Slide 1: Delivering sustainable long-term growth
Delivering sustainable long-term growth CAGNY 2023 Ivan Menezes, Chief Executive Officer Lavanya Chandrashekar, Chief Financial Officer 23 February 2023
Slide 2: Cautionary statements concerning forward-looking statements and non-GAAP financial measures
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Cautionary statements concerning forward-looking statements and non-GAAP financial measures This presentation contains ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only to histori
Slide 3: To be one of the best performing most trusted and respected consumer products companies
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H To be one of the best performing most trusted and respected consumer products companies in the world 3 CAGNY 2023
Slide 4: Key Metrics F23 H1
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Key Metrics F23 H1 OUR BUSINESS IS 36% Organic net sales Organic operating value growth profit growth +9.4% +9.7% bigger on a NSV CAGR F19 H1 -F23 H1 +8% constant basis Free cash flow Interim dividend per share than 2019 1 £0.8bn 30.83
Slide 5: Confident in our strategy and ability to deliver
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H TBA opportunity is large, growing and resilient1 Confident in our Our portfolio is well-positioned in fast-growing categories and premium+ price segments strategy and ability Our advantaged footprint accelerates growth to deliver and d
Slide 6: Diageo has significant growth opportunity
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Diageo has significant growth opportunity 6% 2030 ~ % Our 2030 ambition is to increase 4% Diageo’s TBA market share to 2020 6% from 4% in 2020 1, 2 1 TBA denotes global Total Beverage Alcohol market 6 CAGNY 2023 2 Source: IWSR; depicts
Slide 7: Healthy TBA growth with spirits growing faster driven by premiumisation
TBA OPPORTUNITY LARGE, GROWING AND RESILIENT Healthy TBA growth with spirits growing faster driven by premiumisation 1 TBA RSV by category Spirits share of TBA Spirits RSV growth by price point CAGR 2010-2021 Spirits RSV $1,170bn +7% CAGR 15% TBA RSV 39% 40% 4% CAGR 35% 31% $750bn 8% 7% 1% 2010 2021
Slide 8: US spirits consistently gaining share of TBA and premiumising
TBA OPPORTUNITY LARGE, GROWING AND RESILIENT US spirits consistently gaining share of TBA and premiumising Category share of TBA1 Spirits growth by price point2 12yr CAGR 2010-2022e 60% 51% 15% 50% 40% 42% 37% 30% 27% 7% 4% 20% 22% 22% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20
Slide 9: US spirits category has consistently grown volume and value
TBA OPPORTUNITY LARGE, GROWING AND RESILIENT US Spirits growth rates 15% US spirits category has 10% consistently 5% Mid-single digit 4-6% grown volume and value every 0% year for the -5% last 2 decades -10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 10: Our advantaged geographic footprint
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H F19 H1 to F23 H1 organic net sales value CAGR1 Our advantaged Europe +7% 1 geographic Greater China footprint North America +14% 1 accelerates top- +8% 1 line growth and Asia Pacific +7% 1 drives resilience Latin America and Caribbean
Slide 11: We have grown our portfolio in fast growing premium+ price segments
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H We have grown our portfolio in fast growing premium+ price segments 65% of net sales growth from premium-plus price tiers in F23 H1 F19 H1 – F23 H1 net sales growth on a constant basis1 Reported net sales by price tier by price segment
Slide 12: Our portfolio has been positioned towards fast-growing categories
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Our portfolio has been positioned towards fast-growing categories 5YR RSV CAGR 1 Diageo reported net sales of Spirits by category2 (2021-2026 Forecast, %) F23 H1 Tequila Other Tequila 13 13% 13% Gin 10 Int'l whiskey Cognac 9 Vodka 11%
Slide 13: Scotch is the most premium international spirits category, and we lead it
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Premium+ price points RSV by category 20 $19bn 18 Scotch is the 16 $15bn 14 most premium $10bn 12 10 $9bn 8 $8bn international 6 $5bn $4bn 4 $3bn spirits category, 2 0 Scotch Cognac US Tequila Other Int’l Gin Vodka Rum Whiskey Whiskey
Slide 14: We are the biggest tequila company in the world
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Diageo US Tequila Category Share F19 to F23 H1 We are the biggest 21.0% 22.4% tequila company in 17.3% the world and we 12.4% have more than 10.2% doubled US market share since F19 F19 F20 F21 F22 F23 H1 Don Julio Casamigos Other Diage
Slide 15: Taking Tequila around the world
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Taking Tequila around the world 15 CAGNY 2023
Slide 16: Diageo is consistently outperforming its CPG peer group
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Diageo and CPG peer group organic net sales growth1 (CAGR 2017-2022 years ended 30 June) Diageo is 7.0% consistently outperforming its CPG peer group Diageo HPC 1 Bev 1 Bev 2 Bev 3 Bev 4 Bev 5 Bev 6 HPC 2 Food 1 HPC 3 Food 2 HPC 4 HPC
Slide 17: Our profitable growth algorithm delivers quality long-term growth
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Our profitable growth algorithm delivers quality long-term growth Driving top-line growth 1. Driving top-line growth 2. Improving price/mix Increasing A&P Improving price/mix 3. Driving productivity 4. Increasing A&P Driving productivi
Slide 18: Our world-class innovation has driven sustainable top line growth
Driving top-line growth D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Increasing Improving A&P price/mix Our world-class innovation has driven sustainable top line Driving productivity growth, premiumisation and recruits consumers at scale 19 CAGNY 2023
Slide 19: We deliver consistent best in class price/mix improvement
Driving top-line growth D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Increasing Improving We deliver consistent best in class A&P price/mix Driving productivity price/mix improvement Diageo and CPG peer group price/mix Diageo price/mix contribution contribution to net sales growt
Slide 20: Our productivity savings, efficiencies and disciplined cost control fuel our investments
Driving top-line growth D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Increasing Improving A&P price/mix Driving productivity F19 – F22 Our productivity savings, efficiencies and disciplined cost control fuel our investments Total Marketing Overhead productivity efficiencies effic
Slide 21: We invest strongly in brand building
Driving top-line growth D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Increasing Improving A&P price/mix We invest strongly in brand building Driving productivity Sustained A&P investment A&P Reinvestment Rate (£bn) (%) 2.7 17.6 17.0 2.2 15.9 15.7 2.0 15.5 1.9 1.8 1.8 14.9 F17 F18
Slide 22: Upweighted investment and marketing effectiveness are driving growth and share gains
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Upweighted Percentage of Diageo total net sales value gaining/holding investment and share in measured markets marketing effectiveness are 75% gaining/holding driving growth share and share gains Source: Diageo estimates incorporating
Slide 23: We have a track record of consistently growing operating profit ahead of net sales
Driving top-line growth D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Increasing Improving We have a track record of consistently growing A&P price/mix Driving productivity operating profit ahead of net sales value Diageo Organic NSV and OP growth rates Strategic Levers Organic NS
Slide 24: Consistent and disciplined approach to capital allocation
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Consistent and disciplined approach to capital allocation Leverage ratio policy Adjusted net debt to adjusted EBITDA: 2.5x – 3.0x 1 Organic M&A and Dividends growth portfolio 1.8x to 2.2x management dividend cover Return excess cash to
Slide 25: We are enabling long-term growth through maturing stock and capex investments
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H We are enabling long-term growth through maturing stock and capex investments Strategic maturing stock Sustained CAPEX investment (£bn) (£bn) 1.0-1.2 5.2 annually 5.3 1.1 4.7 5.1 4.9 4.6 0.7 0.7 4.7 4.5 4.3 0.6 0.6 4.3 4.1 4.0 3.9 3.7
Slide 26: Disciplined M&A has increased our exposure to fast growing categories
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Disciplined M&A has increased our exposure to fast growing categories Diageo spirit acquisitions and disposals 1-3 Acquisitions £2.2bn since F17 by price tier Super- Premium-Plus 10 1 2 Premium 6 4 Standard 13 Disposals £1.2bn Value 36
Slide 27: Our disciplined approach to capital allocation is driving steady improvement in ROIC
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H ROIC1 Our disciplined approach to capital 16.8% allocation is driving 15.1% steady improvement 14.3% in ROIC while we 13.8% 13.5% significantly invest in 12.4% long-term growth F17 F18 F19 F20 F21 F22 Covid-19 Source: Diageo 31 CAGNY 2
Slide 28: We have a strong track record of creating shareholder value
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H We have a strong track record of creating shareholder value Dividend per share Return of capital - Annualised TSR 1 pence cumulative share buybacks % £bn 5-year full year dividend CAGR 20-year Annualised TSR 76.18p £8.5bn +4.1% F20-F23
Slide 29: Our advantaged culture drives our performance
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Our advantaged culture drives our performance 33 CAGNY 2023
Slide 30: Society 2030: Our 10-year action plan
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Society 2030: Our 10-year action plan to help create a more inclusive and sustainable world Responsible Inclusion Carbon Preserve drinking and Diversity Zero Water • 1 billion people reach • 50% women leaders • Net zero carbon in • Use
Slide 31: Medium-term guidance ahead of historical growth rates
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H Medium-term guidance ahead of historical growth rates F23-F25 Consistent % to % % to % Organic net sales growth Sustainably grow organic operating profit 35 CAGNY 2023
Slide 32: Confident in our strategy and ability to deliver
D E L I V E RI N G S U S TA I N A B L E LO N G -T E RM G ROW T H 1. Leading premium drinks company Confident in our 2. Advantaged brand, category and market exposure strategy and ability to deliver 3. Portfolio shaping/market firepower sustainable long- 4. Winning in the marketplace term growth 5. I
Slide 33: Diageo
DIAGEO Celebrating ? 5 years
Slide 34: Financial/legal appendix: Definitions and reconciliation of non-GAAP measures
D E L I V E R I N G S U S TA I N A B L E LO N G -T E R M G ROW T H Financial/legal appendix: Definitions and reconciliation of non-GAAP measures to GAAP measures Diageo’s strategic planning process is based on certain non-GAAP measures, including organic movements. These non-GAAP measures are chosen
Slide 35: Continued from the previous page
D E L I V E R I N G S U S TA I N A B L E LO N G -T E R M G ROW T H Continued from the previous page (a) Exchange rates 'Exchange' in the organic movement calculation reflects the adjustment to recalculate the reported results as if they had been generated at the prior period weighted average exchang
Slide 36: Continued from the previous page
D E L I V E R I N G S U S TA I N A B L E LO N G -T E R M G ROW T H Continued from the previous page Gains and losses on the sale or directly attributable to a prospective sale of businesses, brands or distribution rights, step up gains and losses that arise when an investment becomes an associate or
Slide 37: Continued from the previous page: Shareholder value metrics, Market share approach
D E L I V E R I N G S U S TA I N A B L E LO N G -T E R M G ROW T H Continued from the previous page Shareholder value metrics • Dividends: Diageo internal information. • Return of Capital (RoC): Diageo internal information. • TSR: FactSet as of 31st December 2022. TSR based on time periods of 6 mont