2 nd CHINESE HERITAGE BRAND WORKSHOP DUBLISS FOCUSED APPROACH

1. 2nd CHINESE HERITAGE BRAND WORKSHOPDUBLISS FOCUSED APPROACH – MACAU – Nov. 2012

2. Dubliss History 2008-2009 • Dubliss was launched in 2008 • Geo-focus – Pan-Russia • Noncompetitive price: Dubliss-27 RUR/Winston-25 RUR • Brand Perception: • Controversial pack design • Not optimal product range, lack of Super Lights proposition • Too narrow targeted consumer segment • ”Mystery” communication platform not understood • Low brand awareness • DublissIMS, Oct’08-Dec’09 mio st.

3. Recovery Plan 2009 August2009… DECISION TO RE-LAUNCH OBJECTIVE: Renew the DUBLISS offer to better meet the expectations of Russian adult smokers Use focus approach for get best results

4. Action Plan 2009 PRODUCT IMAGE • PRICE / AVALABILITY • Brand considered as affordable & worth its price • Consumers are not satisfied with limited availability of the product New Dubliss offer, price and message are relevant and trigger genuine excitement among adult smokers

5. Russia and its People

6. Area North Area Moscow Area East Area Centre Area South PMSM Map Population / Density Salary Huge Really huge Moscow Novosibirsk Kamchatka 3.7 less dense Five time zones Larger than continental US Poorer with exceptions Share vs. JTI Top Brands % SOM p.p. Not the same starting point Not a single target • Concentrate on Area East to meet volume OB • Clear early indications of significant volume / share potential • “Test Lab” to assess effectiveness of key activities for national roll-out in 2012+

7. Focus Approach Sales and Marketing partnership Sustainability Field Force Consumer Distribution

8. Focus: Field Force Prioritization Motivation program for TE,CE and DSPV Dubliss Workshops 1 2 3 • Communication to Sales Forces about the strategic importance of Dubliss • Building up internal communication within organization to stress on important role of Dubliss • Setting the criteria to win: • Handling 2 SKU’s - 80% for three month period • Visibility (HotSpot) 50% • MultiFacings 50% on territory • Coverage 100% from Route Plan • TPOSM Placement –100% from allocation • Dubliss workshop to engage and reward FF based on achievements • Recognition by meeting DublissSecondees • Understanding of China market and role of Dubliss as a China Heritage brand Field Force full concentration on Dubliss importance 8

9. Focus Approach Sales and Marketing partnership Sustainability Field Force Consumer Distribution

10. Distribution Focus: Distribution DSD Wholesale Key accounts 1 2 3 • Handling and Volume driving programs • Tsunami - non covered territories support - 14K POS • Weekly audits • Dubliss handling and visibility increase through active delivery agents • Dubliss push from vending points and handling increase in DE strata • Dubliss as an obligatory brand for WS C&C, especially in DE strata • Price-off activities • Special offers – PPBBO, Dual packs Extensive Dubliss distribution through all channels 10

11. Focus Approach Sales and Marketing partnership Sustainability Field Force Consumer Distribution

12. Focus: Sales and Marketing partnership Tailor made solution Evaluation and adaptation Area commitment 1 2 3 • Summer NTP programs - 4K DCC • Mobile Hostess team/Mobile Redemption centers • Parking MBBO activities • Weekly reports with key performance • Special target audience research (sales-study) • Regular Field Visits with participation of Brand Group • Flexible Action Plan and decision taking to improve brand performance • Keeping full year focus on DUBLISS during other Brands Cycles • Consistency of support while sharing the universe • Ownership and full commitment Regain internal organization’s trust in the brand by showcasing improving brand performance in Area EAST 12

13. Focus: Sales and Marketing partnership 2011: Dubliss plan improvement in partnership with Area East: Price repositioning (27 RUR 24 RUR) Introduce Full Flavor (Dubliss Red) line extension/ Upgrade Tipping Up-grade mainline packaging

14. Focus Approach Sales and Marketing partnership Sustainability Field Force Consumer Distribution

15. Consumers Consumer • Male, 18 -34 y.o., Urban (RUSSIA mostly provincial cities) • Average income • Secondary technical education (less university education) • Entrepreneurial, however not following a career path • Looking for financial achievements and success but not through constant hard work and qualification but rather as a one time big opportunity • Self-centered, individualistic, caring less about family, tradition, society • Open to the new, users of communication means (Internet, sms, mobile communication) • Sociable, with the boldest attitude 15

16. Focus: Consumer orientation - Novosibirsk example NTP General trade Horeca Shopping malls 16 University

17. Focus: Consumer orientation Mass Needs Occasional 1 2 3 • Shop assistants/Field Force switch purchasing – 350K DCC • Mass Repeated MBBO – 200K DCC • SMBBO and PPBBO sets Redemption centers • Permanent hostesses teams in Shopping Malls • Mobile teams in NTP • 56 K Effective contacts • 90 K Info contacts • 612 K POP were collected • Consumer engagement Non traditional places • Horeca platform • 22 Event & Plug-in, 4K DCC 17

18. Focus Approach Sales and Marketing partnership Sustainability Field Force Consumer Distribution

19. Dubliss Performance Evolution DUBLISS SOM,Jun’10-Sept’12 by Areas % Focus on Area East (full year support) Expand focus to Area Center 0.21 0.17 • Brand performance is directly proportional to PM investment, human resources involvement and support regularity • Low consumer base brand needs extensive support long-term to get sustainable organic growth before reducing support.