Fisherman’s Friends: Maximizing Category Value with NPD and International Success

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2. How can Fisherman’s Friends add more category value? NPD: New formats, new flavours Driving category awareness Driving sales outside of key season Deliver significantly enhanced category profit to Tesco How can we replicate the brand’s international success? *Nielsen Value data 2013 vs 2010

3. Research Q4 2013 7 x key research findings Summary (slide 17) Brand Segmentation Tesco Ranging Proposal Brand Support 2014-15 5-year Brand Vision

4. Research Q4 2013

5. RESEARCH METHODOLOGY SIGNIFICANT INVESTMENT FROM BRAND OWNERS • QUANTITATIVE RESEARCH • ON-LINE QUESTIONNAIRE • Investigating issues such as; • Motivations to purchase • Frequency / Loyalty • Perception of price • Flavour Choice • QUALITATIVE RESEARCH • ACCOMPANIED TRIPS IN-STORE • Investigating issues such as; • Motivations at point of purchase • Fixture Navigation • Decision Tree (Impulse v Planned) • Importance of price & promotion CONFIDENCE TO EXECUTE THE LONG TERM BRAND STRATEGY AND DELIVER THE VISION *Nielsen Value data 2013 vs 2010

6. FF consumers are exceptionally loyal Key research finding no.1 Only 1/3rd of consumers would buy another brand in store if Fisherman’s Friend were not available Q9 If you went into a shop to buy some Fisherman’s Friend and all the flavours of Fisherman’s Friend you would buy were not available, which of these phrases best describes what you would do? Base: 300 interviews

7. FF consumers are exceptionally loyal Key research finding no.1 For just under a quarter of Fisherman’s Friend users, the brand makes up at least 8 out of 10 of their medicated sweet purchases Q8 Out of every 10 packs of medicated sweets that you buy, how many would you say are Fisherman’s Friend? Base: 300 interviews

8. FF consumers are exceptionally loyal Key research finding no.1 ‘Products are effective’ – Fisherman’s Friend achieves highest level of agreement here % saying each statement applies to the brand Fisherman’s Friend Strepsils Lockets Jakemans Hall’s Soothers Hall’s M’lyptus Victory V None of these Q14 We would like to find out your opinion of a number of brands of medicated sweets. For each statement below please tell us which if any of these brands you think it applies to? (order rotated) Base: 300 interviews

9. A BRITISH HERITAGE BRAND SINCE 1865 UK SALES JUST 4% OF TOTAL WORLDWIDE SALES 3 TIMES QUEEN’S AWARD TO INDUSTRY FOR EXPORT ACHIEVEMENT DOREEN LOFTHOUSE RECEIVES OBE AWARD USD$250M WORLD BRAND *RETAIL PRICE

10. BRAND LOYALTY REINFORCED EACH YEAR BY STRONG TV PRESENCE 2011 2012 2013 2000-2010 Spons: Rory & Paddy TV ad: Foundry Spons: River Monsters Spons: Robson Greene’s Extreme Fishing TV ad: Taxi Driver

11. An exceptionally price inelastic brand Key research finding no.2 ‘Medicinal’ qualities and taste are key to purchasing. Only 19% say price is a reason to purchase Q10 Here are some reasons why people might buy Fisherman’s Friend lozenges. For each one, please tell us whether it applies to you a lot, a little, or not at all? (statement order rotated) / Base: 300 interviews

12. An exceptionally price inelastic brand Key research finding no.2 At least three quarters of buyers accept box prices of up to £1.25, and almost all (94%) accept 95p Q13a We are going to show you a number of prices which could apply to the box type pack of Fisherman’s Friend. For each price tell us whether it is very acceptable, acceptable or unacceptable for a box of Fisherman’s Friend lozenges. (prices rotated) Base: 154 interviews (those buying box format)

13. An exceptionally price inelastic brand Key research finding no.2 Very high level of acceptance of 55p and 65p per sachet, and relatively little drop-off even at 75p Q13b We are going to show you a number of prices which could apply to the sachet type pack of Fisherman’s Friend. For each price tell us whether it is very acceptable, acceptable or unacceptable for a sachet of Fisherman’s Friend lozenges. (prices rotated) Base: 258 interviews (those buying sachet format)

14. Flavour consumers are younger Key research finding no.3 45% of Blackcurrant consumers are 18-34yrs Q4 What flavours of FF lozenges do you purchase / eat? Base: 300 interviews

15. Flavour consumers have a higher purchase frequency Key research finding no.4 60% of 18-34 yr olds purchase one a month or more, vs only 39% of 55+ yr olds purchase one a month or more Q4 How often do you buy Fisherman’s Friend lozenges? Base: 300 interviews

16. Honey & Lemon and Blackcurrant are the two most preferred flavours by consumers Key research finding no.5 35-54 year-olds more likely than other age groups to eat Blackcurrant Q7 Thinking about medicated sweets in general, other than Fisherman’s Friend, which flavours do you ever buy/eat? Base: 300 interviews

17. Brand standout within store is poor Portability of 45g is an issue Key research finding no.6 & no.7 “‘Can’t see it! I only know it’s here because I buy a pack each month’” “‘I prefer the small pack as fits better in to my handbag”

18. Research Summary FF consumers are exceptionally loyal FF is an exceptionally price inelastic brand Flavour consumers are younger than Original Extra Strong consumers Flavour consumers have a higher purchase frequency Honey & Lemon and Blackcurrant are the two most preferred flavours by consumers Brand standout within store is poor 25g is a more portable pack than 45g

19. Research Q4 2013 7 x key research findings Summary (slide 17) Brand Segmentation Tesco Ranging Proposal Brand Support 2014-15 5-year Brand Vision

20. BRAND SEGMENTATION

21. SEGMENT A • 55ys+ • Male bias • Medicinal purposes • Appeal of product “strength” • Exceptionally high brand loyalty • Very price inelastic HAROLD ‘I remember my grandfather always had a pack in his green coat. He handed me one when I was eight and said I’d never like them! That was it, I had to try it and I’ve been buying them ever since’ ‘They last a good 10 minutes and I love them, their strength’ ‘They wouldn’t work or warm me up if they weren’t strong, perfect for hiking’ ‘They remind me of my family and my school days so I think of them kindly, silly really’ ‘They are the only cough lozenge I have grown up with’

22. SEGMENT B • 25-45 yrs • No gender bias • Appeal of strong flavoured lozenge • Appeal of “sugar free”(stripes) • Brand quirkiness / Price inelastic • In line with FF international demographics JAMES & KATE ‘if passing the fixture and acting on impulse’ ‘Looking at the fixture now it makes me feel like trying it again – especially the blackcurrant one, I didn’t know they did that’ ‘It was developed originally for North Sea fishermen you know, to keep them warm and sooth their throats, no wonder they are strong but they do the trick’ ‘more like sweets’. • “Sugar free is a real selling point” (female bias)

23. Research Q4 2013 7 x key research findings Summary (slide 17) Brand Segmentation Tesco Ranging Proposal Brand Support 2014-15 5-year Brand Vision

24. RANGING RECOMMENDATION

25. New Pack format: Sep 2014 • Loyalty Pack • 3 x 25g packs • Leverages the brand’s high consumer loyalty and price inelasticity to drive category value margin • Competitive p/g vs 25g & vs 45g • Addresses portability issue MRRP: £2.19 2.9p per g

26. New Flavour: Sep 2014 • Honey and Lemon • A winning combination, known and recognised by all for it’s natural, remedial qualities especially for coughs, sore throats, colds and flu ‘A winner’ ‘I’d try that in a flash’ • Liked by all and strongly felt to encourage trial ‘I can’t believe that they haven’t done this already’ • A combination that would bring new users into the brand • Honey & Lemon flavour accounts for 18.2% of all medicated confectionery sales in the U.K.* *Nielsen, December 2013

27. Honey & Lemon 25g MRRP: 79p 3.2p per g

28. Ranging Proposal: 2014-15 season Segment A Segment B 3 x 25g: £2.19 25g: £0.79 • EDLP • Discontinuation of 45g box • Vs Straight 25g in pharmacy • Case 1x4 • 1/3rd off TPR in NOV (79p to 52p) • 2 for £1 multi-buy in JAN • Strong shelf stand out (1x24)

29. TESCO Packs & Pricing

30. Significant incremental profit opportunity for 2014-15 Range 2013-14 Range £55K £542K

31. 2014-15 SEASON SUPPPORT

32. 2 x on-shelf promos 1. 79p to 52p on 25g flavours: • 33% off (% margin maintained) • encourage segment B to trial brand 1. 2 for £1 on 25g flavours: • 37% off (% margin maintained) • Encourage segment B to trial new flavours National TV Sponsorship • £600K investment • Target audience segment B • Quirky ad for modern audience • Flavour 25g & Sugar Free focus • Supported via on-line campaign, social media and PR National Sampling Campaign: £80K • 1M Blackcurrant & Honey & Lemon samples to be handed out at variety of UK venues • The importance of growing segment B via strong taste profile • In-store activity where commercially viable • Full UK event list TBC

33. Research Q4 2013 7 x key research findings Summary (slide 17) Brand Segmentation Tesco Ranging Proposal Brand Support 2014-15 5-year Brand Vision

34. 5-yr BRAND VISION

35. 5 year vision • Double market share from 5% to 10% • Retail value to £10M • “Original Extra Strong” share of UK portfolio 75% to 40% • Significantly enhanced retailer category value and cash margin generation • High proportion of Segment B are new to medicated confectionary category • Multi-flavour market: annual flavour launch • Reduction in seasonality via Segment B (Tropical launch) • ATL focusing only on Segment B • Quirky TV ads • Stripes / Sugar free • Major event sampling

36. Germany: TV ad 2013

38. Singapore Hong Kong Thailand

39. Australia: Event Sampling 2011-13 ATL Campaign “Are you Fresh or Feisty” Supported with massive sampling campaign at major national sporting events Australian market historically dominated by Original Extra Strong New flavours introduced to the market drove significant incremental category sales Source: Ex-factory sales