2009-2020 Outlook, B2B & B2C Opportunities, Proposition Development for FTSE100 Oil Majors, Hypermarkets, Retailers and Suppliers like Mars, Nestle!

1. Downstream Retail Opportunities for Oil
Companies & Hypermarkets
By Shahzad Paracha

2. Global Forecourts Opportunities & Challenges
Mature Markets BRIC Economies
 Demand Growth 1%  135% demand growth by 2030
 Eroding margins (later stage of  Early Stage Markets
market development)  India, China, Russia
 Aggressive non-traditional  Opportunities
competition  High cars per capita
 Refining Margins Impact  High population & demand growth
 Channel & network choices  Urbanization
 Rise in disposable income &
 Non-Fuel partnership choices – confectionery category
Shell/Sainsbury, Exxon/Tesco
 Competitive RCVP offerings
 Balance of owned, Franchise & JV’s  Double digit premium fuels demand
 Regional footprints via competitive  Transitional Markets
fuel pricing & high margin & high  Brazil
growth Convenience Retailing
 Opportunities
 3% Growth & Good RCVP & Retail
formats in region
 Premium fuels market development
2

3. Percentage of Total Forecourts by country
3
Source : Energy Institute 2008

4. Number of Supermarket Forecourts by
Country - Dec’2008
4
Source : Energy institute 2008

5. Forecourts Retail & Refining Margins 2008
Retail Gross Margins in 2009 & Average Gross Refining Margins NW Europe
increase/decrease in 2008
Downstream Profitability: Retail/Ex-refinery
price spread in p/lit
5
Source: Wood Mackenzie Downstream Oil Service 2009 Source: Energy Institute 2009

6. Volatile Pricing & Weak Demand
Average Retail Fuel price breakdown in Quarterly Road fuel demand changes in
Western Europe @ 2008 Europe 2007–2008
Mature Markets Fuel Demand Growth ONLY 1% hence NEED to
Capitalize Stores Propositions to raise Sales Per density, ROI & ROACE
6
Source: Wood Mackenzie 2009 Source: International Energy Agency (IEA)

7. UK Motor Fuels Industry
Motor Fuels Trading Oil Majors Vs Hypermarkets
1988 2008 Growth (%) Oil Majors Hypermarkets
Forecourts
Passenger Cars MF Forecourt
20 30 50 62 13
(Mln) share (%)
MF Market Share
MF Volume 62 38
15 38 153 (%)
(000 Mln)
Efficiency Index
1:1 1:3
MF Value (000 (E.I)
17 33 94
Mln)
Interesting Trading Trend (1998 -2008): Oil Majors 30% Network rationalization for:
 Slow MF Volume Growth due to high fuel efficiency of cars  Adapting later stage of market development
 Low MF Value Growth Vs MF Volume due to:  Efficient & profitable network model – High ROACE
1. High VAT, duties &  UK #1 Efficient Network Vs EU average (ATP 4 Vs
2. 2% Fuels margins on Non-Premier Retail Fuels, 1.5 MLit/yr in EU)
equivalent to 90% of UK demand
7
Source: Energy Institute / Retail Marketing Survey 2009
* Note: Estimates based on Industry trends & assumptions

8. BREAKDOWN OF UK FORECOURTS 2009
BY GROUP ON MOTORWAY
8
Source: Petroleum Review 2009

9. UK & EU Stores Retailing Opportunities
UK
EU
4 90
Forecourt Stores Demand (£ Bln) Stores in UK forecourts network (%)
25 Stores in EU Network Average (%) 80
UK Retail Demand (£ Bln)
Forecourt Stores Demand (£ Bln) 40
5
Stores Avg Transaction Value (£)
Demand Growth projections (%) 5-7
5 30-40
YOY Demand Growth (%) Average Margins (%)
40 Average Transaction Value (Euros) 5
Average Margins (%)
55% of
Company Operated Stores Share
20 EU CR
Projected Forecourt Stores Demand
2020 (£ Bln) 45%of
BP, Shell, Exxon Mobil Share
EU CR
50
BP, Shell, Esso Market Share (%) UK + Germany + France CR 50% of
EU CR
Sources Various: Energy Institute / Retail Marketing Survey, Mintel (2008 & 2009) 9
* Note: Estimates/projections based on Industry trends, assumptions on market size, consumption & average margins growth etc

10. EU Forecourt Stores Statistics 2009
100
90
80
70
60
50
40 % of Network
30 with Stores
Average Stores
20 Size (sqm)
10
0
10
Source : Energy Institute 2008 & 2009

11. EU Forecourt Stores Statistics 2009
Source : Sources Various - Energy Institute, UKPIA 2008 & 2009 11
* Note : 2008 Actuals & projections based on industry trends, markets size, convenience retailing and disposable income growth rates

12. EU Forecourts – Growth & Savings
Opportunities
Average number of washes per year Consumer perception of car wash options
12
Source : Energy Institute/Retail Marketing Survey 2009

13. Customer Motivation Fuel Management Savings Initiatives
13
Source: Energy Institute/Retail Marketing Survey 2008

14. Oil Companies & Hypermarkets :
Non-Fuel Priorities (in Mature Markets)
 Low Fuel Margins & 30% network rationalization  Insight Focussed RCVP Initiatives –
1998-2008 for high ROACE Development & Execution with KPI’s:
 Current CR penetration 17% of Total CR • Brand share of preference
 Target CR & £20 Bln industry by 2020 • Value for money perception
 Monitor Retail Customer Compliance • customer loyalty/penetration,
 Raise compliance rate of Category Management • Sales density (£/sqm),
Implementation
• Average transaction value
 Improved Supplier relationships
• Shopper marketing
 Card Payments & terminals, huge gap in
• Mystery Motorist Program
demand Vs actual
• Brand Tracker
 Locations – Store locations on customer insight
not property deals.
 Improve Returns on Promotional Spend via
 Desired Customer Experience Offer • More targeted promotions
• Store concepts/formats/product • Wider customer coverage
standardization & consistency
• More precise Sales Volume & Value
• Improved branding
planning
• Site, network operations & CRM
• Monitor compliance
• Supply chain management
14

15. Vending at Forecourts
EU Forecourt Opportunities & Target Markets
for Suppliers - Vending Proposition

16. Vending at Forecourts
• Consumers used to paying for fuel at the point of purchase
• Lost impulse purchase occasions as consumers no longer need to
enter store
• Snacks are impulse purchases and low cost added spend vs cost of
refuel
• Cashless sales spend of snacks greater (up to 15%) vs cash
• Consumers purchase more items and are willing to pay a premium
• Technically possible & need further Tests in Strategic FIT EU Markets
• Fit for purpose machines i.e. In-store & on Forecourts to capitalize
loss opportunity from Pay at Pump & raise Sales Density (£/sqm)
• Part of Forecourts Retailing CVP Implementation Program in Key
Markets within EU
16

17. Examples of Vending
17

18. Mars Market Entry Target Markets
1. UK
2. France
3. Germany
4. Ireland
• 40% of EU CR
Source : Sources Various - Energy Institute, UKPIA 2008 & 2009 18
* Note : 2008 Actuals & projections based on industry trends, markets size, convenience retailing and disposable income growth rates

19. Oil Majors & Hypermarkets Expansion:
Focus on Downstream CR
Opportunity for Suppliers
CR: Convenience Retailing

20. EU Fuel Declining Margins – Capturing Customer Footfall
Oil Majors & Hypermarkets EU Alliances – Successful Pilots
20

21. Successful South Asia Alliances
BP –Sinopec (China) China consider C-store concept
Total –PETRONAS (Brazil 21

22. Global brand trends in Middle East in Fuel &
Non-Fuel Retailing
Source : Circle 22