Pet Center Comercio e Participações S A : Videoconference Transcript Acquisition Zee.Dog 08/03/2021

PETZ

ZEE.DOG ACQUISITION VIDEO CONFERENCE EDITED TRANSCRIPT

AUGUST 3RD, 2021

Mr. Sergio Zimerman: Good morning to everyone. Thank you very much for your time to be with us today. And we're very happy, great deal od satisfaction, pleasure that we come here to announce the join, joining of forces of Zee.Dog with Petz, the most emblematic transaction in their pets' world in the whole world. It's a transaction which brings together absolutely complementary competences.

Next slide, please.

Here is a movement, as I mentioned, which is unique of transformation and consolidation in the pet market, when we put in our vision being worldwide… recognized worldwide as the best ecosystem in the pets' world by 2025. Here we take a major step, an important step, in that direction reaching that vision. With the brands that we already have together, we also add the brands of Zee.Dog and the competencies of Zee.Dog, which are very complementary to ours and that we are taking a gigantic step forward. Next slide.

In our vision of the ecosystem, adding the ecosystem in this perspective of exclusive products, the brands, Zee.Dog adding a great deal of value to what we already bring in the physical world and in the LittleBs franchisees, which is a very important route of transformation for us and in the services area we continue with the… in the direction of intensifying the ecosystem. In the part of content, the participation of Zee.Dog is fundamental, first to advance in the curatorship. And as you will see here, we will be complementing our ecosystem and as I said in various previous calls in a way that is consistent, that is serene, complete, without being in a hurry but doing things well, working with those who are references in this segment. "Cansei de ser Gato", which is a reference in the cat world and now with Zee.Dog which is a worldwide reference as a company of product creation, creating a lifestyle brand as we'll see going forward. Next slide.

Now I'm going to pass the word over to our new partner, with great pleasure and honor to be a partnership with Rodrigo, Tadeu and Felipe, who is the CEO of Zee.Dog and who will conduct the presentation of Zee.Dog.

Very welcome, Felipe, to the Petz Group and I'm sure that together we're going to build a tremendous story in this business world.

Mr. Felipe Diz: Thank you, Sergio. Good afternoon, good morning to everyone. Just adding to what Sergio said at the beginning, I think it's a historic moment that we're living through today. It's been almost a decade in this industry, much less time than Sergio, but we feel that having to be able to look at the panorama, the pet's panorama not only in Brazil but worldwide, we're certain that we're in a historic moment because the union of the two companies… what's going to come out of this two will change forever the pet's market not only in Brazil but worldwide with certainty.

And so, I want to talk to you about in a few slides, talk a little bit about what we've built over these nine years. Talk a little bit about how we think about…. And this will be clear. That perhaps how this will fit together in the world of Petz and so forth.

So, before we start what we've built is a quick overview, a snapshot of the company today, of Zee.Dog today. A little bit, 2/3 is still in Brazil which is where we started and it's a market… which is the second, third largest, a fourth largest market in the world, and globally 1/3 of our sales. Of this total amount, you can see that I'm going to go into more details during the presentation, which is our delivery app which has been in business for two years but it's a phenomenal success. And already 34% of the group's revenue is represented by the app sales. 60% of the global sales is B2B and retail so we talk about our company-owned stores, Zee.Dog stores and e-commerce in Brazil is 19%, which is very carefully… we start a couple years ago very slowly, but it has together with the other digital channels has been one of the biggest drivers of growth.

Before we go into the global sales, more than 60% of our sales comes from digital channels, which is a very good number. Going into the global, 24% of our total sales comes from… of sales standard retail globally. When I talk about B2B globally, I mean, I'm referring to the almost 42 countries, 45 countries today, in which we sell products, many of them through local partners, distributors, store, shop owners… we'll talk about that a little bit more as we go forward. And the e-commerce, global e-commerce, based in the U.S., which today attends the entire world. It represents 7% of our sales today. Next slide.

During this 9 years, I'm going to talk a lot about this, Zee.Dog is recognized because of this. In our vision, we created the most disruptive pet's platform in the world, and we've done this based on a few pillars, a maniacal focus on the four very important pillars. One of them, branding, which is something that I remember when I started Zee.Dog nine years ago, we looked at look at those stores and we didn't see any brand that in fact had the proposal of making a brand that could really become top of mind. So, branding when it's done right, is not something that happens from one day to the next, but it creates that, this brand, which becomes a reference and top of mind for the people in the market.

Going into products, Zee.Dog is also well known because of the quality of the products, the development of products and even the sourcing and supply chain which is very cared for in China, Asia, and other countries. And the combination of branding and product makes it clear how involved with the clients, how we make the retention, this client retention. I'm going to talk a little more about that.

Branding and products, technology it may not seem because Zee.Dog in a way from outside, it seems very much product and brand oriented, but the technology is something that we have been using since the beginning. Most notoriously, in the... which were done lately. But another example is our supplier… our entire supply chain is totally automated. We have dealt the in-

house technology. We're able to see in real time where is each item that's in there under production, what ship it's on, where it is in the world… all over the world. To give you a few examples of how we use technology in our favor, to advance and facilitate this going forward.

And the fourth and perhaps most important of these pillars that has changed the face of Zee.Dog is how we do… our sales channel, when I talk about our sales channel. Next slide, please.

I refer to the digital sales. Again, the notorious example is the Zee.Now, which is a live commerce which we started to do recently, which has been a super success in relation to conversion. We use this also to push through to the entire sales chain throughout the world which uses this live e- commerce. We also use the lives to educate and teach and show more our product and this converts into sales with the public, much more as an e- commerce… By using everything that I said, branding, products, technology, and mindset, a channel mindset to innovate not only the digital world but also… next… not less important in the physical stores, here in Zee.Dog we believe, and we talk a lot about technology, digital channel, yes, it's very important, but we also have the mindset that physical stores are also possibly as important as. It has a different role today. In a way that's more experienced, to be able to have a little bit of contact with the products try them out, have somebody that explains things better to you… We think that the junction of the two, online and offline, and obviously using technology and products and branding and everything else in our favor, is what has in fact made Zee.Dog become the Zee.Dog and it's a super plan for the future.

So before going into next slide, everything that I just showed you, since the user experience in the site, the ideas for retailing, how we do our retailing, how do we tell our story in the best possible… storytell is the word that we have in mind above anything else when we execute this, when we think about making a store like this one here on the left, the Zee.Dog temple, which was a big dream from eight years ago. In the last quarter of this year, storytelling is the most important thing for Zee.Dog and we applied this both in the digital channel as well as offline because we believe that storytelling is what converts people. For us, we have this very strongly in our DNA. It's the strongest weapon that we have for conversion both in online and offline is storytelling. So, all of this together is not just doing it just to do it, but is to call the client to converse and make it possible so he has now the wow factor. Next slide.

Just to give you a give an example about the storytelling that we do, a point that we believe that converts. I want to talk about storytelling, it's from the user experience of the platform to the way that we display our products in the stores and, most importantly, of the story telling is the generation of content. Here, I want to go into this with more detail going forward, the content… by the products by the branding, very few are able to do with Zee.Dog does. But I say with great tranquility and very comfortable that nobody who is… my twin brother is the creative director of Zee, is able to generate content which tells the story as well as Zee.Dog does.

So, I want to show you two very quick videos here exemplifying that these are two products recently released. We spent almost two years developing one on the left and one on the right are Zee.Bed, which has been a sales phenomenon. And I want to show you these two videos just to show you the question of storytelling and how we do that. Can you run those videos please?

Videos.

On vídeo: Mr. Pedro Zunzunegui (Chief Innovation Officer): Bom, eu vou falar um pouquinho sobre como a gente fez a inovação na cama, tá?

A gente decidiu criar a cama Zee.Bed porque era um produto básico na vida do seu cachorro. Quando a gente criou a Zee a gente achou que tinha que o básico coberto da melhor forma possível a gente criou as guias, coleiras, os comedouros e o passo óbvio era o Zee.Bed.

O cachorro, no final do dia, fica quase 80% do dia na cama, e ele precisa ter o conforto total e o apoio na cabeça certo. E a gente vendo vários materiais, a gente chegou nessa espuma viscoelástica. A gente trabalhou na rigidez da espuma, a gente trabalhou na altura da borda para o cachorro apoiar a cabeça, e inclusive os triângulos que têm lá no centro ajudam a tirar a pressão dos pontos de apoio do cachorro pra fazer tudo ali mais confortável.

Quando a gente começou a pesquisar onde a gente poderia fazer, não tinha fábrica de cama de cachorro suficientemente boa para usar esse material e foi aí que a gente chegou à fábrica de cama de humano, com material de qualidade de humano, e a gente bateu na porta e falou, "olha queremos fazer uma cama para cachorros." Claro que os caras da fábrica falaram, "como assim vocês estão querendo fazer uma cama pra cachorro?" E a gente conseguiu, depois de uma ida e volta, visitar várias fábricas, chegar numa delas e conseguimos fazer a nossa própria cama lá na fábrica.

Uma das coisas que a gente não estava 100% satisfeito era o fato de como era feito o transporte das camas, era muito dificultoso pra pessoa comprando na loja, pra loja armazenar lá e pra gente trazer da fábrica até o lugar. Um dos fatores fundamentais pra gente compactar a cama era o fato de facilitar o seu transporte e no caminho vira muito mais ecológico esse transporte. O fato de a gente usar o mesmo espaço pra botar quatro, cinco, oito vezes a quantidade de camas que a gente usava antes, implica menos transporte, implica menos CO2 e implica ser muito mais ecológico.

Mr. Felipe Diz: And that was exactly how, using these videos as an example, we started to understand that through this weapon and brand strength that we've seen being built over this almost one decade of the company. We've seen that we added a tremendous opportunity. Next slide.

That was exactly the mood…the sideways movement into other categories. So Zee.Dog, for those of you who don't know us, started out with just accessories, just leashes and collars, in 2011 and over these years we started building this brand and this storytelling power, the entry into new categories made sense, both from the standpoint of business and expansion to a larger addressable market. But we understand that if we're able to go back to the

original pillars, one of which is branding, it made a tremendous… understood very well our products. Look at every category and see how can we disrupt this category, what's an angle, what's the competitive advantage and how do we tell this story most importantly? So, we have a much greater capacity to have success in these parallel categories. So, we went from accessories to hygiene products. Many… some years ago when we started this, it was a very successful move. We went very recently into the food area, with Zee.Dog Kitchen, we're reformulating and changing the vision of that in the last quarter of this year and this year, and we think that it's going to be a big revolution in this vertical, not only in Brazil as well as outside, even categories that we never imagined previously. Because at the end of the day, we understand that the Zee.Dog client, he wants to consume our brand. And he consumes brand both for his dog, through accessories, food or whatever, as well as for himself and this is the biggest asset that we have, that Zee.Dog has. The strength of our brand, it creates loyalty and once you create this loyalty, he feels part of this community. You wind up consuming it in the most varied ways possible. If you could pass that along, please, to me.

Entering the community and the storytelling which we called for conversation is the community that makes people stay. And we believe that this union that is today is the biggest asset of Zee.Dog. What do I think of the brands that copied Zee.Dog? Today there are several brands that are trying to copy us and as long as they… is resumed to a stamp, a brand is going to be behind us because what they don't understand is that following is not just Zee.Dog's product, it's not the product… it's not our products that attract, it's the way we tell the story is even more important. It's the community which is being constructed over these nine years and a community you don't build in one day. You can't buy a community. A community has to be authentic, it has to connect with people, it takes time to do that. Zee.Dog has done this very well. Here are a few examples of this community building events that we promote. The community is omnipresent when you buy anything from Zee.Dog, the product itself is already an entry to the community, but then there are events, and we've done that a lot of them prior to the pandemic. The Zee.Dog brand has which are our ambassadors, the Zee.Run, Mutirão do Bem, which is a participation of doing social work and some clients we invite, we go to NGOs and help to paint them, help to wash the dogs, help to care for that community. Then, again, pre pandemic, we had the launching of new collars, new products and also, parties, pre pandemic, which we also did, also a big part of Zee.Dog's and this is connecting dogs and people at the park event. Next slide, please.

In this community, of course pre pandemic, we had to shift more and more to the online area because we can't… we can't do this… we started to be unable to do these events with physically present publics. But, as the community grows, this can be the final client purchasing and even people that want to work in Zee.Dog, but were also clients. For example, we had a Designathon question, where people submitted their designs, many of them, even… started to work with Zee.Dog which is very cool, we have several employees who came through this process. We have a thing called Strava, it was one of the first collaborative things that did in this format, where there