1Madrid, October 29, 2003

Results of anempirical studyamong theleading FMCGmanufacturers

International Key AccountManagement –Status and perspectives

2

A. Introduction – I-KAM is one of the hottest topics in the FMCG industry1. Background – Increasing pressure on manufacturers to respond to

retailers' international sourcing demands2. Basis of the study – Strong participation among world's leading FMCG

manufacturersB. Key results of the study – A champions league is emerging

1. Strategic focus – Best practice players focus on opportunities and haveclearly defined international sales strategies

2. Organizational set-up – Best practice players have powerful dedicatedI-KAM teams

C. Outlook – The game is kicked-off, are you prepared?

Contents

33

A.Introduction –I-KAM is one of the hottest topicsin the FMCG industry

44

A.1Background – Increasing pressure onmanufacturers to respond to retailers'international sourcing demands

5

Leading retailers set the rules of the game – sometimesslower than announced, sometimes surprisingly quick

International sourcing developments of retailers (examples)

> Announcement to implement broad cross-country annual negotiationswithin the 4 country clusters led by "Lead buyers"

> 2003, reduction to joint German-Austrian negotiation pilot

> Own distribution of German goods from Ehingen tointernational subsidiaries

> Not even information to suppliers

6

Schlecker is currently the most aggressive player ininternational buying

International sourcing developments of retailers (example Schlecker)

• bought in Germany

• sold in Spain with solelyGerman labeling!

German Henkel product "Sidol":

77

A.2Basis of the study –Strong participation among world's leadingFMCG manufacturers

8

Response rate

The high survey response rate confirms that "I-KAM"is a hot topic in Europe

Outline of the study

TARGETGROUP

> The world's 60 leading consumer goodsmanufacturers

> Interviewees' location: European HQ48%

KEYQUESTIONS

> What do international retailers expect from their suppliers?> What can suppliers expect from international retailers in return?> How can suppliers manage international retailers most efficiently?

STUDYMETHOD AND

PERIOD

> 28 multiple choice questions> Targeted experts interviews before and after written survey> May to August 2003

9

European and US-American companies are both stronglyrepresented in the survey

Participating companies – Origin and regional sales split

GLOBAL HEADQUARTERS OFRESPONDENTS BY REGION [%]

Europe

Rest ofworld

USA

38

10

33

5

10

4

14

6

66

6

7

1

North America

Central/South America

Western Europe

Eastern Europe

Asia/Australia

Africa/rest of world

TOTAL AVERAGE

24

8

52

5

8

3

Average for US companies Average for European companies

54

4

42

REGIONAL SPLIT OF TOTAL SALES [%]

1010

B.

Key results of the study –A champions league

is emerging

1111

B.1

Strategic focus –best practice players

Focus on opportunitiesand have clearly defined

international salesstrategies

12

Growth, improved competitive position and bestpractices transfer are seen as the major opportunities

Perceived opportunities of I-KAMNotimportant

Somewhatimportant Important

Veryimportant

2.4

2.3

2.2

1.8

1.4

1.4

1.3

Improvement of account profitability due tosales increases

Overall sales and market share growth withretailerImprovement of competitive position withretailer (e.g. preferred supplier status)Improvement of business with retailer throughinternational best practice transfer

Retailer support in entering new markets

Improvement of account profitability due torealization of cost synergies with retailerHarmonization of international pricesand terms

13

All companies most fear the reduction of accountprofitability due to I-KAM implementation

Perceived risks of I-KAM

Reduction of account profitability due toadditional terms and conditionsReduction of account profitability due toreduction of net prices

Notimportant

Somewhatimportant Important

Veryimportant

Reduction of account profitability due toretailer volume bundlingIncrease in costs due to growingorganizational complexity

Increase in costs due to necessaryintroduction of new processes and systems

Neglect of local market and business needs

2.3

2.1

1.4

1.1

1.0

0.9

14

7065

5550

4535

302120

10

Retailers mostly aim for additional terms – advancedretailers ask more often for collaboration support

International sales agreements

% OF MANUFACTURERS WITHSIGNED AGREEMENTS

MetroCarrefourAuchanAholdIntermarché

Casino

Wal*Mart/Asda

RETAILER FORM OF MANUFACTURER INVESTMENT [%]

Schlecker

Tesco

Leclerc 10080

10056

5982

5769

5755

Additional terms Int. collaboration projects

20

4441

1843

314345

15

Generally, international sales agreements implysomething in return – and if it is just "peace"

International sales agreements –Types/shares of services offered in return [% of responses1)]

1) Multiple answers possible2) "peace", data exchange, sharing best practice, volume targets

Nothing

13

25

25

30Additional promotions

Additional shelfspace/displays

Internationalcollaboration projects

Other2)

4

96

Development in recent years

Nothing

16

Survey participants rate the counter-performancesto international sales agreements extremely low

International sales agreements – Rating of retailers' services offered in return

Casino1

2 Metro

Carrefour

4 Tesco

Auchan

8 Schlecker

Wal*Mart/Asda6

Ahold

RETAILER

Intermarché

7

9

Poor Satisfactory GoodRANK1.0

0.9

0.9

0.8

0.8

0.6

0.5

0.3

0.2

17

Only five retailers are broadly managed asglobal customers

7958 56

25

13

13

42

8

8 13 218

22 12 13

44

138

5836

13

33

48

26

254

21946

8

17

Account management scope – Top international customers[% of responses]

100% 100% 100% 100% 100% 100% 100% 100%

Carre-four

Metro Wal*Mart/Asda

Ahold Tesco Auchan Inter-marché

CasinoScore1)

1) Weighted average of responses: 1-national, 2-across several countries, 3-across Europe, 4-global

3.6 3.3 3.1 3.1 3.0 2.8 2.4 2.1

National account

Across EuropeGlobal

Across several countries

18

The "second league" of retailers is generally onlymanaged nationally or across several countries

2013

26

14 12

53 64 61 65 5980 71

84 91 86 88

7 4 54 451222

1420

155

3324

23

16

Account management scope – National customers[% of responses]

100% 100% 100% 100% 100% 100% 100% 100%

National account

Across EuropeGlobal

Score1)

1) Weighted average of responses: 1-national, 2-across several countries, 3-across Europe, 4-global

100%100%100%

1.8 1.5 1.5 1.5 1.3 1.1 1.1 1.11.21.31.6Aldi Lidl &

SchwarzSchle-cker

Kruidi-vat

Rewe Leclerc Del-haize

dm Tengel-mann

Edeka/AVA

Boots

Across several countries

19

Company growth targets

Three quarters of the respondents have an detailedoverall sales strategy

Existence and contents of international overall sales strategy[% of responses1)]

1) Multiple answers possible

EXISTENCE CONTENTS

Sales targets

International collaboration projectsAchieving preferred supplier statuswith all I-KAsPromoting innovative initiatives at the I-KAAchieving uniform net pricing/terms/allowances structureAllocating staff resources

Allocating financial resources

72

28

YES

NO

56

50

44

33

13

25

25

301

3

4

5

2

6

7

8

20

Limited scope of clearly defined sales objectives –Planning account profitability is a major goal

Parameters of internal International Key Account planning[% of responses]

48

28

12

20

4

28

0

16

16

28

40

48

44

52

56

68

68

721

2

3

4

5

6

7

8

9

Collaboration projects

Overall sales objectives

Sales objectives per countryHigh-level qualitative account targets(e.g. preferred supplier status)New product launches

Supply chain related objectives

Number of promotions

Account profitability per country

Overall account profitability

TODAY PLANNED

2121

B.2

Organizational set-up –Best practice players

have powerful dedicatedI-KAM teams

22

9

73

10 823

46

238

3-6 7-10 11-14 15-18

The majority of companies focuses on seven to tenretailers as international accounts

Number of internationally managed accounts [% of responses]

Average for European companiesAverage for US companies

23

Retailer's international presence innumerous markets

Top I-KA definition criteria are international executioncapability, future sales potential and broad presence

Retailer's ability to execute inter-national agreements with supplier

Future sales potential with retailer

Your group's actual sales with the retailerExplicit request for internationalcoordination/cross-border skills by retailerFuture profit potential with retailer

Retailer's sales in your category

Top criteria for defining international key accounts

Retailer's total sales

Notimportant

Somewhatimportant Important

Veryimportant

2.4

2.3

2.2

2.0

2.0

1.7

1.7

1.7

1

2

3

4

6

24

35

35

30

Almost 2/3 of participants have a exclusively dedicatedI-KAM resources at least for their major accounts

Allocation of I-KAMs to accounts [% of responses]

DEDICATED I-KAMInternational Management of the I-KA ona full-time basis without additionalnational responsibility for the KA

LEAD COUNTRY I-KAMInternational Management of the I-KAon a part-time basis with additionalnational responsibility for the KA

HYBRID I-KAMMixture of Dedicated and Lead-countryI-KAM model

Retailers usually managed withdedicated I-KAMs in hybrid models:

1

2

3

25

A central I-KAM support department is particularly impor-tant for lead-country I-KAM, but also for dedicated I-KAM

Support functions for I-KAM [% of responses]

22

44

63

DEDICATED I-KAM1

LEAD COUNTRY I-KAM2

HYBRID I-KAM3

EXISTENCE OF I-KAMTEAMS

89

78

63

EXISTENCE OF A CENTRALI-KAM SUPPORT DEPARTMENT

26

A central I-KAM support team has an averageheadcount of 10 managers

Functions allocated to central I-KAM support departments[% of responses1)]

1) Multiple answers possible

BACKUP

20

30

40

40

45

55

55

65

90

Avg. headcount/function if applicable

1.6

2.3

1.4

1.3

6.4

2.5

1.3

1.3

Head of I-KAM

International Sales Coordinator

Int. Trade Terms + Pricing Manager

Sales Controller

International Account Manager

Category Manager

IT support

International marketing support

Logistics support 2.5

Avg. headcount/department

1

2

3

4

5

6

7

8

9

10.2

27

The head of the central I-KAM department mostly reportsto the Global Sales Director

Direct reporting lines to superior functions by organization model –Head of I-KAM [% of responses1)]

1) Multiple answers possible2) Management hierarchy level of Head of I-KAM with regard to Global CEO

REPORTINGLINES

0

33

22

44

22

11

22

44

0

14

14

711

2

3

4

Global Sales Director

Global CEO

Regional CEO

Regional Sales Directorof relevant division

Dedicated I-KAMs Lead-country I-KAMs Hybrid I-KAMs

52

20

20

8

HIERARCHY LEVELOF HEAD OF KAM2)

3rd

2nd

4th

5th

AVG. OF ALLCOMPANIES

28

Overall, I-KAMs mainly report to the head of I-KAM, lead-country I-KAMs mainly to their national SD or the CEO

Direct reporting lines to superior functions by organization model –I-KAMs [% of responses1)]REPORTINGLINES

HIERARCHY LEVELOF HEAD OF KAM2)

AVG. OF ALLCOMPANIES

0

00

0

18

9

9

18

45

7

7

21

36

7

2113

27

13

13

20

13

1 Head of I-KAM/internationalsales department 4th

2 Global Sales Director 3rd

3 National Sales Director inthe home country of KA 7th

4 National CEO in homecountry of KA 5th

5 Regional Sales Director ofrelevant division 4th

6 Global CEO 2nd

7 National head of KAM inhome country of KA 8th

1) Multiple answers possible2) Management hierarchy level of Head of I-KAM with regard to Global CEO

Dedicated I-KAMs Lead-country I-KAMs Hybrid I-KAMs

40

28

32

24

20

12

4

29

Monitoring the overall plan fulfillment and developingthe account strategy is mostly in the hands of the I-KAM

Source: Roland Berger I-KAM study, 2003

33

33

33

63

46

58 42

50

29

54

50

42

Continuously monitoring overall planfulfillment

Elements of customer management process for which the I-KAM is responsible[% of responses1)]

Developing the international customer strategy

Consolidating local objectives (bottom-up) 92%

96%

100%

True for all I-KAMs True for selected I-KAMs1) Multiple answers possible

Planning detailed objectives within thecontext of an international action plan

Monitoring reorganization of specific activitiesof the action plan on the national levelPlanning detailed targets on the basis of thecustomer strategy (top-down)

88%

83%

75%

1

2

3

4

5

6

30

On an international level, I-KAMs have a higher impact,but they still rather set guidelines than issue directives

Business influence of I-KAMs – International [% of responses]

8

25

18

24

38

17

27

33

17

12

32

19

12

21

14

14

25

25

9

10

Receives information Makes suggestions Sets guidelines Approves Issues directives

Overall core1)

2.1

2.0

1.7

1.5

1) Weighted average with 0 � "receives information" and 4 � "issues directives"

International collaboration projects inseveral countries1

National sales targets for internationalsales agreements2

National net pricing corridors3

International marketing activities inseveral countries4

31

On a national level, the I-KAMs can exert most influencein collaboration projects and in pricing issues

Business influence of I-KAMs – National [% of responses]

21

4

8

55

45

38

53

55

25

43

40

18

23

43

21

30

29

35

40

4

27

14

21

15

8

9

8

14

5

5

17

9

4

9

5

1.8

1.7

1.6

1.0

0.9

0.9

0.8

0.6

Receives information Makes suggestions Sets guidelines Approves Issues directives1) Weighted average with 0 � "receives information" and 4 � "issues directives"

Overall core1)

Prices1

Collaboration projects2

Terms and allowances3Delivery guidelines(e.g. minimum order size)4

Listing priorities5

Promotions6

New product launches7

Marketing initiatives8

32

Only 8% of companies do not have task/skills profiles andonly 21% do not provide personal development measures

Task/skill profiles and personal development measures [% of responses1)]

1) Multiple answers possible2) Including personal coaching; Category Management; Language skills

No taskor skillprofiles

92

62

8

TASK AND SKILL PROFILES FORI-KAMS

Detailedtask

profiles

Detailedskill

profiles

Notraining

pro-grams

Strategyand ne-gotia-tion

techniques

Projectmanage-

ment

Businessplan-ning

Pre-sen-tationskills

(Inter-cultural)commu-nication

techniques

Other2)

54 50 46 42 382521

TRAINING PROGRAMS FOR I-KAMS

33

Half of the participating companies have introduced anincentive system for I-KAMs – Main KPI is sales

Incentive system for I-KAM [% of responses1)]

Sales to the retailer

1) Multiple answers possible

EXISTENCE OF INCENTIVESYSTEMS FOR I-KAMs

OBJECTIVES ADDRESSED WITHININCENTIVE SYSTEM

Overall plan fulfillment with the retailerNumber of collaboration projectswith retailer

Achievement of defined initiatives

Account profitability

Customer-specific set of goals

Achievement of defined listing targets

72

28

YES

NO

1

3

4

5

2

6

7

73

53

33

33

27

20

13

3434

C.Outlook –The game is kicked-off,are you prepared?

35

A clear champions league in I-KAM is emerging – wheredo you want to play?

Conclusions – Manufacturer classification

Have clearly defined strategies, efficient structures,processes and systems, excellent people's skills

1 CHAMPIONS LEAGUE

Are committed to I-KAM, but show clear deficitsin the implementation

2 SECOND LEAGUE

Are opponent to retailers' international sourcingand seek to build barriers

3 SPOILSPORTS

36

PEOPLE

Four organizational dimensions determinesuccessful I-KAM

STRUCTURES PROCESSESREPORTS &SYSTEMS

Conclusions – Organizational requirements to manufacturers

WHAT DO/WILL THEACCOUNTS REQUIRE?

WHAT CAN/WILL AMANUFACTURER DELIVER TO

MEET REQUIREMENTS?

HOW CAN THE GAPBETWEEN REQUIREMENTS AND

DELIVERABILITY BE CLOSED?

37

> Delivering results.

38

Phone: +44 (207) 2904845Mobile: +44 (77) 4867 4845e-mail: charles_coates@gb.rolandberger.com

CHARLES COATES

Partner

We are at your disposal for further questions anddiscussion at any time

Contacts at Roland Berger Strategy Consultants

Phone: +49 (0) 89-9230-8325Mobile: +49 (0) 160-744-8325e-mail: heiner_olbrich@de.rolandberger.com

DR. HEINER OLBRICH

Associate Partner