Marco Simões, Communications and Sustainability Vice-President for Coca-Cola Brazil, explains the increasing purchasing power and influence of an emerging middle class in Brazil and details how the company is tapping into this opportunity through a social program that combines online games and training for the communities. The video of this presentation can be seen here: http://www.youtube.com/watch?v=0JF67rpuIrA

1. THINK LATIN AMERICA How to Leverage the Power and Influence of An Emerging Social Class with Increased Purchasing Power MARCO SIMÕES COCA-COLA BRASIL

2. WE ARE ALMOST 200 MILLION PEOPLE. ALL SHARING THE SAME DREAM: A BETTER FUTURE. Source: U.S. Census Bureau, International Data Base, 2009

3. BRAZIL IS DIVIDED IN 5 REGIONS,with many differences among them The Northeast Region, beautiful beaches, but stricken by droughts 28.0% of population 15.4% of GDP North Region, mostly covered by rainforest, is the largest region 7.8% of population 4.5% of GDP Central-West Region, the country’s capital (Brasília) and much of the farmland 6.7% of population 10.4% of GDP Southeast Region has the largest cities (São Paulo and Rio), and is the industrial and financial center 43.0% of population 53.7% of GDP The South Region has industries and agriculture 14.5% of population 15.8% of GDP Source: U.S. Census Bureau, International Data Base, 2009

4. FIFA WORLD CUP 2014 OLYMPICS 2016

5. SOCCER, SAMBA, CARNIVAL ETHANOL, OIL, AIRPLANES AMAZON, PANTANAL, ATLANTIC RAINFOREST

6. BRAZIL IS ON THE SPOTLIGHT

7. AND THE GOOD NEWS IS: THE FUTURE IS HAPPENING NOW.

8. WORLD’S 5TH LARGEST ECONOMY BY 2015 A leading country in South America and one of the BRIC countries, is #8 today GDP US$ billion Top Economies in 2008 15000 5000 4000 3000 2500 2000 1500 1000 500 USA JAPAN CHINA GERMANY FRANCE UK ITALY BRAZIL Source: World Development Indicators Database – World Bank

9. THE EMERGING MIDDLE CLASS

10. WHAT IS THE MIDDLE CLASS INCOME IN BRAZIL? US$ 7,200-US$ 31,200/Yr – 25% growth in 5 yrs Source: CPS/FGV, IBGE (PNAD) – Relates to Family Income

11. EMERGING MIDDLE CLASS GROWTH 56% of Brazil’s population = 120MM 49% of Brazil’s population = 91MM 38% of Brazil’s population = 64.1MM 2003 2008 2015 Source: CPS / FGV / PNAD / IBGE

12. 49% OF THE COUNTRY’S POPULATION IS IN THIS RANGE IT’S MORE THAN 90 MILLION PEOPLE MORE THAN GERMANY’S ENTIRE POPULATION Source: CPS/FGV, IBGE (PNAD)

13. THOSE PEOPLE REPRESENT, TODAY, THE LARGEST CONSUMPTION MARKET AND/OR POTENTIAL MARKET IN THE COUNTRY. 46% OF ALL INCOME 67% OF THE EMPLOYED WORKFORCE 58% OF TOTAL COMPUTER OWNERS 50% OF TOTAL TV OWNERS Source: CPS/FGV, IBGE (PNAD)

14. AND THESE NUMBERS REFER TO 2008! IN 2015, THEY WILL REPRESENT 56% OF THE POPULATION, WITH 54%* OF THE PURCHASING POWER. Source: CPS/FGV, IBGE (PNAD) * Projection

15. HOW IS THIS AFFECTING THE CONSUMER MARKET?

16. WHAT HAVE WE LEARNED

17. NEW PRODUCTS AND SERVICE NEEDS WHAT KIND OF CAR APPEALS TO THIS CLASS? WHAT KIND OF BEVERAGE DO THEY DRINK? WHAT SERVICES DO THEY NEED?

18. HALF GLASS FULL IS THEIR WAY OF SEEING LIFE They share pride and satisfaction of their achievements and have an optimistic view of the future.

19. “ FAMILY IN HONEYMOON Parents and children are building a better future together with no conflict of generations . ”

20. “SHE” IS THE LEADER Although women are not the main income providers, they have great influence on purchasing. Mothers are the foundation of the family, recognized by their community.

21. “ “MY COMMUNITY IS MY WORLD” The community is their extended Family – help lives next door. Services must understand this kind of interactions.

22. “ THE GROCERY STORE ON THE CORNER IS MY EVERYDAY PARTNER ” Small markets understand these people’s financial circumstances, allowing flexible and delayed payments.

23. TECHNOLOGY MEANS SAFE ENTERTAINMENT Buying electronics for the household is not a matter of social status, it’s about the well-being of the family. With computers at home, children are safer and spend less time out in the streets.

24. TECHNOLOGY AS A SOCIAL LADDER As it becomes more accessible, technology now means more than job opportunities – it’s a passport for a better future and an icon for social ascension.

25. WHAT IS COCA-COLA BRAZIL DOING?

27. First Job vision BUSINESS + COMMUNITY GROWTH Coca-Cola and the community sharing a single goal: a better future for everyone.

28. BUILDING A BETTER FUTURE FOR THE EMERGING MIDDLE CLASS, THE COUNTRY AS A WHOLE GROWS STRONGER AND SO DOES THE COCA-COLA BUSINESS THIS IS SOCIAL BUSINESS.

29. TO MAKE IT HAPPEN, WE CREATED THE “COLETIVO” COCA-COLA.

30. VIDEO

31. TODAY, WE HAVE 6 COLETIVOS IN OPERATION. There will be many more throughout the country in the future 2009 6 coletivos 2020 1500 coletivos

32. TO MAKE IT HAPPEN, COCA-COLA BRASIL USES TECHNOLOGY IN A “PLAYFUL WAY” Besides out-of-home activities, students can learn through simulations of POP duties in a computer game.

33. TECH IS THE FUTURE

34. EVERY YEAR, PEOPLE GET MORE CONNECTED Internet Penetration in Brazil 89% 90% 80% 76% 71% 70% 60% 45% 50% 39% 40% 33% 25% 30% 21% 20% 15% 10% 0% 2007 2008 2009 Upper class Lower class Middleclass Source: IAB indicadores, 2009

35. INTERNET CAFES BECAME THE MEETING POINTS FOR THE YOUTH INTERNET ACESS OUT OF THE HOUSEHOLD RESPONDS FOR 49% OF ALL ACCESS THERE ARE MORE THAN 90,000 I-CAFES IN BRAZIL, COMPARED TO 2,600 BOOKSTORES OR 2,300 MOVIE THEATERS. Source: FGV

36. WE DON’T HAVE TO PERSUADE MIDDLE CLASS MEMBERS ABOUT THE IMPORTANCE OF TECHNOLOGY 91% agreeitisveryimportantthatchildren haveaccess to computers. 80% believethatpeoplewho don’t understand technology aretrappedinthepast, and have less opportunities in life. 79% agreethat computers are essential and it’simpossibletolivewithoutthem. 44% ofyoungpeopleagreetheyfeel addicted to technology. Source: McCann-Erickson/Data Popular research, 2008

37. TECHNOLOGY IS ASSOCIATED WITH STATUS, INDICATING PURCHASE INTENT 68% intend to buy a widescreen TV 64% are thinking of buying or changing their computers 61% are considering buying/changing their digital cameras Source: McCann-Erickson/Data Popular research, 2008

38. LAPTOPS ONLY FALL BEHIND CARS AS A SIGN OF STATUS High Status Products 78 64 51 New car Designer watch Laptops Source: McCann-Erickson/Data Popular research, 2008

39. AND THEY ARE ALSO BUYING ONLINE: 59% of online buyers in Brazil come from the middle class, representing 10% of turnover. Source: e-bit

40. FINAL MESSAGE

41. TO ACHIEVE SUCCESS IN BRAZIL, ONE NEEDS TO CONQUER THE EMERGING MIDDLE CLASS. THEY ARE THE FUTURE. AND THE FUTURE HAS ALREADY STARTED.

42. BEING SUCCESSFUL IN BRAZIL (AND LATIN AMERICA) WILL MAKE A DIFFERENCE FOR EVERY BUSINESS. This is the decade of Brazil: The land of the Olympics, the Football World Cup, the energy of ethanol and oil. And home to the world’s fastest growing consumer power.

43. THANKYOU MARCO SIMÕES MSIMOES@LA.KO.COM