience product sales 2006-2007

Understand theconsumer

Grow by optimallyfulfilling

consumer needs

Convenience market Main consumer trends

MACRO:• Increasing mobility • Increase in single households

• Rising working hours• Rising purchasing power (CEE)

Food services1):

+5.4% p.a.

Convenience2):

+4.3% p.a.

Retail3):

+4.8% p.a.

MICRO:• Health orientation

• Group orientation• Hybrid consumers• Entertainment orientation

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MUC-90007-233-16-01-E.ppt 3

We segment the convenience market into three main areasof consumption

The convenience market

Retail format dominance

E.g. full service restaurants,

quick service restaurants,hotels, canteens

E.g. gas stations, kiosks,

new hybrid formats

E.g. hypermarkets,

supermarkets, discounters

Food

Service

Convenience

Stores

Retail

Place of consumption

On the spot

On the move

At home

CONVENIENCE MARKET

Product

fresh

pre-packed

fresh

home-made

pre-packed

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MUC-90007-233-16-01-E.ppt 4Source: Roland Berger

At home convenience segment

Convenience market split

Food services:Restaurants,hotels, canteens

Convenienceformats: Gasstations, kiosks

Retailers:Hypers, supers,discounters


On the spot

At home

CONVENIENCE MARKET

Product

fresh

home-made

pre-packed

Format dominance

On the movepre-packed

fresh

9

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Ice

cream

Frozenpizza

Ready-madesalads

Ready-madeantipasti

1) Germany MAT until May 27, 2007

2) Relative sales share in retail >200m2

(discounters, drugstores, beverage stores, C&C)

Source: Roland Berger, GfK

Retailers exploit the potential of the convenience market byincreasingly offering convenience products

Convenience product sales development in retail channels

Frozenfood

Con-venienceproducts

5,230 5,533

6,9046,632

12,43711,862

20061) 20071)

Retail channels [EUR m]

20061) 20071)

5.3 5.5

6.7

12.0

6.9

12.4

Retail share [%]2)

+4.8% p.a.

+5.8%

+4.1%

Examples

.9

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• The Markant group is one of the driversof small store concepts <300 m2, such as – IK – Ihr Kaufmann (78 stores)

– IHRE KETTE (1,105 stores) – Shop 'n go (20 stores) – Um's Eck (193 stores)

Retailers are developing convenience store concepts for corner stores

Trend toward smaller store concepts – Examples

• The REWE Group has been engaged inthe Mini-Markt franchise concept since2004 with 10 stores

• "Rewe 400m² Nahversorger" stores areunder development

750

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http://slidepdf.com/reader/full/anugakbaumann15-10-07 7/21MUC-90007-233-16-01-E.ppt 7Source: ACNielsen

Outlets [number]

The majority of small grocery stores are unfocused and havenot reacted to consumer needs – Thus strong decline in outlets

Development of small grocery channels in Germany

9,1318,530

7,8507,330

3,8403,565

6,825

3,180

4,134

3,360

25,009

38,274

23,547

35,917

21,563

32,978

20,169

30,859

18,744

28,749

2002 2003 2004 2006

<400 <200 <100Grocery

-7.0

-7.0

-6.3

CAGR -6.9%CAGR'02-'06

2005

Sales [EUR m]

5,090 4,7254,330 4,020 3,750

5,2204,610

4,2953,990

3,775

3,720

14,030

3,530

12,865

3,090

11,715

2,910

10,920

2,655

10,180

2002 2003 2004 2006

-8.1

-7.4

-7.8

CAGR -7.7%CAGR'02-'06

2005

750

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Spar express is currently present

in 164 JET gas stations

(Germany) with the goal of

building 225 with an assortmentof 350 food products

Tesco is operating its Express

format on 600 out of 900ExxonMobil gas station forecourts

in the UK

Source: Roland Berger

Retailers are developing convenience store concepts for gasstations

Convenience store concept for gas stations – Examples

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Food services:Restaurants,

hotels, canteens



On the spot convenience formats



On the spot

At home

CONVENIENCE MARKET

Product

fresh

home-made

pre-packed

Format dominance

On the movepre-packed

fresh

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7%

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• The convenience idea is

represented by system

gastronomy in the on-the-spot segment (McDonald's,

Vapiano, etc.)

• Convenience food formatshave increased their market

share constantly over the last

years - +3%-pts.14% 15% 16% 17%

86% 85% 84% 83%

100%

2003

100%

2005

100%

2004

100%

2006

Other formats

Systemgastronomy(conveniencefocus)

7%

Within HoReCa convenience focused system gastro is mostdynamic – Reflection of micro and macro consumer trends

Convenience food formats in HoReCa [%]

Comments

.0

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Revenue development [EUR m]1) Cooperative ventures

2006

162.8

2005

151.3

1) Revenues of PB/Aral through Petit Bistro and Burger King

Source: Roland Berger, Press, Company Info

• Since 2004, Tank & Rast has intensified

its cooperation with quick service brands,

such as Burger King, McDonald's and

Segafredo (more than 180 bakery

counters, 140 pasta bars and close to 160

coffee bars were introduced in 2006)

• Aral/BP currently operates 1240 "Petit

Bistro" and 22 Burger King restaurants

and plans further investments of EUR 220

m in 2007 in Germany

• In China, McDonald's has been

cooperating since 2006 with Sinopec

(operator of gas stations) to build more

than 120 new drive-through restaurants

Food service chains increasingly complement traditionalconvenience formats

Market development of food service chains at gas stations

+7.6% p.a.

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Food services:Restaurants,

hotels, canteens



On the move convenience formats



On the spot

On the move

At home

CONVENIENCE MARKET

Product

fresh

pre-packed

fresh

home-made

pre-packed

Format dominance

50

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Outlets [number]

The market for small and medium convenience stores isstagnating in terms of POS and total sales

Development traditional convenience channels Germany1)

43,850 43,720 43,440 43,280 43,180

4,200

12,580

60,630

4,250

12,000

59,970

4,300

11,500

59,240

4,350

11,250

58,880

4,350

10,950

58,480

2002 2003 2004 2006

Kiosk Seasonal Kiosk Bakery

-3.4

+0.9

-0.4

CAGR'02-'06

2005

Sales [number]

7,780 7,800 7,740 7,780 7,800

620

5,680

14,080

650

5,500

13,950

650

5,350

13,740

660

5,250

13,690

650

5,130

13,580

2002 2003 2004 2006

-8.1

-7.4

-7.8

CAGR'02-'06

2005

1) Without filling station

CAGR -0.9% CAGR -0.9%

9%

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MUC-90007-233-16-01-E.ppt 15

Gas station revenue split1)

CommentsTRENDTotal [EUR] 960,292 819,008

Future source of business

Core business and future battle-

field with traditional retailers

Area of improvement

Source: BTG annual report 2006; Roland Berger

Coffee

Fast foodCar accessoriesFood & other

Print

Beverages

Tobacco

Communication

ServicesCar washGasoline Gasoline

Services

Retailing

Foodservices

1) Average sales in an average gas station

Today's gas stations rely heavily on retail revenues –Still low fast-food and service revenues

Revenue trends in "gas station" convenience channel – 2006

13% 11%

10%9%

7%8%1%1%

100

6%

5%

6%1%

2%

5%

2%

47%

3%

100

6%

5%

0%

48%

4%

West Germany East Germany

44

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MUC-90007-233-16-01-E.ppt 16Source: BTG annual report 2006

CAGR Comments

• Food Service is one of the

fastest growing

categories on-the-move• Share of total petrol station

shop sales increased by

+3.3% p.a. (total sales

level stagnating)

• Future development of

Food Service at petrol

stations expected to bevery positive – trend to

expand sales area for

bistro concepts

844

2006

829

2005

842

4%

2004

Other shop

revenues

5%4%Food

Service3%

840

2003

Food Service sales at petrol stations1) [EUR '000]

But Food Service is one of the strongest growing categoriesat gas stations – +3.3% p.a. since 2003 at stagnating shop

sales

+0.1%

± 0.0%

+3.3%

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Area Success cases Key lesson learned

Transform business

from "traditionalconvenience

format" into a

strong new

convenience format

with clear value

propositiondepending on

location

RETAIL

ON-PREMISE

SERVICES

Strong retail concepts

• In-store theater • Assortment

• Private labels• Loyalty program

Restaurant atmosphere

• Focus on food• Fuel is marginalized• Place to meet

New value services

• Mail services• Banking services• Media services

Source: Foodservice, Datamonitor, Roland Berger

1

2

3

Successful convenience concepts suggest thetransformation of the traditional convenience format

Successful convenience concepts

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MUC-90007-233-16-01-E.ppt 18

Conventional convenience store

• Highly frequented and easilyaccessible locations

• Food and non-food items andlottery services

• Bistro concepts are gaining inweight

7-Eleven

• The original 7-Eleven concept is basedon a 24-7 concept

• Strong portfolio of own brands

• Besides physical products, 7-Elevenoffers a whole range of value addedservices

Source: Datamonitor, Roland Berger

7-Eleven innovates the convenience store format and leadsby offering value added services and own brands

Comparison of conventional convenience store format and 7-Eleven

%

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MUC-90007-233-16-01-E.ppt 19Source: Datamonitor, Handelsblatt, Roland Berger

Conventional EU gas station concept

• The majority of EU gas stations have aconvenience store

• Relatively short length of stay

• Purchase focused on gas andcommoditized snacks and beverages

US gas station convenience concepts

• Gas stations turn into restaurants• The length of stay is increasing

• Food services help companies differentiateand offer higher margins

ServicesGasoline

On-premise &food services

ServicesGasoline

Retailing

On-premise &

food services

Comparison of EU and US gas station concepts

US convenience concepts increase value creation by trans-forming the gas station into a place-to-stay restaurant

atmosphere

6%

84%

Retailing

4%6%

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MUC-90007-233-16-01-E.ppt 20

Will become more important in the future

Emotional product experience

Socialinter-action

Self orien-tation

F

Me We

E

Availability

Flexibility/

Mobility

Quality

Simplicity

• Thrill/Fun• Independence• Variety seeking

• Indulgence• Authenticity

• Physical health• Effort reduction• Relaxation

• Groupharmony

• Anonymity

• Self-portrayal • Non-conformity

• Customization• Smart shopping • Time saving

• Family care

• Social responsibility

• Envir. res-ponsibility


The convenience needs diamond

Additionally to the core convenience needs we see somenew strong consumer expectation

Key take-out

• Eleven needs areexpected to become

more relevant in thefuture

• These needs are spreadacross the needs-diamond quadrants

• The key challenge is tocombine several partlydiametral needs to de-duct consumer relevantinnovation platforms

Functional product experience

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MUC-90007-233-16-01-E.ppt 21

Indulgence

• Enjoyment

• Pleasure

• Longing for specialmoments

• Exclusivity

• Uniqueness

• Experience

Authenticity

• Trust

• Rituals/ Tradition

• Natural and qualitativeIngredients

•Experience andknowledge

• Craftsmanship

• Heritage

• Reliability

Group harmony

• Togetherness

• Belonging

• Clanning

• Sociability

• Social Acceptance• Chill-out with friends

• Bonding

• Ethnic conviction/community

Social responsibility

• Responsibility in personal

ambit, Ethical standards/correctness

• Idealistic caring for others

• Caring for community,Social benefit

• Integrity

• Fair Trade


Effort reduction

• Ready-made solution

• Personal efficiency• Save physical and

mental efforts

• Does not requirelearning of new activity

• Enabling spare timeactivities

Time saving

• Personal efficiency

• Fast service• Ready-made solutions

• On demand service

• Reduced waiting time

Growing future needs are spread across all quadrants of theneed diamond

Most important future convenience consumer needs

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