1. Private and confidential Go to Master Slide and insert client logo here The “Walmart effect” in SA Kirsty Laschinger +27 11 384 2116 Kirsty.Laschinger@sbgsecurities.com Opportunities for and impact on agriculture

2. Go to Master Slide and insert client logo here 2 2 Contents Introduction The Walmart business model Case studies of the impact on suppliers Supply chain wins Potential benefits for suppliers Focus on fresh produce Walmart as a catalyst for sustainability The good and bad of supplying Walmart/ Massmart Conclusion

3. Go to Master Slide and insert client logo here 3 3 Introduction Walmart’s offer to buy 51% of Massmart effective 20 June 2011 – Subject to legal challenge A real game changer Anxieties about real and perceived threats – Jobs ► Retail and manufacturing – Imports – Concentration in retail sector The deal is done, let’s find a way to make this work

4. Go to Master Slide and insert client logo here 4 4 The Walmart business model Walmart’s every day low prices (EDLP) strategy is based on: – Low promotional sales prices, instead it focuses on low, stable prices; – Stores have some autonomy in setting prices and there can be up to a 10% price difference between stores as a result of the pricing of local competition; – Price positioning is different by format, reflecting the consumer income level at which it is targeted; – Price positioning is different in categories as the group selects some top-of-mind areas where it wants to be “unbeatable”; – It has 100 “highly visible” products priced below market; – Vigorous communication Underpinned by everyday low cost (EDLC) strategy; BUT there is more to Walmart than just prices

5. Go to Master Slide and insert client logo here 5 Impact on suppliers Suppliers key to fulfilling the promise The good: – A better business; – Complete transparency – Support for new businesses; – Willingness to try innovations. The bad: – Focus on price; The ugly: – Relentless drive for efficiency. Source: Walmart

6. Go to Master Slide and insert client logo here 6 6 Supply chain wins – The supply chain will be a focus in the quest for efficiency Source: Ecomodder.com

7. Go to Master Slide and insert client logo here 7 7 Potential benefits for suppliers Building a local business – Supplier support; – Retail Link gives good insight; – Opportunity for innovation and value adding eg shelf-ready packaging. International opportunities – Wine; – Fish; – ???

8. Go to Master Slide and insert client logo here 8 8 Focus on fresh produce Source: Walmart

9. Go to Master Slide and insert client logo here 9 Walmart as a catalyst for sustainability Walmart’s sustainability programme: – Supplied 100% renewable energy; – Create zero waste; – Sell products that sustain people and environment

10. Go to Master Slide and insert client logo here 10 Walmart as a catalyst for environmental change 2005 21 st century leadership speech 2006 Launched packaging scorecard; Goal to sell 100m CFLs. 2009 Announced sustainable product index; Seeded funding for Sustainability Consortium; Met global goal to design and open stores that are more efficient and reduce greenhouse gases (GHGs); Achieved 60% improvement in US fleet efficiency improvement. 2008 Set plastic bag waste reduction goal; Beijing sustainability summit; Met goal to purchase only concentrated detergent in USA; 38% fleet efficiency improvement in USA. 2007 Set concentrated liquid laundry detergent goal in USA; Sold more than 137m CFLs in USA. 2010 Set goal for global GHG emissions in supply chain; Global sustainable agriculture platform launched; Achieved 65% improvement in US fleet efficiency Source: Walmart

11. Go to Master Slide and insert client logo here 11 Conclusion There are both success stories and supplier corpses; An opportunity if engage – Local supply; – New offshore markets; – Potential champion for organic produce; – Good for innovation; Impact – Focus on price – Competitors will squeeze back; – Even if you choose not to supply Walmart/ Massmart, you will become more efficient

12. Go to Master Slide and insert client logo here Private and confidential Questions