AZBUKA VKUSAA WORLDWE LIKEА WORLD WE LIKE2AZBUKA
VKUSA
Our mission is to create theworld’s best retail food chain,
improving the quality of lifeand setting high standards forretail and corporate social
responsibility.

Our business philosophy
is based on uncompromisingquality, freshness of ourproducts and personal service
for every customer.
Thanks to its uniqueconcept and continuous
development, Azbuka Vkusa
is one of the most vibrant andvisible Russian brands.

13

We give our customers theopportunity to enjoy each purchase;to our suppliers and contractors,
the chance to build a long-term,
stable and open relationship; and toour employees, the chance to growprofessionally and fully comprehend
their personal contribution.

А WORLD WE LIKE

42THE RUSSIANRETAIL FOOD
MARKETThe Russian food market may
become the biggest in Europe
in the next two years. Retailtrade will keep growing –up to 10% each year.

5Open air market businesswill continue to dwindle, while
online sales will continue toincrease.
In the competition withglobal players Russian retailchains will keep the leadingrole – unlike the countries ofEastern Europe.

9036446960

LEADINGPOSITIONSST-PETERSBURG
37066

MOSCOW

1998

32001

62003

Net floor space, sqm

32154

27355

17920

26

16190

2411122

22
1119

2004

5671

4372

83941

1639

2

949

1

223

Azbuka Vkusa is the number
one Russian food retailer basedon profitability by floor space, withturnover of $25 000 per square meter.

14472

40

47

53

Azbuka Vkusa was founded in 1997, and theretail chain has now more than 60 supermarkets
in and around Moscow and in St. Petersburg.

1997~60000

А WORLD WE LIKE

62005

2006

2007

2008

2009

Number of stores

2010

2011

2012

2013

2014

7UNIQUEFORMAT
Azbuka Vkusa was the first retail chain in Russia to offer
customers a wide range of high quality products andan unprecedentedly high level of service in Russia.

4The company increases
its turnover by more than30%
every year.

Growth in the number ofstores is based on an effective
combination of internal growthand mergers and acquisitions.

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85

1200

1600

FINANCIALPERFOMANCE
Azbuka Vkusa is among the 50
largest Russian retail store chains. By theend of 2013 fiscal year company turnover
will reach $1.2 bln .

806

879

The official auditor of the company is
Ernst & Young, a member of the «Big Four»of the leading auditing firms in the world.

315

2007

2008

102

30%

177

The annual
growth rate of net
sales is about

303

393

568

Turnover, $mln

2005

2006

2009

2010

2011

2012

2013

2014

96LOGISTICS

Azbuka Vkusa offers customers products of the highestquality. In order to provide prompt delivery to our supermarkets,
we use the most up-to-date logistics technologies and arecontinually improving our methods.
Our distribution center has an automated warehousemanagement system that allows us to effectively control themovement and storage of goods in warehouses and optimize
the processes of delivery, receipt and purchase.

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107PURCHASING
Thanks to well devised
niche strategy, Azbuka Vkusa
has been able to become anexclusive and profitable partnerwith many foreign suppliers andmanufacturers.

We offer our customers the best choice interms of quality, variety and standard of service.
Azbuka Vkusa works with the 900 producers
from 70 countries all over the world.

We are constantly
monitoring consumer
preferences to generate
the best product lines
for different customer
types.

Azbuka Vkusa develops
direct imports to improve thequality of products sold. Direct
import allows the company
to have more control overproducts’ quality.

118ENOTEKA

In 2011 Azbuka Vkusa established aretail chain, Enoteka, which includes shopin-shops in supermarkets and 3 specializedboutiques in Moscow aimed at customers
who are interested in viniculture and want
the opportunity to acquire the best wines
and spirits at special conditions. Enoteka’sassortment includes 1,500 varieties,including the most exciting and distinctive
wines and spirits from Europe and the NewWorld. Our experts personally select thebest wine from the best wine houses allover the world.

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129PRIVATELABELS
Azbuka Vkusa is aimed at different
groups of customers for whom
product quality is paramount. In 2011
we began producing and selling goods
under our own brand.

The shareof the private labelsin the company's
turnover will reach15%
in 2014.

13Вasic everyday products. Thequality is higher than of similar
products in the market.

Ready-to-cook products.
The recipes are created byrestaurant chefs.

Farm products produced
without the use of industrial
technologies under conditions
virtually matching international
standards of eco-agriculture.

Selection
Ready-to-eat meals that havepassed strict quality control.

A collection of premium
products from around the world.

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1410

MULTI-PROFILECULINARYDIVISION

Azbuka Vkusa was one of
the first Russian food retailchains to launch productionof its own food products.

15All dishes are createdunder the supervisionof Michel Chevais,
Azbuka Vkusa’s brandchef, a well-known
former restaurant chefin Moscow.

AZBUKA VKUSA’S OWNPRODUCTS ACCOUNTFOR ABOUT 15% OF THE
COMPANY’S TURNOVER.

The culinary
division is a full-cycle
enterprise, producing
a wide range of foodproducts.

The culinary division
occupies more than 7000 sq. m.
and produces over 350 products.
Their total production is about
16 tons per day.

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1611COOPERATIONWITH FARMERSOne of the Azbuka Vkusa’spriorities is the support offarming in Russia. The company currently works withtwo dozen farms in the Central and Southern regionsof Russia. These farms produce a wide range of dairy
products and vegetables forAzbuka Vkusa.

17This ongoing program is a combinationof efforts aimed at stimulating thedevelopment of agriculture, creation of newjobs and opportunities to offer consumers
high-quality and organic domestic products
at an affordable price.

In the near future the company plans
to launch the production of marbled beef.

А WORLD WE LIKE1812
QUALITY
MONITORING
Guaranteeing the safety and qualityof goods in supermarkets are ourkey objectives.
The quality control department of the company
conducts supermarket inspections for compliancewith shelf life and ensuring that the products
offered meet company standards.

Azbuka Vkusa was the first Russian
food retailer to implement a quality
control system based on ISO standard
9001:2008.
In 2012, the company was successfully
certified as in compliance withinternational quality management
system ISO standard 9001:2008.

The Customer Support Service was establishedin 2006. It is responsible for continuously
responding to all customers’ requests.

1913
LOYALTY
We operate in a highly
competitive market.
We know that customers
always have a choice,so we are constantly
reviewing consumer needs
to make them our regularclients. Our loyal customer
base has more than
500 000 people.

Since 2006, Azbuka Vkusa publishes
TASTE, its own culinary magazine for customers,
containing recipes from top chefs, ideas fortravel, interviews with interesting people andfascinating stories about products.

20А WORLD WE LIKE14
INTERNET
TRADE
In 2009 we launched
our own delivery service.
Azbuka Vkusa is one of few
Russian retailers offering
delivery of food, including
such categories as chilled
meat and seafood.

The Company intends to actively
develop Internet-commerce and increase
it to 5% of the company’s turnover. The
potential for the development of Internet
trade remains rather high. Online businessaccounts for about 2% of total retail salesin Russia today (by comparison, in the U.S.
the figure is 5 %; in the UK, 8%).

2115

NEW TECHNOLOGIES
We attach great importance to communications
with consumers over theInternet. Since 2010, Azbuka
Vkusa has accounts in social
networks where it attracts
everyone who is interested
in cooking and food culture.

We actively
develop new services
such as Internet
applications for usersof smart phones andtablets.

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2216

PERSONNEL
Personnel are the locomotiveof our business. Our staff combines
professionalism with a desire
to constantly improve their skills.
Azbuka Vkusa has its own training center, and
the Wine Academy is responsible for the preparationof highly qualified specialists for their own Enoteka.
Azbuka Vkusa formed a group of expert salesmen
to share their experience and maintain high standardsof customer service.

One of the distinctive featuresof Azbuka Vkusa is theirdevelopment of a corporate
culture based on theirperception of the company
as one big family.

To ensure effective communication
between the employees of the central
office and supermarkets, a program called«immersion» was established to give office
staff a chance to get hands-on experiencein the supermarkets.

2317

SOCIALRESPONSIBILITY

We do our best to comply with the highest
international standards of business ethics andcorporate responsibility. Charity and supportof social projects are elements of company’sbusiness philosophy. Long-standing priorities
include care for seriously ill children
and protecting the environment.

Permanent partner: Gift of Life,
Charitable Foundation for Children
with Cancer and Blood Diseases.
Azbuka Vkusa is actively
implementing «green» technologies andenvironmental programs and enlistingcustomers to take part in these projects.
In 2012 Azbuka Vkusa completely
switched to biodegradable packaging.

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