Business

Annual Report 2010 Business

Consumer Product Goods BusinessPeru2010 was another excellent year for our Consumer Product Goods Business in Peru (CMP). Sales increased 7%, slightly above private consumption growth in Peru. With this, CMP doubled its sales in the last 5 years.

The products portfolio continued expanding to satisfy more consumers, and the distribution system continued strengthening its coverage. Thus, in 2010, new products such as: the detergent “Marsella Max”, “Plusbelle” shampoo and “Kraps” cookies were launched. Brands such as “Alacena”, “Bolívar”, “Opal”, “Glacitas” and “Día” grew by more than two digits. Furthermore, many initiatives were applied to reach more clients. For instance, early in 2010, a new regional segmentation was implemented, which, among other things, expanded the scope of the “Aliados” client loyalty program to include more than 500 people. Later, in July, the new exclusive distributor in Tarapoto started its operations. Additionally, Project “KAI” was implemented to standardize the model to serve key accounts and co-distributors.

Likewise, AXUR (formerly MG ROCSA) consolidated its role as co-distributor of Alicorp and received a larger portfolio of products with a nationwide scope. All this, contributed to the core brands increasing their distribution during 2010 so that during the last quarter, the launching of “Plusbelle” and “Marsella Max” reached record coverage figures in the main channels.

Finally, the 2nd Specialization Program in Commercial Management (EGC) for our sales force began at the Universidad de Lima. In addition, district managers and key account managers embraced a new challenge directing workshops on sales techniques for more than 600 sales people throughout the Network of Exclusive Distributors (DEX).

Alicorp

Marketing - PeruPastaWe consolidated our leading position in the category with the 5% sales, doubling the growth in the market. The Pasta business is well established by a solid portfolio of brands consisting of “Don Vittorio”, “Nicolini”, “Lavaggi”, “Alianza”, “Espiga de Oro” and “Victoria”.

We must highlight the outstanding results of “Don Vittorio”, a brand which continues its consolidation as the market leader, and also has improved its sales volume by almost 10% compared to sales the previous year.

In December 2010, “Don Vittorio” was distinguished with the Fem TV Award, as a result of a campaign which emphasized the new role of women in the peruvian society.

DetergentsContinuing with our strategy to strengthen the detergent’s portfolio, our efforts were focused on increasing the value of our brands “Bolívar” and “Opal” and penetrating the lowest tiers with the launch of “Marsella Max” in October 2010.

Accordingly, we achieved outstanding results in the category. For the first time, we gained leadership with a 47% market share by December 2010. “Opal” became the leading brand and “Bolívar” positioned itself second. Furthermore, “Marsella Max con Gránulos de Jabón” achieved 6% market share only two months after being launched.

In May, our brand “Opal” was recognized with the Golden Effie award in the Products category on account of its extraordinary results.

Laundry soapsActions were aimed at strengthening the brand “Bolívar” and increasing the value of our portfolio of lower price brands. Alicorp led the category with a market share of 81%. Our brand “Bolívar” is beyond doubt the leader.

In June, we re-launched our brands “Jumbo” and “Trome”. In December, we launched the new soap “Trome Blanco”, which one

month after it was launched had surpassed by far our sales targets. “Jabón Marsella” completes our portfolio of Laundry Soaps.

Clothing SoftenerThe “Bolivar” brand “Suaviss”, launched in November 2007 to complement the laundry portfolio, achieved a 5% market share. “Suaviss” and its different versions “Flores Silvestres”, “Flores Blancas” and “Caricias de Bebé” have distinguished themselves as the only softeners with aloe vera and cotton extracts that leave clothes soft and freshly scented.

CookiesWe maintained solid leadership with 33% market share, and grew sales by 8% in 2010. This growth was mainly driven by the consistent support to our leading brands, as well as by launching new cookie brands, with excellent results. From the new launchings, “Kraps”, which became the access point for our entrance into the world of cocktail crackers, strengthening our competitive position in the salted crackers segment.

Other launches included: “Glacitas Doble Chocolate”, “Rellenas Negritas”, “+Wafer x 12”, “Rellenas Día Menta” and “Rellenas Fénix Lúcuma”. We also started nationwide distribution of our brand “Día”.

participation in the Peruvian market in the Detergent category, thus becoming the leader for the first time.

47%

72_73

Annual Report 2010

Sauces“Alacena” is a well recognized and respected brand which, during 2010, sustained its leading position in the mayonnaise and ketchup markets with 95% and 47%, share respectively. “Alacena” is considered the best option of canned sauces for house wives.

Furthermore, our chili and rocoto sauces managed to increase their sales platform, as a result of a expansion of the plant capacity and the launch of new television advertising campaigns.

Pets“Mimaskot” continued leading the pet food category and increased sales by 7% compared to 2009. In April, we launched a new television advertising spot of the brand which dramatizes the differences between human beings and dogs, emphasizing dogs need for special food. In October, we launched “Engríelo con Mimaskot”, our first promotion aimed at modern channel consumers, strengthening the position of the brand in this channel.

“Nutrican” posted 46% growth in sales with respect to the previous year, after being launched in November 2009. Throughout 2010, we launched a new TV commercial for the brand, focused on the benefit of strengthening bones and teeth due to the inclusion of maxi calcium. Furthermore, we conducted numerous events and activities in the provinces, and also sponsored pet contests.

Ice CreamIn 2010, climate factors affected ice cream sales, a category which is extremely seasonal, as sales depend on the warm climate and sunshine. Towards the end of 2010, we launched the 2010-2011 summer Lamborgini campaign, which included a focus on our leading brands “Casino” and “Tartufo”, supported by a strong advertising campaign. Other initiatives involved: the innovation in segments where we did not compete before with the launching of the cone “Chococroc”; the strengthening of the sandwich segment with the launching of “Massimo”; and finally, the strengthening of the S/. 1.00 ice cream segment with the launching of “Crocox”, “Frutisimo” and “Mini Tartufo Pecatto”.

Business

Alicorp 74_75

Annual Report 2010

Powder Refreshment DrinksWe sustained the leading position with 62% market share, through our brands “Negrita”, “Kanú” and “Yaps”. “Negrita” is the leading brand, partially due to its position as “the refreshment with the best flavor yielding three liters”.

Early in 2010, we re-launched “Kanú” as “the juice with the best fruit flavor”, repositioning the brand with a best value added for consumers. We also introduced three new flavors: Peach, pineapple and graviola. As a result, “Kanú” became the third most important brand in this category in Peru.

Edible OilsWe are leaders in the market with a 57% share and a solid portfolio of brands: “Primor”, “Primor Premium”, “Capri”, “Cocinero”, “Cil”, “Friol” and “Crisol”.

The development of a sound marketing strategy and efficient management of the pricing strategy generated a 12% sales growth compared to 2009 results, despite the price increase caused by the higher international prices of the raw material.

The fifth version of the Festival de la Comida Norteña (Northern Food Festival) sponsored by Capri reached record

attendance, turning the Festival into a relevant gastronomic event in the region.

Instant DessertsWe increased our leadership in the Puddings subcategory with the brand “Negrita”, and obtained a 72% market share posting a historical record for the company and the brand. Similarly, our sales grew 7% with respect to the previous year, representing a 4% growth in market participation.

In the Jello subcategory, we continued growing by reaching a 22% share and 7% generating more sales compared to the ones of 2009. This increase was mainly driven by “Negrita”, which experienced a record sales year, growing 35% compared with 2009, which translated in turn, to a 19% share of the Peruvian market. These outcomes were mainly driven by several factors, such as: the value of “Negrita” (excellent flavor and high 2 liter yield), our permanent and competitive investment in advertising, and the implementation of the exchange promotion “Vasos y Dulceras” (shared with refreshments in February 2010) in order to increase brand awareness and improve testing levels.

Hair CareTowards the end of 2010, we launched the brand “Plusbelle” in Peru, the first launching in Peru of a brand acquired abroad.

The campaign was driven by a considerable advertising and promotional support from October through December, including door-to-door sales, which generated the “Plusbelle” test in 140,000 homes in Lima and six other cities in the country. This allowed us to position the brand as the best option for the house wives family.

Soy MilkWe count with four kinds of “Soyandina” powder: “Soyandina Rico Sabor” (the leader of the brand), “Soyandina 100% Soya”, “Soyandina Extra Calcio” and “Soyavena”.

In 2010, we focused our efforts in strengthening the positioning of “Soyandina” in the modern channels, the major sales channel for the brand. These efforts involved rotation, tasting and improved display activities.

Business

market participation achieved by “Alacena” mayonnaise.

95%

Alicorp 76_77

Annual Report 2010

Domestic MargarinesWe maintained our leading position in the market with a 58% share through our brands “Manty” and “Sello de Oro”.

“Manty” continued leading the market mainly due to its positioning as “the ideal spread”. “Sello de Oro” re-launched its image and preserved its position as the ideal cooking and baking margarine, with renovated packaging and a more emotional approach to consumers. These actions placed ”Sello de Oro” as the second brand in the category.

Consumer Product Goods BusinessMercosurDuring 2010, we continued our progress in aligning the Consumer Product Goods Business of Mercosur (Alicorp Argentina) within the Alicorp corporate strategy.

We successfully concluded the acquisition of Sanford S.A.C.F.I. y A in May. This company is engaged in the production and sales

of the “Okebon” cookies and represents a milestone in the history of Alicorp Argentina, as it marks our first step into the world of food in Argentina. This opportunity is aligned with the strategy defined under our Vision for 2015. It is important to mention, that since the purchase of Sanford, the results achieved in both growth and return surpass by far our projections.

Similarly, we consolidated the leadership of “Plusbelle” in the shampoo and conditioner category in both, Argentina and Paraguay, in a year when we widened the price gap until positioning ourselves 20% above our direct competitor.

Furthermore, in line with the strategy to develop sales channels, the highest volume growth in Argentina derived from the modern channel. We achieved a 13% sales growth in the largest supermarket chains, obtaining excellent performances in Carrefour, Walmart, Coto and DIA.

In March, we successfully launched the “Top 150” plan, which aims to provide higher visibility to our leading brands in 153 points of sale (PDF) identified as the most representative in Argentina. They include 117 supermarkets and 36 wholesalers distributed between Buenos Aires (79 PDV) and the provinces (74 PDV). A total of 162 merchandisers supported this plan.

Meanwhile, Alicorp Argentina managed the sales of the “Don Vittorio” pasta in Chile, obtaining excellent results. Total shipments (tonnage) grew 19% with respect to the ones of 2009.

Marketing - Argentina LaundryIn Detergents, our brand “Zorro” grew 6% in volume, and thus maintained market share. We invested in advertising in opened television and promotional activities in order to support the brand. For instance, “Descubrí Zorro Biocristales, te va a sorprender” was a two-month campaign launched throughout the Federal Capital and Greater Buenos Aires (GBA) which included daily mentions in one of the leading FM radio stations and product samplings in the streets. Overall coverage involved 105,000 contacts.

Business

participation in the value segment achieved by “Plusbelle”, thus maintaining its leading position in Argentina.

55%

Alicorp 78_79

Annual Report 2010

2010 was a difficult year for the Laundry Soaps category due to unprecedented price volatility for the fats —its main ingredient— and therefore its shortage. However, the trend was reversed and 2010 closed with a 7% volume increase with respect to volumes in 2009, primarily led by the brand “Gran Federal”.

In the Clothing Softener category, which is represented by the brand “Suave Federal”, volume grew 7% compared to 2009 results, owing the boost to the re-launching of the brand at the end of 2008.

Personal CareIn Hair Care, “Plusbelle” grew 2% in volume and maintained its leading position in the value segment with 55% share despite widening the price gap with respect to its main competitor. This growth was a result of strengthening brand image after re-launching the brand at the end of 2009. In addition, we invested in a strong advertising campaign during the February-March 2010 and provided increased support to the points of sale.

In the Cosmetic Soaps category, a 115% increased in the costs associated to fats and the shortage experienced early in the year impacted sales in this category. Nevertheless, we wereable to preserve our position as second in the market.

In turn, the brand “Plusbelle” consolidated its position with 12,3% market share, and the launch of two new limitededitions for skin care: “Manteca de Cacao” and “Mantecade Karité”.

In Deodorants, “Plusbelle” grew 28% in volume with respect to 2009 results. We also increased market share in the modern channel after launching a campaign through promotional sales force presence in supermarkets to provide greater information about the brand.

During September and October, we carried out the umbrella promotion for all “Plusbelle” categories under the name “Una súper mujer merece premios increíbles” (“A super woman deserves amazing rewards”). It was the first time to participate in internet social networks.

CookiesIn June 2010, we added “Okebon” cookies to the brands portfolio in Argentina, thus starting our first incursion in the food category in the country.

The brand is well recognized in the Federal Capital and GBA areas. Argentineans remember Okebon for its long history which began in 1955. The permanence over time, the unmistakable flavor of its milk cookies and the simplicity of the proposal (a product which has been always recommended for babies) built among consumers an image of quality, health, safety and trust which accompanied by a strong emotional connection inspires positive associations to the brand. “Okebon” ended 2010 with 6% volume increase compared to the ones of 2009.

Consumer Product Goods BusinessAndean and Central American Region

The Andean and Central American Region (CAM) grew 4% in sales, as a result of a strategy focused on consolidating current brands and seeking operating synergies. As a result, sales grew moderately, but with significant profitability improvements. Growth was mainly driven by higher performance in the following categories: Pasta (+37%), Cosmetic Soaps (+170%) and Laundry Soaps (+44%), and sound cost management efficiencies, which allowed us to maintain our competitiveness in different markets. We launched “Don Vittorio” in Colombia and Guatemala, re-launched “Mimaskot” in Colombia and Ecuador, and expanded the “Anua” portfolio in Ecuador.

In Ecuador, consumption recovered significantly as a result of higher performance of our leading brands, after restrictive measures on imports were eliminated (in effect from 2009 to early 2010). Furthermore, during the third quarter, we

Business

Alicorp

implemented changes to our commercial model which permitted to improve our efficacy in the management of the different distribution channels (direct service to the entire modern channel and management efficiencies to the wholesale channel nationwide). Thus, 2010 became again a year of sales growth, mainly driven by the performance of “Don Vittorio”, which increased its sales by 46%.

In that matter, at the end of April, we formalized the alliance between Alicorp and Heladosa of Ecuador for the joint development of the Ice Cream category. We improved our competitiveness in the market by doubling the number of refrigerators and enhancing the product portfolio. With this, Heladosa —of which we are current partners— became the second largest icecream producer in the Ecuadorian market.

In 2010, our Colombia operations underwent a consolidation process consisting of key operating efficiencies, through the Prisma Corporate Program. This Program enabled us to generate important savings throughout the organization. Additionally, on the commercial side, we consolidated our existing categories obtaining a considerable growth in the hair care brand “Babysoft” (+40% versus 2009), and launched new flavors in our “Glacitas” and “Xplosion” cookies. During the second half of the year, we incurred in the Pasta category with the launching of “Don Vittorio” nationwide. “Don Vittorio” was launched with a highly competitive value proposal.

In Bolivia, we obtained outstanding performance with 63% sales growth, owing to key strategic initiatives, which where focused on increased advertising campaigns and enhanced management of distribution channels through our commercial partner. All this, had a positive impact on the brands, from which standouts: “Bolívar” laundry soap (with a 45% sales growth in addition to being the leading brand in its category with a 25% share of the market), and “Don Vittorio” pasta (with 125% sales growth compared to sales in 2009).

In Haiti, sales grew 6% and profitability was estable despite a 2-month interruption after the earthquake occurred early in

2010. These achievements were possible thanks to the excellent management conducted with our commercial partner to overcome the crisis.

In the other countries, we grew 20% overall. It is worth noting, the performance of the Central American region in this result, driven by the success of “Plusbelle” and “Don Vittorio”.

Marketing - EcuadorPets“Mimaskot” was re-launched in August 2010, introducing improvements in its formula, new packaging and a new television commercial, “Brillo”. In addition, we launched “Razas Pequeñas” (“Small races”) in order to align the brand´s portfolio through out the region and therefore reduce costs. The brand maintained our regional strategy, exploiting the benefit of “vitality and shiny hair” and highlighting this benefit through strong advertising and other supplementary campaigns. At year end, “Mimaskot” increased monhly sales by 37%.

Hair Care“Anua” positioned itself among the leading brands in the category with 9% share. We launched a new advertising

sales increase achieved by “Don Vitorio” pasta in Ecuador.

+30%

80_81

Annual Report 2010

campaign under the name “Gracias” (“Thank you”), which aims to bring the brand closer to female consumers, showing that “Anua” knows about the importance of hair for women. In September, we launched the new variety “Nutrición Color”, especially developed for colored hair.

Pasta“Don Vittorio” positioned itself as the third leading brand in the Ecuadorian market, reaching a market share of 10% towards the end of the year. These results are primarily driven by sustained volume growth, which allowed sales to increase more than 30% compared to the ones of 2009.

Powder Refreshment Drinks“Kanú”, positioned as “the juice that does taste like fruit”, achieved a 12% market share and placed third in Ecuador. During 2010, investments were focused on key activities to maintain our sales and distribution levels in all our distribution channels.

Marketing - ColombiaPets“Mimaskot” was re-launched in May 2010, introducing improvements in its formula, new packaging and a new

television commercial, “Brillo”. Additionally, we launched “Razas Pequeñas” (“Small races”) in order to align the product´s portfolio through out the region and, therefore reduce costs. The brand maintained our regional strategy, exploiting the benefit of “vitality and shiny hair” and highlighting this benefit through a strong advertising and other supplementary campaigns.

Cookies“Xplosión” grew 32% in sales volume, a success based on the launching of its additional flavors “Arequipe” and “Chocovainilla”, with “Arequipe” being the leader.

In turn, “Glacitas” launched the flavor “Doble Chocolate”, which is gaining significant presence within the brand portfolio. During the second half of the year, we launched an exclusive promotion with “Bichos” —the leading children’s program in Colombia’s opened television. In this way, we can maintain closed contact between the brand and our consumers.

PastaIn August 2010, we launched “Don Vittorio” in order to strengthen our Colombia´s operations. With this addition, we have consolidated Alicorp´s presence in a category which provides high volume and has a significant presence in the family basket.

Marketing - Guatemala PastaIn April 2010, we launched “Don Vittorio” in order to position the product as the best pasta brand. Special efforts were put in the communication strategy and compliance of high quality standards in terms of product, packaging and advertising. The launching was targeted to modern channel consumers.

Powder Refreshment Drinks“Kanú” reached 6% market share, one year afterbeing launched.

In line with our regional strategy, we focused on positioning “Kanú” as “the juice that does taste like fruit”, and introduced

Business

market participation in Industrial Flours to maintain our leadership.

55%

Alicorp

two new flavors (“Rosa de Jamaica” and “Mandarina”), complementing its portfolio with traditional varieties highly consumed in the country. These initiatives were communicated through advertisements in mass media, television and cable network, as well as through tasting activities in the main points of sale.

Industrial ProductsDuring 2010, we posted record financial results and consolidated an organizational structure focused on capturing new value in three high growth industrial markets: Bread-baking, Food Service and Large-scale Industry. We preserved our leading position of our core brands in each market, improved our service offer and launched new products to meet new needs.

Bread Bakery ProductsThis line of business is focused on the search, development and introduction of innovative solutions for our Industrial bakery customers, aimed at transferring new bakery techniques and products to the market. In this matter, industrial bakeries will improve their businesses, hence, bread-baking in Peru.

Two major initiatives were developed to this effect: the consolidation of the Innovation Center for Bread-Baking and Gastronomy, which promoted the training of more than 1,000 bread-baking clients and the development of innovative products for each market segment (new products underwent an acceptance test in Fábula, our bakery model). Additionally, we were able to consolidate a specialized sales team to bakeries nationwide, improving our approach to B2B segments. Furthermore, Alicorp participated as a official sponsor of the Peruvian Bakers Team which participated in the 2010 World Bread Cup in Las Vegas, United States. Thanks to the effort and commitment of the participants, Peru ranked first and classified to the 2012 France World Cup, where it will compete with the 12 best teams in the world.

Industrial FloursFor the second year in a row, Industrial Flours reached historical figures, owing to strong positioning of its brands, sound management of its pricing strategy, the optimization in the purchase of wheat, and the adequate implementation of promotion and client loyalty-related activities.

We preserved our leadership with a 55% market share as a result of aggressive and differentiated strategies, despite the highly competitive climate. Furthermore, thanks to the quality of our products, the technical advice developed for our clients and the permanent communication of new products and tendencies, our core brands “Nicolini” and “Santa Rosa” obtained significant sales increases, as did the regional brands “Inca” and “Victoria”. In this scenario, the brand “Blanca Nieve” was the most affected.

Premixes Our brand “Experta” achieved excellent results, with a 32% volume increase, consolidating our leading position with a 34% market share. This is a result of a strong penetration in new clients, as well as of the launching of the new presentations “Torta de Chocolate” and “Panetón Premium” and of the consolidation of the technical advisors team within the exclusive distributors, a key aspect in the growth strategy of this category.

Industrial Shortenings and MargarinesIn 2010, we faced a challenging scenario, with a market contraction due to high prices as a result of increased costs of raw materials. However, both categories managed to achieve outstanding results.

The margarines category maintained a leading position participating with 69% of total shipments. During 2010, several key activities directed to the Pastry market, such as: training courses, customized advisory and showrooms with clients, under the brand “Primavera”, as well as through mass workshops aimed at “non-clients”, with the support of the brand “Regia” gave successful results for the category.

82_83

Annual Report 2010

Shortenings also maintained a leading position, participating with 46% of total shipments. The primary goal for the category was to reverse the contraction in the market by offering an incentive for the production and consumption of bread products with higher fat percentage in their formula. Through these incentives, we promote the consumption of regional products such as: cachanga and alfajor de miel. Similarly, we re-launched the portfolio by modernizing the image of “Famosa”, “Gordito”and “Panisuave”.

Food ServiceAs part of the growth and innovation process of our Industrial Products segment, in 2010 we created a new commercial structure focused on serving the growing gastronomy market. Under the brand “Alicorp Gran Cocina”, we offered the Food Service market a portfolio of products especially designed for food businesses with superior results and performances. We also offered a specialized distribution system and culinary advisory services that strengthen the value proposal for our clients. As a result, sales volume in the food service business grew 25%, bordering US$ 30 million in sales and encompassing 8,000 clients nationwide.

Large-scale IndustrySales volume in the large-scale industry category grew 43%. We decided to adjust our sales management and technical support after deeply understanding the needs and processes of our clients in the large-scale industry. This enabled us to adjust and launch products to meet their specific needs and, thus, surpass our annual objectives.

We have strengthen our relations with clients in the ”Industrial Partners Program” through specialized forums, guided visits to our plants, newsletters and a new client loyalty program. With these and other efforts, we are confirming our promise to be the best strategic partners for our clients.

Fat Derivatives CategoryIn 2010, we undertook a restructuring and consolidation process in the category, which included: increasing 39% sales volume to the portfolio, adding new materials, which represented an additional increase of 12%. Thus achieving a 51% total volume growth in the category. It is worth mentioning that 15% of the sales come from abroad. Also, we have closed several commercial agreements with clients in China and Japan.

Industrial Oils Category2010 represented a turning point for this category, as we increased sales volumes 13%. In doing so, we reversed the negative trend of recent years after the decline in production of canned fish and emergence of new competitors. This growth was achieved after redefining our target market to include other industries, such as: agribusiness, government food supply programs, bakeries, poultry, sauces, snacks and others.

Omega 3 CategoryIn 2010, we posted a new sales record with a 35% increase with respect to sales in 2009. Also, three new products were developed to achieve greater efficiency in the client’s processes, providng added value and increasing profitability in this category. This result was also driven by a demand growth for Omega 3 worldwide for its beneficial use in cardiovascular and menopause treatments and obesity prevention.

Business

million in invoicing registered by the Food Service Business, representing a 25% sales increase.

US$ 30

Alicorp

Animal NutritionDuring 2010, shrimp prices reached their highest peak in the last nine years. However, this was not enough to offset the impact of costs increase in shrimp feed production caused by: a sharp rise in raw materials, diseases which affected shrimp crops, and shrimp farmers difficulties to access quality credits. As a result, world shrimp production dropped by 5%. Nevertheless, it is projected that for 2012, shrimp production will recover its positive trend worldwide.

Conversely, worldwide fish production increased its volume 8% with respect to previous year due to the development of species with greater volume, such as carp and tilapia.

Alicorp was able to neutralize raw material price increases owing to an adequate buying strategy. This allowed to stabilize shrimp feed prices during the year. We also applied a replacement pricing strategy, which enabled us to increase our margins significantly. Furthermore, the permanent progress in Research and Development contributed to stabilize costs, despite sharp increases in raw material prices.

Year over year, Alicorp increased its sales volume by 7% through its brand “Nicovita”. In the Andean region, sales volume grew 15% compared to sales in 2009, an increase primarily led by the success in Ecuador, where sales doubled, from 20,000 to 40,000 tons per year. Total sales for “Nicovita” grew 20% with respect to the previous year.

Meanwhile, the Fish category grew as a result of a diversification strategy that enabled materializing sales, especially trout feed in Peru and Ecuador, tilapia in Ecuador and cobia in Colombia. This translated into an increase of more than 70% in sales volume for the category.

In 2010, we established Alicorp Trading (Shenzhen) Ltd. Co. in China and obtained import and sales licenses for feed for shrimp, fish and other aquatic species, in addition to ingredients

and additives for aquiculture. Furthermore, we established Alicorp’s office in China and the first injection of capital directed to the operation of the company.

It is worth mentioning that some tools and activities that “Nicovita” implemented in 2010 demonstrated our commitment to the industry. Some of these activities included: The Fourth Annual Nicovita Symposium, with more than 250 participants and six sponsors; a Traceability Website, a tool interconnected with our SAP system which offers reliable information to clients, ensuring the quality and safety of our products; Acqua Efitec 2010, a contest that promotes efficiency in production management, which attracted 68 participants; and the 2010 Workshops Program consisting in permanent client training according to the needs of each market.

84_85

GerónimoAdriazolaCoordinador de Elaboración - Planta Detergentes

“Alicorp me da todo: seguridad, estabilidad y mucha ayuda. No hay pretextos para no seguir superándose”.

GerónimoAdriazolaManufacture Coordinator - Detergent Plant

“Alicorp gives me everything: safety, stability and a lot of help. There are no excuses for not trying to improve oneself”.

CorporativeSupport Areas

Annual Report 2010 Corporative Support Areas

Corporate Human ResourcesSelectionWe strengthened our image in the local and international market as generators of extraordinary experiences, basing our communication strategy on the campaign “Alicorp crece, crece con nosotros” (“Alicorp is growing, grow with us”).

We expanded our strategic alliances with different academic institutions, consolidating ourselves as one of the leading points of reference in the local and international markets.

As part of our strategy to attract talent and position ourselves worldwide, we participated in the leading employment fairs in universities in Peru, Argentina, Costa Rica, Ecuador and the United States.

We consolidated our Trainee program, having prepared young talents to take up new responsibilities and challenges in the areas of Marketing, Production, Technological Development and Finances.

Our challenge for 2011 is to position our image as a multinational company in expansion.

TrainingWe consolidated our Corporate University model, developing new customized business-oriented programs based on the needs of our internal clients. We strengthened and developed new strategic alliances with academic institutions and graduate schools locally and abroad.

Skills Program We redesigned and added new workshops to our Skills program. To date, 179 junior executives have participated in the workshops and courses dictated by local and internationally renowned lecturers.

The primary objective of the program is to offer the participants tools so that they may develop key competencies to enable them to face challenges successfully in their respective roles.

Alicorp

Specialization in Commercial ManagementIn an alliance with the Universidad de Lima, we redesigned our Commercial Management Specialization Program (EGC) for our second class. This program offers commercial and management tools for the sales force at a national level, enabling them to exercise a role as business advisors to our clients.

Specialization in Distribution ManagementOur first class of employees studying the Distribution Management Specialization Program (EGD) graduated in November. This program is developed in alliance with the ESAN University in Lima, Peru. Participants from Lima and other cities expressed their satisfaction as the program benefited them with tactical tools for their management, as well as concepts and strategies to implement improvement projects.

Certificate in Bakery Industry Techniques We developed and implemented the Certificate in Bread-Bakery Industry Techniques in alliance with the Le Cordon Bleu University to benefit our employees in the Industrial Products Business area.

The program seeks to standardize knowledge and develop strategic skills in the bakery industry. We thus strengthened our leading position as a transformational agent of the market.

Specialization in Maintenance Management We developed the Specialization on Maintenance Management workshop together with the Corporate Maintenance Department, with the participation of more than 20 area employees. The workshop reached its objective to offer management tools for a successful performance in their respective roles.

Grow ProgramWe continued with our Grow program, aimed at secretaries and administrative assistants, strengthening key personal interaction and communication competencies, as well as the development of a helpful and successful atmosphere.

Leadership Development ProgramMore than 200 participants at a national level had the Leadership Development Program (PDL) aimed at chiefs, supervisors,

leaders and/or related positions in industrial areas. This successful program strengthened several subjects concerning emotional intelligence, a key factor in managing work teams.

Safety, Quality and EnvironmentWith the Corporate Quality and Safety department and the Communications area we developed the Safety, Quality and Environmental Guide, a document that consolidated the know-how of our industrial areas management systems.

This is an outstanding guide as it has an experience-based and interactive style that illustrates everyday situations among employees and in the industrial plants, using instructional and graphic design resources.

Educational benefitsNew academic institutions joined our Educational Benefits Program that offers our employees and their relatives the opportunity to access discounts in the programs of different universities and institutes.

We also organized, for the second consecutive year, the Educational Fair, with the participation of 38 institutions of renowned academic reputation.

of favorable responses in our first measurement of work atmosphere–employees.

75%

90_91

Annual Report 2010

have been publishing and to the performance of internal audits for a better personnel management.

We implemented the Virtual File system to digitalize and access our employees’ files through our website in a fast and safe manner. This project forms part of the technological initiatives focused on employee self-management.

In the area of social well-being management, we organized the First Forum on Social Well-being Management, where we shared experiences with leading companies in the industrial sector. The knowledge acquired and the contact networks are being used in our programs and daily management.

Likewise, we continued with the Summer Vacations program that benefited 600 of our employees’ children in Lima, Arequipa, Trujillo and Piura. Furthermore, we kept the standard of the annual medical exams countrywide, represented by the slogan “Prevention is our best weapon against disease”.

Labor RelationsThanks to the joint efforts engaged by the plant management offices and the Labor Relations area, the working atmosphere at Alicorp Peru, in the case of blue collar workers, improved 4%, obtaining 63% satisfaction, one point above the average satisfaction percentage of the companies in the food and beverage line of business. To achieve this improvement, Labor Relations carried out workshops on good labor practices aimed at managers and heads of the Supply Chain Vice Presidency.

In turn, to strengthen a harmonious work atmosphere, we entered into three collective agreements with our unions in Lima and Arequipa, complying, at all times, with the labor framework of the collective bargaining.

We implemented the project “Youth Labor Training” that seeks to contribute to the education of young people, developing their capacities and potential through an educational process covering personal and technical foundations. Upon completion of the program, they will receive a training certificate that will increase their employability in the industry.

Compensations and Corporate SupportWe worked on standardizing corporate policies and work plan support with the Human Resources areas of our affiliates abroad.

In order to apply a compensation model in line with the growth strategy to the year 2015, the first stage of the project Job Description and Assessment was implemented with the Hay Group methodology, which provided us competitiveness in the local and international market.

Human Resources AdministrationThe structures of the talks Head’s Role Communication were designed with the Communications and Compensations and Corporate Support areas, to strengthen through Human Resources policies the role of human resource management of the executives of the organization. In Ecuador, Argentina and Colombia, the implementation of this activity has already been coordinated and programmed for the first months of 2011.

In order to guarantee compliance of the labor framework and good Human Resources practices at Alicorp, we published the Guide for Blue Collar Personnel Supervisors and the Apprentice Guide. Both documents add to the guides and policies that we

Corporative Support Areas

people enjoyed the “Christmas of the Alicorp Child”.

4,500

Alicorp

At the 2010 Inter-Plants event, for the first time we had the participation of football delegations from plants outside the capital: Calixto Romero (Piura), Balanceados (Trujillo) and Sidsur (Arequipa), whose members shared with us the experience and excitement of participating in this integrating event.

Organizational DevelopmentIn 2010, we focused on contributing to the development of talent and cultural consolidation within the organization, in line with the growth strategy of Alicorp.

As part of the SMART Management Excellence Program, 30 new managers and directors of Peru, Argentina, Colombia and Ecuador joined the Self-management Platform. During the process, they discovered their leadership styles and preferred management atmosphere.

In addition, we performed the first employee-organizational atmosphere measurement at a corporate level, with the participation of our affiliates abroad. The results obtained were highly satisfactory as Alicorp achieved an acceptance percentage of 75%, which positioned us 12 points ahead of the average of the leading companies in Spanish-speaking countries (average acceptance 63%).

In order to strengthen our open-door policy, we launched the program “Talking to the Management” in our international operations. Also, in order to show clarity with respect to our company’s strategy, we held group discussion sessions at high management levels in all our affiliates.

In Alicorp Ecuador, we implemented the Competency-based Management Model that seeks to obtain a higher performance from our employees and establish our corporate culture.

Through Introductory Workshops with the active participation of the Management, our Ecuadorian employees started to work by competencies under the concept “Release your Potential!”.

EventsIn June, we celebrated in Fundo Mamacona our integration day called “The Recipe for Fun”, presented under a new format called “Talents Show”, where employees from the different plants presented different performances and dances that made a good impression on the audience. We welcomed 2,480 employees, who enjoyed raffles and a show presented by a well-known musical group.

Meanwhile, for the third year in a row, we celebrated the “Christmas of the Alicorp Child” in Parque de las Leyendas. Employees and their families (4,500 people) enjoyed the Christmas show presented by a well-known child entertainer and the new park attractions.

Finally, in December we held our Christmas Party. After the traditional Christmas Mass, our General Manager shared the year end results and expressed his gratitude for the effort displayed by every one of the employees in achieving the goals of the organization. The event drew to a close with the participation of a known dance and percussion group, whose members delighted us with a show full of energy, in which some of our colleagues from the different areas also participated.

CommunicationsIn 2010, we performed an Internal Communication (CI) diagnostic at a corporate level, with the participation of Peru, Argentina, Ecuador and Colombia. A total of 175 individual and group interviews were carried out. This diagnosis provided us information on the actual situation of our Internal Communications and enabled us to lay the foundations of our 2011 communications plan adjusted to our needs and prioritizing interpersonal communication.

We also designed an Internal Communication Model with an international approach that defines roles, responsibilities and subjects to communicate at local and regional level, and which allows for easier and faster coordination of internal communications in all the countries, respecting cultural differences.

92_93

Annual Report 2010

Furthermore, we strengthened our organizational culture and boosted key programs of the company through the development and implementation of more than 70 internal communication plans, pieces and actions, in line with our organizational culture and strategic objectives. The main campaigns undertaken in coordination with different areas were: Clothing Policy, launching of a webpage and online trivia about Competencies-based Management, Road and Pedestrian Signs Policy, etc.

In addition, in order to strengthen our communication channels with plant personnel, we implemented the optimization and standardization project of our plant bulletin boards countrywide, making it easier to read and put in order our organizational notices, and making them more visible and attractive.

Finally, we developed a new brochure and an institutional multimedia video to present our company to the different stakeholders in a totally updated way.

Social ResponsibilityIn Alicorp, the Social Responsibility model is part of the business strategy, promoting economic, social and environmental development of the stakeholders we relate with and based on

ethical and transparent relations and on the execution of social investment programs focused on early childhood development. We developed a mapping of our stakeholders to learn about their expectations in relation to Alicorp’s management of social responsibility. Furthermore, we continued sharing our experiences and success cases in different national and international forums such as: -The Private Sector Solutions in Nutrition, organized by the Inter-American Development Bank (IADB), the Global Alliance for Improved Nutrition (GAIN) and the Femsa Foundation in Brazil-The Peruvian Congress-The forum organized by the Nutrition Program of Universidad Villarreal-The Nutrition Program of Universidad Peruana de Ciencias Aplicadas (UPC)-The International Refresher Course in Nutrition, CIANA 2010, organized by EsSalud-The forum organized by the Peruvian-Spanish Chamber of Commerce -The Social Responsibility Forum of the National Society of Industries (SNI)-The forum organized by the National Industrial Training Service (SENATI)

With regard to social investment, we had the following initiatives:

Television campaign “Alimenta el Futuro”(Feed the Future)In May 2010, we launched the first stage of “Feed the Future”, a television campaign for child nutrition aimed at all Peruvian families with children under five and pregnant mothers. The campaign was broadcast through five channels of open signal television using commercial spots to promote good eating habits, such as balanced food for infants, eating during pregnancy, the importance of breastfeeding, supplementary food, physical activity, proper hygiene, etc., and to end food-related myths. These suggestions are in line with the recommendations being promoted by the Ministry of Health.

After transmitting the campaign during 21 weeks, we reached 84% in comprehension of messages issued, the best received

Corporative Support Areas

(from 48%) increased the proportion of mothers who feed their children mainly with first course meals instead of soups.

To 62%

Alicorp

being those with advice regarding the importance of physical activity in children under 3 years, babies’ first food and the importance of washing our hands. At the beginning of the campaign, 65% of the mothers thought physical activity was important and by the end of it, this perception had grown to 82%1. Furthermore:-We registered significant progress in good consumptionpractices with regard to the main course: we were able toincrease from 48% to 62% the proportion of mothers whostate they feed their children only, or mainly, with main coursedishes instead of broth.-We strengthened knowledge in mothers and achieved a10% increase in the awareness of the importance of nutritionduring pregnancy.-With regard to “breastfeeding”, the most relevant changewas achieved in their learning that they must give maternalmilk to children up to 2 years old. In the baseline study,only 42% stated being aware of that, and by the end, theproportion grew 12 percent points to 54% of the mothers.-The percentage of mothers considering that for theirchildren to be healthy it is important to feed them with babyfood once they are six months old increased from 69% to 81%.-The percentage of mothers that are aware of the importanceof physical activity grew from 65% to 82%.

1 Source: AF IPSOS Apoyo Opinión y Mercado campaign evaluation, November 2010

Campaign “Healthy Radio” “The Healthy Radio: Community radio and child nutrition guide” reached more than 150 radiobroadcasters in 2010 in rural areas of Abancay, Andahuaylas, Ayacucho, Cusco, Huancavelica and Puno, who received training in the use of the guide to improve their radio techniques and become opinion leaders in child nutrition subjects in their communities. The guides are translated to Quechua and Aymara.

“Recover”For the sixth consecutive year, we implemented the child nutrition educational program “Recover”, in joint efforts with Cáritas of El Callao, in five disadvantaged areas of Pachacutec, Ventanilla. The project, which began in September 2010, seeks to benefit 800 children and 500 mothers in the area. Since it

began, in 2005, it has benefited close to 3,400 children and more than 1,900 mothers.

“Los Niños de Alicorp” (Alicorp Children) Volunteering Program Our internal volunteering program (from our employees, for our employees) had the collaboration of more than 80 volunteers, who dictated educational sessions covering nine important topics concerning nutrition and development of children under five were addressed. Furthermore, three nutritional cooking workshops were conducted with the support of our innovation center “Fábula” and our nutrition consultant Milagros Agurto. In addition, two clinical campaigns were conducted for the children of more than 110 families of Alicorp

It is worth mentioning that our internal volunteering program “Los Niños de Alicorp” obtained first prize in the category Collaborators of the 2021 Social Responsibility and Sustainable Development Award granted by Peru 2021.

Donations ProgramEvery year, Alicorp promotes a donations program for several institutions. We also contributed with sustainable development projects of the Romero Foundation, such as the program “Cuatro x 4” broadcast by two open air channels.

Good Employers Association (ABE)We renewed our commitment with the Good Employers Association (ABE) revalidating our certification as Founding Members. This distinction guarantees that Alicorp meets its legal obligations (salaries, social benefits, medical insurance) and with good labor practices in performance, training, recognition and others.

Furthermore, we actively contributed with the action plans of five new suppliers who seek to join ABE in 2011.

Productive chainsWe continued one more year with the development of the durum wheat production chain, which due to the great demand in the food industry, offers a profitable crop growing alternative for farmers. With an inclusion approach, the chain transferred

94_95

Annual Report 2010

a technological package for farmers to make the most of the seeds yield. One of the most important results was achieved in the Citacocha Valley, Cajamarca, where 100 hectares of durum wheat were sowed, which yielded 3,000 kilos per hectare, when only 1,000 kilos are usually obtained per hectare.

Over the years, the project has benefitted more than 2,500 families and has invested more than S/. 2 million (more than US$ 700,000) to optimize the return for farmers in areas of extreme poverty.

Corporate Supply ChainProductionThis was an excellent year for all the plants of Alicorp Perú, achieving a lower conversion cost (-5%). Furthermore, we implemented Prisma initiativesthat obtained savings of S/. 14.531 million (US$ 5.160 million) and production performance increased by reducing specific use of manpower by 13.3% with respect to 2009.

Pasta Plants LimaWe implemented the Prisma initiatives, which allowed savings amounting to S/. 1.125 million (US$ 0.400 million), and a 17% reduction of PNC (Non Compliant Product) compared to the previous year. Meanwhile, the PFA and PFL plants increased their production 13% with respect to 2009, and we obtained production records in August and September. Line 1 was implemented at our PFA to meet the demand increase for Cortados (Short noodles), producing 914 additional tons during the year and we installed two state-of-the-art packers at the PFL, with which we improved the packing quality and obtained greater production flexibility. Finally, we also started the tolling service for Carozzi, of Chile, in August.

CopsaThrough our Prisma initiatives we achieved annualized savings of S/. 6.487 million (US$ 2.304 million). The new Sauces plant started operating in October, with an investment of

S/. 15,680,000 (US$ 5.6 million), and we achieved historical production records in Oil bottling, packing of Shortenings, Margarines, Sauces and Mayonnaise. We also increased manpower production performance by 10%.

Pets LimaThrough improvement techniques and with the unification of products for the different markets, the Galgo project, of Lean Manufacturing, increased its effective production capacity by more than 50%. We might add that energy consumption was reduced 15% per ton and manpower 10%, with respect to 2009, and according to demand, we were able to easily produce a volume of 16.5% more than in 2009, without working Sundays or holidays since September.

The packing loss decreased 40% with respect to 2009, while the percentage of non-compliant product was reduced down to 1.68%, the lowest value in the last 3 years.

DetergentsWe made significant investments in the Detergents plant to increase the production capacity and we installed a slurry preparation line, an air lift system and a sleeve filter, which, added to the investment made in 2009, increased the detergent blowing capacity by approximately 40%. In the packing area, we also installed three Masipack packing machines, which provide greater capacity and flexibilityfor large bags, thus allowing us to break the production record, 19% more than in 2009. We also reduced the conversion cost, which represented savings of S/. 5.6 million (US$ 2 million).

Our Prisma initiatives achieved savings of S/. 0.615 million (US$ 0.218 million). At the same time, we also streamlined the use of electric power, achieving 14% less consumption per ton, and we succesfully reduced clients’ claims by 70%.

Calixto RomeroThe sales of oleine products achieved 35% increase compared with 2009. We have to say as well that the actual oil loss was reduced at the Neutralization plant. In 2010, we had zero PNC and zero interruptions and were able to comply with 100% of the products required by our clients.

Corporative Support Areas

Alicorp

Ice CreamLast year we started to produce “Chococroc”, the first ice cream on a biscuit cone produced at the plant, thus diversifying our range of products, and we managed to lower the PNC percentage, from 1.2% in 2009 to 0.15% in 2010. We also took different actions for Quality and Production enhancement and we achieved savings of S/. 0.574 million (US$ 0.204 million) with respect to 2009.

SidsurWe obtained BASC certification (Business Alliance for Secure Commerce) and renewed our DIGESA (Health Bureau) certification. The Prisma initiatives implemented allowed us to obtain the following savings: -Capture 2010: S/. 820,000 (US$ 290,000 million).-Annualized: S/. 1,100,000 (US$ 390,000 million).

We also repaired internal roads and main access to the Sidsur Plant and the Arequipa Mill, and built a gatehouse and refurbished the façade. Meanwhile, we implemented fluidizing systems for bulk noodle, flour and sugar in the cookie production and forage storage systems in silos, thus avoiding third shift packing. We also saved more than 140,000 kWh in electric power consumption with lighting enhancements, streamlining of transmissions at the Victoria Mill and replacement with high efficiency motors. Furthermore, we expanded the wheat storage capacity in the Arequipa Mill silos (1,500 additional tons) and started using the Lean Manufacturing management methods in the Premixes plant and TPM (Total Productive Maintenance) up to step 3 in the cookie packers. Finally, we executed a computer-aided surveillance and control camera system to monitor personal access to the property, as well as a fiber optic data network and data communication between the Sidsur and Arequipa Mill properties, using the broad band of Group Alicorp.

Nicovita TrujilloThe Plant at Trujillo had a record annual production comprising 9.128% growth with respect to 2009. Also, Prisma initiatives achieved annualized savings of S/. 0.913 million (US$ 0.324 million). We strengthened the development of feed for trout and exotic species, such as paiche, pargo, cobia, etc., with very good results among our clients. To conclude, we obtained

our BASC re-certification and certification by the National Institute of Civil Defense (INDECI).

Cookie Manufacturing Plant TrujilloWe achieved a 15% production increase with respect to 2009, with a historical production record.

Cookie Manufacturing Plant LimaThe launching of six new products contributed to the production increase (the importance of innovation and the development of new products were emphasized). In turn, PNC decreased 18% with respect to 2009.

Instant Products Plant BreñaWe diminished losses by 40% with respect to 2009, closing the year with 0.15%. Furthermore, we completed our third year without disabling accidents, accumulating, asof December 2010, 1,136 days without accidents; and at November 2010, we recorded a 3% decrease in conversion costs, compared with 2009, surpassing our target.

Callao MillWe obtained our safety certificate from INDECI, and we set in motion the Fire Fighting Network and the Diagram B

production increase in the Pasta Plants Alianza and Lima with respect to 2009.

13%

96_97

Annual Report 2010

automation system. In addition, our improvements proposal system had the participation of 100% of our plant personnel.

Santa Rosa MillWe obtained certification for our Tri-Norma System (Quality, Environmental and Occupational Safety and Health Management), as well as Civil Defense certificates issued by INDECI for the four properties. We also built and installed sound-proof booths for high power motors and lowered the outside noise level.

Faucett MillA milling record was achieved in 2010 and in September we implemented the MFA input warehouse. Likewise, we increased the PMX plant production capacity.

Trujillo MillWe were issued our safety certificate by the National Institute of Civil Defense of the Regional Government of La Libertad; in addition to reducing the dust in the packing area by 70% after modifying the machinery’s aspiration system. Furthermore, we changed the carousel packing system and the control sieve, improving packing reliability. Lastly, we streamlined the packing area, achieving continuous operation of the Fawema machine for the production of 1-kg packs of self-rising flour.

Paita MillThere were no accidents in 2010, and for the second year in a row, external rejected and returned products due to founded quality issues totaled zero. In August, we had historical milling numbers.

ArgentinaMoron PlantWe took over the control of the “Okebon” cookie factory, with its industrial plant located in Moron, achieving an 8% increase in four months production and 4% decrease in process losses.

San Justo PlantTowards the end of the year, we made effective the external packing change of the powder detergent with the implementation of new equipment for fully automatic packing of large bags, which will contribute valuable savings in the cost of this product.

Garin PlantA team of operators of the Garin Plant, which obtained the best results within the EPI Program (International Plusbelle Equipment) which consists basically in the development of self-controlled equipment, was awarded a trip to Lima, where they visited several plants and had the opportunity to get acquainted with the best manufacturing practices, following which they made a presentation for their colleagues back home.

DistributionThe projects presented by the personnel enabled us to achieve annualized savings amounting to S/. 1.550 million (US$ 0.550 million). Altogether, they submitted 57 savings initiatives, 70% of which were implemented in 2010. Among them we must mention several transportation optimization ideas, such as palletized deliveries, agreements with clients for long-distance shipments and changes in the distribution network, as well as improvements in the logistics of the Ice Cream category through the “Just in Time” implementation with the mobile channel and the resizing of our logistic capacities. In Consumer Product Goods, inventories were streamlined in Lima. In Colombia, several streamlining strategies were executed towards improving the logistics performance.

Corporative Support Areas

sales increase of oleine products in Calixto Romero with respect to 2009.

35%

Alicorp

In line with the growth of our Consumer Product Goods and Industrial Products segments, we increased our transportation and warehouse capacities countrywide through negotiations with suppliers.

With regard to the expansion of our fleet, we implemented 50-position palletized trucks for transportation from the plants to the distribution centers, we acquired two tanker trucks to transport flour in bulk between plants and to industrial clients, we negotiated with transportation suppliers to acquire 18 additional trucks for deliveries to clients and we continued with the replacement of the oldest trucks in the fleet.

In the RANSA distribution center, we formed a work team with the Planning personnel to reduce and streamline inventories with several initiatives. Thus, we implemented the project “There is room in the middle” and managed to reduce additional space needs to only 2,000 positions.

In Trujillo, we increased the storage area by 30%. In Cusco, we inaugurated a 6,000 sq m distribution center, with direct access to train tracks and docking for trucks, and implemented a storage area of 1,000 sq m at the Industrial Products distribution center.

As part of the initiatives to improve the delivery service to clients, we separated the planning management and delivery programming for wholesalers from the rest of the clients, establishing different service requirements per distribution channel and client segment. In the case of the supermarkets channel, we are in the process of negotiating centralized deliveries for each chain.

Together with RANSA, we negotiated the renewal of leased combustion-driven lifting equipment, obtaining greater benefits compared to the previous contract.

In Ecuador, we resumed direct distribution to our clients (before, we channeled distribution through an exclusive distributor). This change implied a new design in the operations, the implementation of a distribution center with Ransa Ecuador, implementation of transportation providers and the establishment of new service standards in the delivery of orders.

In Colombia, we achieved significant savings with the start up of different initiatives like the reduction of inventories, the renegotiation of warehousing and freight rates, the negotiation of centralized distribution with supermarket chains, improvement in the coordination of shipments and transfers from the distribution center to an area with substantial tax incentives.

In the Animal Nutrition business, we inaugurated the new warehouse and sales office in Tumbes. With this, we improved warehousing conditions and the image of the brand “Nicovita” in this shrimp growing area.

With regard to the traceability management system, in addition to the GS1 seal re-certification, we implemented the batch-based inventory control in our warehouses in Colombia, a condition essential for the launching of the traceability internet site, a tool that enables clients to verify online the characteristics and quality of the finished product batches.

With regard to projects, direct dispatches from the plant to important clients in Ecuador began, cutting lead times and generating savings for the company and the clients. Furthermore, in Colombia, we implemented the direct dispatch project from container to motor vessel, generating savings in the chain. Meanwhile, the first fish feed exports on pallets began, meeting the demands of one of our main clients in Panama.

As part of the technical advice program of the NNA, reputable warehousing practice workshops were conducted in Ecuador for the personnel of our main clients’ farms. This is to raise awareness of the farm staff about the importance of proper handling and care of the food during storage and transport.

QualityThis was the first year in which our different management systems (Quality, Environment and Safety) passed the audits for ISO 9001, ISO 14001 and OHSAS 18001 recertification simultaneously, completing an important stage of the integration process of these systems.

98_99

Annual Report 2010

We kept the ISO 9001 quality certifications for our plants and distribution area. In addition, the Lamborgini Plant prepared its quality system to be certified in 2011.

In Trujillo, the Balanced Food Plant obtained the CE 834/2007 certification from the European Economic Community and kept its Naturlan certifications for organic food and Global Standard One for traceability. At Calixto Romero, we recertified the quality system with the USP (United States Pharmacopeia) for nutritional inputs.

At the Copsa Plant, we kept our Kosher certification (standard that regulates food products for the Jewish community) for our oils.

EnvironmentIn 2010, we obtained ISO 14001 certifications for the Callao, Santa Rosa and Faucett Mills, that add to the Copsa Plant, Lima and Alianza Noodle Plant, Sidsur and Calixto Romero Plants.

In turn, the Balanced Food plants of Trujillo and Lima, and the Detergents plant, implemented environmental management systems towards obtaining certification in the first months of 2011.

In addition, based on the selection and upgrading of equipment units, our plants generated savings in their electric power consumption:-Rimac: 353,000 kWh.-Copsa: 273,000 kWh.-Lima and Alianza Noodle Plant: 120,000 kWh.-Sidsur 142,000 kWh.

At Copsa, we defined the purchase of a modern plant for treatment of effluents, to improve industrial discharges in compliance with international standards.

Industrial SafetySumming up the outcome of the Occupational Safety and Health Management in 2010, at Alicorp we must state that the total number of accidents was the lowest registered in the last four years, with a frequency rate of 3.37 (disabling accidents per 1,000,000 man hours), a severity rate of 66.04 (days lost per 1,000,000 man hours) this being the third lowest value in the last nine years and an OSHA Incident Rate of 1.70 (total accidents per 200,000 man hours), the lowest in nine years.

Meanwhile, we successfully completed migration of our Occupational Safety and Health System based on Loss Control – DNV and on OHSAS Standard 18001:2007, obtaining certification for our system under this international standard, while facilitating integration with the Quality and Environmental Management area.Another achievement was the certification by INDECI of our Callao Mill, the Manco Cápac Warehouse (September) and the Santa Rosa Mill, including the customs warehouses and the Wheat storage yards (August).

During 2010, we invested US$ 400,000 in safety systems and equipment, for example, for the start up of the fire fighting network at the Callao Mill (as well as its emergency alarm and lighting system); the implementation of signage and emergency lights at Copsa; the installation of a fire system network and alarm system in the Instant Products plant (Breña); the purchase of self-contained air equipment units and radios for our plants and fire-proof doors for our Central Distribution Center, a cooling system in ethanol tank, etc.

Corporative Support Areas

thousand investment to strengthen and improve security systems and equipment.

US$ 400

Alicorp

Our BASC Management System also gave us good results when it achieved recertification for our Animal Nutrition plants in Trujillo (April), the Alianza Noodle Plant (November) and Calixto Romero (March) and our headquarters (December). In turn, we completed satisfactorily the external BASC auditing process for the Callao and Sidsur Mills (December), hence we will be recommended to the World BASC Organization for the certification of these plants. In addition, we consolidated with the service providers the homologation process concerning the legal compliance with Supreme Decree 009-2005-TR that requires that all companies that offer services have in place an Occupational Safety and Health Management System, this being a strict requirement of Alicorp in respect to third parties offering their services in our facilities. Planning 2010Corporate Planning in 2010 had a good performance, in particular with regard to consolidating the demand process in Consumer Product Goods Business Peru, which enabled us to achieve approximately 90% accurate forecasts in all Categories, reaching 94% in some months. At SKUs level accurate forecasts reached 71%. These values positioned us among the best company results in an international benchmark.

With regard to Exclusive Distributors, a resupplying system was implemented in Lima with fixed inventory by SKU, which improved the supply process to them. Adaptations of the planning processes at corporate level were also started in Alicorp Argentina, having implemented the SAP Planning Modules related to MRP and MPS, in addition to the GPT transportation planning and the demand process, similar to the one applied in Peru.

The same adaptions were implemented with the Animal Nutrition Business, where an SCM 5.0 System was installed with the Optimizer module, to start the application of demand processes as the one used in Consumer Product Goods Business Peru. In the Industrial Products Business, we set in motion the segmentation and definition of the products portfolio by office, which will enable us to focus the sales management and the logistic planning management. In the Consumer Product Goods Business Ecuador, we consolidated

the Planning Organization, which offers us the possibility to replicate the way we work in Peru, towards achieving significant inventory reductions and stock outs.

Purchases and Foreign TradeWe consolidated our Purchases and Exports management, in close coordination with the different areas that require purchases and we participated in new products projects.

Furthermore, different strategies were developed that reduced costs and generated other benefits in the amount of US$ 7,480,000 in the year. In Local Purchases, we negotiated with suppliers in different items such as packing, inputs, spares and miscellaneous supplies; we achieved synergies for the purchase of nine similar inputs with our subsidiaries in Argentina and Colombia; furthermore, we made joint purchases with Grupo Romero and significant savings were achieved under the leadership of Alicorp in the negotiations for different items purchased in large volumes.

In Foreign Trade, the main achievement was the reduction of international freight rates. In Imports, we maintained the “good taxpayer” category, which enabled us to make most of our customs clearances with a “green channel”, with the immediate release of our merchandise, avoiding extra costs. We achieved Prisma savings on the purchase of spare parts and, with the participation of Indesmar, were able to recover specific import duties on raw material that had been overcharged in 2001.

We achieved closer contact with public agencies such as the National Institute of Agricultural Health (SENASA), resulting in improvements in the inspection of raw material shipments; with the General Bureau of Environmental Health (DIGESA), for a better treatment of imports of finished product samples; and with the National Port Authority (ENAPU), with whom we initiated a negotiation to lower rates.

In Exports, we managed to cut costs in our operations in border areas by loading and stowing directly into containers, as well as through the direct entry of our cargo into DP World at the

100_101

Annual Report 2010

port of El Callao and at Terminales Portuarios Euroandinos in Paita. We also managed to reduce from 18 to 14 days the transit time of port activities and official inspections in the ports of Buenaventura, Cartagena, Machala and Guayaquil, and obtain discounts in the international logistical cost to these destinations.

Corporate FinancesTreasury and Capitals MarketIn 2010, Alicorp continued consolidating its solid financial situation. We closed the year with a net financial debt of US$ 151.8 million and an EBITDA of US$ 218.9 million, reflecting our optimum capacity to continue funding our expansion. Furthermore, we achieved efficiencies, both financial and operative, which contributed to a significant reduction of financial expenses and to the strengthening of our working capital.

Operational TreasuryAs part of a streamlining strategy process applied in several of the companies of Grupo Romero, we transferred our operational treasury processes to Priox, the new shared service company of the Group. The transfer process was completed in July 2010, which represented an important milestone in our objective to increase efficiency in the use of our internal resources.

Confirming OperationsIn 2010, we increased the use of our factoring lines for suppliers to US$ 27.5 million, channeling our operations through different financial institutions. This system enabled us to offer our suppliers immediate payment for their invoices by discounting them. With these suppliers we were able to access competitive interest rates. In turn, our working capital strengthens as a result of increases in the payment period.

FinancingWe continued improving the conditions of our loans by significantly lowering the average rate of our short-term operations for working capital. This was a result of our efforts to

engage with local and foreign banks, and adequate conditions in the international market.

With regard to our medium-term operations, we refinanced the US$ 60 million loan we had with the Royal Bank of Scotland (initially ABN) with two local banks, lowering the financial cost substantially. We also achieved a considerable reduction of the rate of our corporate bond issued in September 2009, owing to two rate and currency hedging operations made with two international banks. As a result of these actions, we reduced our annual financial expenses by 36.6% with respect to 2009.

Credit RiskIn May 2010, the credit risk rating of our corporate bonds was increased again from AA- to AA, this time by Apoyo & Asociados, which confirmed our financial strength. In 2011, we will continue working to achieve a better rating.

Trust Fund At the end of November, we liquidated the trust fund established in 2004, which was used to issue securitized bonds that same year and were completely repaid by the end of 2009. As part of this process, Molinera Inca, a subsidiary of Alicorp, obtained a medium-term structured loan for US$ 40 million for the purchase of the securities held by the equity. This operation, entered into with an international bank, included a rate and currency hedging structure, achieving a very competitive funding cost.

Hedging OperationsDuring 2010, we were very active in rate and currency hedging operations. With these structures we not only reduced the foreign exchange and rate volatility risk, but also the funding cost. As of the closing of the year, the financial structure of Alicorp presented very low exposure to volatility in rates and quite moderate exposure to exchange rates, while managing to lower our funding cost.

Management ControlThe Lima Stock Exchange recognized Alicorp, for the third year in a row, as a member of the Good Corporate Governance Index, due to the result of the rating obtained in Good Corporate

Corporative Support Areas

Alicorp

Governance Principle compliance. For Alicorp, a good rating indicates to the local and foreign market that we are committed to the principles of responsibility towards shareholders, showing that the company is governed with transparency, trust, fairness and social responsibility.

In order to improve the current return levels, we worked with the Prisma expense reduction program, the execution of which has generated, since it was implemented in 2002, savings of more than S/. 169 million (US$ 60 million) and during 2010, it enabled us to identify 161 initiatives with annualized potential benefit of S/. 28 million (US$ 10 million) and to follow up 169 initiatives with annualized potential benefit of S/. 34 million (US$ 12 million).

In our role as strategic partners in business, the Activities Based Costing System (ABC) is a tool that favors the analysis of a comprehensive vision of the business. During 2010, we kept on innovating in the internal process as part of our permanent improvement, making ABC an active participant in the development of our businesses and participating in different scenarios in order to simulate the performance of new category projects, groups of clients and commercial partners.

AccountingThe new General Corporate Accounting Plan was implemented in February.

Seeking to optimize the accounting process, the accounting and tax duties were transferred to the new shared service company of Grupo Romero, Priox. This process was completed in July 2010.

We also started the machinery and equipment inventory at the industrial plants, for subsequent appraisal of the fixed assets within this heading, as well as in Buildings and Land.

Central Administration Always seeking to offer the best service to our internal clients, during 2010 in the Central Administration area we achievedthe following:-We closed the sale of six properties throughout the country that were not in use any more, in the amount of S/. 28.6 million

(US$ 10 million) and we sold obsolete material for S/. 4.2 million (US$ 1.5 million) and obsolete assets for S/. 3.1 million (US$ 1.1 million).-We developed enhancement projects, achieving annual savings for S/. 0.480 million (US$ 0.170 million).-In the Collecting area, 6,041 tons of solid residues were collected, in our efforts towards environmental protection and market safety, for subsequent sale or disposal.-Furthermore, we implemented 16 remodeling, reorganization and furnishing works for our Consumer Product Goods Business Peru, Industrial Products Business, Corporate Human Resources, Corporate Marketing, Animal Nutrition Plant in Trujillo, Industrial Safety at the Copsa Plant, Finished Products Warehouse at Fideería Lima, Calixto Romero Plant, Paita Mill, Hydrogen/Refinery Plant, Glycerin Plant, Sidsur and the Copsa Plant auditorium, as well as the Nurse Station at our central facilities.-We also undertook the construction and remodeling of locker rooms and toilet rooms at the following plants: Faucett Cookie/Mill; Fideería Lima Plant; Animal Nutrition Plant, Trujillo; Breña Plant; APT Fideería Lima, and for our collection and third party personnel.-In turn, in order to offer greater comprehensive security to our offices and plants, we implemented electronic security systems, alarms, electric fence and closed TV circuits in several of our plants in Lima and outside Lima, and remodeled our entrance

million was our EBITDA result.

US$ 218.9

102_103

Annual Report 2010

hallway and visitors reception desk, among other things.-Implementation of the Perimeter Closed Television Circuit System at the Calixto Romero Plant in Piura, the Animal Nutrition Plant in Trujillo, the Sidsur Plant, and the Callao and Santa Rosa Mills.-Implementation of breathalyzers in all plants in the provinces.-Implementation of access control equipment for personnel (metals detector) and vehicles (inspection mirrors) in all Alicorp plants and buildings countrywide.

SystemsDuring 2010, we worked in upgrading the SAP system to the ECC 6.0 version, starting live use of this version in August in Peru, Ecuador and Colombia and in September in Argentina.

With the Finances Team, we worked on the Inter-bank Payment System to Suppliers and set in motion the new General Corporate Accounting Plant, the digitalized accounting books, the new Liquidity Planner and the Identified Customer Collection system.

In commercial and customer service subjects, we implemented the Contact Center System of SAP in Peru and worked on implementing the sales force of the Industrial Products segment countrywide.

With regard to our Exclusive Distributors (DEX), we installed the Telephone Sales System and the new Incentives System for their work force and Commission Payment System for the DEX.

In Distribution, we installed the Warehouse Management System in the Cookies Finished Products warehouse and established batch management at the CDC.

In Alicorp Argentina, we implemented the Quality Control System (QM), the Plant and/or Stalled Equipment Control System (OEE) and the Planning System (MSP/MRP and GPT).

In Human Resources, we established the digitalized file for workers in the headquarters, classifying digitalized workers’ documents and offering control reports by type of document, worker, effective date, etc.

We established the Talking to the Management System to follow up on discussions of the management offices with their next level staff. This system handles the minutes of the meeting and assists in the programming of the meetings.

In Supply Chain, we implemented the Batch Management (Traceability) in the Industrial Products Segment (Pre-Mixes), the Optimization model for NNA in the national and international shrimp feed network, the Traceability Website for NNA-Shrimp and NPI-Omega Clients and the PM Maintenance and QM Quality modules in all Molinca plants.

We also implemented the QM Quality module in Alicorp Colombia.

At Alicorp, we joined the corporate initiative of Grupo Romero regarding the creation of Corporate IT, incorporating our information technology staff in this new initiative during the second half of 2010; this will favor efficiencies in the acquisition of systems services and sharing best practices.

Investor RelationsIn September 2010, we created the Investor Relations Unit with the primary purpose of achieving higher visibility, effective two-way communication and strong relations among Alicorp, the

Corporative Support Areas

million of savings generated by Prisma expense reduction program.

US$ 60

Alicorp

financial community, and other constituencies. So that, Alicorp obtains a fair market valuation, which reflects adequately the situation and potential of the company.

Performance DataThe chart below shows the shareholders´ annual return for common and investment shares of Alicorp S.A.A. for the past five years (as of December 31st) , and compares it to the annual return of the Lima Stock Exchange Indexes (IGBVL and ISBVL).

Source: Lima Stock Exchange (www.bvl.com.pe)Note: The annual return has been determined using the first and last business day of each year as range.

Shareholders’ Meeting The Annual Shareholders’ Meeting was held on March 30th, 2011, at the Headquarters of Alicorp S.A.A.

Common ShareVoting shares Listed in the Lima Stock Exchange under the symbol: ALICORC1

Investment ShareListed in the Lima Stock Exchange under the symbol: ALICORI1

Contact InformationInvestor RelationsMaría Alejandra de la PuenteInvestor Relations Officer(511) 315-0800(511) 315-0809

For matters concerning information on stock ownership and payment of dividends, please contact the Securities Department at (511) 215-4130 or (511) 226-8368.

Alicorp S.A.A. on the InternetCompany website: www.alicorp.com.peAnnual Report Online: http://www.alicorp.com.pe/espanol/accionistas.html

Youtube Company Videos: Institutional video:http://www.youtube.com/watch?v=VwwqQkjPC1c

Virtual tour of the cookies plant: http://www.youtube.com/watch?v=ff-VX4Bt-Y8

Virtual tour of the sauces plant:http://www.youtube.com/watch?v=zPZpx8ifZHc

Virtual tour of the oils plant:http://www.youtube.com/watch?v=sKRzTtoK6LE

Recover Programhttp://www.youtube.com/watch?v=5YfIBQ1TgGE

Durum Wheat Programhttp://www.youtube.com/watch?v=WVcVnWpaqUM

Shareholders’ annual return5 Years (2006-2010)

104_105

Henry OlguínJefe de Cuentas Claves - Negocio Consumo Masivo Perú

“Alicorp nos hace sentir en casa y nos cuida, a la vez que exige a los trabajadores entrega y profesionalismo”.

HenryOlguínKey Account Chief - Consumer Product Goods Business Peru

“Alicorp makes us feel at home and takes care of us, and it also expects dedication and professionalism from its workers”.