Boston Consulting Group Responsible Consumers - Unilever Discussion 21st July 2015

Unlocking the growth opportunity of the
'Responsible Consumer'
Unilever work session
July 2015
Objectives and agenda for today
Quick round of introductions
Share key findings from our Responsible Consumption research
Share our view on implications (positive and negative) for large companies
Discuss what it could mean for Unilever and your categories and brands
Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.
We have two hours scheduled together lets make it a real
discussion and maximize value to you
Responsible Consumer - Unilever discussion 21st July 2015.pptx Draftfor discussion only 1
Why the research: consumers have been telling us for years
that they buy Fair, Eco, Social products
United States Europe Big 5

% respondents buying 'responsible' products1 % respondents buying 'responsible' products1
80 77 80
73 73 74 74 74 75
72
65 65
60 60
40 40
20 20
0 0
2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
1. % of respondents indicating they a) systematically buy 'responsible', b) sometimes buy 'responsible'

Source: BCG consumer sentiment barometers 2008-2012, Survey Responsible Consumer 2013
Today ~75% of consumers are buying 'responsible' products
.. and >50% of buyers

~75% of respondents buy 'responsible' products.. indicate increase in behavior
% respondents % respondents
26 100
100 60
52
26
80 42
41
40
60
40
14 74
20
11
20
7
8
0 0
Buys in most Buys in Buys in Occasionally Does not Total Buy in more No Buy in less
categories about 5 less than 5 buys buy categories significant categories
categories categories systematically than 2 change than 2
years ago years ago
At the same time broad scepsis on "say don't do", "willingness

to pay" and limited facts on actual purchasing
Source: Survey Responsible Consumer 2013
We have combined deep routed market analyses with
extensive consumer research to clarify this phenomenon
SKU level analyses Consumers

of 20 categories survey with >9000
using IRI US data respondents
Deep routed Deep dives Conjoint with Extensive
market in European ~300.000 purchase consumer
analyses markets choices research
Deep dives of MindDiscovery

selected brands sessions in US and
and stores France
Covering full spectrum of 'responsible consumption'
Product benefits that go beyond what a product directly offers to the consumer
Benefits What it promises With many diverse 'claims'
Social and Fair Fair treatment of producers and workers
Environment Production, use and disposal of the product

friendly does less/no harm to the environment
Local and Products are made close by known
seasonal suppliers, supporting local community
Following organic or bio production

Organic and Bio
standards
Products are made with natural (non-

Natural
artificial) ingredients
Realizing that most of these benefits are poorly defined,

ambiguous and not truly understood by consumers...
Source: press search
Key messages to take away
We have heard about green/fair/social buying for years but always considered it niche
Our research however shows it is the major source of growth in consumer products
'Responsible products' make up ~15% of consumer product turn over and 70% of growth
Combination of explicit claims on Green, Eco, Fair, Organic, (real) Natural, social
Granular US analyses confirmed by lighter touch diagnosis in Europe
These products get an average price premium of 40% which results in high profitability
A-brand players are however losing out on this opportunity the space is captured by niche
brands and by Private Labels who use these claims to play in the premium segment
To capture the opportunity A-brands will have to overcome distrust, dive deep to understand
category and brand specific attitudes and likely have to redefine propositions end-2-end
Topics
Quantitative findings
Consumer drivers
Implications
'Responsible' products account for 15% of grocery sales
% of Sales
50
Household Personal
Food
care care
40
30
20
15%
overall
10
share
0
Baby Yogurt Soup Coffee Dog Frozen Household Laundry Shampoo Cosmetics
food Food Dinners Cleaner Detergent Facial
Cold Snack Milk Bottled Cookies Food Paper Body Shaving Dental
Cereal Bars juices & Towels Lotion Cream Care
Trash
Bags
Europe follow on: 'Responsible' products have substantial
market share across product categories and countries
Very stringent Stringent

Weak claims1
claims1 claims1
% Share 'responsible' of total % Share 'responsible' of total % Share 'responsible' of total

market, FR '13 market, GER '13 market, UK '13
15 15 40
32
11 29
30
10 10
8
7 7 20
5 13
5 4 5
4 9
10
2
0 0 0
Coffee Fruit Household Personal Coffee Fruit Juice Household Personal Coffee Fruit Juice Household Personal
Juice Cleaner Care Cleaner Care Cleaner Care
Claims included
in 'responsible'
1. Shares of responsible categories differ per country due to differences in data bases as in which "stringency" of claims are incorporated in 'responsible'- with the UK having the most lenient definition
Source:IRI Database 2014, BCG analysis
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'Responsible' products outgrow the market
CAGR 2010-2013 (%) Food Household care Personal care
70 66
60 59 58
50
39
40
31
30 27
25
20 20 20
20 17 16
14 13 14
10
10 8 7
6 5 6 6 5
4 3 3
2 1 2 1 1 1 2
0 1
0
-1 -1 0 0 -1
-10
Dog Yogurt Snack Milk Frozen Soup1 Laundry Household Shampoo Hand &
food bars dinners detergent cleaner Body
Baby Coffee Cookies Bottled Cold Paper Trash Shaving Dental lotion Cosmetics
food juices cereal towels & food cream care 1
bags
Responsible Total Market
1. In soup, 'responsible' growth lower than total market growth because of 'not regulated'/ light natural claims. Other claims all growing faster than market average
Source: IRI database
Backup
Europe: 'Responsible' products grow faster than non-
responsible products
%
Growth rates p.a. ('10-'13 ) per product category
30
22.6
20 19.3
16.2
14.9
13.1 13.7
12.6
10 8.5
6.9 6.5 7.2
5.2 5.6
3.7 4.1
3.0 2.4
2.2 2.0
0.4 0.2 0.9
0
Non-Responsible
-6.3
-7.9 Responsible
-10
Coffee Coffee Coffee Fruit Juice1 Fruit Juice Fruit Juice Household Household Household Personal Personal Personal
cleaner1 cleaner cleaner care1 care care
1. '12-'13 growth rate due to lack of sales data

Source: IRI Database 2014, BCG analysis
'Responsible' products drive ~70% of total market growth

Natural biggest contributor, but other claims are growing much faster
% total TO
9% 2% 3% 1% 1% 85%
(% US, 2013)
% of total market growth1 (US, 2010-2013, investigated categories)

32 100
100
80
7
6
60 10
11
40 34 68%
20
0
Natural Environmental Organic/ Bio Social & Local Traditional Total
friendly Fair Trade
Traditional Local
Social & Fair trade Organic/ Bio
Environmental friendly Natural
1. Sum of investigated categories , total market increase is $8B
Source:IRI Database 2010-2013, BCG analysis
Bulk of growth in both Food and Household/Personal Care

caused by 'responsible' products but with different claims
64% of growth in Food 77% of growth in Household/Personal

from 'responsible' products care from 'responsible' products
Total Market Growth1 2010-2013 (US, deepdives $B) Total Market Growth 2010-2013 (US, deepdives $B)
8 1.5
Share 'responsible' Share 'responsible'
2013: 19% 2.4 6.9 2013: 6%
0.3 1.1
6
1.0
0.3 0.2
0.5
4 0.8
0.4 0.0 0.0
0.5
2.5 0.5 77%
65%
2
0.2
0 0.0
Environmental Social Traditional Total Environmental Social Local Traditional
friendly & Fair friendly and Fair
Natural Organic/ Trade Local Natural Organic/ trade Total
Bio Bio
Source:IRI Database Deepdives 2010-2013

Consumers are paying a premium

Examples: coffee, household cleaning and shampoo
Coffee Household cleaner Shampoo

$ price/12 oz $ price/32 oz $ price/ 12 oz
8.2 34 5.9 3 7.0 6
7.5 7 3.5 32 5.8 12
7.5 21 3.2 11 4.3 8
6.6 25 3.1 9 3.6 7
5.6 30 2.7 4 3.4 10
3.9 11 2.5 5 2.9 7
0 10 20 30 40 50 0 10 20 30 40 0 5 10 15
Sales (2013, $M, US) Sales (2013, $M, US) Sales (2013, $M, US)
Responsible claim
Traditional
Source: IRI Database 2013, US retailers

Price premium of ~40% but wide diversity across categories
The 'average' 'responsible' product is Price premiums vary per category,

sold at a price premium of ~40% ranging from ~15-100%
Average weighted price premium per volume 1 Average weighted price premium per volume 2
(%, 2013) (%, 2013)
5 150
+42%
~80% of categories ranging
4 between ~15-100% premiums
3,7
100
3
2,6
2
50
0 0
Carbonated soft drinks

Refridgerated meats
Sports/ energy drinks
Frozen meat/poultry/seafood
Sports/ energy drinks
Cold cereal
Snacks
Paper towels
Dinners/ entrees
Bakery
Bottled juices
Hand & Body lotion
Yogurt
Non-fruit drinks
Meals
Cookies
Snack bars
Frozen baked foods
Refridgerated dough
Facial cosmetics
Frozen desserts
Coffee & tea
SS Fruit
Dog food
Household cleaner
Refridgerated meals
Breakfast
Coffee
Ethnic
Shaving cream
Shampoo
Frozen beverages
Dairy
Other frozen
Cookies & crackers
Juices
Refridgerated produce
SS Vegetables
Drink mixes
Water
Cindiments & sauces
Frozen meals
Baby food
Refridgerated condiments
Refridgerated baked goods
Frozen fruits & vegetables
Average non Average
"responsible" product "responsible" product
1. Weights all prices for Organic and Natural claims in Edible categories, minus 'other natural/organic' to all non natural/organic prices, based on sales and corrected for volume per serving - now only
based on 'Natural' and 'Organic' US products only edible categories included, outliers excluded 2. All IRI edible categories and all non-food from deep dive categories outliers excluded
Source: IRI database 2013
Europe sample: Responsible products growing faster and
gaining higher price premiums than non-responsible
'Responsible' products growing at 8,5% 'Responsible'2 products have an

compared to 4,6% for non-responsible average price premium of 58%
Unweighted average CAGR for 4 product Unweighted price premium3 index based on
% %
categories in UK,FR,GER ('10-'13)1 edible categories in UK,FR,GER (2013)
10 200
8,5 % +58%
8
150
6
4,6 % 100
50
2
0 0
Non-responsible Responsible Non-responsible Responsible
1. 3 out of 12 categories only have '12-'13 CAGR available 2. 4 out of 6 categories that make up the price premium maintain a very strict standard on what is 'responsible' and therefore price premium
is higher than in US a more broad definition would lead to similar results as the US as can be seen in UK 3. Premium based on unweighted average of ground coffee and fruit juice in UK,FR & GER
Source:IRI Database 2014, BCG analysis
Price premium allows 'responsible' products to have superior
economics (for PL but also for A brands)
Example Cost Resulting 'responsible'

Example Food P&L 'Traditional' product1 increase2 product P&L
Raw materials &

22 +20% 26
packaging
Conversion costs 10 - 10
Distribution costs 5 - 5
A&P and indirect costs 15 +20% 18
Total costs 52 59
Gross profit 15 +40% 21
Retailer margin 33 +20%3 40
Retailer sales price 100 +20% 120
0 50 100 150 0 50 100 150
Indication of cost distribution1 (%) Indication of cost distribution1 (%)

1. Based on an 'average' distribution of costs compared to 'traditional' retail sales price in food products from A brands based on several P&Ls in food. 2. Estimate only used as indication 3.Higher
because retailer margin is determined by sales price. Source: BCG experience
Private Label, specialized 'responsible' brands and
specialized stores are capturing the opportunity
examples
Specialized 'responsible' Specialized retailers with Private Label claiming big

brands creating segments growth rates around 15% p.a. share of retail sales
Green Mountain - Net Sales ($B) Whole foods - Net sales ($B) % of Organic sales from Private Label (2012)1
5 15 80
69
+16% 64
4 4 11.7 61 60
10.1 60
10 9.0 50 47
3 +66% 3 8.0
40
2
1 5
20
1 1
0
0 0 0
2008 2009 2010 2011 2012 2009 2010 2011 2012 Sains Morri Wait Tesco Ocada Co-op
burys sons rose
Source: press search, Green Mountain Roasted Coffee annual report 2012, Whole foods Year Report 2012, Soil Association Organic Market Report 2012
A brands are not capturing the growth in this segment
CAGR 2010-2013
(%, US, Food categories, Natural and Organic )
15
12,5
10
5 4,3
1,3
0
A brands Private Label Specialized responsible brands
Note: only possible to do analysis on Food Categories and Natural/Organic claims if expanded to full claims we expect at least comparable results, if not more dramatic picture
Not only do A-brands not lead the change competition can
use these claims to drastically shift preference
Preference without Preference with non-A

'responsible' offers brand 'responsible' offers
% of respondents choosing this type product1

100
32
80 42
60 18
27
40
49
20
-18% 31
0
No 'responsible' products in the market1 PL and specialized offering 'responsible'
products A brands do not2
Private label Specialized brands A brands
1. No 'responsible' attributes, specialized brand with 50% premium, PL price around A brand level
2.Specialized brand with 50% premium, PL with 30%, both specialized and PL with certified Social, Environmental and Organic claims
Source: Survey Responsible Consumer 2013 Simple Conjoint
'Responsible' claims with external validation (certification)
strongly increase product preference
Example US Coffee
Simple conjoint analysis between two A brand products
% of respondents choosing this product1

100
80 77
73
70
66
60 56
50 50 12% 31% 41% 47% 53%
44
40 34
30
27
23
20
0
Two A brand One product with One product with One product with One product with One product with
products with uncertified organic uncertified organic uncertified certified organic certified organic
equal attributes and fair trade organic and and uncertified fair trade
certified fair trade fair trade
Non-'responsible' 'responsible'
1. Products are from the same A brand, price remains at base price example of two coffee products
The size of the price is large: expect ~75 $B of premium price

consumer sales to be added in coming 5 years in US alone
Est. of growth 2013-20181 (US consumer market, $B)

80
4 75
9
11
60
17
40
35
20
0
Natural Environmental Social & Fair Trade Local Organic/ Bio Total
friendly
1. mechanical projection of momentum growth (2010-2013) CAGR's put on maximum of 50%

Source: IRI database 2010-2013, BCG analysis
Topics
Consumer drivers
Implications
Little purely altruistic buing consumers want "And-And"
Survey among 9000 consumers in 8 developed economies
'Good for the 'Good for the world' and 'Good for me' 'Good for me'
world'
4% 86% 9%
Purely altruistic buying

reasons, willing to Doing good by consuming a superior product, combine Focused on what the
compromise on core product altruistic benefits with strong personal benefits product does for consumer
benefits
Note: numbers add to 99% instead of 100% due to rounding. Source: Survey Responsible Consumer 2013, >9000 respondents in nine Developed Countries
Outcomes from US and France MindDiscovery sessions
1 Consumers are very aware and sensitive to 'responsible' consumption
Natural/organic, Fair trade, Local, Nature/ environment prevention all identified by participants
Main association in France with environmental issues, in US with social issues
Consumers open to buy 'responsible', with more 'closer to me' benefits as most powerful triggers, and
2 money as the most important barrier to buy
Health first, local economy protection, and family life identified as most important triggers
Price premiums are a barrier to buy 'responsible' products, mainly in the US
3 Consumers are very confused about 'responsible' offers, and are asking for more regulated claims to help
them understand offerings in the market
Consumers can find information on 'responsible' products but have some doubts and skepticism
They indicated a demand for more advise, certification and government regulation
4 Consumers have less trust when 'responsible' products are associated with A brands and large retailers
A brands launching a 'responsible' product can come across as they only do it out of business purposes
Consumer attitude varies widely per retailers, consumers not willing to buy 'responsible' at Walmart
5 Preferences are complicated; they differ per category, channel, country and brand we already saw some
large differences between French and American consumers
Consumer attitudes around 'responsible' products are very
complex
All 'responsible' concepts named, with most associations around the environment Strong positive associations with 'responsible' products
Respect for Not/less Not

nature beautiful
Taste Local Ecology Healthy Health Neutral
transformed
Bio
Not to hurt Without

React Logos/labels
nature
Environment Purity Laboratory Hypoallergenic
chemicals
Recycling Political Respectful Nature Human being
Environment Not disposable Sustainable Share Family Common Social life
Pollution Ozone Ecosystem Preserve Planet Legacy Transmission
Protection Respect Groundwater Reliable Reusable Strong Recyclable
Green Forever Sustainable
Various (work, Cheaper than

'Direct' Environment Price Expensive Brand Affordability
family, home) used to
Without polluting 'responsible'

treatment
Nature Fair Research Biological products Quality Durability Trust Not obsolete
First price Value for

Local Simplicity Healthier Back to basdics Natural Economic Expensive
products money
Freed from big

companies system
Alternative Charter Marketing
Level of
Ergonomy Simplicity Essential Choice Reliability Which
responsibility
Duration
Emerging from Fair price producer/

countries labels consumer
Values Waste Ethics Traceability
Fair Brand Information Booklet No lie
Respect for Manufacturing

Hygiene Laboratory
consumers/workers
Controlled Transparency Conception
chain
Food processing Tested/

Children work Responsibility
Local Small
Solidarity
producers Manufacturing
Share Origin
Fair Developed companies studied
Universal Globalisation
Concerns about price and sincerity of ''responsible' products
Price and quality Environment Natural and pure Information and transparency Health Social Other
Source: MindDiscovery workshops France (14 participants in total)

Consumer attitudes, needs and preferences are complex
Confused Don't trust

'I am not sure what 'I don't believe Company X
sustainable really means for really delivers on what it
this product' claims'
Need
validation
'I need someone I trust to
tell me what is 'good' "'
Category Brand
Country
specific specific
specific
'In cleaning it is all about the "I think Brand A is really
environment, in dairy about US: "It should be organic" trying to be good" "Brand B
animals, in coffee about France: "It should be local" only makes chemical,
farmers' artificial stuff"
Consumer attitudes, needs and preferences are complex;
they vary per country, category, brand and channel
Country Category Brand Channel

Importance of 'responsible' Well known brand more Trust of 'responsible' offer Some retailers more
cleaning higher in FR important in coffee based on brand associations trusted than others
'I would buy a 'responsible' 'I do buy the 'responsible'

'You need to buy
product from [well-known A line of Chlorox; I know the 'Yes, I would definitely buy
'responsible' in household
brand] since I know their brand and its quality in 'responsible' products from
cleaning, this is extremely
products are good' cleaning' Safeway'
bad for the environment'
'I buy the [well known A 'I just know Chlorox is good I trust Trader Joe's
'I started buying
brand] because quality is so and therefore buy the 'responsible' products'
'responsible' in cleaning'
important' 'green' edition'
'I would never buy a green
'Buying 'responsible' in 'I would never buy any
version of AJAX, there is too
cleaning is not very 'In yogurt, the brand does 'responsible' product from
much history of using
important' not matter that much, I Walmart'
unhealthy chemicals in their
would buy the cheapest one'
products'
'I buy 'responsible' in all 'I once tried to buy
product categories apart 'In yogurt, I would easily go 'responsible' fish at
'I would never buy a
from cleaning, it just does for the Private Label brand' Walmart, and walked away
'responsible' Snickers, all
not matter that much to me'' dizzy'
their products are bad'
Source: MindDiscovery workshops France and US (29 participants in total)

In order to overcome confusion and distrust, consumers use
certification to navigate 'responsible' offering
% of respondents indicating this as a (very) strong

reason to buy 'responsible' products
100
80
70 69
60 57 55
49 47 45 46
40
26 25
20
0
Carries a Carries clear Carries a Is produced Is a regional Is sold in a Is sold in a Is advertised Looks Has a product
certified symbol environmental responsible by a company product from store I trust to special as responsible responsible name that
and social background which I trust is my area be responsible responsible sounds
impact labeling story on its responsible section in responsible
packaging the store
1. Indicated as trusted as more than 50% of respondents indicate they (fully) trust this source 6 out of 15 options
Lack of Trust (next to Price) a main reason not to buy more
Level of distrust varies per country
% respondents indicating Trust as main reason

for not buying more 'responsible' products
30
27
25
20
20 19
17 18
15 15
13
12
10
0
Germany Japan Italy Netherlands France Spain Canada UK USA

Consumers have no preference for 'responsible' products being
provided by A-brands, specialty or PL but distinct drivers
Preference equally distributed

among consumers Reasons to prefer a specific brand do differ
% respondents answering the question A-brands Specialized Private label
'from which type brand do you prefer
to buy 'responsible' products
40 Highest quality 48 22 19
35
33 32 Most real 10 54 11
30 'responsible'
Best price 12 13 59
20
Know this brand 21 7 5
better
10 More convenient 6 2 4
Other 3 1 1
0
A brands Specialized Private
responsible label
brands brands
Note: Slightly more preference for A-brands in coffee and for Specialized in household cleaning, but no large differences
Preference for A-brands, specialty and PL differs per country
% respondents preferring this type brand

50 48
46
45 43
41 40
40
36 35 37 38
35 34 35
31 32 31
28 29
30 28 28 28 28 27
26 26 26
20
20
10
0
Japan Canada USA UK France Italy Spain Netherlands Germany
A brand Specialized brand Private label

Consumers look for validation: low stringency claims largest

today, but growth coming from regulated claims
Least stringent claims with highest

current shares Growth coming from regulated claims
Total Sales (US, 2013, $B) CAGR 2010-2013 (US, Deepdive Categories, %)
20 4,8 5,9 1,1 3,6 15,3
25
4 17
211
20
15 4
1
7 15
15
10 12
7
10
5 16
7%
5
5
5
1
0 0
Not Regulated Partly Regulated Strictly Total Not Regulated Partly Regulated Regulated Strictly Regulated
Regulated Regulated Responsible
XX = % Total Market
1: Much of this growth is driven by Yogurt, excluding yogurt would lead to a CAGR for Partly Regulated of 16% over the 19 remaining deepdives.
Source: IRI database 2013 & 20 deepdives combined
While certification is trusted by consumers, they do not trust
information from companies
Majority of consumers trust this source
Independent consumer reports or tests 66 Consumers

Certified symbols on packaging (e.g. USDA Organic) 66 trust
57
certification
Universities or scientific publications
and labels on
Labels on packaging indicating responsibility 55
packaging
Brands offering only responsible products 54
Friends or family 53
Leading established brands offering responsible product 45
Online communities or reviews 39
Non-government organizations or pressure groups 38 Consumers do
not trust
Retailers and their own labels of responsible products 38
information
Government agencies 36 from
The supplier/producer website 34 companies,
Industry associations 31 especially not
advertising
Newspapers, television, radio 29
Advertisements 21
0 20 40 60 80
Trusted % of participants (strongly) trust this source

Not trusted
Note: Indicated as trusted as more than 50% of respondents indicate they (fully) trust this source 6 out of 15 option
But your starting point as a brand really matters: two A-brands
with the same 'responsible' offer are not equally preferred
Category: Coffee
% respondents choosing this product vs specialized and PL alternative1

80 +12%
-9% Two simulations, in which

67
-29% +17% consumers can choose between
61 60 -7% an A-brand product, a specialized
60 56 57 brand product and a PL product
52 53 +9% A-brand with certified organic
48 -26% and fair trade product with 40%
-8% Average
45 premium
42 share of
40 41 Specialty brand with certified
39 38 preference
40
36 +3% of A-brand organic and fair trade product
31 42% with 50% premium
PL with uncertified organic and
24 25 fair trade claim with 25%
20
premium over own base
First number is % preferring one

A-brand in this exercise, second
number is % consumers
0 preferring a second A-brand in
Canada Germany France Italy Spain Japan Netherlands Spain United exactly the same exercise
Kindom
A brand 1 A brand 2
Note: A-brand 1 and A-brand B both leading A-brands in this category and country order of 1 and 2 is random
1. Specialized with 50% premium, Private label with 25% premium. Specialized and A-brand with certified organic and fair trade claim, PL with uncertified fair trade and organic claim
Topics
Quantitative findings Unilever categories US
Consumer drivers
Implications
Two of Unilever categories were included in US research:
Shampoo and Hand & Body Lotion
Sales (US, 2013, $M)

15,000
2,289 11,703
10,000 294
318 300
489
737
738
838
935
5,000 943
999
1,218
1,605
0
Soap Frozen Margarine/ Shampoo Hair Tea Other Unilever
Novelties Spreads Conditioner Bags US
Ice Deodorant Mayonnaise Spaghetti/ Hair Hand Sales
Cream Italian Spray & Body
Sauce Lotion
Non Deepdive Category
Deepdive Category
Note: Products specified make up 80% of Unilever sales in the US 2013. Example images are not exhaustive
Source: IRI database - 2013
In the Shampoo market the 'responsible' segment accounts
for ~10% of sales and >60% of growth
'Responsible' segment is <10% of the 'Responsible' segment drives >60% of

overal Shampoo market market growth
221 2375 2596 108 57 165
Sales (US, 2013, %) Absolute growth (US, 2010-2013, %)

100 100
80 80 35
60 60
91
100 100
40 40
65
20 20
9
0 0
Responsible1 Non Responsible Total Market Responsible Non Responsible Total Growth
XX Absolute Sales (US, 2013, $, M)
1: Most claims are environmentally friendly claims such as; No sulfates. Other brands have organic claims; such as Organix. Claims are only registered if they are visibile on the packaging.
Note: Only products that make up 80% of market sales have been enriched, share rates might thus be underestimated
Source: IRI Database 2010-2013
3% of Unilever sales are from 'responsible' products, which is
below the market average of 8,5%
Responsible share of total sales (US, 2013, %)

100
Contains products
80 with claims visibile on
packaging; in this
case Tresemm
Naturals 1 No
74 sulfates
60 78 (=environmentally
friendly)
97 97
40
20
Responsible share 26 22
of total market 8,5%
0 3 3
0 500 1,000 1,500 2,000 Sales A Brands
(US, 2013, $M)
Not-Responsible
Responsible
1: Other Unilever Shampoo Brands include: Suave, Nexxus, Dove, Clear & Axe. Suave Naturals has not been classified as responsible as there are no claims made on the packaging (fragrances
inspired by nature. Note: Only products that make up 80% of market sales have been enriched, share rates might thus be underestimated
While the 'responsible' segment grows with 25%, within
Unilever it only grows with 6%
'Responsible' growth 25% For all A brands, 'responsible' growth higher than non
vs. market average of 2% responsible Unilever smallest difference with 6 vs. 5%
CAGR (US, 2010-2013, %) CAGR (US, 2010-2013, %)
25 30
25 30
20 20
15
15 10
5 6
2 2
10 0
-1
5 -10
2 -12
0 -20
Non-Responsible
Responsible
Source IRI database 2010-2013

In the Hand & Body Lotion market the 'responsible' segment
is <15% but drives 60% of the growth
'Responsible' segment is <15% of the 'Responsible' Segment drives 60% of

overal Hand & Body lotion market market growth
243 1468 1711 80 54 134
Sales (US, 2013, %) Absolute growth (US, 2010-2013, %)

100 100
80 80 40
60 60
86
100 100
40 40
60
20 20
14
0 0
Responsible1 Non Responsible Total Market Responsible Non Responsible Total Growth
XX Absolute Sales (US, 2013, $, M)
1: Most claims are natural claims such as; Made with Natural Ingredients & All Natural. Claims are only registered if they are visibile on the packaging.
'Responsible' products make up 12% of Unilever sales in
Hand & Body Lotion, which is below the 14% market average
Responsible share of total sales (US, 2013, %)

100
80
45 Contains products1
with claims visible on
packaging; An
example: St. Ives
60 Naturally Clear
88 Made with 100%
natural exfoliants 91
(=natural ingredients) 100
40
55
Responsible share 20
of total market 14%
12 9
0 0
0 100 200 300 400 500 600 700 800 900 Sales A Brands
(US, 2013, M$)
Not-Responsible Responsible
1: Other Unilever brands in Hand & Body Lotion are Suave, Vaseline & Dove.
'Responsible' segment growth rate 14%, while for most A
brands the non-responsible segment is shrinking (-4 to -13%)
'Responsible' growth rate 14% All 'responsible'segments growing (2-213%) while

against market average of 3% most non-responsible shrink by as much as -13%
CAGR (US, 2010-2013, %) CAGR (US, 2010-2013, %) The St.Ives products
enriched as 'responsible',
15 215 did not exist in 2010 yet,
14 2131
leads to the high CAGR
9
5 4
10
2 2
0
5 -5 -4
3
-10 -9
-13
0 -15
-1% 4% -13% 0%
Non-Responsible
Responsible
1: CAGR 2011-2013 as there were no responsible sales in 2010 yet.

Source: IRI database 2010-2013
Topics
Consumer drivers
Implications
A brands need to dive deep to understand category and brand
specific attitudes and redefine propositions end-2-end
Responsible Compass Plot the course Execute

Where to go? How to do this? How to implement?
How to make, buy,

How to Brand
Proposition Brand or create?
tackle?
Today's Brand
market credibility What to change in
Sourcing
sourcing?
What
does it Product Credibility
take? How to alter
Production
production?
What is
Consumer the
Revenues Costs How to reach my
attitudes business Marketing
target customer?
case?
Consumer Brand
attitudes credibility
Responsible compass: understand today's market Today's

market
Use IRI/GFK data to determine share, growth and premiums in the market
What is the current How much are the Are consumers willing to
'responsible' share? different claims growing? pay price premiums?
Define current 'responsible' Define historic and expected Investigate premiums that
share for all relevant growth of 'responsible' are currently paid in these
categories and countries products categories and countries
Deliverable: make a first prioritization of categories/markets
Consumer Brand
Responsible compass: understand brand credibility Today's

market
Understand competition and consumer preferences with market analyses and consumer research
What are consumers' preferences and

Who is currently playing in the market?
attitudes about me and other players?
Use deepdives to understand competition in Use quant and focus groups to determine
the selected categories - who and what consumer attitudes towards your brands and
sources of advantages/differentiation competitor brands
Consumer Brand
Responsible compass: understand the consumer Today's

market
Understand preferences, purchase drivers and underlying attitudes with a quant and qual
What are consumer What is driving purchase What are underlying

preferences? decisions? attitudes driving behavior?
Execute a quant to Execute a conjoint to test Execute focus groups to
understand consumer preferences in purchase understand underlying
preferences per category decisions attitudes
Deliverable: understand starting point, drivers of choice
and right to win to set ambition and priorities
How to
Proposition Brand
tackle?
Plot the course: how to do this?

What that
Product Credibility
takes
Business
Revenues Costs
case
Define a proposition, decide on product and claim, and calculate the business case
What will be my proposition? Which brand to use for this proposition?

Which benefits? Use my own brand?
How to Which price? Use a flanker or new brand?
tackle? Which channels? Buy or partner with a specialty brand?
Which consumer segment to target?
What defendable differentiation?
What will be my product? How to create credibility?

Which product features? Which claims to use on the product?
What does What packaging? Which stringency level of claims?
it take? Which ingredients? How to include 'responsibility' on product
packaging?
What are my expected revenues? What are the expected product costs?
What is What is are the expected sales of the product? What are the expected sourcing and
the How are sales expected to evolve over time? production costs?
business What are the sources of growth (eg What are the expected distribution, A&P
case? cannibalization) vs no action scenario and indirect costs?
Deliverable: clear priorities and business case
How to make, buy,
Brand
or create?
Sourcing How to change?
Execute: how to implement this? Production
Marketing
How to alter?
How to reach my
target customer?
Create an implementation plan including brand, sourcing, production and marketing
How do I buy, make or create the right brand for this product?
Brand Are there any specialty brands for sale that match my needs? To buy or distribute/partner?
How do I use my A-brand to match my 'responsible' proposition?
What should my flanker or new brand look like to create credibility?
What should I change in my sourcing?

Sourcing Which alterations are necessary to get the right claim?
How should I get the required supply chain and sourcing to substantiate my differentiation?
Should I partner with organizations to get access?
What should I change in my production?
Production Which alterations are necessary to get the right claim?
Should I partner with organizations to get the right production methods?
Am I able to do this myself, or should I outsource?
How should I market this product?

Marketing How can I best reach my target consumers?
Should I partner to increase credibility? What internal autonomy to demonstrate externally?
Should I use advocacy marketing or an other type of marketing to increase effectiveness?
Deliverable: implementation plan
Thank you
bcg.com | bcgperspectives.com
Backup
Example: Azabu Takano, a 'responsible' Japanese brand,
shows annual growth rates of >30%
Description of Azabu Takano Net sales growing with 31% p.a.

Azabu Takano is a specialized 'responsible' Azabu Takano - Net Sales ($M)
company 25
They are active in different segments such as fair
21
trade coffee & tea but also organic foods
20
They are not only a producer of 'responsible' 20
+31%
products, but also sell them on their website
15
15
This brand mainly focuses on organic & fair trade
They offer a variety of both fair trade and organic
products. They also offer some natural products 10
9
7
This brand is sold in specialized stores and on
their own website, and has focused all marketing 5
efforts on being a specialized 'responsible' brand

Sold in specialty stores and online
Marketed as a 'responsible' brand that adheres to 0
2008 2009 2010 2011 2012
'responsible' values while also ensuring food
safety.
Azabu Takano has been active since 1950
Source: Website Azabu Takano website & Orbis database

Backup
Example: Green Mountain Coffee Roasters, a organic coffee
brand, shows annual growth rates of >60%
Description Green Mountain Coffee

Roasters Net sales growing with 67% p.a.
Green Mountain is an American coffee producer Green Mountain - Net Sales ($B)
Currently it sells most of its goods in the United 5
States
The brand focuses on various claims 4 4

Most of their coffee is fair trade certified, but they
also have organic products and environmentally
3
friendly products
+67% 3
This brand is sold through various channels, and 2

has focused marketing efforts on being
1
'responsible'
Sold in specialty stores, supermarkets, 1 1
restaurants and others 0
Marketed as one of the leading 'responsible'
0
brands in the world, mostly on Fair Trade
2008 2009 2010 2011 2012
Green Mountain has been active since 1981
Source: Green Mountain Annual Report 2012 & Website

Backup
Example: Tony Chocolonely, a Fair Trade chocolate brand,
shows annual growth rates of >60%
Description of Tony Chocolonely Net sales growing with 66% p.a.

Tony Chocolonely is a Dutch producer of Tony Chocolonely - Net Sales (M)
chocolate bars 5
Currently active in the Netherlands but looking to 5
expand into new markets
4
Main focus of this brand is on Fair Trade
+66%
Chocolate
3
All chocolate is Fair trade Certified & 100% slave
2
free
2
This brand is sold in specialized stores and 2
supermarkets, and has focused all marketing
1
efforts on being 'responsible' 1
Sold in specialty stores and supermarkets
Marketed as ''responsible', slave labor free fair-
0
trade product' that fights to make consumers
2009 2010 2011 2012
conscious of practices ongoing in cacao-industry.
Tony Chocolonely has been active since 2005
Source: Tony Chocolonely Jaarverslag 2012 & Tony Chocolonely website

Specialized 'responsible' retailers becoming more common
worldwide and showing annual growth around 15%
'Specialized 'responsible'' retailers Examples of 'specialized retailers' show

becoming more common worldwide growth rates of ~15% p.a.
Whole foods - Net sales ($B)

15
+16% 11.7
10.1
10 9.0
8.0
0
2009 2010 2011 2012
The Fresh Market - Net sales ($B)

1.5
+14% 1.3
1.1
1.0
1.0 0.9
0.5
0
2009 2010 2011 2012
Source: web and press search, Whole foods year report 2012, The Fresh Market annual report 2012
Some A-brands are successful in this segment

Success stories are often acquired specialty brands
Natural Personal Care Brand Smoothie brand owned by Icecream brand owned by
owned by Colgate-Palmolive Coca Cola Unilever
Yearly net sales growth1 11% Yearly net sales growth2 26% Yearly net sales growth1 4%
Natural Personal Care Brand Fruit Juice brand owned by Organic foods brand owned by
owned by Johnson & Johnson Coca Cola General Mills
Yearly net sales growth1 8% Yearly net sales growth3 36% Yearly net sales growth1 12%
1: 2010-2013, see slides dedicated to brand for information on which product categories these growth numbers are based. 2: 2009-2012 3. 2011-2013
Source: IRI Database (US Sales, 2010-2013) & Britvic Soft Drinks Reports 2009-2012 for Innocent
Backup
Example: Toms of Maine, a natural personal care brand
owned by Colgate, shows annual growth rates of 11%
Description of Tom's of Maine Net sales growing with 11% p.a.

Tom's of Maine is an American producer of Tom's of Maine - Net Sales1 (M)
natural personal care products owned by Colgate 50
They are active in the mouth care, soap and
deodorant segment in the US +11%
42
They were bought in 2006 by Colgate-Palmolive 40 38
34
Main focus of this brand is Natural Claims 31
30
They do not use artificial ingredients nor test their
products on animals
20
This brand is sold in specialized stores and
supermarkets, and has focused all marketing
efforts on being a specialized 'responsible' brand 10
Sold in specialty stores and supermarkets
Marketed as a natural and healthy brand. It
0
argues that being part of Palmolive has not
2010 2011 2012 2013
changed anything.
Tom's of Maine has been active since 1970
Source: Website Tom's of Maine & IRI database Dental Care 2010-2013
Backup
Example: Innocent, a 'responsible' smoothie brand owned by
Coca-Cola, shows annual growth rates of 26%
Description Innocent Net sales growing with 26% p.a.

Innocent is a smoothie producer and owned by Innocent - Net Sales 1 (UK, M)
Coca Cola 250
Innocent is a fully-owned subsidiary of Coca Cola
Innocent's founders remain in operational control 214
of their business 200
+26%
162
The brand focuses on all natural and rainforest
alliance certified ingredients 150
123
Innocent claims that it tries to get much of its
107
ingredients from Rainforest alliance certified
100
suppliers and all of the ingredients are natural

has focused marketing efforts on being healthy
'responsible' brand
Sold in supermarkets, convenience stores and 0
others 2009 2010 2011 2012
Marketed as being a healthy 'responsible' product
made from natural ingredients while donating
10% of its profits to charity
1: Sales in the UK market for take-home drinks (where Innocent gains the majority of its revenues)
Source: Website Innocent, Coca Cola Annual Report 2012, Britvic Softdrinks Report 2013-2012-2011-2010
Backup
Example: Ben & Jerry's, a 'responsible' icecream brand
owned by Unilever, shows annual growth rates of ~4%
Description Ben & Jerry's US net sales growing with 4% p.a.

Ben & Jerry's is an ice cream maker and a Ben & Jerry's - Net Sales1 (US, $M)
subsidiary of Unilever 600
It is a wholly owned subsidiary of Unilever +4%
B&J's seems to have some autonomy 491 497
513
Decision-making between Unilever and B&J's 455
seems to occur in a balanced consultative way
400
The brand focuses on various claims
Most of their ice-cream has fair trade ingredients,
447 458 480
is GMO-free and comes from animals who are 412
free range 200
This brand is sold through various channels, and

has focused marketing efforts on being a
company with a social mission 44 43 39 33
0
Sold in supermarkets, specialty stores and others
2010 2011 2012 2013
Marketed as having a social mission which they
fulfill by trying to make their product fair trade,
non-GMO and in other ways Icecream
Frozen Novelties
1: Sales in the US icecream & frozen novelties market . Frozen novelties are 'smaller'' icecream around 4OZ while icecream is above 10OZ.
Source: Websites Unilever, Ben & Jerry's and B-Corp 'How can Ben & Jerry be a B-corp'. IRI database 2010-2013 Icecream & Frozen Novelties.
Backup
Example: Aveeno, a personal care brand owned by Johnson
& Johnson, shows annual growth rates of 8%
Description Aveeno US net sales growth with 8% p.a.

Aveeno is owned by Johnson & Johnson since Aveeno- Net Sales1 (US, $M)
1999 250
One of the biggest natural personal care
producers +8% 206
Bought by Johnson & Johnson in 1999 from SC 200
183 184
Johnson & Son. 164
150
The brand focuses on natural claims
Their products focus on natural ingredients that
are rigorously tested and can be trusted to have 100
no detrimental benefits on health

has focused marketing efforts on being a natural
healthy brand
0
Sold in supermarkets & pharmacy stores
2010 2011 2012 2013
Marketed as having active natural ingredients
with true skin benefits
1: Sales in the US in Hand & Body Lotion, Shampoo , shaving cream and facial cosmetics.
Source: Aveeno website & IRI Database 2010-2013
Backup
Example: Zico, a natural coconut drink brand owned by Coca
Cola, shows annual growth rates of 36%
Description of Zico Net sales growing with 36% p.a.

Zico is an American producer natural coconut Zico US Net Sales1 (M)
juices owned by Coca Cola 25
Zico produces various sorts coconut water in and
outside the US +36% 20
They were acquired completely by Coca Cola in 20
18
2013
15
Main focus of this brand is Natural Claims
They only use natural pure coconut juice 11
10
and healthy brand 5
Sold in supermarkets, lunchrooms and more 2
Marketed as a natural and healthy brand for 0
athletic types.
2010 2011 2012 2013
Zico has been active since 2004
1: Based on US sales in Fruit Juices

Source: Website Zico & IRI database Fruit Juices 2010-2013
Backup
Example: Cascadian Farm, an organic snack bar brand owned
by General Mill's, shows annual growth rates of 12%
Description of Zico Net sales growing with 12% p.a.

Cascadian farm is one of the American leading Cascadian Farm US Net Sales1 (M)
organic brands and owned by General Mill's 150
Cascadian farm produces snack bars, cold cereal
and frozen vegetables/fruits
They are owned by General Mill's since 1999 +12%
109 111
100 93
Main focus of this brand is Organic Claims
They have many producs that are USDA certified
80
organic and/or claims that say they are made
from organic ingredients
50
and healthy brand
Sold in supermarkets, lunchrooms and more 0
Marketed as a natural and healthy brand for
2010 2011 2012 2013
athletic types.
Cascadian Farms has been active since 1973
1: Based on US sales in Snack Bars & Cold Cereals

Source: Website Zico & IRI database 2010-2013
Majority of 'responsible' A-brands seem to be struggling

Examples show these can be acquired brands, flanker brands and product lines
Organic Dairy brand owned by Juice brand owned by Campbell Organic tomato brand owned by
Dannon Targeted at natural ingredients General Mills
Yearly net sales growth -5% Yearly net sales growth -6% Yearly net sales growth -12%
Natural food brand owned by Ecological cleaning brand of
All natural yogurt line of Dannon
Kellogg Chlorox
Yearly net sales growth of -9%
Yearly net sales growth of -5% Yearly net sales growth of -30%
Note: net sales growth determined from category deepdives only in investigated categories in the US
Source: IRI Database (US Sales, 2010-2013)
Backup
Example: Stonyfield Farm, an organic dairy brand owned by
Danone, shows annual growth rates of -5%
Description Stonyfield Farm US net sales declining with 5% p.a.

Stonyfield Farm is the world's largest organic Stonyfield Organic - Net Sales1 (US, $M)
yogurt producer and a subsidiary of Dannon 500
Largest organic yogurt brand in the world -5%
Majority owned by Dannon 420 419
395
While Dannon owns 85% of the shares, the 400
363
founder still has 60% of the voting rights
The brand focuses on organic claims 300
All of their dairy is organic (USDA certified), has
no GMO's, no artificial hormones and no
200
pesticides used.

has focused marketing efforts on being an
organic brand
Sold in supermarkets & convenience stores 0
Marketed as being truly organic with no chemical 2010 2011 2012 2013
ingredients used in production
1: Sales in the US in deepdive categories

Source: Website Stonyfield Organic, Website MNN Interview with Stonyfield CEO & IRI database Yogurt 2010-2013
Backup
Example: V8, a natural juice brand of Campbell, shows annual
growth rates of -6%
Description V8 US net sales declining with 6% p.a.

V8 is a natural juice brand of Campbell V8- Net Sales1 (US, $M)
V8 has been a specialty brand, but has been 400
acquired by Campbell already in 1948 -6%
329 327
315
The brand focuses on natural, healthy juices
300
Juices are marketed as being part of a healthy 270
diet
The brand contributes to the Diabetes
Association and the Produce for better health 200
foundation

healthy and natural brand
Sold in supermarkets & convenience stores
Marketed as natural and good for consumers' 0
health 2010 2011 2012 2013
1: Sales in the US in fruit juices only responsible products

Source: Website V8, IRI database 2010-2013
Backup
Example: Muir Glen Organic, an organic tomato brand of
General Mills, shows annual growth rates of -12%
Description Muir Glen Organic US net sales declining with 12% p.a.
Muir Glen Organic is an organic tomato brand of Muir Glen Organic- Net Sales1 (US, $M)
General Mills 10
The company has been founded in 1991 and has
been acquired by General Mills
-12%
The brand sells all kind of tomato-based 8 7
7
products, like pasta sauce and ketchup 7
The brand focuses on organic farming and 6
5
processing of tomatoes
All ingredients have the USDA organic seal
4
No chemical additives are used in production

organic brand
Sold in supermarkets & convenience stores 0
Marketed as organic and without additives 2010 2011 2012 2013

Source: Website Muir Glen Organic, IRI database 2010-2013
Backup
Example: Kashi, a natural food brand owned by Kellogg,
shows annual growth rates of -5%
Description Kashi US net sales declining with 5% p.a.

Kashi is a natural foods brand owned by Kellogg Kashi- Net Sales 1 (US, $M)
Kashi produces a selection of foods with cereals 600
as main product -5%
Kashi has been acquired by Kellogg in 2000 513 502 500
438
The brand focuses on natural and healthy 400

ingredients in all foods, and ethical production
Foods are minimally processed
Food does not contain synthetic colors, artificial
flavors, preservatives or sweeteners 200

natural and ethical brand
0
2010 2011 2012 2013
Marketed as natural, ethical and healthy

Source: Website Kashi, IRI database 2010-2013
Backup
Example: Green Works, an ecological Household Cleaning
brand of Chlorox, shows annual growth of -30%
Description Green Works US net sales declining with 30% p.a.

Green Works is an environmental friendly Chlorox Green works- Net Sales1 (US, $M)
Houshold Cleaning brand of Chlorox 50
Chlorox green offers a wide range of natural 46
cleaning products and laundry detergents
40
The brand focuses on being environmental -30%
friendly and natural 30
30
Products come from biodegradable ingredients
that are naturally derived 23
Products are acknowledged by the EPAs 20
design for the environment program 16

natural and environmental friendly brand
0
2010 2011 2012 2013
Positioned as being a powerful and conventional
cleaners, and also natural and environmental
friendly
1: Sales in the US deepdive categories

Source: Website Green Works, IRI database 2010-2013
Backup
Example: Dannon All Natural Yogurts show annual growth
rates of -9%
Description Dannon All Natural US net sales declining with 9% p.a.

Dannon All Natural is a product line of Dannon in Dannon all Natural - Net Sales1 (US, $M)
yogurt 150
This line exists next to other yogurt lines and 135
-9%
claims to be fully natural
120
111
This line focuses on being all natural and thereby 103
more healthy than other alternatives 100
No additional ingredients
More health benefits than other yogurts

natural, healthy line
Marketed as natural and healthy
0
2010 2011 2012 2013

Source: Website Dannon, IRI database 2010-2013
European retailers offer a wide breadth of 'responsible'
products
Example: ground coffee
1.72 3.49 3.80
1.54 3.19 3.75
1.54 2.79 3.40
1.54 2.72 3.40
1.32 2.69 3.24
1.32 2.39 3.02
0 1 2 0 1 2 3 4 0 1 2 3 4
Price/100g () Price/250g () Price/250g ()

Note: products are only examples, more 'responsible' coffee products available in store
Source: appie.nl, tesco.com, carrefour.fr
'Responsible' buying visible in all categories
Depending on category 50-80% of consumers claim to buy 'responsible' products
% respondents indicating buying 'responsible' products in this category

100
80 77
71 71 70 69 69 68 66 64 63 63 63 61 60 58 58
60 56 56
51 49
40
20
0
Fresh Coffee Fresh Dairy Paper Tea House Laundry Cosme Pasta/ Juices Skin Personal Candy Hair Water Baby Pet Ready Salty
fruit and meats products hold deter tics rice care cleansing and care food care made snacks
vegetables cleaning gents chocolate meals
Food Personal care Household care

We expect this segment to be at least as large in other
Developed Economics would imply >400$B total market1
% respondents indicating buying 'responsible' products

Consumer 85 81 78 77 71 71 69 69
attitudes at par 65 74
with US
Italy Japan Spain USA Germany Canada France UK Netherlands
Organic share (% of consumer market)

US also average 4
on broadly 3
measured 2 2 2 1 1 1 1 1 1 1 1
specific claim 1 1 0 0 0 0 0 0 0 0 0 0 0 1
DE AT NLD SE GER CAN FR SW IR BE UK IT USA NO FI PT AUS IR CZ HUN SP SLO GR SK JAP POL
Category
deepdives show
comparable
breadth of offer in
other countries2
1. Extrapolating the 16% share (from US total market) to sales in other developed countries including US, developed countries as defined by the OECD list 2. This shows part of the 'responsible'
coffee offering at Tesco's only groceries website; claims range from the Rainforest Alliance to Fair Trade and even Organic Claims. This is only a segment of all 'responsible' coffee sold, the PL Tesco
even sells ~10 'responsible' coffee products itself. Source: IRI database, Euromonitor Database BCG analyses, Press Research
Backup
Price premium of edible 'responsible' products ranges from
~13-110% per category and country
Average weighted price per volume1 responsible/non-responsible (2013)

/
40
+13%
UK price premiums in general
lower due to less strict definition of
'responsible'
30
20
+40%
+47%
10
+44% +95% +110%
Non-Responsible
Responsible
0
Fruit Juice Fruit Juice Fruit Juice Coffee2 Coffee2 Coffee2
1. Weights all prices on sales and corrected for volume per serving - outliers excluded 2. Excluding coffee pads/UK instant coffee instead of ground coffee
Note: France and German database are more strict on classifying what is responsible and what is not results may therefore differ from UK
Source: IRI database 2014, BCG analysis
Backup
Growth of A-brands above average in France, but share of
'Responsible' is very low
A-brands performance mixed but not ...however share of A-brands in

worse than PL/specialized... 'Responsible' is very low
% CAGR 'Responsible' growth per brand type France Share of 'Responsible' per brand type France ('13)
%
('10-'13)
30
100% 1% 0%
25 6%
27%
20
15 80%
14 49%
54% 45%
10 7 7 60%
0 50%
0 40%
-1 -1 -1
36%
-5 -5 39% 48%
-10 20% 9%
-14 14% 13%
6%
-20 0% 1%
Coffee Fruit Juice Household Personal Care
Coffee Fruit Juice Household Personal Care
Cleaner A-brand
Cleaner
Specialized
Private label
Other
Note: Data for France only includes strict claims

Backup
A-brand growth rates and shares low, except in personal care
A-brand growth rates below average... ...and share of 'responsible' often low
%
CAGR 'Responsible' growth per brand type Germany Share of 'Responsible' per brand type Germany ('13)
%
50 ('10-'13) 45
100%
40 9% 7%
33 12%
30
80% 21% 25% 46%
20 17
12
9
10 8
60%
0 39%
0 93%
40% 49%
-10 36%
-20 -17
-20 20%
-30 29%
16% 18%
-40 -35
0%
Coffee Fruit Juice Household Personal Care A-brand Coffee Fruit Juice Household Personal Care
Cleaner Cleaner
Specialized
Private label
Other
1. Only private label data available is from Aldi and this is only available for edible categories, hence private label share and growth rates will be underestimated
Note: Data for Germany only includes strict claims for edible categories
Backup
Growth of A-brands above average in UK, and shares of
'Responsible' are high
A-brands performance mixed but not ...however share of A-brands in

worse than PL/specialized... 'Responsible' is very low
% CAGR 'Responsible' growth per brand type UK Share of 'Responsible' per brand type UK ('13)
%
('12-'13)
30
100%
20 19
15 16 15 80%
10 9
7
2 75% 80%
60%
88% 89%
0
40%
-10
20%
-20
-20 22% 14%
9% 7%
3% 4% 5% 4%
-30 0%
Coffee1 Fruit Juice Household Personal Care Coffee Fruit Juice Household Personal Care
Cleaner A-brand Cleaner
Specialized
Other
1. Coffee CAGR is '10-'13 as it is the only category with data of '10 available in the UK
Note: Data UK includes weak claims
Per category, the dominant 'responsible' claim differs
% of Sales Food Non-food
100
80
60
40
20
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Baby food Cold cereal Yogurt Snack bars Soup Milk Coffee Dog food Laundry detergent
Bottled Cookies Dental care
juices Frozen dinners Cosmetics
Hand & Body lotion Shaving cream
Trash & food bags Shampoo
Household cleaner Paper towels
Social & Fair Trade Local Natural Sales
Environment friendly Organic/ Bio (2013, $B, US)

Within the claim types, there are different levels of
'stringency'
Example Not regulated Partly regulated Regulated Strictly regulated

claims brands' own claims 'umbrella claims' with certified ingredients all certified
Social and Fair

Trade claims
Environment
friendly claims
Local and
seasonal
claims
Organic and Bio

claims
Natural claims
Source: press search

Natural and Organic dominate today, but Social,

Environmental Friendly and Local growing much faster
CAGR (10-13)1
40
Social & Fair Trade

30
Environment Friendly
20
Local and seasonal
Natural2
10
Organic/ Bio
0
0 2 4 6 8 10
% share 20131
Sales (US, Deep dive categories 2013)
1. In deepdive categories 2. excluding outliers in 5 categories, with those included growth rate ~5%
Source: IRI database 2010-2013, BCG analysis
Backup
Natural and Organic/Bio are most important today, but
highest growth in Environmental and Fair&Social
'Natural' & 'organic/bio' claims make up Highest growth rates in Social & Fair
80% of today's volume Trade segment with 33% p.a.
Total Sales (US, 2013, $B) CAGR 2010-2013 (US, Deepdive Categories, %)
20 8,5 3,2 1,7 1,3 0,7 15,3 40
1 17
1 1 33
2 1
15 30
4 2
25
4
10
10 20 18
121
5 10 10 8
7%
5
0 0
Natural Organic/ Environment Local Social & Total Natural Organic/ Bio Environment Local Social &
Bio Friendly Fair Trade Responsible Friendly Fair Trade
XX = % Total Market
1. Excluding outliers 12%, including outliers in Milk, Yogurt, Snack Bars, Bottled Juices & Baby Food 5%
Source: IRI database 2013 & 20 deepdives combined
Dynamics are different for Food and Household/Personal care

Environment and Social with high growth in Food categories, Local in Household/Personal care
Food: Environmental and Social with highest Household & Personal care: Local & seasonal
growth with very high growth
CAGR (10-13)1 CAGR (10-13)1 CAGR 320%

due to one
50 50
company
Local and seasonal3
Environment Friendly
40 40
Social & Fair Trade

30 30
Organic/ Bio
20 20
Natural
Local and seasonal
Natural2
10 10
Organic/ Bio Environment Friendly
0 0
0 2 4 6 8 10 12 0 1 2 3 4
% share 20131 % share 20131
Sales (US, Deep dive categories 2013)
1. In deepdive categories 2. excluding outliers in 5 categories, with those included growth rated lower than organic 3.CAGR of over 300% of local claims due to the almost non-existence of the
segment in 2010 (3 million $) and now over 220 million $ mostly in paper towels due to brand "Brawny". Source: IRI database 2010-2013, BCG analysis
Consumer research shows increasing importance in purchase
decisions: 'responsible' at par with price and brand
We tested purchase drivers with >9000 'Responsible' is equal to price and

consumers in 9 countries brand in driving purchase
Consumers were asked for their purchase
decision among products of different brands,
with different prices and 'responsible' claims
In total, ~300.0001 puchase choices monitored Brand 35
'Responsible
34
claim
Price 31
0 10 20 30 40
% importance of attribute for purchase decision
1.9298 participants, 8 screens with choices, 4 brands per screen

Premium in line extension lower than in dedicated

'responsible' brands
Premiums in line extensions lower.. .. than in dedicated 'responsible' A-brand

$ price per volume $ price per volume
20 10
8
15
+14% +35% +63%
6 +40%
10 8.8 4 5
7.7 4
4
3
0% +17% 3 3
5
2.7 2.7 2
1.6 1.9
0 0
Dannon Light Campbells Tomato Star bucks Dannon/ Stonyfield Colgate/Toms Suave/ St Ives
n fit/ all natural Soup/ 100% whole bean / Strawberry 32oz of maine 4.7 Skin Moisturizer
vanilla 32oz natural (19/18.7oz) fair trade 12oz toothpaste (18oz/21oz)
Non responsible Responsible

Source: IRI database 2013 & walmart.com
A-brands with lower premiums than specialty brands and

private label example Organic in Food
Organic deepdive
Average weighted price per volume
Edible Categories1 ($, US, 2013)
5 +25%
4.2
+47%
4
3.5
+10% 3.4
3 2.8
2.5
2.4
2
0
A brand Private label brand Specialized responsible brand
Organic Not organic
1. Weights all prices for all 'responsible' claims to all non 'responsible' prices, weighted by sales and corrected for volume per serving
A-brands are mainly active in lower growth segment of less

'stringent' claims
A-brands mainly active in the least Growth rates higher in (strictly)

'stringent' type claims regulated claims for all type brands
% Sales (US Food categories, Natural + Organic1) CAGR 2010-2013 (US Food categories, Natural + Organic1)
100 25
11
18
33 33
80 20
+2
10 10 38
60 15 14
11 12
17 82 +4
40 10
8
28
+2
46
20 40 5 4
3
16 1
2
5
0 0
Not regulated Partly Regulated Strictly A brands Private Label Specialized brands
regulated regulated
Other2 Private label brand Not and partly regulated
Specialized responsible brand A brand (Strictly) regulated
1. Based on Natural and Organic sales other claims expected to show comparable results 2. other brands are other generic brands with non-'responsible' and 'responsible' alternatives Note: IRI
categories distributed as a) not regulated: Other Natural and Contains Natural Ingredients, b) partly regulated Other Organic, No artificial ingredients and All Natural , c) regulated Made with Organic
Ingredients, d) strictly regulated USDA/Certified organic and 100% Organic Source: IRI database 2013
'Responsible' products used to trade up and play at premium
price point
Price in local currency per volume

6
4 +31%
3.0 +80%
+32%
2.3 2.3 +53%
2 1.8 +38%
1.4 1.4
1.3
0.9 1.0
0.7
0
Carrefour caffenevrij Sainsbury Orange Tesco Milk / AH all purpose AH yoghurt / puur
/ solidair 0,25 kg Juice/ Organic 1 litre Organic (2.27 litre) cleaner lemon / & eerlijk 1 litre
puur & eerlijk (litre)
Non responsible
Responsible
Source: tesco.co.uk & sainsbury.co.uk & ah.nl & carrefour.eu

'Responsible' products heavily promoted in online stores
Albert Heyn Carrefour

Puur & Eerlijk main search result when 'eco', 'bio' or 'fair Carrefour only has a rubric for Biological products, the
trade' is selected because of 'unfair' labeling category it is active in
Carrefour
Puur & only offers a
eerlijk main special rubric
(and first) for ecological
hit when products (the
'biological' segment it is
is selected most active
in
Clear
'responsible' Carrefour does
products not not sell many
labeled (e.g. 'responsible'
'Eat Natural') brands on its
while Puur & website mostly
Eerlijk its own (e.g. no
products are fair trade coffee
labeled but Carrefour's)
'Source: Press search, Albert Heijn website, Albert Heijn store visit & Carrefour Website
Specialized 'responsible' brands showing annual growth
rates of 30-70%
Many 'specialized 'responsible'' brands Examples of 'specialized' brands show

in Developed Countries growth rates of ~30-70% p.a.
Azabu Takano - Net Sales ($M)
30 +31%
20 21
20 15
7 9
10
0
2008 2009 2010 2011 2012
Green Mountain - Net Sales ($B)
6
+67% 4
4
3
2 1
0 1
0
2008 2009 2010 2011 2012
Tony Chocolonely - Net Sales (M)

6
+66% 5
4
2
2 2
1
n/a
0
2008 2009 2010 2011 2012
1. Fairtrade USA no longer part of Fairtrade international in 2012. Sales figures of Fair Trade USA 2011 have been added to 2012 sales
Source: Annual Reports Fair Trade, Annual Report Green Mountian Coffee Roasters, Annual reportTony Chocolonely 2012, press search, Orbis Database.
Consumers indicate a lot of confusion about 'responsible'
offers, leading to distrust
'We should buy more 'You have to think on your own

'There are so many claims
'responsible' products, but it is to find 'responsible' products. It's
and labels, I do not
hard to find which products complicated to know which
understand them'
are actually 'responsible'' products you can trust'
'What we really need is one

'I often think that 'responsible'
'I do not really understand overall label, so that we can
is used by companies just as
what 'organic' means' be sure we are buying a
a marketing trick'
'responsible' product'
MindDiscovery workshop Paris Oct 21 2013

Note: quotes are derived from multiple workhops and not necessary said by the participant indicated in the picture
Source: MindDiscovery workshops France & US (29 participants in total)
Reasons to buy 'responsible' differ per type category
Food Personal Care Household care
'Responsible' products are 'Responsible' products are 'Responsible' products are
more healthy and tasty better for my skin and hair safer for my children
& & &
'Responsible' products help 'Responsible' products are 'Responsible' products are less
local farmers better for the environment bad for the environment
Source: MindDiscovery workshops France and US (29 participants in total)

Specific claims are not relevant in all categories
Social and Fair Environment Local and Organic and

Trade friendly seasonal Bio Natural1
Coffee Trash & food bags Milk Milk Cold Cereal

Categories with highest share
Chocolate Facial cosmetics Bottled Juices Yogurt Yogurt
Fresh fruit Shampoo Coffee Snack Bars Soup
Tea Household cleaner Dog Food Baby Food Snack Bars
Wine Dog food Fruits & Vegetables Frozen Dinners Cookies
Food
Non-food
Note: deep dive categories used as a starting point, augmented with other categories for local/seasonal & social and fair trade claims
Source: IRI database 2013 & BCG analysis
Consumers have a strong opinion about A-brand credibility
Some 'responsible' products can benefit .. while others cannot overcome

from overall brand loyalty.. negative associations
'I am very loyal to this brand,

and will therefore choose this 'I would never buy a green
brands' 'responsible' product' version of AJAX because
there is too much history of
using unhealthy chemicals in
'I really trust the quality of this their products'
brand'
'This is not really a natural
'I highly trust this brand, this is
product, this is only a
really 'responsible''
marketing strategy'
'Danone only expresses

'Les Deux Vache is really
'responsibility to make more
organic'
profit'

A-brand credibility can differ between countries
US consumers trust Dannon far more.. .. than the French trust Danone
'Yes, Dannon makes good quality products, I 'This is not really a natural product, this is only a
would try their 'responsible' product' marketing strategy'
'I trust Dannon to be able to make a good 'Danone only expresses 'responsibility to make
'responsible' product' more profit'
'Dannon seems too large to produce 'responsible' 'If I would have known Les Deux Vaches is owned
products, but I think I would still try it' by Danone, I would have never bought it'

Thank you
bcg.com | bcgperspectives.com

Boston Consulting Group Responsible Consumers - Unilever Discussion 21st July 2015

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Boston Consulting Group Responsible Consumers - Unilever Discussion 21st July 2015

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Unlocking the growth opportunity of the

Quick round of introductions

Share key findings from our Responsible Consumption research

United States Europe Big 5

1. % of respondents indicating they a) systematically buy 'responsible', b) sometimes buy 'responsible'

.. and >50% of buyers

At the same time broad scepsis on "say don't do", "willingness

SKU level analyses Consumers

Deep dives of MindDiscovery

Benefits What it promises With many diverse 'claims'

Social and Fair Fair treatment of producers and workers

Environment Production, use and disposal of the product

Following organic or bio production

Products are made with natural (non-

Realizing that most of these benefits are poorly defined,

Very stringent Stringent

% Share 'responsible' of total % Share 'responsible' of total % Share 'responsible' of total

'Responsible' products outgrow the market

CAGR 2010-2013 (%) Food Household care Personal care

Responsible Total Market

1. '12-'13 growth rate due to lack of sales data

'Responsible' products drive ~70% of total market growth

% of total market growth1 (US, 2010-2013, investigated categories)

Bulk of growth in both Food and Household/Personal Care

64% of growth in Food 77% of growth in Household/Personal

Source:IRI Database Deepdives 2010-2013

Consumers are paying a premium

Coffee Household cleaner Shampoo

8.2 34 5.9 3 7.0 6

7.5 7 3.5 32 5.8 12

7.5 21 3.2 11 4.3 8

5.6 30 2.7 4 3.4 10

3.9 11 2.5 5 2.9 7

Source: IRI Database 2013, US retailers

Price premium of ~40% but wide diversity across categories

The 'average' 'responsible' product is Price premiums vary per category,

Carbonated soft drinks

'Responsible' products growing at 8,5% 'Responsible'2 products have an

Example Cost Resulting 'responsible'

Raw materials &

Gross profit 15 +40% 21

Retailer margin 33 +20%3 40

Retailer sales price 100 +20% 120

0 50 100 150 0 50 100 150

Indication of cost distribution1 (%) Indication of cost distribution1 (%)

Specialized 'responsible' Specialized retailers with Private Label claiming big

A brands are not capturing the growth in this segment

Preference without Preference with non-A

% of respondents choosing this type product1

Private label Specialized brands A brands

Simple conjoint analysis between two A brand products

% of respondents choosing this product1

The size of the price is large: expect ~75 $B of premium price

Est. of growth 2013-20181 (US consumer market, $B)

1. mechanical projection of momentum growth (2010-2013) CAGR's put on maximum of 50%

Purely altruistic buying

Respect for Not/less Not

Not to hurt Without

Recycling Political Respectful Nature Human being

Environment Not disposable Sustainable Share Family Common Social life

Pollution Ozone Ecosystem Preserve Planet Legacy Transmission

Protection Respect Groundwater Reliable Reusable Strong Recyclable

Green Forever Sustainable

Various (work, Cheaper than