Five Essential Ingredients for Product Portfolio Optimization - EY India

1. Get the most from your consumer products portfolio Five steps to drive better results

2. Contents 3 Executive summary 4 You are not optimizing your portfolio as effectively as you think 6 Evidence-based decisions need evidence you can trust 8 The right people will drive growth 10 Effective resource allocation will allow the Grow stars to shine and Exit brands to retain value 12 Decisive action will create sustainable growth, especially when it comes to divesting Exit brands 14 Long-term scenario planning means you’ll see the iceberg coming 16 Conclusion:fivestepstobetterportfoliooptimization

3. Get the most from your portfolio 1

4. Foreword Consumerproducts(CP)companiesaroundtheworldarefightingforgrowthandthebattle they'rewagingisincreasinglydifficult.ThelatestEYConsumerProductsandRetailSurvey, publishedearlierin2016,foundthat75%ofCPexecutiveswerefindingitmoredifficult tosustainprofitablegrowthnowthantheydidadecadeago,asmarginsweresqueezed. Nearly half agreed that much of the heritage that once made them successful now prevented them from changing, such as over-dependence on a category that has become commoditized.Andonly21%ofCPcompanieswereconfidentintheirabilitytooptimize andrationalizetheirportfolio,onwhichsomuchoftheirgrowthdepended. Jim Doucette EYAmericas Corporate and Growth StrategyLeader, Ernst & Young LLP Why weren't their portfolios living up to their expectations? The vast majority of our CP clients have an annual portfolio review, including sophisticated processesdesignedtoyieldactionableoutcomes.Andyetnearlyallofthoseclientsare dissatisfiedwiththeirtop-linegrowthandtotalshareholderreturns. Despite the lack of results, most senior CP executives believe their portfolio optimization processesareworkingwell.But,bydiggingabitdeeper,wehavediscoveredthattheactions theytakeareoftenlackingandthatthereareanumberofareasthatcouldbeimproved.To cite two examples, CP leaders are not directing enough resources towards growth businesses intheirportfolioandtheyaren'tactingdecisivelyenoughtofixorexitlaggingbusinesses. Jim Prevost Executive Director of Transaction AdvisoryServices, Ernst & Young LLP This highlights the areas CP companies need to address to better optimize their portfolios and,ultimately,driveimprovedgrowthandtotalshareholderreturns. About the study In 2016, FT Remark surveyed 50 senior-level executives at global consumer companies with revenues of at least US$3b. All the executives surveyed had responsibility for portfolio management decisions. The survey included a combination of qualitative and quantitative questions, and all interviews were conducted over the telephone by appointment. The results were analyzed and collated by FT Remark and EY, and in this report all responses are anonymized and presented in aggregate. 2 Get the most from your portfolio

5. Portfolio brand categories Executive summary For portfolio optimization to succeed, companies need to classify their brands or businesses as one of the following: The majority of global CP businesses and executives believe their current strategic portfolio optimization process is doing the job and generating improved growth, buttherealitydoesnotnecessarilyliveuptothatperception.MostCPcompanies are not delivering on top-line growth and total shareholder return targets, indicating theirportfoliooptimizationprocessesarelacking. Grow Brandsandbusinessesthatare accretive to earnings and enjoy competitive advantage and/or a leading position in a category withstronggrowthprospects. WeconductedasurveyofleadingCPcompaniesintheUSandWesternEurope,and itconfirmsourviewthatCPcompaniesarenotoptimizingtheirportfolioaseffectively astheythink.Manylacktheessentialingredientsforportfoliooptimizationandneed to address the following: Sustain Brandsandbusinessesconsistently contributing to free cash flow and profits but without significant growth prospects. Get the right set of facts.Makingoptimalportfoliodecisionsrequires analyzing a number of consumer, market and competitive factors from a variety of sources, but few CP companies trust those sources or can convert theaccumulateddataintousefulinsights. Fix Brandsandbusinessesthatdonot hit their targets but are material to the businessorsitinattractivecategories. Competitive disadvantages — for example, an uncompetitive cost structureorweakeningbrandequity —mustbeaddressed. Dedicate the best people.Unless businesses ask their best and brightest talent to lead and manage their optimization strategy and give them the authoritytoimplementchanges,theprocesswillbeunderminedfromthestart. Act decisively on resource allocation. There is little point in identifying growth engines or failing brands or businesses if you are not then prepared toallocateyourresourcesaccordingly. Exit Brandsandbusinessesthathavenot responded to “fix” plans and/or are not meeting performance metrics, andshouldbedivested.Alsoapplies to businesses that are no longer suited tothecompany’sstrategicdirection. Be bold when deciding whether to Fix or Exit.Divesting a business is often adifficultdecision;however,delayingtheinevitableerodesportfoliovalue. LeadingCPcompaniesletthefactsleadthemandmovequickly. Incorporate predictive modeling and long-term scenario planning to stay ahead.Too many CP companies cite unexpected changes in market dynamicsasthekeyfactordrivingtheirdecisiontoexitabusiness.Forward- looking analyses with sophisticated data and analytic tools, coupled with insights produced by employees in the business, will establish a complete picture of the portfolioandallowforunbiasedstrategicplanning. These categories set the stage for active portfolio management, with all decisions driven by an accurate andcompletepicture. Managedsuccessfully,theportfoliooptimizationprocesscantransformaCPbusiness. Ourresearchconfirmsthatexecutivesintheindustryunderstanditsvalueandcansee thebenefits,buttheyneedtobebold,identifyingpotentialgrowthenginesandweaklinks inthebusiness.Theyneedtofreeupandallocateresourceswheretheycanachievethe bestresults.Andtheyneedtofixtheirproblemsorprunethem—ruthlessly,ifnecessary —inordertooptimizetheirportfoliofortrulysustainablegrowth. Get the most from your portfolio 3

6. You are not optimizing your portfolio as effectively as you think The vast majority of global senior CP executives think their optimization process is strategically important, effective, consistent, handled formally and conducted withtherightfrequency.Inotherwords, it’sdoingjustfine.Andmostarerelying onittodeliverimprovedgrowth. themselves moderately or not particularlyeffective.Thisperformance gap is highest for those that are “very effective”identifiersofExitbusinesses orbrands,earning3.2percentagepoint higherreturnsonaverage. Is your portfolio optimization process driving sustainable growth? Butathirdofrespondentsdescribe theirGrow-Sustain-Fixclassification processasonlymoderatelyeffective. Moresignificantly,only46%thinktheir process is very effective at identifying Exit businesses or brands, which could beapotentialdragongrowth. Isthisconfidencemisplaced?Afew percentage points of growth can make all the difference when it comes to delivering on results expectations, and any uncertainty or delay in action canhurtresults.Lookingindetail at companies’ portfolio optimization processes, it’s clear that companies that excel at portfolio optimization arewinninginthemarketplace. Thismeansmanyfirmsareleavingmoney onthetable. That tells the whole story: a rigorous portfolio optimization process feeds your growth engines and prunes weaker brands, including those that were once stars, butaren’tanymore.Ifhandledproperly,a businesswillseeimprovedgrowth.Butmany arestillstrugglingtounlockitsfullpotential. For example, in our survey, those who label themselves “very effective” at classifying theirbusinessesorbrandsasGrow,Sustain orFixdelivered2.2percentagepointhigher shareholder returns on average over a five-yearperiodthanthosewhoconsider 4 Get the most from your portfolio

7. Portfolio optimization brings benefits beyond growth Inoursurvey,76%ofrespondentspointtoimprovedgrowth asoneofthemainbenefitsoftheirportfoliooptimization process.Butgrowthisn’ttheonlybenefit. 90%+ Othersincludebettercashflowandfinancialmanagement — optimization has helped 50% of respondents to allocate resources more effectively to the brands within their businesses,while42%saytheprocessboostedcollaboration betweendifferentbusinessunits. of businesses believe their portfolio optimization process is effective, strategically important, conducted often enough and consistently across the company. “Portfolio optimization has promoted business growth,” says the group director of strategy at a UK-based home andpersonalcarebusiness. “Ithashelpedussignificantlysharpenourfocuson the core business and deliver long-term value to the company’sstakeholders.” But they aren’t as confident that the process is effective at classifying the businesses and brands in their portfolio. That focus is vital when identifying potential growth engines and62%ofrespondentsconfirmthatenhancedcompany focusisoneofthemainbenefitsofanoptimizationstrategy. What are the key benefits of your portfolio optimization process? only 46% Improved growth 34% 30% 12% think their processes are very effective at identifying Exit businesses or brands . Enhanced company focus 24% 22% 16% Why does this matter? Better allocation of resources across brands/lines of business 18% 20% 12% More collaboration across business units or lines of business Because companies with more effective portfolio optimization processes have achieved superior shareholder returns over five years. 6% 14% 22% Improved company alignment around initiatives or activities 14% 10% 4% Improved shareholder returns 3.2 6% 4% 16% An enhanced one firm culture percentage point higher total shareholder returns were delivered over five years by those who are “very effective” at identifying Exit businesses/brands 4% 10% 2% . First choice Secondchoice Third choice Get the most from your portfolio 5

8. Evidence-based decisions need evidence you can trust Understand your brands Portfolio optimization demands information.Withoutobjectivedata and a clear picture, it’s impossible to identify the handful of brands and businessesthataregoingtogrowquickly and should be fueled by investment, those thatjustifyfixingratherthanexiting,and those that will remain stable and provide “ballast”totheportfolio. Over half of the respondents (58%) agree theywouldbenefitfromastrongerfact base;thisishighlightedby38%ofthe executives in the survey as the single most important way to improve the current optimizationprocess. 46% of respondents do not trust information presented or supplied by others Sophisticateddataandanalyticstools can help by structuring data in a way that allowsCPleaderstogleanvaluableinsight. Butfirst,businessesneedtocollectbetter, more accurate data — if they don’t have that, they won’t have the right market sensingcapabilitiesinplace. CP companies have access to a mountain of data from both internal and external sources;thatdatashouldbedrivingthe portfoliooptimizationprocess.Butthe dataisnotstrongenough.Almosthalf the executives we surveyed don’t trust thatdata. “The data collected from the reviewing processoftenlacksqualityasthesources are diverse and the amount of data collected is very large,” says the head of strategy at a UK-based food and beverage business.“Thatmakesitdifficulttorely onourdataortobasestrategiesonit.” Find better data Betteranalysisstartswithbetterdata, a view echoed by the global director of portfoliostrategyandinsightsataUS foodandbeveragebusiness. 57% cite lack of resources as a pain point What data do you need to gain reliable insights? “It’sdifficulttoassumefutureconsumer demand patterns through mere statistical data.Weneedathoroughandholistic understanding for more accurate decision- making.Weneedastrongerfactbaseto understandthemarketwell.” 6 Get the most from your portfolio

9. Portfolio optimization: too much of a burden, not enough payoff? Despitetheirconfidenceintheportfoliooptimization process, almost a third (28%) of the respondents in our survey describe their optimization process as burdensome, arguing that it doesn’t produce useful results given the cost anddoesn’tdriveaction. thisasapainpoint,with22%sayingit’stheirbiggestheadache. Asaresult,for34%ofrespondents,theirprocessdoesn’t doenoughtochallengethestatusquoinanysignificantway. Andwithoutthatchallenge,theirportfoliomaystagnate. Inallcases,it’sclearthattheanalysisisnotsufficientlydetailed and robust enough to implement real change in their portfolio optimizationprocess. They also point to a lack of resources, whether people or technology, to improve their optimization process — 57% cite What’s preventing your optimization process from being more effective? 57% 34% 28% 28% 28% 23% 22% 21% 19% 15% 13% 13% 9% 9% Not given enough resources Does not sufficiently explore options or challenge the status quo Regarded as burdensome Doesn’t produce useful results/ delivers low return on investment Doesn’t drive action Not seen as important in light of other priorities Process leaders are insufficiently influential Mostimportant Allthatapply Get the most from your portfolio 7

10. The right people will drive results Let people offer insights It’scriticaltodedicatetherightpeople to the process, with the right level of support.That’sthechallenge—there’s atendencytohavefinanceorstrategy people prepare most of the portfolio review.Butthebestpracticeistoget cross-functionalparticipation.Itrequires more time and planning, but the results areusuallymorerobustandaligned. businesses, and they need the tools to dothejob.It’sanassessmentmind-set, and it needs to be in-depth and challenge existing assumptions rather than validate them.Ifit’spartofthecompanyculture and the right process and tools are in place,peoplewillmakeitapriority. 24% say the biggest single improvement to their optimization process would be more internal co-operation Agreement across the board Executives need to be onboard for theexercisetoproducetangibleresults. Understandably, many line managers may be biased, looking after the interests oftheirownbrandorbusiness. Technology should do the heavy-lifting in terms of data gathering and analytics, but your people must be able to convert that information into decisive action, fasterandwithgreateraccuracy. CP managers need to be able to make nimble, fact-based strategic assessments of brands or businesses based on those insights — and they need to do so without itbecomingonerous. 58% deploy their highest performing talent to a great extent based on whether a business or brand is classified as Alackofconsensusmakesitdifficult to trust information or data coming out of the various business units or brand teams as they advocate their own corner —46%ofrespondentscitethisconcern. Thatcanholdeverythingback. Grow Sustain The best and the brightest need to devote a block of time during any given portfolio review period to assess their brands and “Process leaders concentrate on improving their own group functions rather than working on common ground Fix Exit 8 Get the most from your portfolio

11. Portfolio optimization demands better data, more cooperation and the will to change “We need to adopt a stronger fact- based approach to make our portfolio optimization more effective,” says the group director of marketing, strategy andcapabilitiesinanAmericanhome andpersonalcarecompany.“Predicting likely market outcomes, eliminating or changing products in a portfolio and understanding the linkage between different brands or products is where wecouldimprove.” Justunderaquarter(24%)saythe biggest single improvement to their optimization process would be more internalcooperation,with14%looking for more openness to fresh ideas and 10% focusing on a reduction in biases andbrandfavoritism. One possible solution, according to 34%ofrespondents,istogivegreater authority to those executives responsible fordrivingoptimizationprocesses. Well over half of the respondents (58%) in our survey agree they could improve their current processes with a stronger factbase;thisishighlightedasthe single most important improvement for38%oftheexecutivesinthesurvey. Given that 21% of those surveyed feel theirprocessleaderslacksufficient influencetochangethesituation,it’s clear that decisive action needs to be takentoturnthingsaround. How do you think your current process might be improved? forthebenefitofthewholecompany,” comments the head of marketing at a UK food and beverage business, while the senior director of marketing ataBelgiancompanyinasimilar businessadds:“Wehavespecific brand preferences and our portfolio optimization is carried out with this in mind — at times, these preferences look biased and some brands are favored.Ifeelthisshouldendand attention should depend on the need ofthebrandorportfolio.” 58% 46% 38% 38% 38% 36% 34% How is technology enabling your people to make more accurate decisions faster and more decisively? 24% 14% 10% 10% 4% More Increased openness to fresh ideas (i.e., not keep doing what has always been done) More internal cooperation (rather than business unit leaders fighting own corner) Reduction in organizational biases an brand “favoritism” More Stronger fact base (e.g., more granular data, competitive benchmarks) authority for group that drives the process to make necessary changes consensus around underlying fact base (e.g., trust in information presented by others) Mostimportant Allthatapply Get the most from your portfolio 9

12. Invest resources decisively Areyouinvestingenoughtimeandmoney inyourGrowbrands?Areyouinvesting too much in businesses you’re planning to exit? Or too little, which could affect sale price? When it comes to investing resources in their portfolio, not all CP companies are choosingwisely. Effective resource investment will allow the Grow stars to shine and Exit brands to retain value The trouble is that the split for each investment resource, whether capital, marketing spend or talent, is typically thesameineachcategory.Growbrands tend to receive half the resources while the remaining brands get the other half, but CP business leaders need to be more ruthless.Capitalneedstobeallocated more effectively and it’s not just about the marketing budget, it’s also about talent: the best people and capital should beallocatedtoGrowbrands. This can be a challenge for business leadersandbrandownersfightingfor thesamesliceofthepie.It’shumannature — imagine a business with 10 brands in itsportfolio.ThreeareGrowbrands,five areSustainbrandsandtheothersare FixorExit.ThemanagerofaSustain or Fix brand is going to advocate for their business and put together the best business plan to grab as many resources as possible, intending to improve the chancesofdelivering.Evenifthebusiness or brand isn’t a strategic priority for the firm,themanagerwillstillwantthebest people and as many resources supporting thebusinessastheycanget. ResearchconfirmsthatExitbrands and businesses receive less than 10% of investment resources across theboard,whichmayreflectthefact that CP companies are designating relativelyfewofthemasExits. However, EY’s earlier research, including theGlobalDivestmentStudy,indicates that many are simply failing to invest in thesebusinessesasamatterofcourse. These results suggest that CP companies are not basing their investments on data- driven portfolio reviews and that will not produce the results company leaders want orexpect. 10 Get the most from your portfolio

13. Invest consistently Accordingtooursurvey,72%of respondents say their capital spending will change to a great extent depending upon whether a brand or business is classifiedasGrow,Sustain,FixorExit. Butthisfallsto58%whenitcomes to deploying the company’s highest- performingtalent.Thislackofconsistency when it comes to resource investment canhavealong-termimpactongrowth. How does portfolio optimization influence your investment decisions? IfabrandisinSustainmode,itdoesn’t have particular advantages over key competitors.Andifthere’snopoint of differentiation, why spend money onmarketing?Instead,companies should spend on getting the price right tomakesureit’scompetitiveontheshelf. Highest-performing talent 42% 58% Innovation spending Under the circumstances, the company would do better to bring the brand back into the shop and rework it: what is magic about this brand? What is its point of differentiation? What needs to be done differently? 38% 62% Marketing spending Our survey asks to what extent organizations shift their marketing talent capital away from Exit brands and over toGrowbrands.Morethanhalfsaythey handlethiswell,butthatshouldbe100%. 40% 60% Capital On the other hand, if a brand is a star in its category and given the right levels of marketing and capital support, it can even take business from surrounding categories.That’sthekindofgrowthevery CPcompanyshouldaspiretoachieve. 28% 72% IfyouidentifyaGrowbrandandaSustain brand, it doesn’t mean the former gets 60% of marketing talent and resources andthelattergets40%. To a moderate extent To a great extent You have to be smart when investing your resources — considering long-term scenarios and focusing your resources where you have advantage in attractive markets — but that doesn’t mean you abandonbrands.ForExitbrands,you still need to keep them going with tactical investments if you believe they can be soldtoabetterowner.Otherwise,you riskdestroyingvalue. Do you have someone with the authority and influence to drive change in your organization, and the processes in place to make it happen? How much are you investing in your brands/businesses? 5.2 7.5 9.0 8.1 20.5 17.9 19.3 20.1 Highest- performing talent Innovation spending Marketing spending 47.2 48.4 Capital 50.5 52.5 22.1 23.8 22.5 25.4 Brands/businessescategorizedas"Grow" Brands/businessescategorizedas"Fix" Brands/businessescategorizedas"Sustain" Brands/businessescategorizedas"Exit" Get the most from your portfolio 11

14. Decisive action will create sustainable growth, especially when it comes to divesting Exit brands Changedoesnotusuallycomequickly toconsumerproducts.Theeconomic landscape may shift and people’s tastes may change, but if CP businesses are vigilant during the life of a brand, they canusuallyavoidunpleasantsurprises. 18%consideringitthemostsignificant, and 16% admitting a bias against exiting businessesandbrandsintheirportfolios. 20% say the growth rate is the most significant factor in deciding whether to fix or exit a business/brand “The longer we have engaged with something, especially if we have built significantmarketshare,themore reluctant we will be to exit,” says the chiefmarketingofficerofaEuropean foodandbeveragecompany. Andwhenaportfolioreviewidentifies a brand or business as underperforming — or likely to be so in the future — CP leaders havetoactquicklybeforeitaffects growth.Andthat’sneverstraightforward. Somebusinessesseequickdivestments as an admission of weakness: “We feel that directly exiting a brand or a business impacts on the customer base and promotes a negative image,” says the director of marketing at a French home andpersonalcareproductsbusiness. “Consumers are unpredictable and divesting a single brand can have an impact on demand for the remaining product line and on our customer base,” cautions the director of business developmentandstrategyataUShome andpersonalcareproductsbusiness. CP company leaders need to avoid sentimentality if they want their portfolio optimizationstrategytosucceed.Asthe directorofstrategyandgrowthataUS- based home and personal care products company puts it: “We have a bit more This unpredictability extends to the company’s own attachment to the brand – heritage is an important factor in whether tofixorexitfor26%ofrespondents,with 12 Get the most from your portfolio

15. Fix or Exit: growth factors sentiment and bond with our brands, butthisisahurdleIthinkshouldbedealt withrationally.Ourstrategiesshouldbe focusedongrowthandprofitability.” Businesseswillnaturallyfeelmorereluctanttoexitbrands that are sitting in fast-growing segments, even if they are notachievingtheirfullpotential.Oneinfiverespondents (20%) say the growth rate of the business or brand itself isthemostsignificantfactorwhenconsideringwhether tofixorexit,whilealmostasmany(18%)citethedegree ofconsumerloyaltytothebrand.Halfoftherespondents cite the respective category growth rate as either the first(16%)orsecond(34%)mostsignificantfactorinthe decision-makingprocess. Itdoesn’thelpthat84%ofrespondents do not consider the potential selling price of an underperforming brand as key fortheirdivestmentdecision.Ifanexit strategy doesn’t include a business’ or brand’s potential sale value, there will be less motivation to make it an attractive option for buyers and that could have animpactongrowthacrosstheportfolio. What influences your decision to fix or exit a brand? Brand/business growth rate Hesitation is understandable — this isoneofthemostdifficultdecisions abusinessleaderisgoingtoface. Mostcompaniesarenotgoodatpruning businesses, but they’ve got to be tough tomakethemostoftheirportfolio. Unfortunately, the decline of a non-core brandtendstoacceleratefirstbecause the brand is typically not in an advantaged position in an attractive category, and second because, over time, the lack of resources sent its way further erodes itsposition.Thelongermanagement waits, the more expensive the hesitation canbecome. 20% 10% Degree of consumer loyalty 18% 14% Connection of brand or business with parent company heritage 18% 8% Category growth rate 16% 34% Company bias against exiting businesses 12% 4% Strength of brand equity 10% 20% Could you be bolder in deciding which businesses to fix and which to exit? Price or value that could be realized by selling the business 6% 10% First choice Secondchoice Get the most from your portfolio 13 Get the most from your portfolio 13

16. Long-term scenario planning means you’ll see the iceberg coming Businessesthatplanaheadbased on reliable data-driven insights and experience should be able to spot trouble coming.Underperformingbusinessesthat aredoomedtofailshouldbeidentifiedand sold earlier, to avoid the drag on growth andtorealizethebestprice. be a long term “climate-like” trend — or it couldbeanicebergoutinfrontoftheship. Either way, it’s important to constantly scanthehorizon. The right integrated analytics can track the market and a brand’s performance ingreatdetail,fromsalesfiguresto social media commentary, with all the positivesandnegatives.It’simportantfor CP businesses to step back and remain objective, otherwise they might overlook ordiscountwhat’sinfrontofthem. 80% say their final decision was driven by changing market dynamics — that is, factors beyond their control CP businesses are not necessarily learning this lesson: a clear majority (80%) claim unexpected changing market dynamics — that is, factors beyond their control — were a major factor in their decision to exit a brand or business after attemptsatafixfailed. These tendencies — to blame unexpected market dynamics or hesitate before exiting—aremisleading.Ontheone hand, respondents are suggesting that their analysis of market conditions and the state of the business or brand meant afixwaspossibleandtherightchoice. On the other hand, they’re suggesting that market conditions change so rapidly that theycouldnotforeseewhatwastocome. 31% say their final exit decision was driven by a buyer willing to pay the price Do you ruthlessly execute what your scenarios are telling you? Marketdynamicsdon’tsuddenlybecome anissue.Theyevolveovertime.Itcould 14 Get the most from your portfolio

17. When you have divested a brand or business that you had previously attempted to fix, what factors drove your decision? Market dynamics turned against the brand or business 80% 29% say failing to fix a business or brand was a factor in its subsequent sale 58% Other changes in the portfolio negatively affected the brand or business 35% 12% A buyer emerged that was willing to pay an acceptable price 31% 14% Attempts at fixing failed 29% 16% Allthatapply Mostimportant Get the most from your portfolio 15

18. Conclusion: five steps to better portfolio optimization Get the right set of facts. The results of this survey are very much aligned with the issues we have often seen withourclients.Themajority of the respondents in our survey agree that a portfolio optimization process can drivegrowth.Companieswith a “very effective” portfolio review process have enjoyed greaterfive-yeartotal shareholder returns than those with less effective optimizationpractices. Sophisticateddataandanalyticstoolsshould generate continuous insight that leads to nimble and decisive action, but many CP executives struggle with overwhelmingandoftenunrefineddata,andprocesses thatdonotdelvedeepenough.Dataissuesneedto be sorted to deliver information that is actionable for portfoliodecision-making. Dedicate the best people. Ifyoudon’tgiveyourteamthetimeandtoolstheyneed to conduct a thorough evidence-based portfolio review process,theywillneverchallengeyourassumptions. You risk becoming complacent and that will eventually undercutgrowth. Webelievetherearespecific key actions CP companies should take to kick-start their growth engines and trimthedeadwood. Act decisively on resource allocation. Aportfoliooptimizationprocessbeginswithidentifying potential growth engines, but it only succeeds when executives are ruthless in prioritizing resources — marketinginvestment,capital,talent—tothoseareas. 16 Get the most from your portfolio

19. Contacts To learn more, please speak with your EY contact or get in touch with one of us: Jim Doucette AmericasCorporateandGrowthStrategy Leader, Ernst & Young LLP Tel:+12036743372 Email:jim.doucette@ey.com Be bold when deciding whether to Fix or Exit. Company heritage and other emotionally driven factors can weigh heavily when deciding whether tofixorsell/exitanunderperformingbrand. Failing brands and businesses may be retained and allowed to lose value for far too long, making the eventual exit more complicated and at a lower value than could have been realized with earlier, moredecisiveaction. Jim Prevost Executive Director of TransactionAdvisoryServices, Ernst & Young LLP Tel: +1 312 879 3229 Email:jim.prevost@ey.com Incorporate predictive modeling and long-term scenario planning to stay ahead. When asked why they divested a brand or business, most executives we surveyed mention unexpectedchangesinmarketdynamics.But changes like these can be anticipated through effective scenario planning — by asking better questionssooner—andaddressedbeforethey becomeaproblem.Brandsandbusinessescan thenbefixedorsoldbeforemarketchanges affectaportfolio’sprofitabilityorgrowth. Get the most from your portfolio 17

20. EY |Assurance|Tax|Transactions|Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services.Theinsightsandqualityserviceswedeliverhelpbuildtrustand confidenceinthecapitalmarketsandineconomiestheworldover.We develop outstanding leaders who team to deliver on our promises to all ofourstakeholders.Insodoing,weplayacriticalroleinbuildingabetter workingworldforourpeople,forourclientsandforourcommunities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legalentity.Ernst&YoungGlobalLimited,aUKcompanylimitedby guarantee,doesnotprovideservicestoclients.Formoreinformationabout ourorganization,pleasevisitey.com. ©2017EYGMLimited. AllRightsReserved. EYGno.00000-164Gbl ED None This material has been prepared for general informational purposes only and is notintendedtoberelieduponasaccounting,tax,orotherprofessionaladvice. Pleaserefertoyouradvisorsforspecificadvice. The views of third parties set out in this publication are not necessarily the views oftheglobalEYorganizationoritsmemberfirms.Moreover,theyshouldbeseen inthecontextofthetimetheyweremade. ey.com/consumerproducts Strictlyforinternaluseonly ©2017EYGMLimited. AllRightsReserved. ED None