Jamie Oliver – Spain

¡Qué sea sencillo!

(Keep it Simple)

Small Grind Mills - Marketing Strategy

Spain 2011

Index Executive Summary………………………………………………………….... 3 Macro Analysis – P.E.S.T. Analysis……………………………………….. 4 Spain – Vital Statistics……………………………………………………...... 5 Spain – Consumer Index…………………………………………………….. 6 Jamie Oliver in Spain…………………………………………………………… 7 The Spanish Consumer……………………………………………………….. 8 Micro Analysis – S.W.O.T……………………………………………………… 9 Marketing Strategy and Objectives……………………………………… 10 Segmentation, Targeting, and Positioning………………………...... 11 The Marketing Mix……………………………………………………………... 12 The Retail Environment………………………………………………………. 13 Point of Sale……………………………………………………………………….. 14 Implementation………………………………………………………………….. 16 Sales Objectives…………………………………………………………………… 17 Monitoring and Control……………………………………………………….. 18

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Executive Summary Jamie Oliver has long since developed from a cheeky, celebrity TV chef, to the principal ambassador for an internationally recognised brand promoting an enthusiastic and fun approach to creating uncomplicated meals from good quality, healthy ingredients. Over recent years the brand has developed its global appeal enjoying phenomenal success in its international expansion. Jamie Oliver TV programmes are aired in more than 100 countries and his products can be bought in over 40 different nations worldwide. In Spain, the Jaime Oliver brand gets regular exposure through the emission of its TV programmes on Canal Cocina, a popular cooking channel and his retail products are on sale in all many outlets of the El Corte Inglés premium retailing giant. However the brand does not enjoy widespread recognition and the average Spanish consumer is, at best, only aware of Jamie Oliver as an enthusiastic, young chef, failing to appreciate the breadth of the Jamie Oliver brand. The purpose of this report is to provide Fiddes Payne, on behalf of Jasa Internacional S.A. with an integrated marketing strategy for the introduction of the Jaime Oliver Small Grind Mill Range into the Spanish market place, in this instance the Community of Valencia. In so doing, it is hoped that Fiddes Payne will not only achieve a greater understanding of the Spanish retail environment and consumer trends but also establish an on-going, successful relationship with Jasa Internacional S.A., their Spanish distribution partners.

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Spain - PEST Analysis

Political Overview

The PSOE (Socialist Party) was re-elected in national elections in May 2008 but without an overall majority with Prime Minister Jose Luis Rodríguez Zapatero at its head. Spain is divided into 17 autonomous regions each with its own parliamentary government. In the Community of Valencia the centre-right “Partido Popular” has been in office since 1995 although current, on-going corruption allegations could see this trend bucked in the imminent autonomous elections in April. On a national level, Socialist Party is becoming increasingly unpopular as a result of the economic crisis and it is widely accepted that Zapatero´s party will fail to win another term in the 2012 elections.

Economic Overview

Before the crisis the Spanish economy was hugely dependent on its booming construction sector, accounting for 16% of GDP in 2007, more than twice the EU average. However, at the end of 2008 Spain entered recession. The economy contracted by 3.6% in 2009 and 0.3% in 2010 with unemployment rising to 20%. However, positive growth is forecast for 2011 and Spain has some notable strengths that will assist the recovery, such as a robust central banking system and a resilient export sector

Social Overview

Spain has a different working timetable. The majority of businesses will shut between 14:00 and 16:30 and employees generally finish the working day at around 20:00. Despite the presence of regional dialects the main business language used throughout Spain is undeniably Castilian Spanish. Generally English is not widely spoken especially amongst smaller agents or distributors. British firms will therefore need to be prepared for communicating in Spanish.

Technological overview

The Spanish IT sector is now worth over €100bn but modern IT systems have been slow to penetrate SME´s and as a result Spain lags behind its European neighbours. Spain has been marked 7.77 out of 10 for business environment e-readiness in The Economist’s “e-readiness ranking 2008”. 4

Spain - Vital Statistics Population: 46 million Madrid: 6.3 million Barcelona: 5.3 million Trade statistics 2010 UK Exports to Spain € 8.9bn UK Imports from Spain € 9.1bn

Comunidad de Valencia Population: 5.1 million Valencia Capital: 2.5 million Alicante: 476,000 Castellón 180,000 Trade statistics 2010 UK Exports to Valencia € 0.9bn UK Imports from Valencia € 1.7bn

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Spain - Consumer Index: Q3 - 2010

As is the case in many other European countries there is an increasing trend among Spanish consumers to spend more of their money in Supermarkets and heavy discounters to the detriment of traditional retailers.

The performance of the Spanish supermarket format, which has gained more than 2% market share in the last year can, in the main, be attributed to the continued success of the supermarket chain Mercadona which combines value for money, quality of produce and high convenience.

The economic crisis means consumers are increasingly favouring hard discounting outlets and seeking more “Marca Blanca” (Private Label) brands.

Source: ©Europanel GIE 2010

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Jaime Oliver in Spain Despite the on-going international success of the Jamie Oliver brand, in Spain it remains largely unknown. His TV programme “En Casa de Jaime Oliver” which is regularly emitted by specialised, pay-per-view cooking channels has a small but loyal following. However, the brand has failed to achieve wider appeal and those that do indeed recognise Jamie Oliver consider him solely a talented and enthusiastic TV chef, remaining largely unaware of his social campaigning, celebrity status and range of consumer products.

Who is Jaime?

United Kingdom TV Chef Celebrity Enthusiasm Simplicity Fun and Tasty Naked Chef Pukka Tukka School Dinners Recipe Books Sainsbury's Kitchen Products 15 Restaurants

¿Quién es Jamie?

Spain TV Chef Enthusiasm Fun and Tasty ? ? ? ? ? ? ? ? ?

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The Spanish Consumer Food plays a very important part in Spanish society with a great deal of time dedicated the days main meal “la comida” (lunch). Traditionally many companies will shut for up to two hours in the afternoon between 14:00 and 16:00 and employees will return home to enjoy a homemade dish. This trend in however changing with international businesses adopting a more north European approach in their working hours and as such a greater emphasis is placed on the ease and speed of preparing tasty meals. It should be pointed out that the Spanish are, in general, fiercely proud of their nation's culinary reputation and a stubborn reluctance to try something different permeates many people's attitudes towards food “from abroad”. This is evidenced in the fact celebrity TV chefs, a relatively new concept, are all from Spain and rarely provide anything more daring that a reinvention of a famous and popular national dish.

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Karlos Aguiñano Ferran Adrià Bruno Oteíza

Internal

Strengths Weaknesses

• Jamie Oliver as brand ambassador. Goes

beyond cooking

• New exciting concept in home cooking

• Strength of Jamie Oliver Brand

• Well established brand philosophy and

image

• Packing is not currently in Spanish

• Breadth of Jamie Oliver brand largely

unknown

• Route to Spanish market under-developed

External

Opportunities Threats

• Jamie Oliver has universal appeal

• Modern trend towards a more north

European work ethic, emphasis on saving

time

• Potential to cross sell other JO products,

building consumer loyalty

• Traditional Spanish cooking habits conflict

with grinder mill concept

• Negative attitudes towards English cuisine

• Eating habits and working routines are very

different in Spain

• Threat of dominance of private label

products

• Ongoing economic crisis means increased

price sensitivity

• Spanish consumer generally unreceptive to

new ideas

S.W.O.T. Analysis

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Marketing Strategy and Objectives Strategy

As we have seen the Jamie Oliver brand is still relatively unknown among Spanish consumers. Furthermore, those familiar with Jamie Oliver “the chef” are largely unaware of the wide range of consumer products, books, restaurants and social campaigning that make up Jamie Oliver “the brand”. In addition, as a relatively new concept to food preparation the Jamie Oliver Small Grinders range is in conflict with certain “dyed-in-the-wool” Spanish eating habits and cooking techniques. To ensure success it is therefore crucial that the marketing message challenges these traditional habits and stimulates not only a growing awareness of the brand but also a sustainable interest. Ultimately a successful market campaign will need to combine high reach and frequency but in this instance, in the interest of economy, it is suggested that reach is sacrificed for high frequency among a targeted segment of early adaptors, willing to try new products and capable of influencing their peers. In this way, the task of convincing potential consumers about the benefits of the JO Small Grind Mills falls on peer group opinion leaders and as such carries considerably more impact at considerably less cost.

Objectives Increase awareness in general of the Jamie Oliver brand and develop recognition and recall. Reach a frequency of at least three times a week among the targeted audience of early adaptors.

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Segmentation, Targeting and Positioning Segmentation Geographic: Valencia community, cities, flat dwelling Demographic: Young, male, independent, educated, middle class, above average income

Targeting MEET JUANJO: Aged anywhere between 25 and 35 Juanjo is an independent young man, either sharing a flat with his friends or recently moved in his long term partner. He is university educated, driven and progressing well in his chosen career. Technology is important to Juanjo. He has the new iPhone 4 which he regularly uses to update his Twitter and LinkedIn accounts. Although Juanjo has an above average income he is fully aware that there is more to life than just work so he is constantly on the lookout for new ways of having fun. On the weekends he enjoys pursuing a range of outdoor activities from hiking to mountain biking or simply relaxing on the beach in the summer. To save money before going out at the weekends, Juanjo and his friends regularly have dinner at home, taking it in turns to cook. Juanjo´s will happily admit his skills in the kitchen are limited but he is not afraid to have a go and he regularly surprises his guests with new and original creations. He is self-confident, outgoing an excited about the future even though he is not certain where it will lead.

Positioning Although marketing mix must be adapted to the Spanish market it is also essential that it respects the core Jamie Oliver brand philosophy and image, which is already extremely well defined.

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The Marketing Mix Product Primary Product: Jamie Oliver Small Grind Mills Benefits: Quick and easy solution to improving meals Design: Quality upright grinder. Secondary Product: The Jamie Oliver Brand and subsidiary products Price Small Grind Mill – RRP: €2.99. Subject to price promotions. Place Currently on sale at El Corte Inglés but needs to increase its presence and gain listings in other, more accessible supermarket chains. The principal supermarket chains are; Carrefour, Consum, Aldi, Eroski and Al Campo. (Mercadona has not been included due to its over-emphasis on private label brands) Promotion The principal form of promotion for the JO Small Grind Mills should be an aggressive pricing strategy, either through attractive discounting or giveaways with a minimum order quantity. This shall be supported by heavy P. of P. sales promotion in the form of leaflets, display stands and sample packs, ideally incorporating the whole JO herbs and spices range. It is also suggested that a strong element of public relations is incorporated into marketing mix helping the target audience to familiarise itself with the breadth of the JO brand. Suggested publication are supermarket magazines such as the El Corte Ingles Club de Gourmet monthly publication.

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The Retail Environment – Key Factors

More Supermarkets

According to the Ministry of the Environment, Rural and Marine Affairs (MARM) there are a total of 17,000 modern grocery retail stores in Spain, 70% of which are supermarkets. The supermarket sector has experience the highest growth in recent years. Last year 70% of store openings were supermarkets against 10% for the hypermarket format, (source: Alimarket 2010). Mercadona is the market leader in the supermarket format and in order to compete, traditional large distribution groups such as Carrefour have reevaluated their strategies to focus on the smaller, convenience format.

More Private Labels

As consumers become more price sensitive they are opting for cheaper, but generally reliable, private label products. AC Nielsen estimates that in 2010 private labels sales represented over a third of total FMCG sales. In addition NPD launches decreased by over 50% as manufactures tried to consolidate the sales of existing products with more aggressive pricing strategies.

Strong Foreign Presence

The market has a strong foreign presence, with French and German groups heavily represented in the Hypermarket (Carrefour and Auchen) and discount (Dia, Lidl Aldi) sectors. However the supermarket format is dominated by domestic chains (Mercadona and Eroski).

Market Share of Spain´s Leading Grocery Chains

Source: Alimarket October 2009 13

Why El Corte Ingles?

Ranked fifth largest retailer in Spain the ECI Group offers a wide range of formats from hypermarkets to petrol forecourts. Overall ECI attracts a more educated and affluent consumer in line with our target audience.

Price Strategy

Traditionally ECI has competed more on quality than price but recently it has had to readjust its strategy to cope with increasing price sensitivity. As such, in the current climate ECI represents excellent value for money.

Promotion

It is common for suppliers and manufacturers to be contractually obliged by ECI to carry out a minimum of 2-3 price promotions throughout the year. Generally suppliers are expected to invest between 10 and 15% of the estimated annual sales (fixed by the buyer). Promotions can include: end if aisle displays with 10% discount, promotional leaflets and/or in-store display units.

Point of Sale

An essential part of the marketing mix will be careful consideration and selection of adequate points of sale for the JO Small Grind Mills range. Appropriate retailers that combine reasonable pricing with high quality and convenience must be approached in order to expose the JO range to the highest possible concentration of our target audience.

El Corte Inglés already stocks various JO products so it is likely that regular ECI customers are already familiar with the brand. It makes sense to build upon this brand awareness, increasing the JO presence among all the different ECI formats.

With its commitment to innovation the Carrefour group is the second retailer that should be targeted in this marketing plan and will be examined in detail below.

El Corte Inglés Group

Group/Banner Nº Stores Sales 09 (M.€) % 08/09

Hipercor 356

4,630

-5.8%

Supercor 37

El Corte Ingles 83

Opencor 54

TOTAL 356

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It should be noted that Carrefour and Dia have separate buying departments and logistic systems so cannot really be considered together. For the purposes of the marketing plan we shall consider Carrefour exclusively.

Why Carrefour?

In 2009 Carrefour was Spain's second leading grocery retail group having been overtaken by Mercadona. To remain competitive they have developed three new formats: Carrefour Mini-Hypermarkets (a compact version of their star format), Carrefour Market (the supermarket range) and Carrefour Express (inner-city convenience outlets). Carrefour Express branches are small neighbourhood stores similar to the Tesco Express format with an average size of 450m2 and stocking roughly 4000 references. Convenient, innovative in terms of NPD and reasonably priced the Carrefour Express branches fit well with the buying habits of our target audience and form an essential of the marketing mix.

Price Strategy

Carrefour positions itself and the market leaders in product innovation, keeping up to date with the latest purchasing trends so are ideally suited for introducing a new concept such as the JO Small Grinder Mills. They have seven private label food ranges making up 30% of their annual sales in 2009 (Alimarket 2010) in contrast to Mercadona where the figure is over 50%.

Promotion

The annual value of promotion support is amongst the highest in Spain and can reach 23% for branded products. Manufactures are expected to launch 3-4 promotions a year. Common strategies are “3 for 2”, second unit with 30-70% discount and in-store leaflets.

End of aisle displays can cost up in the region of 400 – 500€ per store for 1 week.

Listing fees are common but can vary depending on the product. On average the fees are between 8,000 and 10,000€.

N.B: It is worth noting, when considering the full Fiddes Payne range that Carrefour holds a Disney license agreement for its “Carrefour Kids” product line.

Carrefour Group

Group/Banner Nº Stores Sales 09 (M.€) % 08/09

Carrefour 281

14,296

-7%

Dia 2,814

TOTAL 3,095

15

2

12 7

29

50 22

8 1

31

0

10

20

30

40

50

60

70

80

90

CarrefourGroup

ECI Group

Yearly Media Schedule Obtaining a listing for the JO Small Grind Mill range in a large supermarket chain often implies certain yearly promotional obligations, in many cases at least three times a year. A marketing schedule must therefore be developed to effectively control this process and ensure that all marketing communications maximize the product exposure. A guideline campaign has been designed to give the brand maximum coverage throughout the year. The Carrefour outlets will be the subject of a “guinea-pig” campaign owing to its smaller market share and fewer stores within the Valencia Community. A month later, allowing time for evaluation and improvement a “copy cat” campaign will commence among the more abundant ECI outlets. This will also help to avoid a pronounced peak and trough sales pattern and will provide steadier cash flow throughout the year. In addition, a quarterly ECI Gourmet magazine campaign will run simultaneously to the in-store promotions lending greater frequency to the campaign and positioning the products within the high quality sector. The promotional year will end in March 2012 with maximum exposure among all media and results will be collected and analyzed for the following year.

Stores in Valencia Community

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Implementation

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Magazine Magazine Magazine Magazine

End of Aisle 3 for 2 10 % O f f End of Aisle

End of Aisle 3 for 2 10 % O f f End of Aisle 3 for 2

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ECI

Carrefour

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Sales Objectives

Monthly Sales Targets: 2011/2012 It is hoped that the campaign will achieve a turnover of approximately € 50,000 in its first year but with ECI's 50 stores in the Valencia Community in contrast to Carrefour's 31, it is not expected that monthly sales are distributed evenly between the two retailers. We see below estimated monthly sales targets for year 1, with notable peaks at Christmas and throughout the year in harmony with the various price promotions and media communications included in the campaign.

April May June July Aug Sep Oct Nov Dec Jan Feb Mar TOTAL

ECI 1250 1750 2500 2000 2250 3250 2500 3000 3750 2250 2500 3000 30,000

Carrefour 1000 750 1250 1500 1000 1500 2250 1750 3000 2000 1750 2250 20,000

TOTAL 2250 2500 3750 3500 3250 4750 4750 4750 6750 4250 4250 5250 50,000

Monthly Sales Figures

This Marketing Report has been carried out by Messum Export on behalf of Jasa Internacional S.A. and Fiddes Payne.

For more information contact us on info@messumexport.com

Monitoring and Control As is the case with any FMCG marketing strategy the ultimate measure of control will be seen in the sales volumes achieved throughout the life of the campaign. If monthly sales targets are regularly met and/or exceeded it is natural to assume that the campaign has been a success. However from a long term perspective it is also crucial to evaluate the perception of the brand among not only its current buyers but also those who have the potential to become loyal consumers. Big supermarkets regularly carry out taste testing's in focus groups and it will be important to liaise closely with them to discover feedback. It is also proposed that a series of focus groups be established throughout the course of the campaign among the public to discover, monitor and control people

s awareness of and attitudes towards the Jaime Oliver brand.