Making it work in Russia

Local perspectives on the consumer products sector

January 2011

Contents

Making Russia work Key takeaways Focusing on critical success factors Companies are reporting an OK year Homing in on the middle classes some observations Challenges are threatening growth prospects

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Making Russia work

Consumer products companies are in the process of resetting their perspectives on Russia. While concerns over the predictable unpredictability of the market remain, there is now a much sharper focus on how to make the business work better and on getting things done rather than on where the market is going or when consumer condence will return.
Russia is a tough market but a good one. That was the consensus at a meeting hosted by Ernst & Young, with Dr. Danny Thorniley, President of DT-Global Business Consulting, in December 2010, for 15 country leaders from some of the worlds largest consumer products companies operating in Russia. While some executives question whether conditions are improving and there remains impatience with the slow pace of change, we see a lot of resilience among local Russian leaders and a clear determination not to be beaten. Character traits of successful leaders in this marketplace seem to be a willingness to experiment, an acceptance that there will be some failures, a relatively high tolerance of uncertainty but, above all, an ability to learn, adapt and master the art of what some might call strategic improvisation. Ernst & Young continues to believe that there is opportunity in Russia. Although having decoupled somewhat from other emerging markets, the country offers consumer products companies the strongest opportunity for growth in Europe. The middle class is rapidly expanding and its high levels of disposable income compared to developed economies (where consumers typically carry much higher levels of personal debt) create considerable opportunities for corporates that are able to produce innovative products with a strong value proposition. This holds particularly true for companies operating primarily at the premium end which is still such a dominant feature of this market but also for those that followed consumer spending patterns down by expanding their affordable offerings. Against this backdrop, one of the key strategic challenges in 2011 will be how to get the balance right between premium and affordable goods in an operating environment where the cost of people, space and raw materials can be as high as in developed markets. Despite the recent nancial crisis, global headquarters still expect very strong top and bottom line growth and a high return on investment. Talent is another key challenge exercising country leaders. Will the shortage of talent hinder company growth? Firms need to invest in leadership and develop the right management structures and workplace environments that nurture talent, provide opportunities for development and therefore boost the retention and growth of local personnel on which the future of the business will depend.

Emmanuelle Roman Global Markets Leader Consumer Products eroman@uk.ey.com +44 (0)20 7951 1651

Dmitry Khalilov CIS Retail & Consumer Products Leader

Adlai Goldberg CIS Performance Improvement Leader Advisory Services adlai.goldberg@ru.ey.com +7 (495) 755 9847

dmitry.khalilov@ru.ey.com +7 (495) 755 9757

Making it work in Russia Local perspectives on the consumer products sector

Key takeaways
Company leaders still view Russia as a market with huge opportunity. However, some still feel that they need to explain Russia to their global headquarters. Most executives agree that you have to live with the predictable unpredictability of the market, in particular the arbitrary tax and regulatory environment. A concern for some companies is the perceived unpredictability of government intervention. For most companies, 2010 was OK, ne, not bad but generally not a bounce back or a fast V-shaped recovery; some companies, however, performed better than average. Executives all agree that consumer condence is coming back and they are feeling more positive about the future. The last four to six weeks of the year were going to be decisive for some in judging 2010 as a whole there was still a lot to play for. The turnaround is attributed by many to getting the innovation, value proposition, pricing and consumer service right. There is consensus that the market will no longer be the same and that the game has changed. Executives remain unsure about the future intentions of the consumer just as they were six months ago. They do know that the Russian consumer is more value conscious and has become more sophisticated. As one executive put it Russia is becoming a normal market where people are becoming real, more informed and educated consumers and therefore much more like their European neighbors. Most executives report that the premium segment is strong and there is still room for growth in years to come. Some wonder to what extent they should focus on affordable innovation. One executive asked: What should be the right combination between premium and mass market going forward? Human resources and talent management remain at the forefront of executive strategic thinking loyalty, turnover and rising salaries are issues. Some executives question whether they will be able to grow their business at the rate they plan due to the shortage of talent. Developing a strong middle management team is seen as a signicant driver to motivating and retaining people.

Economic snapshot
GDP is recovering and so is the Russian economy. The GDP growth would have nished 2010 at 5.2% without the summer drought and autumn investment dip. It looks set to nish 2010 just under 4.0% and next year rise to 4.5% and maintain at that level in future years. Ination is rising but interest rates remain low. For the same reasons, ination would have nished at 6.8% in 2010; instead it nished at 8.8%. It will remain stubborn in the rst three to four months of 2011 before falling back to around 7.8% at the end of the year and trending down to around 6.8% in 2012. The Central Bank had been keeping interest rates low because it wanted to stimulate the economy, but looks set to raise them gradually in 2011. Credit ow is still an issue. Bank credit grew in singledigits in 2010 and the Central Bank is probably correct to expect credit emissions to rise by 12%15% in 2011. But this is insufcient to drive the economy. Consumer credit was rising at the end of 2010 and we shall see if that trend continues. Oil price is strong but the rouble is going through a funny period. With the oil at US$100 per barrel, the rouble ought to be trading 4%6% higher than it is, based on averages in the last 18 months. Low interest rates, rising ination and resulting capital outows are some reasons why the rouble is going through a funny, weak period at a level logically lower than normal.

Making it work in Russia Local perspectives on the consumer products sector

Focusing on critical success factors

Pulling together some of the key themes from the meeting and drawing on our experience of working with consumer products companies in Russia, we believe that in order for companies to make Russia work for them, the focus should be on the following:

and providing strong leadership can pay dividends in an increasingly competitive marketplace. The game is about more than just cash investing in the development of a modern workplace, introducing exible management practices and applying an international mindset can have a signicant effect.

Striking the right balance between premium and affordable

Finding the right balance between premium which is still performing well and where margins are higher and affordable goods, where volumes are greater, is a critical task. With most companies operations geared toward a particular end of the spectrum, deciding how to adjust the product mix to maximize market opportunity at both ends of that spectrum and still leverage the existing sourcing, manufacturing and distribution model is a signicant challenge. The stakes are raised even further in an environment where the cost of doing business is comparable to developed markets and much higher than in other so-called developing economies.

Driving out cost in an increasingly high-cost environment

The cost of doing business in Russia remains high and is compounded by rapidly rising commodity costs, inefcient supply chain logistics, rising salary levels and the high cost of space. However, in our experience, there are cost-saving opportunities, particularly in areas such as procurement, sourcing, logistics and working capital (both in inventory and collectibles). Tax is also a particular concern, and frequent and relatively complex changes put a premium on insightful planning and prompt mitigation efforts. Fundamentally however, the question remains: are there enough efciencies that can change the cost structure signicantly in Russia? This paper provides context and insights on the current environment in Russia and highlights specic points which underpin the strategic imperatives that companies must consider in this market.

Sharpening the value proposition across the portfolio

The post-crisis consumer is more sophisticated, buying a combination of premium and affordable products as the situation requires, but always with a clear focus on value for money and quality. Russian consumers expect more for their rouble across the spectrum of premium to affordable product ranges. As we believe there may still be big shifts in consumer behaviors to come, consumer products companies success will depend on improving real-time consumer insights and developing the right offer at the right price. In an environment where Western brands are no longer seen as automatically better, we believe that skill in communicating the value proposition will create tangible market advantage.

Key questions for 2011

Attendees were keen to get better answers to a number of questions as they look to the future: How will consumer behavior continue to change? What is the rate of development of modern retail trade expected to be? What will the distribution model look like in ve years? What changes will be needed to optimize the operating model? What talent will be available in future in Russia? What will the global priorities be in terms of growth markets?

Managing talent effectively

Turnover of local staff remains high and wages are rising, but executives are noting that attitudes to work and qualication levels are not improving, unlike, for example, in fast-growth Asian markets. Higher-performing companies have focused on the people issues throughout the nancial crisis and are discovering that greater focus on managing middle management, nurturing talent

Making it work in Russia Local perspectives on the consumer products sector

Companies are reporting an OK year

Against a mixed economic backdrop, executives are not reporting a sustained business recovery. While business has certainly improved, executives need more time to judge the sustainability of the pick-up. Several executives summarized their business in 2010 as acceptable, but the majority were not overexcited by results in 2010, nor were they naively overoptimistic about prospects for 2011. There is a gap between economic and business results. In Russia indicators for GDP growth, disposable income and real wages started to rise in January 2010. However, retail spending and Western sales grew proportionally more slowly for several months. The gap only started to narrow in the second and third quarters when consumers became sufciently condent to splash out on Western products.

One of the more bullish attendees saw revenue in Eastern Europe grow 20% in 2009 as the business beneted from unemployment worries and women looking to save money during the recession. A regional MD from the beverage sector summarized his latest trends and future ones by saying: I am increasingly positive. Our nancial year started in July and we had a tough start with a slow quarter. But the consumer is coming back and November was strong. People are beginning to spend and Christmas will be good as Russians like to have a good Christmas. After January, it will be a sustained recovery, so I am feeling good but not great. One major company operating across several consumer products sectors had reported topline sales growth of 8%10% in 2010 and, in its 2011 budget, was managing expectations and looking to grow further at a steady 12%14% through 2011. He said that these numbers matched those of many consumer products companies overall.

Russia is seen as challenging but worth it

The large majority of executives were realistically hopeful about steadily improving business trends in 201112 and most thought that Russia hosting the soccer World Cup in 2018 will have a positive economic impact, in that it will drive consumption and add a real stimulus to infrastructure spending. There is general skepticism about the value of government investment in innovation, modernization and infrastructure, and little expectation that efforts to diversify the economy will generate meaningful change. Yet, the sense of the meeting was that the market is nevertheless attractive and that the risks are manageable. Even if the country is not developing as far and as fast as companies would wish, the sentiment was that Russia is still very much worth it. In part, this is down to the recognition that although the glory days of 200708 are gone forever, 2011 looks as if it may prove to be a steady to good year for business. Many good features of the market remain, it is just that Russia has become a tougher, more competitive, more consolidated and, in some cases, less protable market, than in the past. However, longer term, the prospects look stronger, with Russia set to become the engine of European growth.

The mood is broadly positive

Reecting on the year overall, the Managing Director (MD) of one major European company noted that: The HPC (household and personal care) business is going OK, with growth reported at 5%6% while our pharmaceutical (OTC) business is doing really well with 30% growth. This executive explained that they had experienced a tough time in the rst half of the year but the second half was improving, which reects a general business trend. The MD of a leading tobacco company conrmed these trends when he remarked: The business is going OK-ish. There are some hints that the market is recovering but it is not bouncing back. The next 6 months will tell us a lot, in particular about consumer behavior. Trends in the coffee and tea market were seen as very dynamic by one senior executive who said: I can see three to ve years of growth in our premium sector. This executive, however, was concerned that increasing regulation could hit his business in the future, along with price regulation.

The consumer is coming back ... people are beginning to spend.

Making it work in Russia Local perspectives on the consumer products sector

Russia will be the engine of growth in Europe

While it may have decoupled from other emerging markets, Russia remains the fastest growth market in Europe and is performing well ahead of Turkey and Poland, its nearest CEE* competitors. Russia is the European BRIC and its growing middle-class with its high levels of disposable income means a strong top and bottom line in super premium and premium goods. Russia will be the largest consumer products market in Europe by 202224. Companies reporting single digit growth in 2010 are projecting 11%14% growth in 2011. However, the picture is not uniform while 20% of consumer products companies are already growing above 10%, the same proportion report at or falling growth. Russia will grow as a proportion of CEE business in 2011, we expect Russia to account for 35%40% of the regional market share on average and more for a few major consumer products companies.

One luxury goods executive said that 2010 had been an ascending year. Fundamentally, beauty and luxury is an enduring segment in Russia, and Russians have a passion for brands. A brewer conrmed that consumer condence is returning at the top end and that premium brands are selling better than cheaper goods. A consumer products leader endorsed this view, saying: Tier 1 and 2 products are going up, tier 3 are at and tier 4 are declining. I see more premium brands growing. The premium trend is also apparent in apparel. An executive said: Expensive products are going through the roof when you have good innovation and a good story, you are there with the consumer. With the right innovation and the right communication, consumers are responding very well. Overall, the market continues to premiumize in coffee, dairy, alcohol, tobacco and other segments, although the rate of premium growth was not as high in 2010 as assumed in operating plans. With premium the primary driver of margin in an increasingly high-cost market, companies will be keen to conrm that appetites remain strong. All eyes will be on the rst quarter of 2011 as a marker for how sustainable the market will prove to be. December to March is a critical season for this industry and, at this point, it remains to be seen whether the ups of Christmas may be compensated by a sluggish rst few weeks of the new year.

Premium is performing strongly

The absence of debt and low taxes means that Russias emerging middle class is well positioned for the future. Less exposure to the stock markets and to the vagaries of pension and mortgage markets, combined with higher levels of savings mean that Russian consumers have more spending power than, for example, consumers in the US. The Russian consumer craves Western brands and the message and lifestyle that go with them. This view was conrmed by several executives who stated that their premium-priced segment is holding up well.

Consumer behavior is changing and the market is becoming more normal

However, consumers are not interested in luxury at any price and businesses have to work harder to demonstrate value at every level. One executive neatly summed up what many feel will be an enduring change in Russia: People are becoming real consumers, being more informed and educated, they are comparing prices. The market is not the same any more. We need to add value, give an experience to our consumers by focusing on the quality of retail and building the brand. Russia is becoming a more normal market. Many at the meeting shared the view that the Russian consumer wants value at every price point. The new consumer is more sophisticated, willing to take time to shop, to make comparisons around price and quality, and to buy products of differing quality at different times for different occasions. While there was still some

When you have good innovation and a good story, you are there with the consumer. With the right innovation and the right communication, consumers are responding very well.

* Central and Eastern Europe.

Making it work in Russia Local perspectives on the consumer products sector

uncertainty over the future intentions of the consumer, just as there was at the meeting six months previously, executives seemed to be more comfortable with this uncertainty. There is a growing acceptance that this is the way the Russian market is, and a growing belief that companies can make it work, despite not having all the answers. Lower down the product portfolio, the stress on value remains equally important. As one executive in the beverage industry conrmed: We followed the consumer down during the downturn and the search for value will remain. It has hit our margins. The consumer has been trained to look for value during the recession, and an increasing volume went via promotions. It will be difcult to go back.

also a particular concern and adding to margin pressures. None of these concerns is expected to improve in the short or medium term, putting continuing pressure on companies ability to perform adequately in this segment. Although getting the balance between premium and mass market right will be tough, at least one delegate felt this was a positive position to be in, however: The good news is that the Russian market has the potential to be both a good premium price market and an expanding lower price, affordable innovation market.

Work is still needed on managing HQ expectations

Global managers remain focused on execution risk in Russia, which is considered very high because of a range of factors, including the relative lack of transparency, and the lack of predictability and reliability in the regulatory environment. One executive neatly summed up the problem: The issue we have is that the people in the organization do not believe us when we tell them that there is a new tax law to be effective a month later but nobody knows what it will be. Large scale counterfeiting and a persistent level of corruption also represent a considerable drag on businesses. There was no sense at the meeting that the intensity of concern from global headquarters is diminishing. In fact, we noted a slight shift at global headquarters to focus on the Russia/CEE region more. This may stem from the fact that the outlook for growth in Western Europe is very bleak and, therefore, CEOs are focusing their attention on the growth that markets such as Russia can bring. As a result, Russian business leaders continue to have to work hard to manage the expectations of global headquarters management and to communicate both the opportunities but also the complexity of this market. The challenge is to generate some comfort that, while the market may be difcult and unpredictable, it does not mean it is uncertain consumers are back and appetite for premium remains.

Getting the right balance between premium and affordable is a real challenge
Executives are very concerned about rising commodity/input prices making Russia an even more expensive place to do business. This raises questions about how companies implement affordable innovation: how do you create products at cheaper prices in Russia when your cost base is so high? Execution and productivity are the answers, but how viable are these? A food company executive spoke of how the company had introduced a pricing reset and prioritized affordable innovation as part of a refocus away from heavily advertised premium goods in favor of the mass market, where it sees signicant potential. This strategy had generated double-digit growth across every indicator but raises a new question: What is the right balance between premium and mass market?

The good news is that the Russian market has the potential to be both a good premium price market and an expanding lower price, affordable innovation market.
The challenge for companies is in funding affordable innovation when costs are rising and margins are shrinking. In addition to Russian ination, global imported ination and food product ination are both pushing up the cost base, usually quicker than the price rises of Western products. The rising cost of people is

People in the organization do not believe us when we tell them that there is a new tax law to be effective a month later but nobody knows what it will be.

Making it work in Russia Local perspectives on the consumer products sector

Homing in on the middle classes some observations

Companies at the meeting were expressing greater interest in the middle and mass markets. Russia, home to 140m consumers, is the most prosperous of the BRIC countries and its middle class is more afuent and easily accessible. Our view is that companies are making a move to target this segment, promoting international brands at price points that are comparable with local products. The middle class in Russia is stronger than in other emerging markets and is growing strongly. Some 73% of the population is urban (half the population lives in cities of more than 100,000 people) and accounts for 85% of the purchasing power, making Russias middle class more afuent and easier to address than in other emerging markets. Although the population may be smaller and is forecast to decline due to low birth rates, abnormally high death rates and emigration, Russia is currently the most prosperous of the BRIC countries. The country boasts a stronger upper middle class with 10m households earning over US$50,000 per annum at PPP (purchasing power parity).

Russians remain brand conscious and the growing middle class makes this an attractive market for high-value items. However, companies should note that average gures conceal considerable regional inequalities. For example, rural areas tend to contain a higher proportion of poorer Russians, especially elderly living on xed incomes.
150
146

140

135

129 122

Russias population is forecast to continue to decline

Russia population (m)

100

50

0 2000 2010 2020 2030 2040

Source: Global Insight, Rosstat

Moscow Saint Petersburg Novosibirsk Yekaterinburg

1.41 1.34 1.28 1.14 1.14 1.13 1.10 1.05 4.60

10.56

73% of the population is urban and accounts for 85% of the purchasing power Half of Russias population lives in cities with greater than 100,000 inhabitants

25

GDP per capita (US$000)

21

20
14

82% of all households in Russia will be part of the middle class by 2015 Russia is the only BRIC market with a tangible upper middle class today (10m households with income >US$50,000 at PPP)

Nizhny Novgorod Kazan Samara Omsk Chelyabinsk Rostov-on-Don 0

15

10

Source: Global Insight, Rosstat 4 6 8 10 Population of Russias largest cities 2010 (m) 12

0 Brazil 1,500 Russia India China

12

Number of households (m)

10 8 6 4 2 0

Number of Russian households by income bracket (US$PPP000, 2009 actual prices)

Population (m)

1,000

500
140 135

0 Brazil Russia India China

2010

2020

Source: Global Insight, Rosstat

1 to 3

3 to 5

5 to 10

10 to 15

15 to 20

20 to 25

25 to 30

30 to 40

40 to 50

50 and above

2009

2014

Source: CEEMEA Business Group

Making it work in Russia

Challenges are threatening growth prospects

Russia, like many emerging markets, has never been an easy place to do business. Companies are struggling with a raft of challenges, none of which are showing any signs of being resolved soon.

Another suggested strategy was to focus on leaders. What makes people tick are leaders. You need to nd a leader, someone who makes things in a simple way and someone who wants change; then, you need to talk to them to ensure that what is in your head is in their head. There are gems out there.

Where should HR focus?

While the crisis persists, HR departments are likely to continue re ghting laying off staff, controlling salary increases, trimming or slashing benets, and managing expectations downward. There is a recognition they need to upskill and contribute more to innovation, strategic thinking and relationship building if they are to become better partners to the business. HR issues that are on the horizon include the concern that staff turnover will only increase as market condence returns and that salary expectations will rise as growth and protability strengthen, making talent management an even more critical success factor for the business. How much to raise salaries is one of the most challenging questions for country managers. At least, 45% of companies are looking at providing salary increases in the range of ination plus 1%10%. With ination rising now by almost 9%, this means salary increases for many companies of 12%17%. For top-talent, the range can be much higher. One executive in the consumer products sector has raised the concern: We are growing sales at 7%8% but salaries are rising at 15%18%. How do we reconcile that? Also of concern is the future role of expatriates typically they have experience of running large complex operations and are corporate insiders well known to HQ. However, their presence can block the development of senior local staff and they are unlikely to want to remain in a job beyond a typical three-year posting in order to maintain the ability to transition smoothly to a corporate role in the West.

Managing the HR issues

According to some executives, staff turnover is high (20% precrisis), quality is reducing and the attitude of staff and their willingness to learn appears to be diminishing compared with other markets. One suggested that people tend to be issue-oriented rather than solution-oriented. Another said that Russian companies do not look after staff, but pay well, creating a culture of high nancial expectations, but where the international companies have to act as the university for people. One company felt it was easier to nd people 15 years ago and another suggested that lack of talent was putting a brake on corporate growth: Making our business sustainable will require the right team it is difcult to nd and build it. Little wonder then that human resources and talent management remain at the forefront of executive strategic thinking in Russia. To combat the issues around turnover, wage expectations, attitude and professional development, one country chief commented that he now spends 20% of his time screening and interviewing staff and another explained the importance of having a back-up plan a number two for critical roles who could step in should a key person leave.

Making our business sustainable will require the right leadership team it is difcult to nd and build it.

One executive explained how he tackled the turnover problem by interviewing all the leavers and identifying what was clearly a core issue that 95% were not satised with the management. Since that time, the company has invested in middle management, is looking after them and, as a consequence, has seen motivation levels rise and staff turnover drop to less than 10%.

Making it work in Russia Local perspectives on the consumer products sector

Anticipating government intervention and taxes

One executive commented that: The biggest challenge is regulatory, ongoing government interference. By trying to tackle illicit trade, bad decisions are being taken. Executives were concerned that the spirits and tobacco subsectors continue to be hit hard, and companies in other subsectors are wondering when attention will turn to them. The consensus was that government intervention is a daily reality and that it is becoming progressively more difcult to do business in Russia due to the unpredictable tax environment and bureaucracy.

In the current unpredictable regulatory environment, companies seemed to be experiencing difculties in framing an effective response to these black market challenges. A beverage company questioned when regulations will become clear and transparent to reduce the level of grey business in Russia.

Keeping a lid on costs

The costs of doing business are rising as a result of the challenges outlined above. Companies are hiring additional and expensive staff to keep pace with changing regulation, which represents a considerable drag on the bottom line. One executive commented: It is a lot more difcult to do business in Russia now than it was a few years back, due to the tax environment and bureaucracy. Another conrmed: These are non-value added activities and there is a cost attached to them. Maintaining a rm line on salaries is easier in developed markets where staff tend not to expect fast, frequent and above-ination pay rises. But Danny Thorniley predicts is a disjunction in the emerging markets, where many staff accepted cuts or at salaries during the crisis but now want a larger share of the cake.

Taxes have the largest potential impact on our business, a huge impact on our protability.

One of the executives conded that: Taxes have the largest potential impact on our business, a huge impact on our protability. What can we expect? When the Government is looking for money, it targets bad sectors (such as tobacco) and foreign companies, so we are not in the best position. While the Government continues to prioritize social spending for example, raising pensions by 46% the need to balance the budget by raiding corporate coffers is unlikely to diminish. Not surprisingly, there is a level of frustration that while businesses know that tax changes will be implemented, they receive no advance warning of the nature of the change and therefore have no opportunity to plan accordingly; or to factor the impact of future tax charges into their growth projections.

Judging the timing and size of pay increases is the most challenging operational issue facing executives globally but especially those in emerging markets.

Responding to corruption, counterfeiting and illicit trade

One beverage company pointed out that 46% of vodka sold in Russia is produced by companies that are not paying taxes and therefore enjoy a signicant advantage over foreign brands. On a related theme, intellectual property protection is an issue for one apparel company, where 25% of products in the marketplace are counterfeit. The senior executive from this company noted that: There are smart people out there who produce quality products and price them as our brand products.

In addition, businesses are struggling with rising commodity costs, which will translate into higher input costs resulting in lower prot margins. Globally, the cost of raw materials rose sharply in 2010, driven by supply constraints, increased demand, particularly in emerging markets and investment speculation. Companies are starting to acknowledge that they will need to pass on these additional costs in higher consumer prices.

Making it work in Russia Local perspectives on the consumer products sector

Ernst & Young Assurance | Tax | Transactions | Advisory

About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com How Ernst & Youngs Global Consumer Products Center can help your business The global recession has reset the consumer products landscape. Value-seeking consumers, intensified competition, increased commodity costs, and growth opportunities in emerging markets are driving change. Consumer products companies now need to be leaner and more agile, with a relentless focus on execution. If you lead a consumer products business, you need to anticipate trends, identify implications and make informed decisions that support your business goals. Our Global Consumer Products Center enables our worldwide network of over 13,000 industry-focused assurance, tax, transaction and advisory professionals to share powerful insights and deep sector knowledge with businesses like yours. This intelligence, combined with our technical experience, can help you accelerate and improve your execution. We can help you to realize the full value of your transactions, improve customer and brand profitability, drive down costs and build an agile and resilient supply chain. If you want to compete powerfully in your market, well help you achieve your potential today and tomorrow. The views of third parties set out in this publication are not necessarily the views of Ernst & Young. Moreover, the views should be seen in the context of the time they were expressed. 2011 EYGM Limited. All Rights Reserved. EYG no. EN0267
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