AN0C™ Distribution

Taking China by storm!

AN0C stormed the Chinese beverage market by utilizing an extensive distribution network that resulted in a deep market penetration to a broad base of national consumers. Within the first three months following the brand's initial launch, over 27 million bottles of RTD tea had been distributed to the sales channel and re-orders were in place. In March 2011, the company had established their national headquarters in Shanghai along with 12 regional AN0C offices, responsible for the marketing, national (KA) channel sales and distribution of AN0C consumer products. Over next three months the AN0C team established 51 Tier II sales and marketing offices and another 125 Tier III sales and marketing offices. By July, AN0C had a work force of over 1,250 full time sales and marketing staff whose primary roles were to work with the Company's distributors and retailers. They also assisted in the promotion of the AN0C brand and consumer products, and provide valuable service to all the distributors. The outcome resulted in AN0C RTD teas being available in approximately 75,000 KA and traditional outlets.

How consumers buy dictates distribution and sales channels

Beverage purchases tend to be a combination of spontaneous purchases and stocking up through traditional outlets. Very often purchase decisions are made on the spot as consumers walk by a kiosk or store and see the drink, or feel thirsty and will grab whatever drink is closest to hand. This kind of impulse behaviour tends to lead to many street vendors with portable iceboxes and drink stands that pop-up along sidewalks and at popular gathering places or tourist spots. Often there is good business for smaller kiosks outside hypermarkets, as consumers are value convenience over price. The alternative, of engaging in an impulse purchase from a crowded supermarket and stand in line for a one-off purchase is less likely. As a result, approximately 80% of beverage purchases are made from these traditional outlets.

AN0C's all-natural zero calorie beverages support farmer, health and government reforms

Good government relations can help distribution. The government of China is deeply concerned about the growing national health issues around obesity and diabetes. They are also concerned with economic growth within rural farming communities. The vertically integrated business that GLG and AN0C conduct in China from its stevia research to the production of stevia based consumer products is double edged. The Country benefits from increased farming opportunities around growing stevia which leads to an increase in rural wealth and it can also benefit from the AN0Cs development of national brand around zero-calorie stevia that results in healthier beverage and food alternatives for consumers.

The outcome of GLG and AN0C's efforts has resulted in a healthy relationship with many levels of government, a relationship of mutual support. This, in part, is why AN0C has received government assistance in the recruitment of national distributors such as Walmart, Carrefour, Metro and Tesco as well as assistance is securing the top OEM bottler in China - The Hon Chuan Group. AN0C has also received assistance in securing the best national advertising slots, assistance for the approval of its products and through media coverage. GLG was profiled in a nationally televised CCTV documentary series about the Xiaogang story in the past few months. This media coverage has been invaluable in helping broadcast the GLG name across China and positioned the company as a leading international business that has come to the aid of Xiaogang and played a valuable role in helping develop their rural economy and taking it to the next level in wealth and job creation.

Great distribution equals even better sales

In the approximately three months of sales activity (end of March through June 30th) AN0C has sold approximately 27 million bottles of its (RTD) Teas. Our largest volume sold was in the month of June with 12.6 million bottles of RTD Tea. June proved to be landmark month demonstrating AN0C's growing success being the first month since our March launch with all of the following sales enablers in place:

1. OEM manufacture capacity in place to handle volume
2. Distribution outlets increased from 20,000 to 65,000 by this time.
3. Sales support was in place (51 Branch Sales Offices & over 1,250 sales and marketing professional in place supporting sales with our Distributors)
4. Increased Advertising levels

With all the necessary components in place, AN0C sold 12.6 million bottles of its RTD teas. This is worth approximately $40 million in product sales on an annualized basis. This sales milestone has given AN0C management the data and confidence that their all natural sweetened zero calorie products are being well received in the Chinese marketplace. Based on annual sales data (Euromonitor, 2010) for China's top competitors within in the RTD tea category, AN0Cs annualized June sales would place it within the top 12 national competitors in this category. This is a significant achievement within a three month period of product launch and demonstrates our confidence in rolling out additional zero calorie products in the marketplace.

The introduction of additional products will now be launched to capitalize on this opportunity and in so doing, put us in a leadership position in the market for this category. AN0C's President, Katzu Cheng who pioneered the sugar sweetened ready to drink market 10 years ago in China, sees the naturally sweetened zero calorie product opportunity as a similar stage growth opportunity as the sugar sweetened RTD Tea market was in 2001 when it first started to be sold in China. Today the RTD Tea market is estimated at USD 5.3 Billion.