Diageo Plc · LSE:DGE
Diageo — Investor Day (May 2019)
36 slides from Diageo's investor day presentation, May 2019
Slide 1: Diageo India
DIAGEO INDIA ANAND KRIPALU CEO, UNITED SPIRITS LTD MAY 2019 • Good day. • I’m Anand Kripalu, Managing Director & Chief Executive Officer of United Spirits Limited, Diageo’s business in India. • After spending three decades in the consumer products industry, predominantly in India, I joined Diageo ov
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This document contains forward-looking statements that involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking
Slide 3: Diageo India
DIAGEO INDIA ANAND KRIPALU CEO, UNITED SPIRITS LTD MAY 2019 • Good day. • I’m Anand Kripalu, Managing Director & Chief Executive Officer of United Spirits Limited, Diageo’s business in India. • After spending three decades in the consumer products industry, predominantly in India, I joined Diageo ov
Slide 4: We Are Now Diageo India
WE ARE NOW DIAGEO INDIA 4 • We started our journey in 2014 with the objective of transforming our business in India from the erstwhile United Spirits to making it a true Diageo subsidiary. • We went through the process of picking core/focus brands and then refreshing most of them. We have made a big
Slide 5: What We Will Cover Today
WHAT WE WILL COVER TODAY PROGRESS MADE TO DATE OUR STRATEGY CONFIDENCE IN THE FUTURE 5 • I am going to start today’s presentation with a quick recap of the progress we have made since our last meeting. • I will then update you on where we are against our medium-term strategy. • Finally, I will talk
Slide 6: What We Will Cover Today
WHAT WE WILL COVER TODAY PROGRESS MADE TO DATE OUR STRATEGY CONFIDENCE IN THE FUTURE 6 Before we look at the progress, let me give you a context of our portfolio and recent operating environment. 6
Slide 7: We Have the Leading Portfolio Across Price Points
WE HAVE THE LEADING PORTFOLIO ACROSS PRICE POINTS Consumer Focus brands prices* Luxury >£20 Premium £10 - £20 Prestige £4 - £10 Popular < £4 *Average consumer prices in India, 750ml bottle 7 Firstly, just to remind you, we have the broadest and the most comprehensive portfolio of brands in the alcob
Slide 8: Challenges in Operating Environment
CHALLENGES IN OPERATING ENVIRONMENT November 2016 Demonetisation – economic slowdown April 2017 Highway ban July 2017 Goods & Services Tax (GST) Various Route to market changes 8 Secondly, let me recap the operating environment that we have been in during the last couple of years in India. There hav
Slide 9: We Have Grown the Business, Reshaped Portfolio and Expanded Margins
WE HAVE GROWN THE BUSINESS, RESHAPED PORTFOLIO AND EXPANDED MARGINS NET SALES GROWTH (%) SALES BY SEGMENT (%) OP MARGIN EXPANSION (BPS) 17% 12% 12% 527 9% 42% 35% 58% 65% 77 F18 F19H1 F18 F19 H1 F18 F19 H1 Overall sales Popular Prestige and above sales Prestige and above sales Note: Franchised popul
Slide 10: What We Will Cover Today
WHAT WE WILL COVER TODAY PROGRESS MADE TO DATE OUR STRATEGY CONFIDENCE IN THE FUTURE 10 So those were the key business metrics. Let me now walk you through “how” we have been executing against our medium-term strategy. 10
Slide 11: Our Five Strategic Priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 11 Our
Slide 12: Our Five Strategic Priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 12 Sta
Slide 13: Playing into India's Top Passion Points
STRENGTHEN & ACCELERATE CORE BRANDS PLAYING INTO INDIA’S TOP PASSION POINTS MUSIC FOOD CRICKET 13 The first is to play into India’s top passion points with our core brands. We believe that in order to deepen relevance & connection with consumers it is critical for brands to have a strong play in cul
Slide 14: Bringing Passion Point Alive Through Purpose-Led Marketing
STRENGTHEN & ACCELERATE CORE BRANDS BRINGING PASSION POINT ALIVE THROUGH PURPOSE-LED MARKETING #challengeaccepted campaign RCB app Coa ch 14 The second way in which we are strengthening and accelerating our core brands is through purpose led marketing, that brings these passion points alive. RC is a
Slide 15: Leveraging Our Extensive Scotch Portfolio
STRENGTHEN & ACCELERATE CORE BRANDS LEVERAGING OUR EXTENSIVE SCOTCH PORTFOLIO SCOTCH PORTFOLIO SCOTCH NET SALES GROWTH £165+ 27% 22% LUXURY SCOTCH Bottled in Origin (BIO) 4% F18 H1 F18 H2 F19 H1 PRIMARY SCOTCH Bottled In India (BII) £11 All figures above represent organic numbers 15 The third way in
Slide 16: Bringing Category Vibrancy Through Innovation
STRENGTHEN & ACCELERATE CORE BRANDS BRINGING CATEGORY VIBRANCY THROUGH INNOVATION RECRUIT RE-RECRUIT DISRUPT through new propositions through new variants through untapped categories 16 The fourth lever towards strengthening and accelerating core brands is our innovation funnel. Innovation is a capa
Slide 17: Making Scotch Hip: Recruiting New Consumers
MAKING SCOTCH HIP: RECRUITING NEW CONSUMERS 17 RECRUIT: Hipster: Our new Scotch offering The Scotch Hipster is an innovative take on Scotch that unlocks a new opportunity for consumers. It is uniquely portable and designed to complement the style of every consumer, just like their smartphone. This n
Slide 18: Our Five Strategic Priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 18 Our
Slide 19: Evolve Route to Consumer: Multi-Pronged Approach
EVOLVE ROUTE TO CONSUMER MULTI-PRONGED APPROACH AFFLUENT INDIA MIDDLE INDIA ASPIRING INDIA Unique experiences, Leverage outlets Focus on retained states, Weddings & Banquets to build brand equity support franchisees 19 India is not a homogenous country and at the minimum, we believe the consumer bas
Slide 20: Enabling the Multipronged Approach
EVOLVE ROUTE TO CONSUMER ENABLING THE MULTIPRONGED APPROACH AFFLUENT INDIA MIDDLE INDIA ASPIRING INDIA • Dedicated team driving joint • Clear outlet execution • Dedicated teams driving business planning with top 1300 standards distribution in retained states Key Accounts • Customized activations at
Slide 21: Our Five Strategic Priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 21 Let
Slide 22: Driving Productivity Across All Lines
DRIVE PRODUCTIVITY TO INVEST IN GROWTH DRIVING PRODUCTIVITY ACROSS ALL LINES 18 MONTH PERIOD NET REVENUE Efficient trade spends (JUL 17 – DEC 18) MANAGEMENT Positive price/mix from P&A growth Gross margin +491 bps Rate & feature optimization COGS Manufacturing footprint optimization Efficiency in ag
Slide 23: All lines of our P&L moving in the right direction
• Overall, I am pleased that all lines of our P&L are moving in the right direction enabling us to create a virtuous cycle of performance. 22
Slide 24: Our Five Strategic Priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 23 Our
Slide 25: Corporate Citizenship
CORPORATE CITIZENSHIP CORPORATE CITIZENSHIP CHANGE REPUTATION OF INDUSTRY STATE-LEVEL Alcohol in Society: Road safety, underage consumption EXCISE POLICIES & PRICING Building thriving communities: Project SHE LIMITED RETAIL SHAPE REGULATORY ENVIRONMENT FOOTPRINT Minimized impact of GST Unlocked pric
Slide 26: Regulatory environment outcomes
Accessibility is another challenge, with a country of 1.35 billion people having c.75000 outlets to buy or have alcohol. Contrast that to a country like Spain, with a fraction of India’s population having 250,000 outlets. To add to the complexity, direct advertising of alcohol is not permitted. The
Slide 27: Our Five Strategic Priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 25 The
Slide 28: Building a Future Ready Organisation
WINNING ORGANIZATION BUILDING A FUTURE READY ORGANISATION Attracting and developing talent Enhancing diversity Driving simplification Building a high performance culture 26 1. First is to attract the right talent – to this end we have been able to attract talent from some of the leading companies fr
Slide 29: What We Will Cover Today
WHAT WE WILL COVER TODAY PROGRESS MADE TO DATE OUR STRATEGY CONFIDENCE IN THE FUTURE 27 • We have made good progress against our 5 strategic priorities but there is still a lot to be done • The market place is getting far more aggressive, far more competitive and while we did evolve many of out bran
Slide 30: Evolution of Consumer Landscape
EVOLUTION OF CONSUMER LANDSCAPE 2005 2018: 2030: 7TH LARGEST ECONOMY 3RD LARGEST ECONOMY (GDP £2.13T) (GDP £7.7T) Affluent Households by annual income (>£30,000) 1% 3% 7% 7% 21% 44% Middle (£3,000 - £30,000) 23% 33% 34% Aspiring 69% 43% 15% (<£3,000) # of households 219M 293M 386M ~45% of India’s po
Slide 31: Growing Per Capita Consumption and Premiumization
GROWING PER CAPITA CONSUMPTION AND PREMIUMIZATION ALCOHOL CONSUMPTION VS PER CAPITA INCOME SPIRITS NET SALES (CAGR) Per capita consumption (liters of pure alcohol) 7% +7% 17% Premium+ Prestige 9% India 2030 India Upper range 2023 Lower range Popular 1% Per capita income (£) 2017 2022 Source: David T
Slide 32: Confidence in the Future
CONFIDENCE IN THE FUTURE India continues to present an attractive market opportunity Consistent progress on our strategic priorities Transforming business to harness the future MEDIUM TERM GOAL GROW TOPLINE BY DOUBLE DIGIT AND IMPROVE OPERATING MARGIN TO MID-HIGH TEENS 30 • Undoubtedly, this makes I
Slide 33: Thank You
THANK YOU 31
Slide 34: Diageo: Celebrating Life, Every Day, Everywhere
No script DIAGEO CELEBRATING LIFE, EVERY DAY, EVERYWHERE 32
Slide 35: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This presentation and its notes (together, this “Presentation”) contain ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking
Slide 36: Cautionary statement (continued)
•movements in the value of the assets and liabilities related to Diageo’s pension plans; •Diageo’s ability to renew supply, distribution, manufacturing or licence agreements (or related rights) and licences on favourable terms, or at all, when they expire; or •any failure by Diageo to protect its in