1. Food and drink industry in the region through the eyes of the practitioner Veli Pekka Tennilä CEO Part of the Carlsberg Group

2. Agenda Carlsberg Group Today Saku Õlletehase AS Food and Beverage Industry – impact and insights Beer Industry – impact and insights

3. 3 The Carlsberg Group today No 1 in Northern Europe No 1 in Western Europe No 4 worldwide 75 breweries in +25 countries More than 45 000 employees 150 markets sell Carlsberg brands 120 million HL beer produced in 2008

4. 4 Saku Õlletehas 1820 founded by Karl Friedrich von Rehbinder 2008 Saku became the member of Carlsberg Group 260 employees – the biggest employer in Saku local municipality 41 % Saku is the leader in Estonian beer market Beer, long-drink, cider, waters - categories Saku competes in Brands: Saku Originaal, Rock, Carlsberg, Kiss, Zip, Vichy and VivaFresh Export markets: Finland, Sweden, Baltics, Ukraine, England, US, Canada

5. 5 The European food and drink industry is the EU’s single largest manufacturing sector in turnover and employment terms 2008 turnover € 965 billion (+3,2% compared to 2007) The largest manufacturing sector in the EU (12,9%), followed by - automobile - chemical industries € 23.6 billion €1.1 billion €10.5 billion € 16.4 billion Turnover in EU Net sales in region

6. 6 4.4 million people (+0.8% compared to 2007) leading employer in the EU (13.5%), followed by - fabricated metal, - machinery - equipment industries 65 600 people (2.3%) 16 700 people (2.5%) 34 600 people (1.3%) 55 400 people (1.2%) The European food and drink industry is the EU’s single largest manufacturing sector in turnover and employment terms Direct employment in EU Direct employment in region

7. 7 Retail market concentration top 3 retailers account for 75% Dansk Supermarket, Coop and Dagrofa top 3 account for 60% ETK, Rimi, Selver top 3 account for 83% S-Group, Kesko, Suomen Lähikauppa top 3 account for 75% ICA,CoopNorden, Axfood Concentration in the retail sector is exceedingly high in most EU countries Concentration in region

8. 8 Together with retail trade concentration the private label share increases 18.4% 3.15% 14.2% 19.7% Private label value share 2007 23% of sales 4% of sales 15% of sales 2% of sales Europe is the “home” of private label Private label in growth trend – in certain retailers 89% of the product range is private label Discounters are the true private label experts in terms of sales shares.

9. 9 Household spent on food and beverages In 2008, households spent on average 13% of their expenditure in the EU on food and non- alcoholic beverages 11%11% 20% 13%13% 12,5% Household spend in region

10. 10 The food industry dominated by international brands (Kraft Food, Unilever, Coca-Cola, Pepsi) Agricultural product mainly from local suppliers (Arla Food, Danish Crown) The supermarket is the principal store format Private label “low”, but growing Growth in convenience & forecourt retailing According to international statistics, food in Finland is approx. 10% more expensive than average EU. HoReCa sector continues to grow slowly. Responsibility, food safety, sustainable development, green values and functional food are the core values in current and future food marketing Domestic preference is strong. Swedish consumers display a high loyalty to domestic food – influx of ‘cheap’ food imports after EU Entry. Authorities place strict requirements on overseas suppliers vis-à-vis hygiene and food security – salmonella testing. High consumer awareness of environmental issues, organic food production and animal welfare Consumers are very price-sensitive regarding food purchases Market characteristics

11. 11 European beer industry impact Europe is the number-one beer producer world-wide Annual consumption ca 394 million hectolitres, i.e. €124 billion in value 2.5 million jobs generated by EU brewing industry (1% of all jobs in EU) € 57 billion government revenues from brewing industry

12. 12 Per capita consumption split in pure alcohol 2007

13. 13 Export and import AVERAGE PERCENTAGE = 15% AVERAGE PERCENTAGE = 13% IMPORTEXPORT

14. 14 Consumption: off-trade versus on-trade In 2008 some 394 million hectolitres (hl) of beer were consumed in the EU Over 60% is purchased off-trade (in supermarkets and other retail outlets) The other 40% is purchased on-trade (hospitality sector – pubs, restaurants)

15. 15 Questions please! v.p.tennila@saku.ee