Imperial Brands Plc · LSE:IMB
Imperial Brands — Investor Day (June 2016)
20 slides from Imperial Brands's investor day presentation, June 2016
Slide 1: ITG Brands
ITG Brands David Taylor, Chief Executive ITG Brands
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation and financial effects of the plans and events prepared for, and only for the members of the constitute or may constitute forward-looking described in this presentation. As a result, Company, as a body, and no other persons. statements. Any statement
Slide 3: The US Market
The US Market Highly attractive • World’s largest profit pool1 (>$14bn2) 25% of world tobacco profit • No. 2 market by volume1 (264bn cigarettes in 20153) • Steady and predictable long term volume decline although stable in last year • Pricing leading to steady net revenue growth • Relative cigarett
Slide 4: ITG Brands Snapshot
ITG Brands Snapshot • Cigarettes ~ 85% of net revenue Cigars Cigars other brands – Focus Brands ~ 70% Focus Brands – Other brands ~ 30% • Cigars ~ 15% of net revenue Cigarettes – Focus Brands ~ 80% other brands Cigarettes Focus – Other brands ~ 20% Brands • 2,700 total employees • National sales for
Slide 5: US Integration
US Integration Substantially complete • Corporate activities migrated to Greensboro • Wind-down of Commonwealth-Altadis largely complete • One sales force representing cigarettes, cigars and e-vapour • Manufacturing transition progressing smoothly • All ITG Brands machines now migrated to Greensboro
Slide 6: Retailer Contracts Supporting Strategy
Retailer Contracts Supporting Strategy 4 key areas Product Distribution of Focus Brands (to the SKU level) Availability Visibility Shelf space and product visibility to the consumer Awareness Interior/exterior advertising of Focus Brands Pricing Management of consumer price points 6 | Imperial Brand
Slide 7: Rewarding Retailers
Rewarding Retailers Focus on customer engagement • Buydown payments – on product purchases or consumer sales (paid directly to retailer) • Product promotional levels higher than non-contracted retailers • ITG Brands has achieved outstanding results – 164,000 retailers contracted representing 88% of
Slide 8: Focus On Four Brands
Focus On Four Brands Premium Brands Discount Brands Winston USA Gold • National • Regional (rural markets) • Focus: volume and share growth • Focus: share growth • No.6 brand in US • No.14 brand in US Kool Maverick • National • National (urban/suburban markets) • Focus: volume and share growth • Foc
Slide 9: Investing for Sustainable Growth: Winston
Investing for Sustainable Growth Market share and profit growth focus Winston Key national Focus Brand Supported coast to coast Product tests well with consumers New packaging New advertising New relationship marketing – Direct mail – Internet/website – Social media – Mobile couponing 9
Slide 10: New Packaging Across all Winston Styles
New Packaging Across all Winston Styles 10 | Imperial Brands Investor Day | June 2016
Slide 11: Investing for Sustainable Growth: Kool
Investing for Sustainable Growth Market share and profit growth focus Kool Key national Focus Brand (menthol developed markets) Brand competes in growing US segment (menthol 32%) Product tests well with consumers New advertising New relationship marketing – Direct mail – Internet/website –
Slide 12: Performance Improved
Performance Improved Post acquisition market share success 13 weeks ended 12 June 13 weeks ended 2 April 2015 2016 Vol % Chg Vol % Chg % Chg vs vs YAG % Share vs YAG % Share 12 June 2015 Focus Brands (3.0) 6.75 (0.1) 6.90 0.15 Winston (4.5) 2.00 3.9 2.12 0.12 Kool (3.8) 1.75 1.3 1.83 0.08 Maverick (
Slide 13: Strengthening Winston Share
Strengthening Winston Share Building momentum 2.55 2.45 2.37 Start of increased Market share (%)* 2.35 promotion 11/21/15 2.25 2.00 2.17 2.15 Merger 2.05 2.00 1.95 2012 2013 2014 2015 2016 13 | Imperial Brands Investor Day | June 2016 *Winston share based on 4 week rolling average volume
Slide 14: Strengthening Kool Share
Strengthening Kool Share Building momentum 2.05 2.00 1.95 Start of 1.95 increased promotion Market share (%)* 11/21/15 1.88 1.90 1.71 1.85 Merger 1.73 1.80 1.75 1.70 1.65 2012 2013 2014 2015 2016 14 | Imperial Brands Investor Day | June 2016 *Kool share based on 4 week rolling average volume
Slide 15: Improving our Cigar Performance
Improving our Cigar Performance New model driven by consumer demand Push Model Pull Model • Discount product to push products to • Focused and consumer relevant brand wholesale portfolio • Special incentives to some wholesalers to • Ensure maximum distribution and visibility purchase high volumes at
Slide 16: New Model Driving Positive Results
New Model Driving Positive Results Simpler more profitable portfolio • Improved product efficiencies A more profitable portfolio • Equitable wholesale and retail programs A simpler range of products • National sales force coverage Available to all trade partners • Consistent and expanded consu
Slide 17: New Model Strengthens Market Share
New Model Strengthens Market Share Improving trend 15.0% ITG Brands cigar market share 14.5% 14.0% 13.5% New model 13.0% 12.5% 12.0% 11.5% 11.0% 10.5% 10.0% Sep-14 Mar-15 Sep-15 Mar-16 • Growth driven by Focus Brands Backwoods, Dutch Masters and Dutch • Portfolio mix more consumer relevant and focus
Slide 18: Becoming More Consumer Relevant
Becoming More Consumer Relevant Focus on brands and price • Brand equity • Buy downs • Visibility in store • Price marked products • Consumer activation 18 | Imperial Brands Investor Day | June 2016
Slide 19: ITG Brands Performing Strongly
ITG Brands Performing Strongly Quality, agility and discipline • Strengthening performance of Focus Brands • Actions to date demonstrating positive effects on share trends • Further brand building efforts underway • Focus on maintaining momentum behind portfolio • Culture of winning and team motivat
Slide 20: Imperial Brands
Ve IMPERIAL A BRANDS