2004 Confection Business Plan

Prepared by Joyce Musgrave

November 4, 2004

©2004 A L C A N I N C. Slide 1 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Vision

Selectively grow market share with targeted customers

based upon their value, market behaviors, and amount of
profitability.

©2004 A L C A N I N C. Slide 2 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Mission
• In 2005, Alcan Packaging will expand the
Confection business by focusing on:
– Identifying and establishing our strategic
position
– Rationalizing specifications
– Execution of a go-to-market strategy
• By 2008, Alcan packaging will:
– $7.7 MM annual revenues and restore 26%
margin on blister foil
– Grow revenue to $75 MM with 32% margin on
laminations

©2004 A L C A N I N C. Slide 3 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Market Analysis – U.S. Confectionary Market
Value of Domestic
Manufacturer's Shipments
• Chocolate - $9.1 $15.2 Billion
• Non-Chocolate - $4.3
– Dried fruits
– Hard candy
Gum
– Chewy candy – jelly beans, caramels, marshmallow 11%
– Soft candy
– Licorice candy Miscellaneous
– Novelty – cotton candy, pixie stix
Non
 Plain Mints – starlight mints, after dinner mints Chocolate
 Specialty Nut & Coconut – Jordan almonds, peanut Chocolate
brittle 32%
 Variety packs 56%
 Seasonal candy

• Gum - $1.7 B
– Chewing Gum
– Breath Fresheners

©2004 A L C A N I N C. Slide 4 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Market Analysis – U.S. Confectionary Market
5%
8%
30% Mars
15% Nestle
Hershey
Other
Wrigley
15% Cadbury
27%

Based on domestic retail sales of $24.8 Billion which includes imported product

©2004 A L C A N I N C. Slide 5 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Customer Analysis
Where is the Business?
04 Es timate Co nfe c tio n Pkg
Co mpany S hare $ Value , MM
Ma rs 30% $ 170
Ne s tle 27% $ 160
He rs he y 15% $ 89
Wrigle y 8% $ 45
Ca dbury 5% $ 27
Othe r 15% $ 90
To tal $ 581

©2004 A L C A N I N C. Slide 6 Alcan Packaging – Food & Specialty Flexibles

 Dry Mix Business Plan
Market Analysis – Confection

Industry growth, including imports, is moderate

– Chocolate + 3%
– Non-chocolate +5.3%
– Gum +3.2%

Trend Driver
Off-shore production and co-packing - Global Cost & Consolidation
Need for portability smaller portions, single serve packages Convenience
Ethnic flavors driving growth for new products in non-chocolates Consumer Preference
Met Pet replacement Cost Reduction/Availability
Monoweb Cost

©2004 A L C A N I N C. Slide 7 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Competitive Analysis
Total Market size = $584.2MM

6% 3%
6% Milprint
29%
Printpack
8%
Sonoco
Alcan
8% Other
Reynolds
Bryce
17% Hueck
23%

©2004 A L C A N I N C. Slide 8 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Customer Analysis
Who has the Business?
04 Es timate Co nfe c tio n Pkg
Co mpany S hare $ Value , MM
Be mis 29% $ 172
P rintpa ck 23% $ 136
S onoco 17% $ 101
Othe r 8% $ 48
Alca n 8% $ 48
Re ynolds 6% $ 35
Bryce 6% $ 34
Hue ck 3% $ 15

©2004 A L C A N I N C. Slide 9 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Critical Issues Analysis

• Scale-up of Master Foods

• Retention of Cadbury Schweppes
• Implementation of Project Miracle
• Address OPP, foil and other raw material cost
disadvantages
• Market based R&D expertise
• Communication of product offering, capabilities,
and targets to sales team

©2004 A L C A N I N C. Slide 10 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan

Strengths SWOT Analysis Weaknesses

•Global •Lack of purchasing power in OPP & Foil
•Customer Service •Cost position on push-through foil
–Flexibility •Focused marketing effort
–Customer Responsiveness •Undefined participation strategy
•Association with Master Foods, Cadbury-Schweppes, •Market based R&D expertise
Wrigley •Non-integrated Financial and Specification reporting

•Scale up Master Foods Low barrier to entry

•Implement Project Miracle to gain global Wrigley in Defend position at Cadbury Schweppes
2006 Bid process
•Flexo print on blister foil
•Low cost manufacturing through Novacel
•Rationalize product line (fix or exit)

Opportunities Threats
©2004 A L C A N I N C. Slide 11 Alcan Packaging – Food & Specialty Flexibles
 Confection Business Plan
Goals

–Identify Strengths
–Identify Customer Value Drivers
–Rationalize Product Offering & Defend
Marquee Accounts
–Identify targets
–Implement Go to Market strategy

©2004 A L C A N I N C. Slide 12 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Objectives

2005 2004 2005 2004 2005 2004

Sales Sales Income Income Margin Margin
(MM $) (MM $) (MM $) (MM $) (%) (%)
Blister foil 4.7 4.7 1.2 1.5 26.0% 32.7%

O/W & Lam 51.6 43.0 16.5 13.0 32.0% 30.2%

©2004 A L C A N I N C. Slide 13 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan

Project
Action
Category
Plan
Potential
Summary
Owners Plant
Sales/Savings
Market Growth Mktg/R&D/Sales Bellwood/Toronto/
Resource Team Shelbyville
Rationalize Cost Mktg/R&D Bellwood/Toronto/
product Shelbyville
offering -
platform
specifications
Implement Innovation MDE/Mktg Shelbyville
Project Miracle & Growth
Flexo blister Innovation MDE/Sales/Mktg Shelbyville
& Growth

©2004 A L C A N I N C. Slide 14 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Strategy & Action Plans
Strategy: Lead Quarterly MRT (Market Resource Team) for the Confection

Action Item Start Date Completion Owners

Date
Assemble team members and set meeting Dec ’04 Nov ‘04 Mktg.
dates (1 in ’04, and 4 in ’05)
Determine content / agenda of meetings – Nov ‘04 Nov ‘04 Mktg.
Objective is growth and alignment - strategy
review, financial review, PCP project review,
plant issues, customer review
Kick-off first Quarterly review meeting Dec ’04 Nov/Dec ’04 Mktg.

Meetings once per quarter in ’05 On-going On-going Mktg.

©2004 A L C A N I N C. Slide 15 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Strategy & Action Plans
Strategy: Confection rationalize product offering - platform specifications

Action Item Start Date Completion Owners

Date
Develop cross-functional team and set up Dec ’04 Jan ’04 Mktg.
meetings
Cross-functional to evaluate product mix and Nov ’04 Jan/Dec ‘04 Sales,
re-define “platform spec” for the Confection R&D,
segment Mktg., Mfg.,
Capacity
Recommendations from team on the platform Jan ’04 Feb ‘04 Sales,
translated to the selling strategy – sell sheet R&D, Mktg.
Communicate expectations to Confection Mar ‘05 On-going Mktg..
team – presentation of selling strategy based
on platform that has been identified

©2004 A L C A N I N C. Slide 16 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Strategy & Action Plans
Strategy: Implementing Project Miracle

Action Item Start Date Completion Owners

Date
Produce product with re-formulated water Oct ’04 Oct ’04 Shelbyville
based adhesive MDE
Perform all physical property tests Nov ’04 Nov ’04 Shelbyville
MDE

Schedule trial at customer Dec ’04 Dec ’04 Sales/MDE

Begin scale-up Jan ’05 On-going

©2004 A L C A N I N C. Slide 17 Alcan Packaging – Food & Specialty Flexibles

 Confection Business Plan
Strategy & Action Plans
Strategy: Vetting blister foil flexographic printing as fit for use in applications

Action Item Start Date Completion Owners

Date
Perform larger scale trial Nov ’04 Jan ’05 Mktg/Shelb
yville

Identify Target Accounts Nov ’04 Jan ’05 Sales/MDE/

Mktg

Choose Scale-up partner Jan ’05 Jan ’05 Sales/Mktg

/MDE

Trials Feb ’05 April ’05 Sales/MDE/

CTS

Commercial Launch ? ? Mktg.

©2004 A L C A N I N C. Slide 18 Alcan Packaging – Food & Specialty Flexibles