Profitable and sustainable growth by internal growth, strategic partnerships and acquisitions primarily in Europe.

Transcription

1 ANNUAL REPORT 2011

2 Our Vision Leading European fruit juice and fruit beverage company, based on strong number-one / number-two brands, with an excellent reputation for successful innovations. Profitable and sustainable growth by internal growth, strategic partnerships and acquisitions primarily in Europe. With a motivated and competent team in a very attractive company characterized by an open and entrepreneurial culture.

3 Corporate Boards Supervisory Board of Eckes AG Axel Hamm Dr. Karl Brings Chairman Deputy Chairman Thomas Hübner, until December 18, 2011 Willi Schwerdtle, effective December 19, 2011 Stefan Kobold Christian Köhler Thierry Paternot Executive Board of the Eckes-Granini Group GmbH Thomas Hinderer Ulrich Bunk Sidney Coffeng Heribert Gathof Albert Grätz Sabine Holtkamp Emmanuel Manichon José Martí Cos Chairman Senior Vice President, Supply Chain Senior Vice President, Controlling & Finance, IT General Manager Eckes-Granini Germany General Manager International Business Development Senior Vice President, Human Resources & Organizational Development General Manager Eckes-Granini France Senior Vice President, Marketing, R&D

4 National Organizations Austria Eckes-Granini Austria GmbH St. Florian, Austria Denmark Valsølille Most Aps Glostrup, Denmark Estonia Eckes-Granini Eesti AS Tallinn, Estonia Finland Eckes-Granini Finland Oy Ab Turku, Finland France Eckes-Granini France SNC Mâcon, France Germany Eckes-Granini Deutschland GmbH Nieder-Olm, Germany Hungary Sió-Eckes Kft. Siófok, Hungary Latvia SIA Eckes-Granini Latvija Riga, Latvia Lithuania UAB Eckes-Granini Lietuva Vilnius, Lithuania Norway Brämhults AS Oslo, Norway Romania Eckes-Granini Romania S. R. L. Bucharest, Romania Spain Eckes-Granini Ibérica S. A.U. Barcelona, Spain Sweden Brämhults Juice AB Brämhult, Sweden Switzerland Eckes-Granini Suisse S. A. Henniez, Switzerland 51 % Turkey Yıldız Granini Meyve Suyu Sanayi Istanbul, Turkey 50 % Ve Ticaret A.Ş. 100 % interest unless otherwise indicated

5 Contents 1. Foreword 2 2. Business Year Building values 13 with strong brands 4. Our Countries 26 Overview 26 Germany 28 France 30 Austria 32 Belgium 33 Czech and Slovak Republics 34 Finland 35 Hungary 36 Lithuania 37 Romania 38 Scandinavia 39 Spain 40 Switzerland 41 Turkey Key Business Figures, 44 Commentary 6. Contacts: Countries 46 and Business Units 7. Publishing Data 49

6 2 Foreword Foreword 3 Record-high raw material prices pressure earnings From the standpoint of the entire fruit juice industry and thus of our company as well the year 2011 was dominated by the influence of drastic increases in the costs of nearly all raw materials. Consequently, we were confronted with an unprecedented challenge in 2011, a challenge that posed extraordinary problems for all producers in our industry. Prices for raw materials and above all for orange juice concentrate, our most important raw material reached historical highs during the past year. By the end of business year 2011, total cost increases for all raw materials purchased by the Eckes-Granini Group were roughly equivalent to our profits for In an effort to counteract this trend, we significantly and consistently raised our sales prices to food and beverage retailers a process that involved agonizing negotiations with our partners in some cases. Despite all of these negative influences, we achieved volume and turnover gains of 2 % and 4.6 %, respectively, in our core fruit beverage business. We also held our market share in a fruit beverage market that recorded a rise in sales value due to broad-based price hikes despite slumping sales volumes. In spite of price increases and systematic cost-cutting measures, the dramatic rise in raw material costs could not be fully offset in Consequently, net profits of 52.4 million EUR were down significantly from However, in view of the absolute magnitude of our cost increases, that must be regarded as a solid result which underscores the strength, resilience and unique character of our business model. Despite the massive cost pressure that affected earnings, we continued to make substantial investments in advertising support for our brands in hopes of achieving sustainable positive effects in the coming years. We face difficult market conditions in the current business year as well. Raw material prices remain at record-high levels, while troubled economies in several of the countries in which we are represented by subsidiaries pose additional challenges for our Group. From left to right: Albert Grätz, Sidney Coffeng, Heribert Gathof, Thomas Hinderer, Sabine Holtkamp, Emmanuel Manichon, José Martí Cos, Ulrich Bunk. We have prepared our group well for these challenges, and are now ideally positioned. We aim to of the Eckes-Granini Group by intensifying strong We will continue to drive the international expansion build on the success of past years and are striving to partnerships and through carefully selected acquisitions. In this way, we hope to take optimum ad- establish a positive earnings trend again in vantage of the strong international potential of our Our business model is unique in the European fruit premium brand granini. The rapidly growing Turkish beverage market. With our premium brand granini market for fruit beverages will be an important focus and our strong local brands, which hold leading positions in many countries, we will achieve our business a leading position in that market in cooperation with within the context of that process. We aim to achieve objectives. The Eckes-Granini Group stands on a solid our partner Yıldız. foundation, with sound finances and a healthy equity ratio. The Executive Board Eckes-Granini Group We remain fully committed and disciplined in our pursuit of the Eckes-Granini Strategy As we proceed, we intend to build on the positions of our strong brands and provide new, sustainable impulses to the market with a wide range of new attractive products as well as additional investments in advertising.

7 Business Year Eckes-Granini kept its market position in a difficult business environment The market: Declining volumes, increasing values Overall, the fruit beverage market suffered from the effects of dramatic increases in raw material costs during the past year. While the resulting price adjustments resulted in turnover gains, the higher consumer prices exerted downward pressure on volume sales. The situation in the fruit beverage market served by the Eckes-Granini Group (data from 14 core countries, retail food trade*) was much the same. Turnover rose by 4.6 %, while volume sales decreased by 2.4 %. The ambient fruit beverage segment (products in nonrefrigerated shelves) was particularly hard hit by volume losses, whereas chilled fruit juices gained ground. Trade labels performed in line with the general market trend. Demand for healthy fruit refreshment beverages continued to rise during the past year. The syrup segment recorded growth in both volume and turnover. Sales of PET bottles increased, while sales of glass bottles declined. It appears likely that the current situation will persist through this year as the market remains under pressure. In view of the higher prices for fruit beverages, the most probable scenario is one of market stagnation. * Belgium, Denmark, Germany, France, Lithuania, Norway, Austria, Romania, Sweden, Switzerland, Spain, Turkey, Hungary; own estimate: Finland

8 6 Business Year 2011 Business Year Key Figures Diff. vs. YA Turnover in million EUR * Volume sales in million litres * Volume sales in million litres * 1,183 1,113 1,034 1,061 1, % of which fruit beverages (core business) 1, % 1,094 1,183 1,113 1,034 1, Net turnover in million EUR * % of which fruit beverages (core business) % Earnings before interest and taxes (EbIT) % in million EUR Employees (full-time equivalent) 1,527 1,478 1,461 1,547 1,646 * including licence business The Eckes-Granini Group: Volume and turnover growth, earnings down significantly from 2010 Along with the entire European fruit juice industry, we found ourselves confronted with record-high raw material prices during the past year. At the close of the business year, the net value of cost increases for all raw materials was roughly equivalent to our profits for Consequently, Eckes-Granini raised its selling prices consistently and substantially, a process that involved agonizing negotiations with some of our partners in the trade. However, we managed despite these influences to maintain our value-based market share at a nearly constant level at 11.8 % (2010: 12.0 %). Total net turnover for the Eckes-Granini Group rose by 4.2 % to 888 million EUR in 2011 (2010: 852 million EUR). Revenue from the core fruit beverage business rose to 869 million EUR (2010: 831 million EUR), a gain of 4.6 %. Volume sales increased slightly by 1.1 % to billion litres (2010: billion litres). The volume increase in core sales of fruit beverages from 939 million litres (2010) to 958 million litres amounted to 2.0 %. We suffered slight losses in volume sales of our strategic brands, due largely to a lack of promotional support in connection with our negotiations with trade partners with respect to the consistent implementation of price increases. We achieved further improvements in our market position in Lithuania, Switzerland, Spain and Turkey. Earnings before interest and taxes (EbIT) fell to 52.4 million EUR, well below the previous year s figure of 64.8 million EUR a shortfall of 19.2 %. This is attributable to the unusually steep rise in raw material costs. Although we raised our selling prices to the trade and implemented systematic cost-cutting measures, it was not possible to compensate fully for the dramatic rise in raw material prices. Nevertheless, we continued to invest heavily in advertising support for our brands during the past year with the expectation of sustainable positive effects in the years to come. * including licence business Earnings before interest and taxes (EblT) in million EUR

9 8 Business Year 2011 Business Year Net sales shares by brand in 2011 (figures rounded) * We also occupied a new segment in Finland, where The quality and quantity of the apple harvest in probiotic products play an important role, with the Europe (with the exception of Hungary) were Marli Protect sub-range. These chilled fruit beverages satisfactory. However, growers and suppliers kept a Strategic brands 85 % made from fruits and berries unite the positive effects of probiotic cultures with numerous vitamins. larger portion of the harvest as table apples in their warehouses instead of making the fruit available for juice production. At the same time, prices for apples granini 26 % Innovations in the core fruit juice and nectar business and the fruit refreshment beverage category from China also reached record-high levels due to a high fruit price and a strong demand for table will be a major focus during the current business apples. This ultimately led to a significant increase in year. The granini samtig & fein concept will be the price of apple juice concentrate. hohes C 25 % introduced to other markets as Joker Pur Jus Velours in France, for example. We will also be Sugar prices rose by nearly 50 % under the influence of EU regulations and the world-wide supply positioning the innovative hohes C Naturelle Sport shortage. Joker 16 % concept in the German market this year. Together with our joint venture partner, we are build- Other strategic brands 18 % * Base: core business fruit beverages Tactical brands 10 % Other turnover 5 % Supply Chain: Dramatic rise in raw material prices Prices for nearly all raw materials rose dramatically over the course of the past business year Despite a very good harvest in Brazil, prices for ing a new production facility in Turkey, which is a key step in our business expansion plan. Process improvements and systematic cost reductions efforts contributed significantly to enhanced product- orange juice concentrate reached record highs, ivity in the supply chain. partly as a result of a supply shortage brought about by the accumulation of warehouse stocks. In keeping with the principle of sustainable resource The situation was also exacerbated by the strength management, we achieved further reductions in sav- Innovations: Generating sustainable impulses The local fruit product lines are another example of suc- of the Brazilian currency and increased costs for ing both energy and water as well as waste ratios. with viable concepts cessful concept transfer. The hohes C Local Fruit and El- orange growers, which also impacted on the We also reduced the weight of our PET bottles. Our The international subsidiaries of the Eckes-Granini menhorster Gimtinės (Lithuania) ranges were extended price of orange juice concentrate. German organization earned EMAS (Eco Manage- Group provided sustainable impulses to their markets to include additional varieties and SIÓ Frissen Preselt ment and Audit Scheme) certification for exemplary with a number of innovative new products during the was introduced in Hungary. We also took advantage of environmental management for the second time. past business year. our local expertise in support of seasonal product lines: Other European facilities will be certified in the near granini Saison Suisse (Switzerland) and Joker Le Fruit de future. In the premium and enjoyment segment, granini Saison (France). samtig & fein (Germany) represents an unusual novelty. These fruit juices are characterized by their Refreshment was the watchword in the fruit extraordinarily fine flavour and velvety-smooth texture beverage category in Central and Eastern European (with pulp but without fibres). countries. In Hungary, we expanded our offerings through line extensions and the launch of the new We generated significant synergy effects through the SIÓ Limonádé range. SIÓ Limonádé combines fruity application of established product concepts to other flavour with the tradition of home-made beverages. national markets. With the YO Fresh sub-range, the YO brand (Austria) One example was the relaunch of the Marli Syrup demonstrated how syrup can be effectively combined range (Finland). In this case, the practical PET bottle with convenience and delicious refreshment. with the anti-spill cap developed for YO in Austria was appropriated for the Finnish brand.

10 10 Business Year Human Resources & Organizational Development: Binding talented employees to the company in the long term As one of the pillars of our Strategy 2015, we place particular emphasis in the interest of future growth on effective talent management. Our goal is having the quantity and quality of managers in the right positions to meet current and future business priorities and respond effectively to increasing competition, to position ourselves as an attractive employer and to develop and motivate our competent and dedicated employees over the long term. With that in mind, we drafted a Group-wide concept for the definition of key positions at the Group and local levels in 2011, focusing on individualized development plans (external development programmes, coaching, mentoring, project work, talent days), which will be implemented in a step-by-step process. In addition to talent management activities, support was provided for international change processes within the Eckes-Granini Group in the form of communication and stakeholder management measures as well as roll-outs in individual countries. Another focal point was organizational development within the context of external growth. Workshops on the subject of Intercultural Management tailored to the requirements of specific target groups and cultural environments help promote the efficient implementation of our processes and structures as well as effective intercultural cooperation from the outset. Prospects: Meeting challenges successfully through sustainable initiatives We along with all other market players will be confronted with record-high raw material prices again this year. With the aid of even larger investments in advertising and a number of new, attractive products, we aim to provide sustainable impulses to the market with our strong brands. Major projects and investments for 2012 include the commissioning of the cold-aseptic PET bottling plant in Turkey and the implementation of our HiScore process and IT optimization programme.

11 34 Die Marke macht`s! Building values with strong brands 13 Building values with strong brands They are lighthouses and points of orientation for consumers. They generate demand and frequency in the retail trade. They motivate employees, while offering partners security and reliable prospects. And last but not least, they involve suppliers actively in product-development and innovation processes. We are talking about brands strong brands which create lasting images that stick in the minds of consumers as clearly defined ideas about the body and soul of a product. What picture comes to a consumer s mind when she thinks of granini? Most likely it is the uniquely shaped dimpled bottle. And she would surely recognize granini even with her eyes closed just by grasping the bottle. It is with brands like granini that the Eckes-Granini Group strives day in and day out and with considerable success to reach and win the minds and hearts of consumers, retailers, employees and suppliers. brand portrait granini: The best fruit for the best juice. A brand icon with strong international potential The international premium brand granini continues to impress consumers in over 50 countries around the world with its extraordinary fruitiness and superior quality. granini is sold in the food retail trade and the out-of-home market. Incidentally, the granini success story began in Since then, the best sunripened fruit and careful processing have served as the basis for the premium quality of granini products. The distinctive dimpled bottle makes this brand truly unique. granini is known for its unrivalled range of varieties with over two dozen flavours. Brands are on the rise as is clearly indicated by a recent study * conducted by the German Markenverband (Brand Producers Association) in cooperation with McKinsey Company Inc., a leading corporate consulting firm: Rather than turning away from brands, consumers now rely more than ever on quality and innovation when it comes to choosing products. * It's all about the brand. The role of brands and the brand industry in Germany (November 2011)

12 14 Building values with strong brands Building values with strong brands 15 Brands stand for quality, security and trust And why is that? One important reason is that people place strong emphasis on security and trust. Brands benefit from this need for security and superior quality is one of the key arguments expressed in brand advertising. For many consumers, favourable price is no longer the only criterion they apply to purchases. Quality-consciousness now plays an increasingly important role in consumer decisions, according to the authors of the study conducted by the Brand Producers Association. This argument is particularly apt and compelling when it comes to food products. We regard the brand as one of the most important keys to success and as a decisive strategic competitive advantage, notes Thomas Hinderer, Chairman and CEO of the Eckes-Granini Group. We believe in our strong, widely esteemed brands and rely on them in the long run. In addition to consistent reliance on quality as a competitive factor, that also encompasses continuous investment in communication and attractive innovations. All of Eckes-Granini s local strategic brands rank either first or second in their respective markets. We are making a consistent and sustained effort to maintain and improve upon these leading positions. And we also aim to make granini the number-one premium brand in the market for fruit beverages in continental Europe in the medium term. From hohes C to Joker to our other strategic brands, each one stands for a distinctive brand personality that is promoted with diligence and passion and developed carefully but steadily. The recipe for success is the right blend of continuity and innovation, which means preserving the brand core while continually generating new impulses for consumers. Multifaceted brand management Timely recognition and response to market trends and consumer preferences require reliable analysis and a keen business sense. brand portrait hohes C: Only the best for the whole family hohes C rich in natural vitamin C. Millions of people have placed their trust in the most popular German fruit juice brand since hohes C in the distinctive brown bottle is still the leading fruit juice in Germany and is very popular among consumers in Austria, Hungary and Switzerland as well. Produced entirely from pure, natural fruit juice without added sugar, colourings or preservatives and rich in natural vitamin C, hohes C makes an important contribution to healthy nutrition day in and day out. An international premium brand and local heroes Our business model based on the international premium brand granini and strong local brands that hold leading positions in many countries is unique in the European fruit beverage market and gives us a definite competitive edge, notes Hinderer. The latter group includes the strategic brands hohes C in Germany, Austria, Switzerland and Hungary, Joker in France, SIÓ in Hungary, YO Syrup in Austria and neighbouring markets, Marli in Finland, Brämhults in Scandinavia and Elmenhorster in Lithuania.

13 16 Die Marke macht`s! Building values with strong brands 17 In this way, brands provide useful and necessary guidance for consumers seeking their way through the brand portrait product jungle. And that is especially true when they are recognizable at first glance and stand out by virtue of their packaging alone like granini in the typical dimpled bottle, for example, or Joker (France) in the four-sided PET bottle or oval carton. Website JOKER PARK In addition to our clear consumer orientation, we also strive consistently in managing our brands to produce and market unique products that stand clearly apart from those of our competitors. That is yet another strength of brands in general and of our brands in particular, explains Hinderer. In keeping with this policy, Eckes-Granini has also created new segments (e.g. Mild Juices, Local Fruits) and played an instrumental role in the successful promotion of new trends (e.g. juices in PET bottles with a clear brand identity or consumers be it through such traditional channels as the post, and the telephone, or in the sphere of social media. In this context, we develop communication programmes and extraordinary activities in keeping with each brand type. One example is the unusual marketing campaign we carried out in support of our Brämhults fresh juice brand last year, which was awarded the Swedish trade prize. 100,000 Swedish consumers were asked which juice they thought tasted better the newly introduced apple juice or the Elmenhorster: Sharing good things with others Loyalty, trust and a sense of family are values of the highest priority for the people of Lithuania. Sharing delicious, fine-quality foods and beverages is an important part of Lithuanian culture. Introduced in 1992 as the first international fruit juice brand, Elmenhorster has been produced in Lithuania since 1997, and has been regarded ever since as a local brand that has earned the trust of consumers and a strong market position. Elmenhorster is the most popular fruit juice brand in Lithuania today. Brands are not just here today and gone tomorrow, but rather permanent fixtures on store shelves. As adults, we tend to appreciate the things that were familiar to us as children and perhaps to pass them on to the next generation as well. A typical example is hohes C. Millions of people three generations of parents and children place their trust in the German fruit juice brand that invented bottled orange juice in And much the same applies to other brands, such as Joker in France, Marli in Finland and SIÓ in Hungary. new packaging seals and caps). popular orange variety. 50,000 consumers submitted As a traditional beverage producer, we have accumu- their votes. Based on the results (57.4 % for orange lated decades of experience and relevant know-how. We work in close partnership with our suppliers and the trade, and take advantage of synergy effects and 42.6 % for apple), a new juice mix with precisely that ratio was successfully introduced six weeks later. within the Group. Successful concepts are applied to other countries and other brands. Moreover, we provide sustained support for our brands in the form of substantial investments in communication. brand portrait Orientation and security in the product jungle Faced with a virtually unlimited range of products not only in the food and beverage sector consumers find it increasingly difficult to make the right New communication challenges Brand producers in particular are faced with changing requirements in the area of communication, according to the study by the Brand Producers Association: Companies hoping to profit from the increasing consumer need for security and trust should respond professionally to the questions, wishes and problems of their customers. Today, more and more consumers are looking for answers online and discussing their experiences with specific products in social networks. Thus companies are called upon to establish a presence here as well and to manage brand communication actively and systematically. We at Eckes-Granini are firmly convinced of that and we are dedicated at Joker: C est toute une histoire! Enjoyment, pleasure and well-being the French brand Joker still embodies these three values after over 75 years. Invented in 1936 and named Joker for the familiar playing card, the brand is known for its extraordinary quality and fruit expertise. And thus it is no wonder that Joker is one of the most popular fruit juice brands in France today, with a brand recognition rating of over 90 %. Every glass is full of life is the slogan for Joker, which has firmly established itself as a healthy product in the French market. choices when they shop. And the wealth of information that is constantly available in printed form, on the Internet, in advertising and on product packaging does not necessarily make the process of selecting a specific product any easier. Brands have always been a helpful guide in this jungle of merchandise. They are a source of orientation and identification for consumers, who may often be confused or uncertain. If a product is identified as a brand, it simply must be of good quality. Brands make promises and are expected to keep them. the local level to pursuing intensive dialogue with

14 18 Building values with strong brands Building values with strong brands and others that repeatedly generate powerful impulses with innovative product concepts. These concepts, Our basic business principles: which as a rule involve substantial investments by - Our business model is based on strong brands. - Every market and market segment needs leading brands. - It is essential to understand both the needs and wants of consumers and the dynamics of the market segment and to act accordingly. producers in development, production and advertising, regularly provide new, attractive alternatives for consumers and thus generate genuine added value for the retail trade. Generally speaking, innovations of this kind which - Unique, iconic packaging is a brand s crucial capital and a competitive advantage. may even include the creation of entirely new seg- - Communication and innovation are fundamental prerequisites for successful brand management. ments and categories can only be achieved by brand producers. In the subsequent phase, the pioneering role played by brands in his context also benefits trade labels, which then quickly appropriate the innovations for their own use. They also profit from the price benchmarks set by strong brands, which makes the price of trade labels appear more attractive. Brands stand for quality and reliability. Consumers Last but not least, brands offer something consumers As lighthouses in the diverse product landscape and can trust them. And that is especially important when can identify with and even though this may not be competitive environment, brands also help ensure that it comes to foods and beverages. In a certain sense, quite as important for food and beverages as for other retailers contribution and profit margins are sufficient. brands enable consumers to minimize the risk of pur- kinds of products represent certain values that are chasing merchandise of inferior quality. important to them. Because consumers appreciate the quality and reliabilbrand portrait ity of branded products and thanks above all to their Brands also offer abundant diversity within a given Brands generate impulses for the trade good name brands offer real added value and range in terms of flavour or packaging sizes, for Brands are not only important as sources of guidance higher profit margins for the retail trade. instance. Strong brands invest continuously in and orientation for consumers, they also offer advan- product development and innovation in order to keep tages for the retail trade. Branded products are always pace with new trends and satisfy changing consumer in demand, and thus they contribute to increased needs. frequency and shopping volume in stores. They serve as points of attraction on supermarket shelves and attract consumers. The leading discounters recognized this long ago and now stock real brands alongside trade labels. Brands also ensure continuous development within their respective categories. In the case of fruit beverages, it is brands like granini, hohes C, Joker, Marli Producers and suppliers benefit from cooperation Marli: From the best berries and fruits Generations of Finns have grown up with Marli, and practically everyone, young or old, has his or her favourite juice or syrup. Marli is not only the leading fruit juice brand, but also one of the oldest suppliers of fruit beverages in Finland. The first branded product, the nonalcoholic seasonal berry drink Marli Glögi, was introduced in the 1950s. Thus the brand stands for decades of experience and extensive know-how in fruit beverage production. It stands as a symbol for excellent raw materials, quality and authentic, natural taste. One thing is clear if not at first glance, then at least when one takes a second look: Strong brands are also important for supplier relationships. Many brand producers and especially small and mid-sized companies place strong emphasis on the development of close, long-term partnerships with their suppliers. And that applies to Eckes-Granini as well. In order to offer consumers high-quality products, producers must exercise great care when selecting and purchasing raw materials. Close coordination between suppliers and producers ensures trouble-free business operations for both parties. At Eckes-Granini, the consistently superior quality of raw materials has the highest priority in keeping with the credo Only the best of fruit. 19

15 20 Building values with strong brands Building values with strong brands 21 Statements by employees: brand portrait Brands contribute to employee motivation and loyalty The impact of successful brands is not limited to consumers, suppliers and traders alone. They also play Eckes-Granini offers great brands, international flair and an open, team-oriented working climate based on mutual respect. Ina Wantulla, General Manager Business Unit Ultrafresh Europe Best of fruit is particularly evident in the fact that Eckes-Granini uses only certain varieties of such fruits as peaches, pineapples, pears or pink grapefruits. Furthermore, wherever Eckes-Granini is the main purchaser of fruit, fruit juice, fruit juice concentrate or fruit puree, suppliers also make an extra effort to meet the company s specifications. Brand producers transform raw materials into premium-quality products but not every raw material is suitable for that purpose. Thus suppliers who meet such demanding requirements earn special recognition in the market. SIÓ: Hmm, delicious, zamatos... SIÓ has become a virtual household word in Hungary. As a synonym for fruit juice, the brand stands for good-old Hungarian fruitgrowing tradition and outstanding product quality, fruitiness and authenticity. Founded in 1977, SIÓ is the oldest fruit beverage brand in Hungary and the market leader with over three decades of fruit expertise. Only the best, tasty, carefully selected fruit most of which is locally grown is gently processed to make SIÓ juices. And they are all simply zamatos (delicious). a crucial role within the organization. They make a significant contribution to corporate philosophy and culture, influence strategies and day-to-day operations and are an important aspect of the daily work of every employee. People who work for successful brands tend to be highly motivated and approach their work with passion and commitment. They are proud of what they do and benefit from the trust that others family members, friends and acquaintances place in their brand. This strong sense of identification is expressed in the Purpose of the Eckes-Granini Group, in which we have defined common beliefs and values that transcend all national boundaries. The guiding principle of the Eckes-Granini Group as formulated by our employees is: We give people the best of fruit for a I work with products one can easily identify with because they are both delicious and healthy. That is simply fun. Sidney Coffeng, Senior Vice-President Controlling & Finance, IT The Group stands for healthy, good-tasting products made from fruit. That is important to me. I can identify closely with our brands. Elke Euler-Horn, Manager Applied Research, Headquarters healthy and enjoyable life. In this spirit, they regard their brands as personalities with identities of their own, which are unique indeed magical in a certain sense and which awake emotions, offer orientation and build trust. The same principle of cooperation applies to relationships with raw material suppliers and machine and packaging producers alike: As experienced partners, both sides share important insights and know-how relating to the market and to consumer behaviour patterns. Timely involvement and participation in promising initiatives, projects and innovations are helpful and useful to everyone concerned. Fine examples of that are our innovative PET bottles, our brand-specific packaging forms, such as the oval carton for Joker, and our special seals and caps, such as the anti-spill cap for YO Syrup.

16 22 Building values with strong brands Die Marke macht`s! 21 brand portrait That all goes to show that brands and companies shape one another neither one stands alone. That may be less applicable to corporate enterprises that YO Syrup: From the number one in Austria to an export hit Authentic, cheerful, fruity and of the highest quality. YO, the popular Austrian fruit syrup brand, is all of that. The thirst-quencher for the whole family is beloved not only in its native country but among German, Czech and Hungarian consumers as well. Originally launched in the fruit juice segment, this fruit syrup has played an important role in the YO portfolio since the 1970s. This fruit juice expertise is not the least of the reasons for YO s continued success today. are not necessarily identifiable as producers of certain brands, but it is definitely true for mid-sized familyowned businesses like Eckes-Granini. Corporate culture influences the value of a brand, and vice-versa. Strong brands provide leeway for entrepreneurial freedom. In the case of the Eckes-Granini Group, strong local brands actually promote and demand a decentralized organization. At Eckes-Granini and this is truly something special the various local brands also offer an extraordinarily wide range of possibilities for intercultural cooperation. That is demonstrated again and again in the joint development of new products and the intelligent application of successful concepts to other brands and markets. Perspectives and security for partnerships: The international premium brand granini Strong brands and popular products are also essential prerequisites for the attractiveness and success of strategic partnerships. Because of their popularity, they offer good perspectives and security for Eckes-Granini in its search for competent and capable partners and for potential cooperating partners themselves. In a very real sense they are among a company s most valuable assets. Companies that produce and sell high-quality branded products know their business that goes without saying. And brand producers are particularly concerned with ensuring sustainable, long-term development, which is ordinarily reflected in their business relation- The declared objective is to combine the strengths of each partner for the benefit of both and to recognize and exploit synergies. The formula > 2 shows how additional income and growth is generated for both parties. That also opens up attractive financial perspectives. And a strong brand is a key factor in this case the international premium brand granini. Companies that produce brands developed and nurtured over a period of decades contribute a great deal of expertise, know-how and experience to a partnership. In the case of Eckes-Granini, that amounts to nearly 80 years of fruit juice expertise. ships as well. The Eckes-Granini Group, which has been pursuing a consistent policy of international expansion since the early 1990s, is well aware of the need for sustainable brand portrait cooperation with competent, capable partners. The spectrum of business models ranges from strategic cooperation with local companies operating under licence (as in Romania and the Czech Republic) to joint ventures (as in Switzerland or Turkey). Brämhults: Juice just like fresh-squeezed We love fruit is the credo of the Brämhults brand. The company has been distributing freshly squeezed fruit and vegetable juices from the small town of Brämhult in southern Sweden under that name since Today, chilled juices factory pressed and delivered on the same day are genuine consumer favourites, not only in Sweden, but in Norway, Denmark and Finland as well. Even the Swedish royal family, for whom Brämhults is an official court supplier, appreciate the freshness, quality and flavour of these products.

17 24 Building values with strong brands Building values with strong brands 25 Guest Article: Changing traditions Three specific trends have had a particularly significant impact on the brand product industry in recent years. The first is the longing expressed by consumers for familiar, trustworthy brands that can provide guidance in what seems to be an increasingly confusing world. Secondly, local brands have been among the winners in the battle for consumer acceptance. And thirdly, many companies have begun to focus exclusively on their core strengths. The era of the mixed-merchandise shop is long past. These three trends are exemplified by the Eckes-Granini Group. The first major shift involved Eckes withdrawal from the spirits business, coupled with the concen- Yet the aspect of regionalism is also firmly anchored in the strategy of the Eckes-Granini Group. The Europe-wide acquisitions of recent years have not been devoted solely to the goal of developing a strong sales and distribution structure for the premium brand granini. It was and remains just as important to the Group not only to acquire national brands, but to develop them as well. This embrace of local brands has also enabled Eckes-Granini to occupy special market segments, such as fruit syrups and freshly squeezed chilled juices. Furthermore, the increasingly important theme of Local Products has been emphasized through Eckes-Granini has been a family-owned enterprise for more than 150 years. Although a great deal has changed in the interim, continuity remains a key success factor for the Group. Perhaps the success story can be summarized in a nutshell: Changing traditions, which is also expressed in the name Eckes-Granini. The name of the founding family represents the origins and history of the brand producer, which added granini to the name to represent its bestknown guarantor of success. The fact that all national organizations have gradually assumed the Eckes-Granini name does as much to strengthen the coherence of the brand policy as the focus on strategic brands and the resulting withdrawal from the trade label business. The Eckes-Granini Group has demonstrated with all of these measures that it has grasped the principles of modern brand policy while remaining loyal to its own history. tration of operations in the market for branded fruit special offers, one of which is the hohes C Local beverages. Today, Eckes-Granini produces and markets Fruits range. Marli, Elmenhorster and Brämhults nothing but fruit beverages, and conveys a correspondingly focused and credible image. have introduced similar product programmes. Torsten Schöwing Editor of MARKENARTIKEL, A second guarantor of success is the top brand granini, which was acquired in granini is as familiar and The industry journal issued by the German Brand Producers Association popular among consumers in Germany as it is in such countries as Spain, Switzerland and Romania and not only because of the eye-catching design of the dimpled bottle. granini became the common denominator and catalyst for the international expansion of the Eckes-Granini Group, which now has subsidiaries in 15 countries and markets its products in over 70 countries.

18 26 Our Countries / Overview Our Countries / Overview 27 Country Strategic brands Value-based market share * Market position Germany hohes C, granini 16.5 % 1 France Joker, granini 8.7 % 2 Spain granini 8.8 % 3 Finland Marli, Mehukatti, granini 36.3 % ** 1 Hungary SIÓ, hohes C 25.4 % 1 Switzerland granini, hohes C 10.6 % 1 Austria YO Syrup, hohes C 7.2 % 2 Sweden Brämhults, granini 7.3 % 4 Denmark Valsølille 3.5 % 2 Lithuania Elmenhorster, granini 23.7 % 1 Romania granini 9.3 % 5 Norway Brämhults, granini 1.6 % 7 Turkey içim, Link 6.8 % 4 Belgium granini 2.7 % 4 * Source: leading market research institutes, base: value sales retail food trade ** Own estimate From France to Romania and from Norway to Austria the Eckes-Granini Group is now represented by its successful brands in the most important European fruit beverage markets. We are also moving ahead with further expansion beyond the boundaries of Europe by intensifying sound partnerships and making selective acquisitions. We have recently taken another important step forward with our entry into the rapidly growing Turkish fruit beverage market. This will remain a focal point of activity in the years ahead when it comes to exploiting the tremendous potential of our premium brand granini. The national organizations of the Eckes-Granini Group EXPANSION BEYOND EUROPEAN BORDERS: ECKES-GRANINI ENTERS THE TURKISH MARKET As a leading brand producer of granini as well as such strong local brands as hohes C, Joker, SIÓ, Marli, YO, Brämhults and Elmenhorster, we offer an innovative product portfolio for both the retail trade and the out-of-home sector. Moreover, we also export our juices, fruity thirst-quenchers and refreshment drinks to over 70 countries world-wide. Nearly two-thirds of our total sales revenue come from foreign markets, primarily in Europe. The other one-third is generated in our home market of Germany. 1,646 employees do their very best day in and day out to provide high-quality, delicious, healthy products to our consumers. Relative contributions of countries to the total turnover 2011 * (rounded figures) Export and other turnover 2 % Baltic States 1 % Romania 1 % Turkey 2 % Germany 41 % Switzerland 4 % Austria 4 % Scandinavia 4 % Spain 6 % Hungary 6 % Finland 9 % France 20 % * Base: core business (fruit beverages)

19 28 Germany Germany 29 Germany ECKES-GRANINI DEUTSCHLAND MAINTAINS MARKET LEAD General market situation The German market for non-alcoholic beverages remained stable during the past year, as volume sales declined by a mere 0.3 %. Turnover rose by 5.2 % due to price hikes in various segments. This trend also impacted on the fruit beverage market in Germany: While volume sales fell by 6.2 %, revenue increased by 3.9 %. The out-of-home sector recovered nicely following a weak start early in the year. While volume sales declined substantially in the discount sector due to rigorous price increases, the company achieved solid growth in the traditional retail food trade in a difficult market environment. Major contributors to that success were granini, hohes C (fruit juices) and hohes C Naturelle, each with successful new product launches. The repositioning of the FruchtTiger children s brand as a 100 % natural beverage for kids also bore fruit Brand initiatives A variety of market initiatives contributed once again to the success of Eckes-Granini Deutschland during the past year. One outstanding example is the hohes C Local Fruits concept, which recorded double-digit volume gains over the preceding year. Apple-Plum, the fourth flavour introduced in January 2011, immediately established itself as one of the best-selling varieties. The strong performance of this sub-range was reflected in numerous In the out-of-home market, the launch of granini Rhubarb both as a fruit nectar and a non-alcoholic spritzer contributed sustained impulses to the market. Furthermore, the introduction of the innovative spritzer dispenser enabled granini to tap additional growth potential. In the 0.25-litre bottle with sports cap, the FruchtTiger children s brand became the new hit drink in the King Box for kids at Burger King. Corporate development Under the influence of dramatic increases in raw material costs, Eckes-Granini Deutschland was also compelled to raise selling prices to the retail trade significantly, a development that resulted in a 6 % decline in volume sales. The company maintained its unrivalled lead in the fruit beverage market with a market share in The YO syrup brand exceeded all expectations. Propelled by turnover growth of 41 %, the brand now holds a market share of 14.6 % (2010: 11.1 %) in the beverage syrup segment. The German company also recorded slight growth in the out-of-home sector, maintaining its lead in this market as well. Takeaway sales show especially gratifying growth. awards from the industry press as well as the response of new, primarily young consumers. The new flavour variety Apple-Passion Fruit effectively rounded out the successful hohes C Naturelle refreshment line and attracted even more new consumers to the brand. This positive brand performance was supported by attention-grabbing campaigns for granini, hohes C, hohes C Naturelle and FruchtTiger during the past business year. Broad-based social-media activities supplemented traditional TV and poster advertising. Facebook fans of hohes C Local Fruits had an opportunity to plant 400 Trees for the home garden and test the new variety in advance of the official launch. The new samtig & fein sub-range was a major busi- Certification audits passed with flying colours Eckes-Granini Deutschland underwent two extensive audits during the past year. First, Supply Chain was certified once again with very good results in accordance with the IFS (International Food Standard). The next test was the environmental audit for EMAS (Eco Management and Audit Scheme) certification. The successful completion of this audit was documented in a new issue of the Environmental Management Report. ness focus for granini. Introduced in three varieties, the products are an absolute novelty in the market. The fruit pulp is refined in an entirely new way, producing a particularly fine, velvety consistency. These juices offer the full flavour of fruit pulp but without the noticeable presence of fruit fibres. Thanks to strong demand for these products, the sub-range accounted for 50 % Pack your suitcase was the name of a campaign in support of hohes C Naturelle, and potential fans of granini samtig & fein were asked the question: Are you a friend or foe of fruit pulp? The FruchtTiger children s brand was on the lookout for young testers, and asked children to explain the world from their perspective in the spirit of the slogan Just as natural as of turnover growth for granini during the past year. our children. of 16.5 % (2010: 16.6 %). Eckes-Granini Deutschland still holds the number-two position in the overall market for non-alcoholic beverages, second only to Coca-Cola.

20 30 France France 31 France ECKES-GRANINI FRANCE SUCCESSFUL WITH JOKER General market situation Unlike most other European fruit beverage markets, the dynamic French market grew in both volume (3.5 %) and value (7.8 %) during the past year. Growth was evident in all categories including fruit beverages in the ambient (products on nonrefrigerated shelves) segment and chilled fruit juices. While brand producers suffered losses overall, trade labels recorded gains in Corporate development We were compelled to raise our selling prices to the retail trade in France as well, which led to unpleasant conflicts in some cases. Yet Eckes-Granini France succeeded in holding its number-two position in the fruit beverage market even in this difficult business environment. In fact, the company actually took the lead in the ambient fruit beverage category. Eckes-Granini France s value-based market share slipped to 8.7 %, due largely to declining sales of the Réa brand, and thus fell slightly below the level achieved in 2010 (9.2 %). In the out-of-home market, Eckes-Granini France recorded an excellent volume gain of 27 % over 2010, thanks to its focus on the international premium brand granini. Major contributors were the 1.0-litre PET Bottle (+ 22 %) and the 0.25-litre returnable glass bottle (+ 12 %). As a result, the company s market share rose to 12 % and thus moved up from the number-three to the number-two position in the market share rankings. A key success driver was the launch of the new BIB Brand initiatives Marketing activities during the past year were focused above all on the Joker brand and the launch of the 1.5-litre PET bottle with a special grip zone. This feature facilitates pouring, as it enables consumers to grip and hold the bottle securely. Media support was provided for the brand with the Joker Park, the new online communication platform ( Online since March 2011, the new brand website attracted 179,000 visitors during the major promotional campaign in September alone. (bag-in-box) programme in cooperation with OC22, Fruit juice is fun The new brand website lures visitors into a colourful, fruity juice universe. The communication platform designed as a theme park unites the product world with the principles that stand behind the brand in a particularly charming presentation. Joker stands not only for delicious fruit juice full of vitamins but also for a cheerful, optimistic outlook on life. The new campaign also includes TV commercials and TV sponsoring as well as events at various different supermarkets. Joker s value-based market share remained stable at 7.8 %. The Pur Jus range of direct juices achieved especially gratifying results (volume sales up 10.2 %). In this case, the new 1.5-litre PET bottle generated additional demand. Joker Le Fruit featuring the new Cranberry variety and the Le Fruit de Saison concept recorded turnover gains but lost some ground in volume sales (- 2.6 %). a leading distributor of hot and cold beverages to the out-of-home sector in France. Within the framework of this cooperative undertaking, over 800 dispensers were installed in hotels and catering operations beginning in March This year, Eckes-Granini France aims to build on the positive performance of the Joker brand in the direct juice segment and strengthen its position in the fruitjuice-from-concentrate category. Two attractive new products were introduced within the Le Fruit sub-range under the Joker label during the past year: Cranberry, with its high antioxidant content, and Le Fruit de Saison, which is offered in the two seasonally limited varieties of Nectarine-Peach (spring) and Apple-Pear (autumn). Special events and investments The modernization and restructuring programme for Eckes-Granini France launched in 2008/2009 was completed on schedule early last year. Corporate headquarters now operate entirely from Mâcon, supported by Marketing and Sales Key Account Management Retail Food Trade in Paris.