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Pepsi & Gatorade. Regional Market Update. May 2011. Regional markets offer the best opportunity to grow Pepsi sales and improve ROI. 40 % of cola category sales come from regional markets Pepsi in has growth momentum in regional – more popular than in metro for first time

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Pepsi & Gatorade

Regional Market Update

May 2011


Regional markets offer the best opportunity to grow Pepsi sales and improve ROI

40% of cola category sales come from regional markets

Pepsi in has growth momentum in regional – more popular than in metro for first time

Lack of competitive RTV activity gives Pepsi a rare opportunity to gain regional markets share

Gatorade – strong regional BDI means it will benefit from category growth


RTM is the marketing bureau for Regional free to air TV

www.regionaltvmarketing.com.au


Regional TV covers all areas outside capital cities and reaches 36% of population

QLD

DIARY

REG. WA

NNSW

SNSW

VIC

TAS


Regional TV coverage includes large cities and fast growing coastal suburbs

Gold Coast

Newcastle & Central Coast

Canberra

Wollongong & Illawarra


Diary markets: A diverse mix of urban and rural

Darwin

Satellite

Regional WA

Mildura

Griffith

Port Pirie/ Broken Hill

Loxton/Mt Gambier


Populations of major regional TV markets are comparable with the metros

NNSW 2,079

SNSW 1,410

People

Source: ATR & OZTAM 2011, Nielsen Media Research 2010


Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas

QLDNSWVICTASMETRO

National average

Population Increase: 2001 vs. 2011

Source: ATR & OZTAM 2011


Urbanisation and high population growth changing the profile of regional Australia

  • Lower cost of living and lifestyle are main attractions

  • Rural populations moving to regional hub towns

  • Less than 4% of households depend on farming


1,573,000

Australian teens age 13-17

3

7

%

live in Regional TV markets

Source: OzTam AGB Nielsen 2011


3,035,000

Australian youths age 16-24

3

3

%

live in Regional TV markets

Source: OzTam AGB Nielsen 2011


Seachange…

… for baby boomers

…for families


“Typical” SeachangerRyan, 36. Wollongong NSW

Made the seachange from the “Shire” to the “Gong”. Owns a small business in building trade

Above average income & primary focus is kids and lifestyle.

Loves footy , cars and teaching kids surfing.


Regional consumers have similar demographic profile to metro

Source: Roy Morgan Single Source (12mths to Dec 2010)


Doubling in number of wealthy people living in regional Australia in past five years

People 18-54 with HHI $130k+ or Investments $500K+

Source: Roy Morgan Single Source (12mths to Sep 2010, 2009, 2008, 2007, 2006, 2005 )


Why has regional spending been more stable and the outlook more positive?

  • Lower cost of living – less debt

  • Huge investment in infrastructure

  • Population growth driving development of local economies

  • Resources growth impacting many parts of regional: NSW, QLD, WA, SA.


3

8

%

of young Coladrinkers live in Regional

Source: Roy Morgan Single Source (12mths to December 2010)


37% of regular Pepsi drinkers (14-24) live in regional TV markets: Regional has 3rd, 5thand 6th biggest markets

Drank Pepsi P7D: People 14-24

Source: Roy Morgan Single Source (12mths to December 2010)


Pepsi has increased consumption in regional markets above metro for first time in past year

Dec 2010

Coca-Cola

Pepsi

People14-24 drink Any Coke or Pepsi variant in the P7D

Source: Roy Morgan Single Source (12mths to Dec 2010, June 2010, June 2009, June 2008, June 2007, June 2006, June 2005, June 2004, June 2003)


Pepsi and Coke increased their TV ad investment in Regional TV until last year – in 2011 Coke spend down

Regional TV spend FY since 2004

Source: Nielsen Media Research AdEx Jul – Jun year as labelled, except Jan- Dec 2010


In 2011 Coca-Cola has spent $1.9m on TV …99% in metro

…big opportunity for Pepsi to grab regional market share through increased RTV spend


Pepsi grew YOY in Regional QLD and Reg. VICRegional NSW has big growth opportunity ahead

Drank Pepsi P7D:People 14-24

Source: Roy Morgan Single Source (12mths to December 2010 vs. 2009)


Pepsi Max grew its consumption in regional markets except for NNSW where it declined

Drank Pepsi Max P7D:People 14-24

Source: Roy Morgan Single Source (12mths to December 2010 vs. 2009)


Coca Cola consumption increased in NNSW and Sydney

Drank Coca Cola P7D:People 14-24

Source: Roy Morgan Single Source (12mths to December 2010 vs. 2009)


High volume regional sports drinkers skew slightly older and prefer PepsiCo Gatorade

Source: ABG NMR Panorama (12mths to Dec 2010)


Sports drink consumption is low in regional NSW – big opportunity for brand and category growth

Drink sports drinks several times a week:People 18-39

Source: AGB NMR Panorama 12 months to December 2010 vs. 2009


Regional consumers are heavier viewers of FTA TV but otherwise have same media habits as metro

Source: Roy Morgan Single Source 12 months to Dec 2010, *AGB NMR Panorama 12 mths to Dec 2010


Audience share of the new commercial “digital” channels has more than tripled since June 2010

June 2010

Dec 2010

March 2011

Sept 2010

Source: Mediaweek, Metro data from OzTAM and Regional data from Regoional TAM. All People 18:00 - 23:59


New commercial channels driving Free to air TV audiences up in 2011

  • Subscription TV audiences are down in all key dayparts for the Survey Year to Date

  • FTA viewing is up & commercial TV even more

Audience Year on Year % Change; Combined Agg Markets (QLD, NNSW, SNSW, VIC & TAS) Total People; Sun-Sat; Survey 1-2, 2011 vs. 2010

Source: Regional TAM; Survey 1-2, 2011 vs. 2010; Consolidated Data


Reg. TV CPM is 45% below metro TV average and delivers double the cost efficiency and ROI

Index

TV market CPM indices

National average CPM P18+ = 100

Source: Regional TV Agency Survey 2010


Higher cost efficiency of regional TV is opportunity to push growth harder than in metro

Share of national TV budget

Share of national population


The next year is a crucial opportunity for Pepsi to gain ground in the most cost efficient market where 40% of its potential volume is ….Regional Australia…and for only 25% of the national TV budget


2008 RTM case study showed…

3

3

%+

of Pepsi grocery channel sales are from regional

*Pepsi includes – Pepsi, Pepsi Light, Pepsi Light Caffeine Free, Pepsi Max, Pepsi Samba

Source: Scan Data (4 W/E 11/05/08 to 31/08/08) Coles /Woolworths/Bi Lo (Excludes NT)


In 2010 Coca-Cola brands continue investment in RTV – in 2011 PowerAde invested 23% in RTV – Coke 0%

Pepsi Max

PowerAde

Gatorade

Period: Jan-Dec 2010

Source: Nielsen Media Research AdEx

Category: Beverages – Non Alcoholic, Aerated Soft Drinks


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