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CONFIDENTIAL
7 SEPTEMBER 2010
CONSUMER PRODUCTS INDUSTRY
Brazilian Consumer Products Industry
BRAZILIAN CONSUMER PRODUCTS INDUSTRY
Table of Contents
Brazilian Consumer Products Industry
Brazilian Consumer Products Overview and Segments

The Consumer product industry generated a turnover of ~160.0 bn in 2008 s The segments presenting the highest growth were domestic appliances (25%), clothing and shoes (16%), tobacco and beverages (15.5%) and pharmaceutical and cosmetic items (15%) s The consumer products industry can be divided into four groups s Beverages: segregated in beer market, hot drinks market and soft drinks market s Food: includes the retail sales of all food products, both packaged and unpackaged s Household and personal care Household products market consists of air fresheners, dishwashing products, general purpose cleaners, textile washing products, toilet care products and others including bleach, furniture polish, insecticides and scouring products Personal care includes fragrances market and make-up items market s Consumer Electronics: includes audio visual equipment and games console products designed primarily for domestic use
s
BRAZIL CONSUMER MARKET SEGMENTATION (% SHARE, BY VALUE, 2008)

Consumer Electronics 4 .5%
Househuold & Persona Ca l re 8 .7%
Beva ge ra 25.1%
Food 61.8%
Brazilian Consumer Products Market Dynamics

s
An increase in the level of salaries and a reduction in unemployment, the consumer segment in Brazil avoided the effects of a stronger negative GDP brought about by the reduction in exports and foreign direct investment in the country Companies like Unilever reports Brazil as their second largest market, making up 21% of global sales and contribute $6 bn per year for consumer goods Brazil remains one of the top destinations in the global consumer and retail for several important reasons:
s
Due to geographic position, level of industrialization and developed service industry, Brazil is considered a hub to Latin America Argentina is the second most important destination of exports from Brazil after the US, while Chile, Colombia and Mexico located just around the corner Basic consumer products such as personal hygiene products, consumer electronics such as mobile phones and appliances, as well as processed foods such as frozen vegetable chips, are manufactured in Brazil and shipped to neighboring countries Economic development as well as two highly anticipated events, the 2014 World Cup in Brazil and the 2016 Olympic Games Rio de Janeiro, some are to strengthen the infrastructure, telecommunications, retail sectors and services
Brazilian Consumer Products Market Drivers

s
The rise of Brazil retail market Over the years, many Brazilian companies have become more competitive and innovative in most segments with procurement and purchasing becoming more sophisticated, along with the rise of cost and pricing specialists
s
Innovative sales promotions and services are backed by customer surveys and trend analysis and help enhance the typical Brazilian shopping experience
Continued consolidation Many local consumer and retail companies have been turning to mergers and acquisitions (M&A) in order to capture economies of scale, fight off domestic and foreign competition as well as secure leadership positions within their segments
DATE
INDUS TRY
ACQUIRER
TARGET
RESULT
s
Jun 09
Electro nics Retail
Po de Acar (Largest local competitor to Carrefour, WalMart) Po de Acar
70% of Ponto Frio
Makes Po de Acar key segment leader, with 1,200 stores and $15 bn in yearly revenues
Dec 09
Electro nics Retail Electro nics Retail
Casas Bahia
Adds 500+ stores to Po de Acar, which is now present in 337 cities in Brazil, with close to $10 bn (2008) in sales, mainly in furniture and electronics Forms a 480-store player with $2.7 bn in annual sales
May 10
Ricardo Eletro and Insinuante
Merger of Ricardo Eletro and
Insinuant e Jun 10 Drugst ores Electro nics Retail Drogaria So Paulo Ricardo Eletro and Insinuante Drogo
s
Makes Drogaria So Paulo the largest drugstore chain in Brazil, with $1.5 bn in annual sales Adds 170 stores to the Ricardo Eletro and Insinuante group
Jun 10
City Lar
Brazilian Consumer Products Market Drivers

s
Impact of social media trends E-commerce in Brazil has been growing at ~ 30% per year since 2000, reaching close to $5 bn in 2009 even if broadband, at just slightly less than six percent, is not yet a reality for most people. Brazil also has one of the most well developed online banking systems in the world
s
In addition, the country occupies leading positions in terms of number of Internet users (63M or 35% of the population) and there is ample space for further growth
The potential of the unbanked The banking industry took a major leap when second tier Ita acquired Brazils third largest bank, Unibanco, to become the countrys largest bank, overtaking the position of market leader, Bradesco
s
Both groups now plan on targeting the 49% of the population who are unbanked, either through new branches to be opened in remote areas of the country, or through partnerships with popular retail chains, who typically sell on credit and are thus already playing the role of a bank
Greater credit card penetration Credit in Brazil accounts for nearly 40% of gross domestic product, far behind the 70% average of other emerging countries
s s
Over 50% of the population does not have a credit card Bradesco, in partnership with Banco do Brasil, will be launching a credit card in August 2010 that targets lower SES level consumers
Emphasis on being eco-friendly Brazilian consumers are more demanding than their European counterparts in their concerns about the environment and how products are manufactured or disposed of
s
Companies that fail to respect at least the basic environmental rules in the region are at risk of being rejected by a good percentage of local customers
An aging population Store sizes in Brazil have been shrinking, partly due to the aging population, as older shoppers prefer not to carry heavy shopping bags home
BRAZILIAN CONSUMER PRODUCTS INDUSTRY s
Life expectancy in Brazil increased from 69.5 years in 1998 to 72.7 years in 2008 Consumer
Brazilian Beverages Market
AA
Brazilian Beer Market
AA
BRAZILIAN BEER MARKET
Brazilian Beer Market Overview

s
The Brazilian beer market generated total revenues of $16.6 bn in 2008, representing a compound annual growth rate (CAGR) of 2.2% for the period spanning 2004 - 2008
s
In comparison, the US and Mexican markets grew with CAGRs of 1.3% and 2.3%, respectively, over the same period, to reach respective values of $79 bn and $11.7 bn in 2008
Standard lager sales proved the most lucrative for the Canadian beer market in 2008, generating total revenues of $14.4 bn, equivalent to 86.6% of the market's overall value
BRAZIL BEER MARKET VOLUME LITERS (2004-2008)
% Grow th 2.35% 2.30% 2.25% 8,000 6,000 4,000 2,000 0 2004 2005 2006 2007 2008 1.25% 1.20% 1.15% 1.10% 1.05% Lite in million rs 10,000 % Grow th 1.30%
BRAZIL BEER MARKET VALUE (2004-2008)

$in billion 18 15 12 9 6 3 0 2004 2005 2006 2007 2008
2.20% 2.15% 2.10% 2.05% 2.00% 1.95%
AA
Brazilian Beer Market Overview

s
The Brazilian Beverages market comprises of five segments standard lager, premium lager, specialty beer, low/no alcohol and Ales, stouts & bitters Premium lager accounts for a further 6.5% of the market's revenue In comparison, the US accounts for a further 67.1% of the market's value
s
s s
Brazil generates 14.2% of the Americas beer market's revenue

BRAZIL BEER MARKET GEOGRAPHIC SEGMENTATION % SHARE, BY VALUE, 2008
Bra zil 14.2%
BRAZIL BEER MARKET SEGMENTATION % SHARE, BY VALUE, 2008

Low/ no a lcohol 2.3 % Ales, stouts & bitters 1.4%
Specia beer lty 3.1% Premium la ger 6.5%
Mexico 10.0%
Sta rd la nda ger 86.7%
US 67.1%
Ca da na 8.7%
AA
Brazilian Beer Market Future Outlook

s
The market's volume is expected to rise to 9.7 bn liters by the end of 2013, representing a CAGR of 1.1% for the 2008 - 2013 Periods The performance of the market is forecasted to decelerate slightly, with an anticipated CAGR of 2.1% for the five-year period 2008-2013, which is expected to drive the market to a value of $18.4 bn by the end of 2013
s
Comparatively, the US States and Mexican markets will grow with CAGRs of 1% and 2%, respectively, over the same period, to reach respective values of $83 bn and $12.9 bn in 2013
BRAZIL BEER MARKET VOLUME FORECAST LITERS (20082013)
Lite in million rs 9,800 9,700 9,600 9,500 9,400 9,300 9,200 9,100 9,000 8,900 2008 2009 2010 2011 2012 2013 % Grow th 1.14% 1.12% 1.10% 1.08% 1.06% 1.04% 1.02% 1.00% 0.98% 0.96%
BRAZIL BEER MARKET VALUE FORECAST (2008-2013)

$in billion 19.0 18.5 18.0 17.5 17.0 16.5 16.0 15.5 2008 2009 2010 2011 2012 2013 % Grow th 2.12% 2.11% 2.10% 2.09% 2.08% 2.07% 2.06% 2.05% 2.04% 2.03% 2.02%
AA
Brazilian Beer Market Market Forces and Dynamics

s
The Brazilian beer market is concentrated and dominated by large multi-national breweries that concentrate on the production of mass-marketed lager and have access to large distribution channels The Brazilian beer market will be analyzed by considering beer producers as players, with off-trade distributors such as specialist retailers as buyers, since these distribute the largest single share of the markets volume Traditionally, beer makers operated non-vertically-integrated businesses: buying hops from independent producers along with either barley from farmers for processing at the brewerys own malting house, or malted barley from third-party malting Barriers to entry, such as capital outlay on large-scale production plants and the need to establish reliable supplies from multiple third-party hop and barley growers is higher From the point of view of retailers or on-trade businesses, the switching costs are not high, the per-unit volume prices may be higher such as for spirits or wine
AA
FORCES DRIVING COMPETITION IN THE BEER MARKET IN BRAZIL

Buy r Powe e r 5 4 3 De eof Riva gre lry 2 1 0 Supplie Powe r r
Substitute s
Ne Entra w nts
AA
Brazilian Beer Market Key Players

BRAZIL BEER MARKET SHARE% SHARE, BY VALUE, 2008
Other 10%
Cerveja ria Petrpolis 9% Primo Schinca riol 1 3%
Inbev 68%
KEY PLAYERS
COMPANY
FINANCIALS (2009) Revenue Net Income

$1,919.5 $(113.1)
s
DESCRIPTION
Engages in brewing and operates as subsidiary of AB InBev
s Manages s The
a portfolio of nearly 300 brands in brewing
Company owns a 50% share in Grupo Modelo
439.0
NA
s Engages s
The company has network of marketing products made with 11 distribution centers, about 200 dealerships and several sales offices 478.2 NA Engages in manufacturing and distribution of alcoholic drinks
s s
Based in Petropolis, Brazil
10
AB
Brazilian Hot Drinks Market
AB
BRAZILIAN HOT DRINKS MARKET
Brazilian Hot Drinks Market Overview

s
The Brazilian hot drinks market generated total revenues of $4.7 bn in 2008, representing a CAGR of 5% for the period spanning 2004-2008
s
In comparison, the US and Canadian markets grew with CAGRs of 0.5% and 2.3%, respectively, over the same period, to reach respective values of $9.2 bn and $733.5M in 2008
Market consumption volumes increased with a CAGR of 3.9% for the period 2004-2008, to reach a total of 715.1M kilograms in 2008 Coffee sales proved the most lucrative for the Brazilian hot drinks market in 2008, generating total revenues of $4.3 bn, equivalent to 91.6% of the market's overall value
s
In comparison, sales of tea generated revenues of $86.7M in 2008, equating to 1.8% of the market's aggregate revenues
BRAZIL HOT DRINKS MARKET VOLUME LITERS (2004-2008)
Kilogra in million ms 800 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 % Grow th 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% % Grow th 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
BRAZIL HOT DRINKS MARKET VALUE (2004-2008)

$in billion 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008
10
AB
Brazilian Hot Drinks Market Overview

s
Coffee sales proved the most lucrative for the Brazilian hot drinks market, generating 91.6% of the total revenues
s
In comparison, sales of other hot drinks generated 6.6% of the market's value
s s
Brazil generates 27.6% of the Americas hot drinks market's value The US accounts for 53.5% of the regional market's value
BRAZIL HOT DRINKS MARKET GEOGRAPHIC SEGMENTATION % SHARE, BY VALUE, 2008
Bra zil 28%
BRAZIL HOT DRINKS MARKET SEGMENTATION % SHARE, BY VALUE, 2008

Tea 1.8% Other hot drinks 6 .6%
Rest of America s 10%
Mexico 5% Ca da na 4%
Coffee 91 .6%
US 53%
11
AB
Brazilian Hot Drinks Market Future Outlook

s
The markets volume is expected to rise to 9.7 bn liters by the end of 2013, representing a CAGR of 1.1% for the 2008-2013 periods The performance of the market is forecasted to decelerate slightly, with an anticipated CAGR of 2.1% for the five-year period 2008-2013, which is expected to drive the market to a value of $18.4 bn by the end of 2013
s
Comparatively, the US and Mexican markets will grow with CAGRs of 1% and 2%, respectively, over the same period, to reach respective values of $83 bn and $12.9 bn in 2013
BRAZIL HOT DRINKS MARKET VOLUME FORECAST KILOGRAMS (2008-2013)
$in billion 820 800 780 760 740 720 700 680 660 2008 2009 2010 2011 2012 2013 % Grow th 2.65% 2.60% 2.55% 2.50% 2.45% 2.40% 2.35% 2.30% 2.25% 2.20%
BRAZIL HOT DRINKS MARKET VALUE FORECAST (2008-2013)

$in billion 5.8 5.6 5.4 5.2 5.0 4.8 4.6 4.4 4.2 2008 2009 2010 2011 2012 2013 % Grow th 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
12
AB
Brazilian Hot Drinks Market Market Forces and Dynamics

s
The Brazilian hot drinks market is fragmented and has leading players such as Sara Lee, Strauss-Elite and Mellitta The hot drinks market is concentrated in terms of distribution channels, with the key distribution channel being supermarkets/hypermarket (58.9%) The low economic status of some of the countries within such regions, combined with the large number of independent growers and the relatively undifferentiated nature of the product, limits the supplier power of growers Market entrants face barriers such as a launch of a price war by existing players, especially where a new entrant moves into a more concentrated segment However, considering the high proportion of the population consuming hot drinks products, it is unlikely that such substitution would substantially impact upon sales. Overall, the threat of substitutes within the Brazilian hot drinks market is low
13
AB
FORCES DRIVING COMPETITION IN THE HOT DRINKS MARKET IN BRAZIL (2008)

Buye Powe r r 5 4 3 De eof Riva gre lry 2 1 0 Supplie Powe r r
Thre t of Substitute a s
Ne Entra w nts
14
AB
Brazilian Hot Drinks Market Key Players

BRAZIL HOT DRINKS MARKET SHARE % SHARE, BY VALUE, 2008
Sa Lee ra 18%
Stra uss-Elite 13%
Other 63 %
Mellitla 6%
KEY PLAYERS s
consumers Brands include Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Kiwi, Sanex and Senseo
NA
NA
s s
Engages in manufacturing food & beverage
Comprises of four core business units: Strauss Israel, Strauss Coffee, Strauss North America and Strauss Water 1,634.7 NA Engages manufacturing and distribution of commercial filter coffee machines
s s s
Cafina, is the Swiss subsidiary of the Company
15
AC
Brazilian Soft Drinks Market
AC
BAZILIAN SOFT DRINKS MARKET
Brazilian Soft Drinks Market Overview

s
The Brazilian soft drinks market generated total revenues of $18.6 bn in 2008, representing a CAGR of 2.1% for the period spanning 2004-2008
s
In comparison, the US and Canadian markets grew with CAGRs of 2.1% and 0.6%, respectively, over the same period, to reach respective values of $117.3 bn and $6.6 bn in 2008
Market consumption volumes increased with a CAGR of 1.2% for the period 2004-2008, to reach a total of 22.9 bn liters in 2008 Carbonates sales proved the most lucrative for the Brazilian soft drinks market in 2008, generating total revenues of $14.1 bn, equivalent to 76% of the market's overall value
s
In comparison, sales of bottled water generated revenues of $3.6 bn in 2008, equating to 19.3% of the market's aggregate revenues
BRAZIL SOFT DRINKS MARKET VOLUME LITERS (2004-2008)
Lite in billion rs % Growth
BRAZIL SOFT DRINKS MARKET VALUE (2004-2008)

$ in billion % Growth
20 18 16 14 12 10 8 6 4 2 0 2004 2005 2006 2007 2008
3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
25 20 15 10 5 0 2004 2005 2006 2007 2008
1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%
15
AC
Brazilian Soft Drinks Market Overview

s
Carbonates sales proved the most lucrative for the Brazilian soft drinks market, generating 76% of the total value
s
In comparison, sales of bottled water generated 19.3% of the market's value
Brazil accounts for 10.8% of the Americas soft drinks market's value
s
The US leads the Americas soft drinks market, generating 68.1% of the market's value
BRAZIL SOFT DRINKS MARKET GEOGRAPHIC SEGMENTATION % SHARE, BY VALUE, 2008
Bra zil 11% Mexico 10%
BRAZIL SOFT DRINKS MARKET SEGMENTATION % SHARE, BY VALUE, 2008

Juices 2.7% RTD tea& coffee 1.4%
Functiona drinks l 0.6%
Bottled wa ter 19.3 %
Rest of America s 7%
Ca rbona tes 76.0%
US 68%
Ca da na 4%
16
AC
Brazilian Soft Drinks Market Future Outlook

s
The market's volume is expected to rise to 24.6 bn liters by the end of 2013, representing a CAGR of 1.4% for the 2008-2013 period The performance of the market is forecasted to accelerate, with an anticipated CAGR of 2.8% for the five-year period 2008-2013, which is expected to drive the market to a value of $21.3 bn by the end of 2013
s
Comparatively, the US and Canadian markets will grow with CAGRs of 2.4% and 0.8%, respectively, over the same period, to reach respective values of $131.8 bn and $6.9 bn in 2013
BRAZIL SOFT DRINKS MARKET VOLUME FORECAST LITERS (2008-2013)
Lite in billion rs % Growth
BRAZIL SOFT DRINKS MARKET VALUE FORECAST (2008-2013)

$ in billion % Growth
22.0 21.5 21.0 20.5 20.0 19.5 19.0 18.5 18.0 17.5 17.0 2008 2009 2010 2011 2012 2013
3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
25.0 24.5 24.0 23.5 23.0 22.5 22.0 2008 2009 2010 2011 2012
1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%
17
AC
Brazilian Soft Drinks Market Market Forces and Dynamics

s
The Brazilian soft drinks market is concentrated and has the presence of leading players like The CocaCola Company and PepsiCo Consumers in this market are likely to be strongly influenced by brand and this weakens buyer power as retailers are forced to stock brands popular among consumers The fast developing Brazilian soft drinks market is switching into low sugar and sodium products, which requires different production methods. Overall, supplier power is moderate in this market Difficult for a new entrant to compete with the brand strength and reach of existing players, it may be possible to achieve small scale success stressing a unique production method or nutritional benefits The substitutes for soft drinks primarily include traditional tea and coffee or homemade juices to name a few. Leading players tend to have diverse product offerings, which reduces the threat posed by substitutes
18
AC
FORCES DRIVING COMPETITION IN THE SOFT DRINKS MARKET IN BRAZIL (2008)

Ne Entra w nts
19
AC
Brazilian Soft Drinks Market Key Players

BRAZIL PHARMACEUTICALS MARKET SHARE: % SHARE, BY VALUE (2009)
Other 28% The Coca -Cola Compa ny 30%
PepsiCo 15%
Ca dbury Schw eppes 27%

KEY Income PLAYERS P/E
COMPANY
M. Cap
$132,932.6
Revenue
$30,990.0
DESCRIPTION
Engages in manufacturing, distribution and markets nonalcoholic beverage concentrates and syrups s The Company sells finished beverage products through distributors and beverage concentrates and syrups to bottling and canning operators, distributors, fountain wholesalers s Engages in the confectionary business s As on February 2010, the Company was acquired by Kraft Foods s Engages in manufacturing, marketing and selling various foods, snacks and carbonated and noncarbonated beverages s The Company operates in four divisions: Americas Foods, Americas Beverages, PepsiCo Europe and PepsiCo Asia, Middle east and Africa
s
$6,824.0
19.6x
12,008.5 104,317.5
5,975.0 43,232.0
509.0 5,946.0
43.0x 17.4x
20
Brazilian Food Retail Market
BRAZILIAN FOOD RETAIL MARKET
Brazilian Food Retail Market Overview

s
The Brazilian industry generated total revenues of $98.3 bn in 2008, representing a compound annual growth rate (CAGR) of 22.4% for the period spanning 2004-2008 In comparison, the US and Canadian industries grew with CAGRs of 5.8% and 4.3% respectively, over the same period, to reach respective values of $824,422.2M and $82,037.9M in 2008 Sales made through convenience store and gas station proved the most lucrative for the Brazilian industry in 2008, generating total revenues of $38,278.5M, equivalent to 38.9% of the industry's overall value
s
In comparison, sales via hypermarkets, supermarkets and discounters generated revenues of $35,752.4M in 2008, equating to 36.4% of the industry's aggregate revenues
BRAZIL FOOD RETAIL INDUSTRY VALUE (2004-2008)
$in billion $120.0 100.0 80.0 60.0 40.0 20.0 0.0 2004 2005 2006 2007 2008
% Grow th 45.0% 36.0% 27.0% 18.0% 9.0% 0.0%
20
Brazilian Food Retail Market Overview

s
The Brazilian Food Retail market comprises of six segments s Convenience Stores and Gas Stations s Hypermarket, Supermarket and Discounters s Food and Drinks Specialists s Cash and Carries and Warehouse Clubs s Drug Stores and Health and Beauty Stores (inc Pharmacies) s Other
BRAZIL FOOD RETAIL INDUSTRY GEOGRAPHIC SEGMENTATION
Mexico 12.6% Bra zil 7.8%
BRAZIL FOOD RETAIL INDUSTRY SEGMENTATION

Ca a Ca sh nd rries a Wa nd rehouse Clubs 0 .6% Food a Drinks nd Specia lists 2 3.4% Drug a Hea & nd lth Bea Stores uty 0 .2%
Other 0.5%
Convenience Stores a Ga nd s Sta tions 38.9%
Rest of the America s 7.5%
Hyperma rket, Superma rket, a nd Discounters 36 .4%
US 65.6%
Ca da na 6.5%
21
Brazilian Food Retail Future Outlook

s
In 2013, the Brazilian food retail industry is forecast to have a value of $160.3 bn, an increase of 63% since 2008 The compound annual growth rate of the industry in the period 2008-2013 is predicted to be 10.3%, which is expected to drive the industry to a value of $160,306.8M by the end of 2013
s
Comparatively, the US and Canadian industries will both grow with CAGR of 2.7% over the same period, to reach respective values of $942,140.4M and $93,846.5M in 2013 French and German industries will grow with CAGRs of 2.1% and 1.5% respectively, over the same period, to reach respective values of $257,395.2M and $262,328.7M in 2013
The performance of the industry is forecasted to decelerate, with an anticipated CAGR of 19.3% for the five-year period 2008-2013, which is expected to drive the industry to a value of $493,116.7M by the end of 2013
22
BRAZIL FOOD RETAIL INDUSTRY VALUE FORECAST (2008-2013)

$in billion $180.0 150.0 120.0 90.0 60.0 30.0 0.0 2008 2009 2010 2011 2012 2013 % Grow th 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
23
Brazilian Food Retail Market Forces and Dynamics

s
Wal-Mart Stores, Companhia Brasiliera de Distribuicao and Carrefour S.A., the market leaders in the Brazilian food retail market Retailers range widely in size with large chain supermarkets or hypermarkets embodying far stronger forces than smaller specialty, luxury or organic food outlets whose grip on the industry is significant but currently limited Suppliers to the food retail industry include food manufacturers, farmers and agricultural cooperatives. In order to ensure stability and offset the dangers of local sourcing problems or price fluctuations, large retail companies often maintain relationships with a wide range of suppliers Large-scale, established retailers hold a natural advantage in operating businesses that benefit significantly from economies of scale, allowing aggressive pricing schemes that are not viable for smaller retailers The chief alternative to food retail is food service. Supported by strong marketing campaigns in the case of fast food companies and cultural traditions with respect to sit-down restaurants, both types represent a relevant alternative for many consumers
24
FORCES DRIVING COMPETITION IN THE FOOD RETAIL INDUSTRY IN BRAZIL (2008)

Ne Entra w nts
25
Brazilian Food Retail Market Key Players

KEY PLAYERS
FINANCIALS (2009) COMPANY

M. Cap
$189,245.9
Revenue
$408,214. 0
Net Income
$14,335.0
P/E
13.3x
s s
DESCRIPTION
Operates retail stores in various formats Segment includes various formats of retail stores and restaurants, including supermarkets, combination discount and grocery stores, super centers, Sams Clubs, hypermarkets, cash-n-carry stores, department stores and general merchandise stores At the end of January 2010, the Company operated 971 discount stores, 2,447 super centers, 591 Sam's Clubs and 132 Neighborhood Markets in the US
s
Also operates various international markets as well, these include the UK, Canada, Japan, Mexico, Brazil and China
s
5667
13,447
342
26.8x
Operates as a retailer and wholesaler of food products, bazaar articles, clothing, home appliances and other products through its chain of hypermarkets, supermarkets, specialized and department stores, convenience stores and the Internet in Brazil
s
As of December 2009, the Company operates 57, 353 located in the Brazilian state of Sao Paulo
s
26
33,567
109,274
416
67.0x
Operates hypermarkets, supermarkets and hard discount and convenience stores primarily in Europe, Latin America and Asia
s
As of December 31, 2009, had ~15,661 stores in 34 countries, including 1,395 hypermarkets, 2,949 supermarkets, 6,475 hard discount stores, 4,698 convenience stores and 144 cash and carry stores
s
27
Brazilian Household & Personal Care Market
CA
Brazilian Household Market
CA
BRAZILIAN HOUSEHOLD MARKET
Brazilian Household Market Overview

s
s s s
The Brazilian household products market grew by 7.7% in 2008 to reach a value of $4.6 bn s The market represented a CAGR of 8.9% for the period spanning 2004-2008 s In comparison, the US and Mexican markets grew with CAGRs of 0.7% and 5.8%, respectively, over the same period, to reach respective values of $17.2 bn and $3.1 bn in 2008 Textile washing products sales dominated the Brazilian household products market in 2008, generating 59.8% of the market's overall revenues Brazil accounts for 15.9% of the Americas household products market's value Unilever accounts for 39.8% of the Brazilian household products market's value Supermarkets and hypermarkets leads the Brazilian household products market distributing 66.3% of the market's overall value
BRAZIL HOUSEHOLD PRODUCTS DISTRIBUTION (% SHARE, BY VALUE, 2008)
Conve nc nie e Store s 2% Inde nde pe nt Re ile ta rs 29% Supe rke rma ts/ hy rma ts pe rke 66%
BRAZIL HOUSEHOLD PRODUCTS MARKET VALUE (2004-2008)
$in billion $5.0 4.0 3.0
% Grow th 12% 9% 6%
Othe r 3%
2.0 1.0 0.0 2004

CREAET GRAPH
3% 0% 2005 2006 2007 2008
25
CA
Brazilian Household Market Market Segments

s
Textile washing products sales proved the most important for the Brazilian household products market in 2008, generating total revenues of $2.7 bn, equivalent to 59.8% of the market's overall value
s
In comparison, sales of general-purpose cleaners generated revenues of $607M in 2008, equating to 13.2% of the market's aggregate revenues. The market represented a CAGR of 8.9% for the period spanning 2004-2008
BRAZIL HOUSEHOLD PRODUCTS GEOGRAPHIC SEGMENTATION (% SHARE, BY VALUE, 2008)
BRAZIL HOUSEHOLD PRODUCTS MARKET SEGMENTATION (% SHARE, BY VALUE, 2008)
Air fre ne she rs 1% Toile c re t a 3% Dishwa shing produc ts 7% Ge ra purpose ne l c a rs le ne 13%
Othe r 16%
Ca da na 6% Re of Ame a st ric s 7% Me o xic 11% Te xtilewa shing produc ts 60% US 60% Bra zil 16%
26
CA
Brazilian Household Market Future Outlook

s
The performance of the market is forecast to decelerate, with an anticipated CAGR of 6.9% for the fiveyear period 2008-2013, which is expected to lead the market to a value of $6.4 bn by the end of 2013
s
Comparatively, the US and Mexican markets will grow with CAGRs of 1% and 5.3%, respectively, over the same period, to reach respective values of $18.1 bn and $3.9 bn in 2013
BRAZIL HOUSEHOLD PRODUCTS MARKET VALUE FORECAST (2008-2013)
$in billion $7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2008 2009
CAGR 2 0 2 1 : 6 % 0 8 0 3 .9
% Grow th 10% 8% 6% 4% 2% 0%
2010
2011
2012
2013
27
CA
Brazilian Household Market Market Forces and Dynamics

s
Unilever, Reckitt Benckiser and S.C. Johnson & Son are the market leaders in the household products market, with 56.6% of the market value Supermarkets and hypermarkets are the main buyers in the Brazilian market and the larger chains may exert strong buyer power Manufacturers of household products are able to source some of their raw materials from only a relatively small number of suppliers boosts supplier power The existence of strong brands and the scale economies associated with the high volume production facilities prevent the threat of new entrants from becoming a significant factor High exit barriers and fixed costs tend to increase rivalry between manufacturers. In general, the intensity of competition in the global household products market is assessed as moderate
FORCES DRIVING COMPETITION IN THE HOUSEHOLD PRODUCTS MARKET IN BRAZIL (2008)
Buyer Pow er 5 4 3 Degree of Riva lry 2 1 0 Supplier Pow er
Threa of Substitutes t
New Entra nts
28
CA
29
CA
Brazilian Household Market Key Players

BRAZIL HOUSEHOLD MARKET SHARE: % SHARE, BY VALUE, 2009
Othe r 43% Unile r ve 40%
S.C. Johnson & Son 8%
Re kitt c Be kise Pic nc r 9%
KEY PLAYERS FINANCIALS (2009) COMPANY

M. Cap
$75,180
Reven ue
$50,611
Net Income
$4,283
P/E
18.0x
s
DESCRIPTION
Manufactures and markets consumer goods in the food, personal and homecare segments s Operates through two parent companies: Unilever NV and Unilever plc s Operates through subsidiaries in Germany, Switzerland, France, the UK, the US and China and has operations in over 150 countries s Manufactures and distributes household cleaning and personal care products s Operates through eight business segments: fabric care, surface care, health and personal care, home care, dishwashing, pharmaceutical, foodand other household s Products are sold in 180 countries worldwide
37,26 1
11,86 6
2,170
17.2x
30
CA
NA
NA
NA
NA
Focuses on development, manufacturing and marketing of home storage, air care, auto care, shave care and insect control s Operates manufacturing facilities in Argentina, Canada, China, the Netherlands, Mexico, the UK, the US and other countries
31
CB
Brazilian Personal Care Market
CB
BRAZILIAN PERSONAL CARE MARKET
Brazilian Personal Care Market Overview Fragrances

s
The Brazilian fragrances market generated total revenues of $3.6 bn in 2008, representing a compound annual growth rate (CAGR) of 16% for the period spanning 2004-2008 s The Brazilian fragrances market has posted steadily decreasing growth rates since 2004 s This trend is expected to continue towards 2011 when the market is expected to stabilize with a growth rate of 12.4% Market consumption volumes increased with a CAGR of 14.6% between 2004-2008, to reach a total of 169.9M units in 2008 Female fragrances sales proved the most lucrative for the Brazilian fragrances market in 2008, generating total revenues of $2.2 bn, equivalent to 59.9% of the market's overall value Natura Cosmeticos dominates the Brazilian fragrances market with a 21.4% share of the overall value s Boticario is the second biggest company, with 19.5% of the market's revenues
BRAZIL FRAGRANCES MARKET VOLUME (2004-2008)
Units in millions 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2004 2005 2006 2007 2008 % Growth 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
BRAZIL FRAGRANCES MARKET VALUE (2004-2008)

$ in billions 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004
CREAET GRAPH
% Growth 20% 15% 10% 5% 0% 2005 2006 2007 2008
30
CB
Brazilian Personal Care Market Segments Fragrances

s
Female fragrances generate the largest share of the Brazilian fragrances market accounting for 59.6% of the revenues
s
In comparison, male fragrances account for a further 35% of the market's value
BRAZIL FRAGRANCES GEOGRAPHIC SEGMENTATION (% SHARE, BY VALUE, 2008)
Mexico 5.9%
BRAZIL FRAGRANCES MARKET SEGMENTATION (% SHARE, BY VALUE, 2008)

Unisex fra nces gra 5.1%
Ca da na 6.2%
Ma fra nces le gra 35.0 % Bra zil 34.1% Fema fra nces le gra 59.9% US 53.8%
31
CB
Brazilian Personal Care Market Future Outlook Fragrances

s
The performance of the market is forecasted to decelerate, with an anticipated CAGR of 12.7% for the five-year period 2008-2013, which is expected to drive the market to a value of $6.6 bn by the end of 2013
s
Comparatively, the US and Canadian markets will grow with CAGRs of 0.4% and 3.2%, respectively, over the same period, to reach respective values of $5.8 bn and $767.7M in 2013
BRAZIL FRAGRANCES MARKET VALUE FORECAST (20082013)

$ in billions 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2008 2009 2010 2011 2012
12.7% -2013: R 2008 CAG
BRAZIL FRAGRANCES MARKET VOLUME (2008-2013)

Units in m illions 350 300 250 200 150 100 50 0 2008 2009 2010 2011 2012
12.0% 2013: 2008CAGR
% Growth 14.5% 14.0% 13.5% 13.0% 12.5% 12.0% 11.5% 11.0%
% Growth 14.0% 13.5% 13.0% 12.5% 12.0% 11.5% 11.0% 10.5%
32
CB
Brazilian Personal Care Market Forces and Dynamics Fragrances

s
The major manufacturers tend to advertise to consumers in order to build brand loyalty s This reduces buyer power, as most retailers must stock popular brands in order to maintain their own sales volumes, with little option for alternatives s However, retailers often occupy a strong position in the supply chain, which allows them to negotiate favorable contracts with manufacturers, thereby enhancing buyer power The quality of many of the raw materials is highly important, hence Chemicals used in these products must be of a standard suitable for manufacturing consumer products and for some ingredients there are no substitutes, increasing supplier power s A small number of brands, some globally recognized, have a strong position in this market The major companies are large firms whose economies of scale allow them to compete more effectively on price and invest in their own business s Companies entering the market may find it difficult to compete Leading players are often either large manufacturers of personal care products or large fashion houses
33
CB
FORCES DRIVING COMPETITION IN THE FRAGRANCES PRODUCTS MARKET IN BRAZIL (2008)
Buyer Power 5 4 3 Degree of Riva lry 2 1 0 Supplier Power
New Entra nts
34
CB
Brazilian Personal Care Market Key Players Fragrances

BRAZIL FRAGRANCES MARKET SHARE: % SHARE, BY VALUE, 2009
Na turaCosmeticos 21.4% Other 4 3.8%
Botica rio 19.5% Avon Products 15.3%

KEY PLAYERS

M. Cap
$10,694
Reven ue
$2,457
Net Income
$396
P/E
27.0x
s
DESCRIPTION
Engages in the development, production, distribution and sale of cosmetics, fragrances and hygiene products in Brazil, Argentina, Chile, Peru, Mexico, France, Venezuela and Colombia s Also offers skin treatment products, cosmetics and fragrances under the Faces de Natura brand, daily use products under the Tododia brand and products for babies and under the Mame e Beb brand s Operates a network of perfumery and cosmetics stores and points of sales in Brazil, Portugal, Mexico, Bolivia, Peru, Paraguay and Japan s Product categories include body, facial and sun care products, deodorizing colognes, deodorants, soaps and
NA
NA
NA
NA
35
CB
shampoos 13,057 10,383 626 21.0x Manufactures and markets beauty and related products s Markets its products through direct selling and independent representatives, as well as through distributorships
s
36
CB
Brazilian Personal Care Market Overview Haircare

s
The Brazilian hair care market generated total revenues of $3.0 bn in 2008, representing a compound annual growth rate (CAGR) of 9% for the period spanning 2004-2008 s In comparison, the US and Canadian markets grew with CAGRs of 2.5% and 3.7%, respectively, over the same period, to reach respective values of $7.4 bn and $1.2 bn in 2008 Market consumption volumes increased with a CAGR of 6.8% during 2004-2008, to reach a total of 594.9M units in 2008 Shampoo sales proved the most lucrative for the Brazilian hair care market in 2008, generating total revenues of $1.2 bn, equivalent to 38.5% of the market's overall value s In comparison, sales of hair colorants generated revenues of $840.9M in 2008, equating to 27.9% of the market's aggregate revenues
BRAZIL HAIRCARE MARKET VOLUME (2004-2008)
Units in millions 700 600 500 400 300 200 100 0 2004
CREAET GRAPH
BRAZIL HAIRCARE MARKET VALUE (2004-2008)

$ in billions 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008
% 08: 9.0 004-20 CAGR 2
% Growth 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
: 6.8% 4-2008 GR 200 CA
% Growth 7.6% 7.4% 7.2% 7.0% 6.8% 6.6% 6.4% 6.2% 6.0% 5.8%
2005
2006
2007
2008
37
CB
Brazilian Personal Care Market Segments Hair Care

s
Hair care segment is further subdivided into shampoo, hair colorants, conditioner, styling agents and perms and relaxes Shampoo sales generated 38.5% of the Brazilian hair care market's overall revenue
s
In comparison, sales of hair colorants generated 27.9% of the market's aggregate revenues
BRAZIL HAIRCARE GEOGRAPHIC SEGMENTATION % SHARE, BY VALUE, 2008
Rest of America s 6.4 %
BRAZIL HAIRCARE MARKET SEGMENTATION (% SHARE, BY VALUE, 2008)

Perms & rela xers 1.0%
Styling a gents 8.3%
Ca da na 8.6%
Conditioner 24 .3%
Sha mpoo 38.5%
Mexico 10 .3% US 53.1% Bra zil 21.6%
Ha colora ir nts 27.9%
38
CB
Brazilian Personal Care Market Future Outlook Hair Care

s
The performance of the market is forecasted to decelerate, with an anticipated CAGR of 7.5% for the five-year period 2008-2013, which is expected to lead the market to a value of $4.3 bn by the end of 2013
s
Comparatively, the US and Canadian markets will grow with CAGRs of 1% and 2.9%, respectively, over the same period, to reach respective values of $7.8 bn and $1.4 bn in 2013
The market's volume is expected to rise to 804.9M units by the end of 2013, representing a CAGR of 6.2% for the 2008-2013 period
BRAZIL HAIRCARE MARKET VALUE (2008-2013)

$ in billions 5.0 4.0 3.0 2.0 1.0 0.0 2008 2009 2010 2011 2012 2013
: 7.5% 8-2013 GR 200 CA
BRAZIL HAIRCARE MARKET VOLUME (2008-2013)

Units in m illions 900 800 700 600 500 400 300 200 100 0 2008 2009
6.2% -2013: R 2008 CAG
% Growth 8.4% 8.2% 8.0% 7.8% 7.6% 7.4% 7.2% 7.0% 6.8% 6.6%
% Growth 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.1% 6.0% 5.9% 5.8% 2013
2010
2011
2012
39
CB
Brazilian Personal Care Market Forces and Dynamics Hair Care

s
The Brazilian hair care market is fairly fragmented with many small players, with their scale economies, investment in product development and brand identity make them formidable incumbents for prospective new entrants to challenge Manufacturers of surfactants are the main suppliers to the industry and supplier power is moderate in the market High growth in the Brazilian market reduces the rivalry between players, who offer a broadly diversified portfolio of personal care segment products which reduces dependence on hair care products alone This wide range of available products with an accompanying variance in quality and price means that buyer power is prevented from becoming disproportionately strong in this market Substitutes to the market are other home made hair products and substitute power is weak
40
CB
FORCES DRIVING COMPETITION IN THE HAIRCARE MARKET IN BRAZIL (2008)
New Entra nts
41
CB
Brazilian Personal Care Market Key Players Hair Care

BRAZIL HAIRCARE MARKET SHARE: % SHARE, BY VALUE, 2008
L'Orea l 1 9.5%
Other 52 .0%
Unilever 14.6 %
P&G 13 .9%
KEY PLAYERS

M. Cap
$61,834
Reven ue
$22,497
Net Income
$2,308
P/E
26.7x
s s
DESCRIPTION
Provide various cosmetics products for men and women Operations in Europe, North America, Latin America, Africa, the Middle East, east Asia and the South Pacific s Provides fast-moving consumer goods in Asia, Africa, Europe and Latin America s Sells products directly, as well as through independent brokers, agents and distributors to chain, wholesale, co-operative and independent grocery accounts, food service distributors and institutions s Provides consumer packaged goods in the US and internationally s Also offers baby care and family care products, including baby wipes, bath tissues, diapers, facial
76,16 8
51,27 5
4,339.1
18.0x
171,070
76,694
13,436
17.8x
42
CB
tissues and paper towels under the Bounty, Charmin and Pampers brands
43
CB
Brazilian Personal Care Market Overview Make-up

s
The Brazilian make-up market generated total revenues of $1.0 bn in 2007, representing a CAGR of 12.5% for the period spanning 2003-2007 s In comparison, the US and Mexican markets grew with CAGRs of 3.3% and 5.1%, respectively, over the same period, to reach respective values of $6 bn and $496.3M in 2007 Market consumption volumes increased with a CAGR of 8.6% between 2003-2007, to reach a total of 200.4M units in 2007 Lip make-up sales proved the most lucrative for the Brazilian make-up market in 2007, generating total revenues of $344.7M, equivalent to 33.4% of the market's overall value s In comparison, sales of nail make-up generated revenues of $303.6M in 2007, equating to 29.4% of the market's aggregate revenues
BRAZIL MAKE-UP MARKET VOLUME (2003-2007)
Units in millions 250 200 150 100 50 0 2003 2004 2005 2006 2007
003 CAGR 2 8.6% -2007:
BRAZIL MAKE-UP MARKET VALUE (2003-2007)

$ in billions 1200 1000 800 600 400 200 0 2003 2004 2005 2006 2007
CAGR2 .5% 07: 12 003-20
% Growth 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
% Growth 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0%
44
CB
Brazilian Personal Care Market Segments Make-up

s
Make-up segment is further subdivided into Lip make-up, Nail make-up, Eye make-up and face makeup Brazil generates 12.1% of the Americas make-up market's revenue
s
In comparison, the US accounts for a further 69.7% of the market's value

BRAZIL MAKE-UP GEOGRAPHIC SEGMENTATION (% SHARE, BY VALUE, 2007)
Mexico 6% Lip ma ke-up 33% Bra zil 12%
BRAZIL MAKE-UP MARKET SEGMENTATION (% SHARE, BY VALUE, 2007)
Fa ma ce ke-up 15%
Eye ma ke-up 23%
Ca da na 12%
US 70% Na ma il ke-up 29%
45
CB
Brazilian Personal Care Market Future Outlook MakeUp

s
The performance of the market is forecasted to decelerate, with an anticipated CAGR of 8.4% for the five-year period 2007-2012, which is expected to drive the market to a value of $1.5 bn by the end of 2012
s
Comparatively, the US and Mexican markets will grow with CAGRs of 3.3% and 4.6%, respectively, over the same period, to reach respective values of $7 bn and $620.4M in 2012
The market's volume is expected to rise to 279.7M units by the end of 2012, representing a CAGR of 6.9% for the 2007-2012 periods
BRAZIL MAKE-UP MARKET VALUE FORECAST (2007-2012)

$ in billion 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2007 2008
8.4% -2012: R 2007 CAG
BRAZIL MAKE-UP MARKET VOLUME FORECAST (2003-2007)

Units in m illion 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012
: 6.9% 7-2012 GR 200 CA
% Growth 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2009 2010 2011 2012
% Growth 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
46
CB
Brazilian Personal Care Market Forces and Dynamics Make-Up

s
s s
Strong brands from the major players reduce buyer power, as most retailers must stock popular brands in order to maintain their own sales volumes, with little option for alternatives The major companies are large firms whose scale economies allow them to compete more effectively on price and invest in their own business; companies entering the market may find it difficult to compete Many of the leading players tend to offer a diverse ranges of cosmetic and personal care products in addition to their range of make-up products This diversification defends their performance against competition pressures in any one market Fixed costs are high in this market, as most companies own large production facilities and the need to divest such assets on exiting the market constitutes an exit barrier and therefore a driver of rivalry
FORCES DRIVING COMPETITION IN THE MAKE-UP MARKET IN BRAZIL (2007)
Substitutes
New Entra nts
47
CB
48
CB
Brazilian Personal Care Market Key Players Make-Up

BRAZIL MAKE-UP MARKET SHARE: % SHARE, BY VALUE, 2007
Avon Products 1 4.5%
L'Orea l 13.4% Other 60.9%
Na turaCosmeticos 1 1.2%
KEY PLAYERS

M. Cap
$13,057
Reven ue
$10,383
Net Income
$626
P/E
21.0x
s
DESCRIPTION
Manufactures and markets beauty and related products s Markets its products through direct selling and independent representatives, as well as through distributorships Provide various cosmetics products for men and women
s s s
61,834
22,497
2,308
26.7x
Operations in Europe, North America, Latin America, Africa, the Middle East, east Asiaand the South Pacific 10,694 2,457 396 27.0x Engages in the development, production, distribution and sale of cosmetics, fragrances and hygiene products in Brazil, Argentina, Chile, Peru, Mexico, France, Venezuela and Colombia
49
CB
Also offers skin treatment products, cosmetics and fragrances under the Faces de Natura brand, daily use products under the Tododia brand and products for babies and under the Mame e Beb brand
50
CB
Brazilian Personal Care Market Overview Hygiene

s
The Brazilian personal hygiene market generated total revenues of $1.5 bn in 2007, representing a compound annual growth rate (CAGR) of 1.2% for the period spanning 2003-2007
s
In comparison, the US and Canadian markets grew with CAGRs of 0.5% and 3.8%, respectively, over the same period, to reach respective values of $4.4 bn and $850.6M in 2007
Deodorant sales proved the most lucrative for the Brazilian personal hygiene market in 2007, generating total revenues of $805.3M, equivalent to 55.4% of the market's overall value
s
In comparison, sales of soap generated revenues of $549.8M in 2007, equating to 37.8% of the market's aggregate revenues
BRAZIL PERSONAL HYGIENE MARKET VOLUME (2004-2008)
Units in million 1,000 900 800 700 600 500 400 300 200 100 0 2003 2004
3-20 CAGR 200 07: 0.5%
BRAZIL PERSONAL HYGIENE MARKET VALUE (2003-2007)

$ in million 1,600 1,400 1,200 1,000 800 600 400 200 0 2003 2004 2005 2006 2007
3-20 CAGR 200 07: 1.2%
% Growth 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%
% Growth 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% -0.2% -0.4% -0.6%
2005
2006
2007
51
CB
Brazilian Personal Care Market Segments Hygiene

s
Deodorants dominate the Brazilian personal hygiene market with 55.4% of the market's value
s
Soap accounts for a further 37.8% of the market's revenue
Brazil accounts for 20% of the Americas personal hygiene market's value
s
In comparison, the US accounts for a further 60.7% of the market's revenue

BRAZIL PERSONAL HYGIENE GEOGRAPHIC SEGMENTATION (% SHARE, BY VALUE, 2007)
Mexico 8% Ca da na 1 2%
BRAZIL PERSONAL HYGIENE MARKET SEGMENTATION (% SHARE, BY VALUE, 2007)

Ba & shower th products 7%
Soa p 38%
Deodora nts 55% Bra zil 20%
US 60%
52
CB
Brazilian Personal Care Market Future Outlook Hygiene

s
Market consumption volumes increased with a CAGR of 0.5% between 2003-2007, to reach a total of 902.8M units in 2007
s
The market's volume is expected to rise to 956M units by the end of 2012, representing a CAGR of 1.2% for the 2007-2012 periods
The performance of the market is forecasted to accelerate, with an anticipated CAGR of 1.7% for the five-year period 2007-2012, which is expected to drive the market to a value of $1.6 bn by the end of 2012
s
Comparatively, the US and Canadian markets will grow with CAGRs of 0.4% and 3.5%, respectively, over the same period, to reach respective values of $4.5 bn and $1 bn in 2012
BRAZIL PERSONAL HYGIENE MARKET VALUE FORECAST (20072012)

$ in million 1,600 1,550 1,500 1,450 1,400 1,350 2007 2008 2009 2010 2011
2: 1.7% 007-201 CAGR 2
BRAZIL PERSONAL HYGIENE MARKET VOLUME FORECAST (2007-2012)

Units in million 960 950 940 930 920 910 900 890 880 870 2007 % Growth 1.25%
2: -201 2007 1.2%
% Growth 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%
1.20% 1.15% 1.10% 1.05% 1.00% 0.95% 0.90%
R CAG
2012
2008
2009
2010
2011
53
CB
Brazilian Personal Care Market Forces and Dynamics Hygiene

s
The Brazilian personal hygiene market will be analyzed taking market players as manufacturers and buyers as the distributors of personal hygiene products such as retailers
s
Retailers often occupy a position of power in the supply chain which allows them to negotiate favorable contracts with manufacturers, this enhances buyer power
The makers of tapes, closures, films, back sheet and top sheet material, super absorbent polymers, elastics and the many other components of a typical hygiene product are constantly trying to balance innovation with cost effectiveness while looking for new areas, both from a regional and market perspective to grow their products The Brazilian market has grown relatively slowly in recent years, making it less attractive to new entrants. However, rising incomes are leading to a change in attitudes and personal hygiene products are being seen as essential items rather than a luxury Retailers are considered as buyers in this market, consumer choice will have a significant pull, consumers opt for the substitutes, retailers will not buy so much from the manufacturers
54
CB
FORCES DRIVING COMPETITION IN THE PERSONAL HYGIENE PRODUCTS MARKET IN BRAZIL (2007)
Substitutes
New Entra nts
55
CB
Brazilian Personal Care Market Key Players Hygiene

BRAZIL PERSONAL HYGIENE MARKET SHARE: % SHARE, BY VALUE, 2007
Other 38.2 %
Unilever 46.7%
Johnson & Johnson 6 .0%
Colga te-Pa lmolive 9.2%
KEY PLAYERS

M. Cap
$76,1 68
Reven ue
$51,2 75
Net Income
$4,339.1
P/E
18.0x
s
DESCRIPTION
Provides fast-moving consumer goods in Asia, Africa, Europe and Latin America s Sells products directly, as well as through independent brokers, agents and distributors to chain, wholesale, co-operative and independent grocery accounts, food service distributors and institutions s Engages in manufacturing and marketing consumer products worldwide s The company markets its pet foods through pet supply retailers and veterinarians for everyday nutritional needs under Science Diet name
36,37 7
15,32 7
2,291
17.1x
56
CB
162,319
61,897
12,266
13.4x
Engages in the manufacture of health care products and provides health care related services for the consumer, pharmaceutical and medical devices and diagnostics markets
57
D Brazilian Consumer Electronics Industry
BRAZILIAN CONSUMER ELECTRONICS INDUSTRY OVERVIEW
Consumer Electronics Market Overview

s
The Brazilian consumer electronics market generated total revenues of $7.1 bn in 2008, representing a CAGR of 4.8% for the period spanning 2004-2008 Electrical and electronics retailers sales proved the most lucrative for the Brazilian consumer electronics market in 2008, generating total revenues of $2,944.1M, equivalent to 41.3% of the market's overall value The performance of the market is forecast to decelerate, with an anticipated CAGR of 3.6% for the fiveyear period 2008 - 2013, which is expected to drive the market to a value of $8,505.7M by the end of 2013
BRAZIL CONSUMER ELECTRONICS MARKET VALUE (2004-2008)
$in billion $8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2004 2005 2006 2007 2008
% Grow th 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
50
Consumer Electronics Market Segments

s
The Consumer Electronics market comprises of following segments: s Electricals and Electronics Retailers s Hypermarket, Supermarket and Discounters s Discount, Variety Store and General Merchandise Retailers s Music, Video, Books and Stationery Retailers s Department Stores s Other
BRAZIL CONSUMER ELECTRONICS MARKET GEOGRAPHIC SEGMENTATION
BRAZIL CONSUMER ELECTRONICS MARKET SEGMENTATION

Electrica a ls nd Electronics Reta ilers 41% Hyperma rket, Superma rket a nd Discounters 7% Discount, Va riety Store a Genera nd l Mercha ndise Reta ilers 3% Music, Video, Books a nd Sta tionery Reta ilers Depa rtment Stores 1% 1 %
Bra zil 6% Ca da na 5% US 81% Mexico 5% Rest of the America s 3 %
Other 47%
51
Consumer Electronics Market Forces & Dynamics

s
The market is highly competitive, forcing a high level of customer service and meeting pricing and regulatory pressures Despite the poor performance of consumer electronics in volume terms, some categories especially those with high unit prices experienced strong growth such as portable computers, LCD TVs, BD players and home cinema and speakers The key buyers are specialized retailers of consumer electronics as well as supermarket chains and music stores and manufacturers of test gear, electronic components and related products as the key suppliers Potential new players face several barriers fixed costs are fairly high, as is initial capital outlay, especially if a company proposes to set up its own production plant. Scale of economies are generally important in this market Retailers likely to be strongly influenced by end-user demand. Potential substitutes include personal computers, games consoles which fulfill similar leisure functions to audio and video products Rivalry is strongly affected by the number and size of players in the market. It is a moderately easy market to enter, the need to recover the cost of investment in manufacturing equipment, specialized staff and a logistics network raises exit barriers, which intensifies rivalry
52
FORCES DRIVING COMPETITION IN THE CONSUMER ELECTRONICS MARKET IN BRAZIL (2008)

New Entra nts
53
Consumer Electronics Future Outlook

s
The Brazilian consumer electronics market is forecast to have a value of $8.5 bn, an increase of 19.3% since 2008
s
The CAGR in the period 2008 - 2013 is predicted to be 3.6%

BRAZIL CONSUMER ELECTRONICS MARKET VALUE FORECAST (2008-2013)
$in billion $9.0 8.5 8.0 7.5 7.0 6.5 6.0 2008 2009 2010 2011 2012 2013
% Grow th 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 3.3% 3.2%
54
Consumer Electronics Key Players

KEY FINANCIALS COMPANY
M. Cap
$28,767.7
Revenue
$29,857.7
Net Income
$527.9
P/E
25.0 x
s
DESCRIPTION
Engages in the healthcare, consumer lifestyle and lighting product businesses s Consumer lifestyle products and solutions comprise televisions, electric shavers, female depilation appliances, hair care and male grooming products Designs, develops, manufacturesand sells electronic equipment, instrumentsand devices for consumer, professional and industrial markets Offers consumer products and devices, including televisions, video cameras, compact digital cameras and digital single-lens reflex cameras Manufactures and sells electronic and electric products systemsand components for consumer, business and industrial uses Offers video, audio equipment, information and communications equipment, such as AV, security, electronic, Internet-enabled equipment, flat-panel, plasma TVs, blue - ray disc, DVD recorders, digital video cameras, personal computers and mobile phones
30,137.9
85,631.2
(484.3)
NM
27,081.8
88,052.8
(1,228.1)
NM
55

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CONFIDENTIAL

CONSUMER PRODUCTS INDUSTRY

Brazilian Consumer Products Industry

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Consumer Products Industry

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Consumer Products Overview and Segments

BRAZIL CONSUMER MARKET SEGMENTATION (% SHARE, BY VALUE, 2008)

Househuold & Persona Ca l re 8 .7%

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Consumer Products Market Dynamics

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Consumer Products Market Drivers

Electro nics Retail

Po de Acar (Largest local competitor to Carrefour, WalMart) Po de Acar

70% of Ponto Frio

Electro nics Retail Electro nics Retail

Ricardo Eletro and Insinuante

Merger of Ricardo Eletro and

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Consumer Products Market Drivers

BRAZILIAN CONSUMER PRODUCTS INDUSTRY s

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Beverages Market

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

Brazilian Beer Market

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN BEER MARKET

Brazilian Beer Market Overview

BRAZIL BEER MARKET VALUE (2004-2008)

2.20% 2.15% 2.10% 2.05% 2.00% 1.95%

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN BEER MARKET

Brazilian Beer Market Overview

Brazil generates 14.2% of the Americas beer market's revenue

BRAZIL BEER MARKET SEGMENTATION % SHARE, BY VALUE, 2008

Specia beer lty 3.1% Premium la ger 6.5%

Sta rd la nda ger 86.7%

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN BEER MARKET

Brazilian Beer Market Future Outlook

BRAZIL BEER MARKET VALUE FORECAST (2008-2013)

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN BEER MARKET

Brazilian Beer Market Market Forces and Dynamics

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN BEER MARKET

FORCES DRIVING COMPETITION IN THE BEER MARKET IN BRAZIL

BRAZILIAN CONSUMER PRODUCTS INDUSTRY

BRAZILIAN BEER MARKET

Brazilian Beer Market Key Players

Cerveja ria Petrpolis 9% Primo Schinca riol 1 3%

FINANCIALS (2009) Revenue Net Income

a portfolio of nearly 300 brands in brewing

Company owns a 50% share in Grupo Modelo

Based in Petropolis, Brazil

BRAZILIAN CONSUMER PRODUCTS INDUSTRY