Strauss Maximize – Productivity Journey

People & Innovation for

Business Sustainability

April 2018

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Agenda

What have we done

Our plans for 2018

Background and Benchmark

2

3

1

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Strauss structure

Strauss Group

Strauss Israel Strauss Coffee PepsiCo-StraussDips & Spreads

Strauss Water

Mexico

Australia

50%

Israel

49 %

28%IsraelYotvata

50%

Obela

USA

Canada

Sabra

UK

China

50%

Poland

BrazilDairy

50%

Confectionery

Salty Snacks

Salads

Yad Mordechai

20%

49%

Business Partners Network

Romania

Serbia

Russia

Ukraine

Last update: 17.4.2018

Strauss Family 60.41%

Public 33.11%

Institutional 6.48%

New Zealand

Netherlands

Germany

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Analysts aiming for low growth companies structures

IMF warns world economy growing too slowlyThe “increasingly disappointing” world economy is facing

the threat of a “synchronized slowdown” and mounting risks including another bout of financial

market turmoil and a political backlash against globalization

Growth has also fallen in both advanced and emerging economies. High levels of private and public debt are

constraining spending – mainly growth-enhancing capital spending, which fell after the global financial crisis and has

not recovered to pre-crisis levels. That falloff in

investment implies slower productivity growth,

while aging populations in developed countries

* All the quotes above were written during 2016

Our economic future isn’t what it used to be. The Office for

Budget Responsibility revised down its growth estimates for each of the next five ears

Productivity growth, the long-term motor of rising

living standards, is slowing!

since the publication of the January 2016 Global Economic

Prospects, weakness in the global economy has persisted ….. the divergence in economic conditions

between commodity exporters and importers has widened. Some of the downside risks identified in January have

materialized, including softer-than-expected growth in advanced economies

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Global food industry trends driving significant difficulties

Israel F&B market left behind the credit card purchase trendDeveloped markets (Europe & NA) continuous decline in calories consumption per capita

“Best in Class” companies 2013-15 sales CAGR (reported)- difficulties to deliver top line

194

205

218

230

250

263

194 197205 202 206 210

Credit card purchases

F&B

0%-2%-3%-3%-4%-4%

-8%

Kraft Foods (pre KHCmerger)

NestleDanonePepsiCoGenerall Mills*Strauss GroupMondelez (pre coffeedivestiture)

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F&B companies seeking for global growth

• 4Pepsico 2013-2015 sales CAGR by regionsMondelez 2013-2015 sales CAGR by regions

-7%

-9%

-8%

Emerging marketsDeveloped marketsTotal Mondelez

-2%

-4%

-3%

Emerging marketsDeveloped marketsTotal PepsiCo

- F&B market significant slowdown at the developed markets (Europe / North America) with slow population growth

- Emerging Markets (Asia, Africa & SA) uncertainty environment effecting FX devaluations

Global F&B volume growth facing a slow down to almost zero in recent years

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TSR impacted mainly by growth but F&B market not growing…

*BCG analysis

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Since 2011-2012 “best in class” F&B companies put their focus on productivity as high priority KPI

to deliver return to stakeholders & sustainability

Companies Productivity journey starting point..

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Significant productivity initiatives around the world

• Nestlé has strengthened its global capabilities in e-commerce by signing a partnership with Alibaba in China, to grow online sales,

• Key brands strengthen and sales full control

• Lower cost structure with better data, planning, lower waste and disposal, selling exp…

• After global business slowdown, P&G launched three-year effort to trim its office workforce by about 10,000 employees in a year ahead of schedule, and up to 6,000 additional non-manufacturing jobs could be eliminated over the next two years

P&G employees elimination

• Closing 7 plants in US

• 2,600 positions elimination

• Significant investment and post new structure re-consideration of capacity needs and modernizing facilities

Kraft Heinz merger

• Closing 3 dairy plants in Italy, Germany & Hungary

• This step should allow Europe division be more competitive after 4Y of economy issues and consumer lower spending on food

Danone- Production restructure

Nov 15’June 14’

Nestle- E-commerce

Jan 15’ Apr 15’

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Companies productivity measurement - How and What ?

Long term goal of 5% of total cost structure YOY

2015 2016

% From Cost Structure XX% XX%

…

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Supported By:

01 02

03

Management focus• On-going control with steering

committee, transparency and data sharing

• “Out of the box thinking”

Technology/innovation• Implementing cutting edge new

technologies

People• Maximize current capabilities & new generation

Cultural and perception change to support SG sustainability

On going structured processes to maximize companies capabilities while routing new investments in future growth

Productivity primary task and main objectives

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SG adopting new

organizational state of mind

Common productivity definition & methodology

among Strauss Group companies

Connection to Strauss

Group strategy

Productivity

Project

Full commitment of SG and company’s

management to productivity process

2016 Phase I - Project goals

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The processKey functions across all value chain supported the project

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Setting the operational tools

Project framework

Productivity KPIsProductivity definition

Project filter

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We faced significant challenges during the project

Define Productivity, lack of

information and best practice

Different productivity

business stage in each SG

companies

One accepted methodology

and KPI by all companies and

SG management

Implementation – cooperation,

responsibility, no “early wins”

HQ added value and involvement

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SG Productivity development Timeline

1st Generation

• 3Y cost reduction in S. Israel• VIC project• New Cellular and Vehicles agreement • SG HQ cost reduction• S. Water re-organization• Automation of processes and

infrastructure

…201720162012… 2012

Efficiency projects

2nd Generation

Efficiency & cost reduction projects

Next Generation

• BOM improvements • Substitute RM• Substitute suppliers• Alternative packaging materials• Production line optimization• SKU efficiency • Products re-sizing

Managing productivity performance across the entire

value chain

• Cutting edge innovation & technology• New infrastructure and platform• Personalization marketing• B2C and E-commerce • Organization restructure• Plants consolidations• Managerial culture• Decision making measurement• Organizational connection with new generation

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AOP main productivity objectives - Sample

S. Israel

*Productivity managerial tool

S. Water S. Coffee BV Sabra + Obela

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2017-2020 productivity mission implementation

Productivity cultural change

Delivering process rationale to partners &

stakeholders

Full project Implementation &

Communication through the organization

Project implementing as integral part of partners

work plans

Main KPI approvalAOP

implementation

On going KPI control and BOD updates across companies

Phase 1 Phase 2

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Thank you