Diageo Plc · LSE:DGE
Diageo — Investor Day (May 2019)
45 slides from Diageo's investor day presentation, May 2019
Slide 1: Diageo US Spirits
DIAGEO US SPIRITS DEIRDRE MAHLAN PRESIDENT NORTH AMERICA MAY 2019 • No script 1
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 US Spirits
DIAGEO US SPIRITS DEIRDRE MAHLAN PRESIDENT NORTH AMERICA MAY 2019 • Good afternoon everyone • I am pleased to be here with you today to share the progress US Spirits has made to improve our growth trajectory toward our goal of delivering quality net sales growth on a sustainable basis • We have made
Slide 4: Let me update you on what we have been up to since we last met
• Let me update you on what we have been up to since we last met... 3
Slide 5: Key US Spirits Priorities
KEY US SPIRITS PRIORITIES Delivering strong and sustainable performance Driving growth through data driven insights Building sustainable leadership in innovation Ensuring executional excellence in our route-to-market 4 • These are the key priorities for the US Spirits business • Our first priority i
Slide 6: The US is Diageo's Largest Market
THE US IS DIAGEO’S LARGEST MARKET US Consumers spend over $220 billion on total beverage alcohol Over $85 billion is spent on Spirits Spirits Value Share by Supplier Diageo*, 19% All Other, 30% Sazerac*, 10% Diageo is the market leader in the Spirits industry Gallo, 2% Beam, 10% Constellation, 3% Pr
Slide 7: US Spirits Industry a Consistent Growth Driver
US SPIRITS INDUSTRY A CONSISTENT GROWTH DRIVER US SPIRITS INDUSTRY VALUE GROWTH Source: Diageo internal analysis; using Nielsen, NABCA, Distributor Indicators, DISCUS, IWSR, and Beverage Information Group *2019 L12M estimate thru March 6 • The US Spirits industry is resilient, demonstrating continue
Slide 8: Strong Diageo Position in Premium, Opportunity in Premium+
STRONG DIAGEO POSITION IN PREMIUM, OPPORTUNITY IN PREMIUM+ 55% % OF F18 RETAIL SALES VALUE ($) Market 39% Diageo 29% 27% 14% 11% 11% 4% 4% 0% 1% 2% 0.5% 1% Value Popular Premium Super Ultra Luxury Luxury+ F15-F18 CAGR Premium Premium TOTAL: -2.3% +0.1% +3.7% +9.0% +7.9% +24.1% +8.7% DIAGEO: n/a -4.1
Slide 9: Industry Leading Brands
INDUSTRY LEADING BRANDS No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 Vodka Spiced Canadian Gin Irish Rye Scotch Blended Brand Rum Whiskey Cream Whiskey Family Source: IWSR Volume 8 • We are in a strong position, with #1 brands in 8 spirits categories 8
Slide 10: Leading Position in Canadian and Scotch, Gaining in Tequila
LEADING POSITION IN CANADIAN AND SCOTCH, GAINING IN TEQUILA 29% % OF F18 RETAIL SALES VALUE ($) 27% 23% Market 18% Diageo 14% 10% 10% 9% 9% 9% 8% 6% 5% 5% 5% 4% 4% 3% 2% 0% 0% 0% Vodka American Canadian Tequila Rum Cordials* Scotch Cognac Gin Irish Brandy F15-F18 CAGR Whiskey Whiskey Whiskey TOTAL:
Slide 11: Key Brands Are Supporting Market Share Gains
KEY BRANDS ARE SUPPORTING MARKET SHARE GAINS VALUE SHARE CHANGE F17 F18 F19 YTD (BPS, TOTAL SPIRITS) -2 +2 +4 +21 +5 +17 +1 +3 -2 +6 +11 +16 +10 +7 +7 Source: Nielsen Census xAOC + Liquor thru 3/23/19 & NABCA thru 3/31/19 10 • As you know, many of our key growth delivering brands are continuing to d
Slide 12: Some Progress in Vodka but More to Do
SOME PROGRESS IN VODKA BUT MORE TO DO VALUE SHARE CHANGE F17 F18 F19 YTD (BPS, TOTAL SPIRITS) -21 -21 -22 -7 -4 +14 -16 -12 -11 Source: Nielsen Census xAOC + Liquor thru 3/23/19 & NABCA thru 3/31/19 11 • However, there is still more work to do in Vodka • As you can see on this slide, Ketel One has i
Slide 13: Captain Morgan Performance Challenged
CAPTAIN MORGAN PERFORMANCE CHALLENGED PERFORMANCE Value share change (bps, Total Spirits) F17 F18 F19 YTD -8 -10 -19 OUR STRATEGY • Recruit more diverse consumers • Launch interventions that can deliver an immediate impact • Reposition in culture through a new platform • Improve physical availabilit
Slide 14: Growing Broadly in Line with Industry in F19
GROWING BROADLY IN LINE WITH INDUSTRY IN F19 DIAGEO 4.7% 1.3% 3.4% 3.3% 1.2% Volume 1.9% 3.4% 2.1% Price/mix 1.5% F17 F18 F19 H1 13 • Overall, our increased investment and focused execution has put us within reach of industry growth. Over the past decade we have seen the spirits industry growing at
Slide 15: Improving Share Trajectory, Achieving Share Gain
IMPROVING SHARE TRAJECTORY, ACHIEVING SHARE GAIN DIAGEO VALUE SHARE PERFORMANCE1 (Y/Y BPS) 9 -12 -18 -23 FY16 FY17 FY18 F19 YTD Source: Combined NABCA & Nielsen 45 chains in food, drug and mass liquor, F19 YTD compared to F18 YTD through Mar 2019 1 Includes Casamigos and excludes sold brands 14 • He
Slide 16: A Great Place to Work
A GREAT PLACE TO WORK DIVERSE & INCLUSIVE CULTURE INVESTING IN OUR PEOPLE LIVING OUR PURPOSE BUSINESS RESOURCE GROUPS 15 • As Ivan referenced earlier, our brands and our performance depend on the talent and commitment of our employees • We value a wide range of viewpoints, experience and skills to b
Slide 17: Key US Spirits Priorities
KEY US SPIRITS PRIORITIES Delivering strong and sustainable performance Driving growth through data driven insights Building sustainable leadership in innovation Ensuring executional excellence in our route-to-market 16 • Now I’d like to turn to our next priority – leveraging data to ensure we are a
Slide 18: We Have Segmented Our Portfolio to Drive Investment and Activation Priorities
MACRO TRENDS ANALYSIS WE HAVE SEGMENTED OUR PORTFOLIO TO DRIVE INVESTMENT MICRO AND ACTIVATION PRIORITIES INSIGHTS & NEW TOOLS 17 • To inform resource allocation, we regularly review our portfolio strategy • We consistently look at the macro trends around: • shifting occasions • consumer cohorts • c
Slide 19: How We Will Deliver Growth
HOW WE WILL DELIVER GROWTH Consumer Geographical Consumer Trends Occasions Differentiation Deliver vibrant experiences and activation at point of purchase Continuing to optimize investment in our brands Unlock the next wave of growth 18 • In order to deliver sustainable growth, we are focused on dev
Slide 20: Consumer Trends: A Consistent Orientation Toward a Consumer-First Strategy
CONSUMER TRENDS: A CONSISTENT ORIENTATION TOWARD A CONSUMER-FIRST STRATEGY CONSUMER TREND DIAGEO’S FOCUS Premiumization 19 brands at lower price points sold to Sazerac; focus on premium+ innovation Aged 50+ Targeted investment against older Consumers consumer cohort More occasions at Activating agai
Slide 21: Consumer Occasions: Investing Behind Quality Insights
CONSUMER OCCASIONS: INVESTING BEHIND QUALITY INSIGHTS SMIRNOFF KETEL CÎROC CROWN BULLEIT DICKEL JW BUCHANANS MALTS Indulgent Moment at Home Party Night Out Key Consumer High Energy Hangout at Home Occasions Gd Company, Gd Drinks Out Out to Impress We're Out to Impress 20 • Our consumer-first strateg
Slide 22: Improved the quality of our insights
improved the quality of our insights. These insights inform our investment choices and growth drivers 20
Slide 23: Geographic Differentiation: Top Cities Driving Disproportionate Growth
GEOGRAPHIC DIFFERENTIATION: TOP 10 CITIES DRIVING DISPROPORTIONATE GROWTH Data analytics being leveraged to identify where future market growth is coming from Geographical Differentiation Informs our Allocation of Resource 21 • A granular understanding of exactly where our consumers and the best opp
Slide 24: Delivering Vibrant Local Experiences
DELIVERING VIBRANT LOCAL EXPERIENCES Event mix prioritized according HYPER LOCAL EXPERIENCES to consumer insights Consumer first model that delivers local, in- culture brand experiences at scale TYPE TIER What size event, and Which lifestyle pillar correlational size of does the event serve? brand e
Slide 25: Effective Point of Purchase
EFFECTIVE POINT OF PURCHASE DISTINCTIVE IN-STORE EXECUTION CONSUMER-ORIENTED OMNICHANNEL 23 • We want to ensure we have the right brands in the right place and at the right price – which is why we are focused on distinctive in-store execution and omni-channel platforms. • For example [in-store]: • O
Slide 26: Investing to Win Behind Our Portfolio
INVESTING TO WIN BEHIND OUR PORTFOLIO UPWEIGHTING / BALANCING MEASUREMENT / ROI Performance Allocation Media Spend by Type • Understanding growth drivers by brand • Future profit pool analysis • Balancing investment mix • Return on Marketing Investment • Driving competitive media • Optimization to h
Slide 27: Increasing Focus on Building Next Wave of Growth
INCREASING FOCUS ON BUILDING NEXT WAVE OF GROWTH Amplify Accelerate Incubate • Amplifying proven growth • In-culture, on-the-ground • Dedicated long-term drivers activation investment focus • Hypertargeting, clear • Targeted investment ahead • Test & learn; access to expansion plans of growth Diageo
Slide 28: Business Development Strategy Supports Portfolio Priorities
BUSINESS DEVELOPMENT STRATEGY SUPPORTS PORTFOLIO PRIORITIES $4.4B US RSV Category KEY ACQUISITION 8.6% +9bps Total US Spirits Forecasted 5yr CAGR Value Share in F19 YTD Source: Left hand side – IWSR 2018; Right side: Combined Nielsen / NABCA thru March 2019 26 • We are also prioritizing M&A investme
Slide 29: Key US Spirits Priorities
KEY US SPIRITS PRIORITIES Delivering strong and sustainable performance Driving growth through data driven insights Building sustainable leadership in innovation Ensuring executional excellence in our route-to-market 27 • As we continue to focus on long-term growth, a key enabler will be innovation
Slide 30: Maintaining a Consistent Leadership Position in Innovation
MAINTAINING A CONSISTENT LEADERSHIP POSITION IN INNOVATION % OF US TOTAL SPIRITS RETAIL SALES INNOVATION CONTRIBUTED BY DIAGEO 67% 60% 48% 41% F16 F17 F18 F19 YTD Source: Nielsen, including Casamigos 28 • We are the leader in innovation in the US and innovation is our biggest single driver of growth
Slide 31: We Are Driving Toward Consistent and Sustainable Growth in Innovation
WE ARE DRIVING TOWARD CONSISTENT AND SUSTAINABLE GROWTH IN INNOVATION INNOVATION BASE BUSINESS GROWTH (%) 11% F16 F17 F18 F19 YTD -9% -20% -25% Source: Nielsen, including Casamigos 29 • This slide demonstrates the contribution of prior year launches to growth. Each year on this chart reflects the gr
Slide 32: Upweighted focus and investment behind innovation launches
• We have heavily upweighted our focus and investment behind innovation launches that we believe have potential to recruit • For example, Crown Apple plays a key role in recruiting new drinkers and opening new higher energy occasions for the brand portfolio, overindexing in “Drinks Out” occasions an
Slide 33: Video: US Spirits Game of Thrones
VIDEO US Spirits Game of Thrones 31
Slide 34: Limited Time Offers
• As Ed mentioned earlier, we’ve improved the focus of Limited Time Offers (LTOs) to delight the consumer on key occasions and build the base trademark • For example, you’ll see here a number of seasonally relevant LTOs, such as Crown Royal Salted Caramel that does really well in the winter holidays
Slide 35: Key US Spirits Priorities
KEY US SPIRITS PRIORITIES Delivering strong and sustainable performance Driving growth through data driven insights Building sustainable leadership in innovation Ensuring executional excellence in our route-to-market 33 • Lastly, we’re working to ensure we have the right capabilities, tools and peop
Slide 36: Why We Needed to Evolve & What Has Changed
WHY WE NEEDED TO EVOLVE & WHAT HAS CHANGED TECHNOLOGY IS THE NATURE OF WHY? RAPIDLY CHANGING SHOPPING HAS CHANGED WE NEED TO EVOLVE LEVERAGING ADVANCED EVOLVING OUR EXECUTION CHANGING WAYS OF WORKING WHAT? ANALYTICS TO TAILOR STANDARDS FOR EVERY OUTLET MODEL TO DELIVER EVERY DAY GREAT EXECUTION BETW
Slide 37: Creating Visibility into Stores and Bars - Trax
CREATING VISIBILITY INTO STORES AND BARS - TRAX WHAT IT IS – Assists in field data collection & automated measurement – In flight view of outlet level KPI scorecards HOW IT WORKS Images are captured Real-time analysis in Actionable insights and products are the Trax Cloud through mobile recognized s
Slide 38: Video: US Spirits EDGE
VIDEO US Spirits EDGE 36
Slide 39: EDGE Standards Are Already Driving Growth
EDGE STANDARDS ARE ALREADY DRIVING GROWTH 3X Growth Average EDGE Outlets Outlets Growth over 12M thru March 2019 37 • As you can see, this new EDGE technology is providing each member of our salesforce the data, insights and tools required to achieve the right points of distribution in every store o
Slide 40: Example: Outlet Driven Approach to Targeting
EXAMPLE: OUTLET DRIVEN APPROACH TO TARGETING VODKA PREFERENCES Other Rum Scotch + Teq Whiskey Vodka Diageo sales Ethnicity Household Education income Outlet demographics 38 • Here’s an example of how we’ve developed our recommendations / standards for EDGE • As you see here, we take examples of outl
Slide 41: Integrating Advanced Analytics Capabilities into the Business to Maximize Growth
INTEGRATING ADVANCED ANALYTICS CAPABILITIES INTO THE BUSINESS TO MAXIMIZE GROWTH 39 • I’ve spoken today about several analytical tools that we are deploying, but this is just the tip of the iceberg. Beyond Catalyst and EDGE, we are building a best-in-class, cross-functional Advanced Analytics team t
Slide 42: Summary
SUMMARY Leading spirits business in an attractive market On track to grow in line with industry in F19 Leveraging data-backed insights to ensure long-term, sustainable growth Delivering improved capabilities supporting to ensure effective, efficient execution 40 • In summary, we are proud of what we
Slide 43: Diageo: Celebrating Life, Every Day, Everywhere
DIAGEO CELEBRATING LIFE, EVERY DAY, EVERYWHERE Oo script DIAGEO 41
Slide 44: 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 45: 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