British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Investor Day (March 2019)
74 slides from British American Tobacco P.l.c's investor day presentation, Mar 14, 2019
Slide 1: Investor Day | 14 March 2019
——EEE BRITISH AMERICAN TOBACCO Investor Day | 14 March 2019 * ae RANSFORMIN ACCELERATING DELIVERY —
Slide 2: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES A very significant growth opportunity PAUL LAGEWEG | DIRECTOR NEW CATEGORIES
Slide 3: Important Information
Important Information The information contained in this presentation in relation to British American Tobacco p.l.c. (“BAT”) and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or intended for distribution to or use by, any person or entity
Slide 4: Important Information
Important Information Forward-looking Statements (continued) Additional information concerning these and other factors can be found in BAT’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F to be filed on 15 March 2019 and Current Reports on
Slide 5: Paul Lageweg, Director, New Categories
PAUL Director, New Categories LAGEWEG 27y Global FMCG and tobacco experience • BRITISH AMERICAN TOBACCO • Regional Head of Marketing, Asia-Pacific and Middle East • Group Head of Marketing Futures • Area Director, East-Asia • KIMBERLY-CLARK CORPORATION • CEO South Asia / CEO Philippines, India & Vie
Slide 6: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY NEW CATEGORIES ENHANCE PROFITABILITY WINNING WITH RECENT OFFERS IN KEY MARKETS A STRONG PIPELINE OF TRANSFORMATIONAL TECHNOLOGIES
Slide 7: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY NEW CATEGORIES ENHANCE PROFITABILITY WINNING WITH RECENT OFFERS IN KEY MARKETS A STRONG PIPELINE OF TRANSFORMATIONAL TECHNOLOGIES
Slide 8: New Categories attract more consumers and generate more revenue growth
New Categories attract more consumers and generate more revenue growth # NICOTINE CONSUMERS (Mn) RETAIL VALUE OF NICOTINE CATEGORIES (£bn) 18 4 221 248 299 314 2018 Source: Incidence Study & BAT internal estimates (Top 40 markets, Excl, China, India) New Categories include Vapour, THP and Modern Ora
Slide 9: New Categories' growth driven by entrants
New Categories’ growth driven by entrants NEW ENTRANTS INTO NICOTINE (Mn consumers) % ENTRANTS USING NEW CATEGORIES 14% 13 13 T40 Mkts 27% 11 3 56% 1 85%* 22% 50% 30% 38% 34% 80% 12% New Categories: Share of Market 21% 2011 2015 2018 New Categories: Share of Entrants New Categories Traditional Categ
Slide 10: Significant portion of Vapour & Modern Oral growth driven by entrants
Significant portion of Vapour & Modern Oral growth driven by entrants THP Vapour Modern Oral Growth driven by Switching ..more than half …Entrants share increasing New entrants Balanced 11% 42% Source of Source of Source of 50% 50% Gains* Gains Gains 58% 89% Switching Entry * Split of consumers ente
Slide 11: No single category meets all requirements
No single category meets all requirements New Categories address unmet requirements better PRODUCT REQUIREMENTS Cigarettes THP Vapour Modern Oral IDENTITY GRATIFICATION CONSIDERATION AFFORDABILITY MANAGEMENT DISCRETION Source: Landscape Study (Consumer research)
Slide 12: Moments are being regained through poly usage
Moments are being regained through poly usage CATEGORY USAGE ACROSS MOMENTS Outside with Others First thing in the morning +30-35% Home with Others Alone Out of Home ~ +30% +15-20% +30-35% At Office/ Workspace After Meals Source: Consumer Segmentation & Tracking study
Slide 13: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY NEW CATEGORIES ENHANCE PROFITABILITY WINNING WITH RECENT OFFERS IN KEY MARKETS A STRONG PIPELINE OF TRANSFORMATIONAL TECHNOLOGIES
Slide 14: Poly-usage is value accretive
Poly-usage is value accretive NEW CATEGORY CONSUMERS COMPOSITION THP Revenue* per Consumer 100 230 284 Solus Cigarettes Poly-user Solus THP 55% Consumer (Cigarettes & THP) Consumer 65% VAPOUR Revenue per Consumer 35% 45% 100 151 112 Solus Cigarettes Poly-user Solus Vapour^ Vapour THP Consumer (Cigar
Slide 15: THP has significantly higher margins than cigarettes
THP has significantly higher margins than cigarettes Japan S Korea Global ~ 2.7X ~ 1.2X Cigarettes Cigarettes ~ 2.8X Cigarettes Russia Italy Romania GM/ Mille* ~ 2.7X ~ 5.8X ~ 2.7X Cigarettes Cigarettes Cigarettes * per 1000 cigarettes Source: BAT internal estimates; Consumables margin comparison at
Slide 16: Modern Oral also has significantly higher margins
Modern Oral also has significantly higher margins Sweden Global ~ 2.4X Cigarettes ~2-3X Cigarettes UK Switzerland GM/ Mille * ~ 3.1X ~ 1.5X Cigarettes Cigarettes * per 1000 cigarettes Source: BAT internal estimates; 2018 Actual Exchange rate
Slide 17: Vaping margins to improve due to evolving landscape
Vaping margins to improve due to evolving landscape OPEN TO CLOSED SYSTEM VAPE STORES TO TRADITIONAL RETAIL THE FUTURE BRAND CONSOLIDATION INCREASED REGULATIONS blu JUUL
Slide 18: Shift from Open to Closed Systems
Shift from Open to Closed Systems VAPING REVENUE (£bn) VAPING REVENUE (£bn) 20% 35% 43% 66% 70% 81% 80% 65% 57% 34% 30% 19% 2013 2018 2023* 2013 2018 2023 * Open System Closed System Source: BAT internal estimates * Estimate Revenue calculated at constant 2019 Budget rates
Slide 19: Channel shift enhancing margins
Channel shift enhancing margins VAPING RETAIL OUTLOOK 20% Traditional Retail 43% 50% 20% 23% Online 30% 60% 34% 20% Vape Store 2013 2018 2023 * Source: BAT internal estimates * Estimate Retail Value calculated at constant 2019 Budget rates
Slide 20: Shift from Fragmentation to Consolidation
Shift from Fragmentation to Consolidation TOP 3 PLAYERS RETAIL VALUE CONTRIBUTION (2018 FY) 87% 64% Source: Measured Retail data
Slide 21: FDA – 2021/2 PMTA
Regulation will further accelerate these trends FDA – 2021/2 PMTA
Slide 22: Vaping margins to improve due to evolving landscape
Vaping margins to improve due to evolving landscape SHIFT FROM VAPE STORES SHIFT FROM OPEN TO TO TRADITIONAL RETAIL CLOSED SYSTEMS AND ONLINE BRAND INCREASED CONSOLIDATION REGULATION
Slide 23: New Categories represent a significant growth opportunity
New Categories represent a significant growth opportunity Growing number Increased number of Nicotine of Usage Consumers Occasions Vaping margins will improve Better SHIFT FROM VAPE STORES Better THP SHIFT FROM OPEN TO CLOSED SYSTEMS TO TRADITIONAL RETAIL Modern Oral AND ONLINE Margins Margins BRAND
Slide 24: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY NEW CATEGORIES ENHANCE PROFITABILITY WINNING WITH RECENT OFFERS IN KEY MARKETS A STRONG PIPELINE OF TRANSFORMATIONAL TECHNOLOGIES
Slide 25: Winning with recent offers in key markets | THP
WINNING WITH RECENT OFFERS IN KEY MARKETS | THP TRIPLED VOLUME AND FASTEST GROWING GLO LEADING WITH 70% SHARE REVENUE IN 2018 IN JAPAN AMONG CONSIDERATES ~3X ~3X Volume (’17-’18) Revenue (’17-’18) glo SoS* IMPROVING COMPETITIVENESS NEW PIPELINE WILL IMPROVE BUILDING CAPABILITIES FOR AMONG INNOVATION
Slide 26: Tripled global volume and revenue in 2018
Tripled global volume and revenue in 2018 GLO VOLUME (Bn) GLO REVENUE (£Mn) 3x ~3x 6.8 575 43% OF BAT 2018 REVENUE 2Mn+ GROWTH consumers 2.2 200 201 7 201 8 17 8 2017 2018 2017 2018 Source: Company data & BAT internal estimates Revenue calculated in 2018 Constant Exchange rates
Slide 27: glo | Fastest growing brand in the biggest THP market
glo | Fastest growing brand in the biggest THP market JAPAN ~70% OF GLOBAL THP INCREMENTAL SHARE GAIN Volume share of New Categories +1245bps +697bps +617bps RoW +14bps 32% 2017 2018 2017 2018 2017 2018 JAPAN 68% -711bps B AT JT -1862bps PMI PloomTech iQOS Source: Retail data (Convenience off-take)
Slide 28: Continued glo volume and value share growth
Continued glo Volume and Value share growth 26.7% 28. 0% 8.0 % 26. 0% 7.5 % 24. 0% Value Share 22.3% 7.0 % of THP* 23.1% 22. 0% 6.5 % 20. 0% Volume Share 19.1% 6.0 % 18. 0% of THP 5.5 % 5.1% 16. 0% 5.0 % 14. 0% 4.5 % 12. 0% Volume share in 4.0 % 4.0% 10. 0% Total Tobacco 8.0 % 3.5 % Nov-18 Feb-18 Ma
Slide 29: Strong combustibles & corporate share growth
Strong combustibles & corporate share growth BAT VOLUME SHARE OF COMBUSTIBLES BAT VOLUME SHARE OF TOTAL TOBACCO VOLUME SHARE OF TOTAL TOBACCO (Dec 2018 vs. Dec 2017) 17.1% 16.0% +133bps 14.7% - -6bps PMI 13.6% -153bps - JT JAN 2017 MAY SEP JAN 2018 MAY SEP Wk3 FEB 2019 JAN 2017 MAY SEP JAN 2018 MAY
Slide 30: New categories currently concentrated in 2 segments
New categories currently concentrated in 2 segments Considerates and Innovation Enthusiasts account for 80% OUTER DIRECTED MAIN INNOVATION STREAMERS ENTHUSIASTS SMART ELEGANCE TASTE ASPIRING MASTERS ECONOMISERS AFFILIATION INDIVIDUALITY LOCAL PRIDE CONSIDERATES PRICE STRUGGLERS INNER DIRECTED Source
Slide 31: New categories currently concentrated in 2 segments
New categories currently concentrated in 2 segments Considerates and Innovation Enthusiasts account for 80% OUTER DIRECTED › Style/Modernity INNOVATION › Experimentation ENTHUSIASTS › On-trend › Flavour AFFILIATION INDIVIDUALITY › Social Consideration › Harm Reduction CONSIDERATES › Value › Simplici
Slide 32: Further extending leadership in Considerate segment
Further extending leadership in Considerate segment KEY SMOKER SEGMENTS FOR THP glo STRONGHOLD IN CONSIDERATES Q4’18 • Style/modernity Q3’18 • Experimentation Penetration 70% • On-trend • Flavour glo SoS* 60% 70% Innovation Enthusiasts Imagery GAP glo – competition 34% Easy to insert stick 29 low TH
Slide 33: Neo growing premium share among Innovation Enthusiasts
Neo growing premium share among ‘Innovation Enthusiasts’ Q4’18 Q3’18 glo SoS* 14% 21% 5.1% glo volume share of total tobacco 4.0% JAN 2018 FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN 2019 W1 Feb W1 Feb Source: Consumer Tracking research & Convenience off-take data * glo share of segment among ‘I
Slide 34: Building a stronger brand through digital engagement
Building a stronger brand through digital engagement BRAND BUILDING & ACQUISITION AWARENESSS & TRIAL BUILDING CONSTANT CONSUMER ENGAGEMENT 3MN+ CONTACTS 357K REGISTERED HYPERCARE USERS 1.6BN PROGRAMMATIC IMPRESSIONS 1.6MN REGISTERED USERS 580MN DIGITAL AD VEIWS Source: Company data
Slide 35: Consumables upgrade to enhance sensorial satisfaction
Consumables upgrade to enhance sensorial satisfaction
Slide 36: Exciting pipeline to enhance appeal
Exciting pipeline to enhance appeal Premium & Prestige Performance Modern & Stylish Shape and size Progressive For AU30
Slide 37: Improving device appeal and satisfaction for Innovation Enthusiasts
Improving device appeal and satisfaction for ‘Innovation Enthusiasts’ OUTER DIRECTED INNOVATION ENTHUSIASTS FOLLOWER SEGMENTS AFFILIATION INDIVIDUALITY CONSIDERATES INNER DIRECTED
Slide 38: glo now available in 15 markets
glo now available in 15 markets These markets represent ~95% of Industry THP footprint glo FOOTPRINT JPN KOR ITA RUS National National National Key Cities SWZ CAN ROM SER National GVA* Nat. Urban Key Cities CRO KAZ POL GRE Zagreb Key Cities National National CZE UKR BUL National Key Cities Key Citie
Slide 39: Building foundation for future growth in Europe
Building foundation for future growth in Europe Romania Moscow Kazakhstan 14% 5% 11% Share of THP Share of THP Share of THP New Activation Model & Rental program New Digital Media campaign Retail expansion & HORECA Bulgaria Croatia Serbia Mod. Trade 7% 6% 4% Share of THP Share of THP Share of THP Ne
Slide 40: Europe | Focus on brand building & capabilities
Europe | Focus on brand building & capabilities BRAND BUILDING THROUGH RESPONSIBLE MASSIVE AND SCALABLE CONSUMER FAST ROLL OUT OF CRM CAPABILITY SOCIAL MEDIA ENGAGEMENT CONVERSION THROUGH NEW CAPABILITIES ACROSS KEY MARKETS Instagram, Facebook, Twitter, etc Social Selling & Hypercare Single Consumer
Slide 41: Winning with recent offers in key markets | THP
WINNING WITH RECENT OFFERS IN KEY MARKETS | THP TRIPLED VOLUME AND FASTEST GROWING GLO LEADING WITH 70% SHARE REVENUE IN 2018 IN JAPAN AMONG CONSIDERATES ~3X ~3X Volume (’17-’18) Revenue (’17-’18) glo SoS* IMPROVING COMPETITIVENESS NEW PIPELINE WILL IMPROVE BUILDING CAPABILITIES FOR AMONG INNOVATION
Slide 42: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY NEW CATEGORIES ENHANCE PROFITABILITY WINNING WITH RECENT OFFERS IN KEY MARKETS A STRONG PIPELINE OF TRANSFORMATIONAL TECHNOLOGIES
Slide 43: Winning with recent offers in key markets | Vapour
WINNING WITH RECENT OFFERS IN KEY MARKETS | VAPOUR VYPE ePEN3 AND VYPE ePOD / VUSE ALTO GOOD INITIAL MARKET RESULTS FOR SUPERIOR TO COMPETITION VYPE ePEN3 & VYPE ePOD / VUSE ALTO #1 #1 #2 #2 EXCITING MARKET LAUNCH PLANS FOCUS ON STRENGTHENING BRAND EQUITY 2.4 NIC LAUNCH EUROPE LAUNCH Q2’19 Q2’19 #1
Slide 44: Industry Vapour consumer pool and value doubled since 2014
Industry Vapour consumer pool and value doubled since 2014 NUMBER OF VAPERS (Mn) VAPOUR RETAIL VALUE (£bn) 52 5X 9.2 vs. THP ~2.0X ~2.5X 27 3.5 2014 2018 2014 2018 Source: Incidence Study & BAT internal estimate; Constant 2019 Budget rates
Slide 45: BAT Vapour revenue grew by ~30% in 2018
BAT Vapour revenue grew by ~30% in 2018 BAT VAPOUR REVENUE (£Mn) ~1.3x 325 * 4Mn+ consumers 258 ^ 17 8 2017 2018 * Revenue calculated in 2018 Constant Exchange rates ^ On a representative basis as though the Group had owned the acquisitions made in 2017 for the whole of that year and adjusted at con
Slide 46: Vapour landscape previously shaped by open vs. closed systems
Vapour landscape previously shaped by open vs. closed systems New spaces emerging in Vapour also OUTER DIRECTED Open systems INNOVATION ENTHUSIASTS FOLLOWER SEGMENTS AFFILIATION INDIVIDUALITY CONSIDERATES Cigalikes INNER DIRECTED
Slide 47: Winning closed system portfolio
Winning closed system portfolio Vype ePen3 Vuse Alto
Slide 48: Winning closed system portfolio
Winning closed system portfolio Vype ePen3 84% ePen3 JUUL 66% 65% 54% 43% 44% 34% 18% Taste Ease of use Satisfaction Trial to Usage Intensity Conversion* Source: Quantitative Product test (UK) among adult nicotine consumers. Sample size 200 * Source: Tracking study Q4’18
Slide 49: Vype ePen3 and Vype ePod/Vuse Alto superior to JUUL
Winning closed system portfolio Vype ePen3 and Vype ePod/Vuse Alto superior to JUUL Vype ePen3 Vuse Alto 84% ePen3 JUUL 92% Vuse Alto JUUL 90% 87% 66% 65% 84% 81% 54% 78% 43% 44% 66% 34% 55% 18% Taste Ease of use Satisfaction Trial to Usage Ease of use Likely to Appeal Purchase Intent Intensity Conv
Slide 50: Vuse continues to grow revenue
Vuse continues to grow revenue VUSE SHOWING GOOD GROWTH ~£4bn+* REVENUE OPPORTUNITY BY 2021/2 Vuse Indexed Revenue 613 511 397 2021/2 262 Now Future 100 Expected consolidation of the market following PMTA submissions 2014 2015 2016 2017 2018 Indexed to 2014 Vuse Revenue as 100 Source: Company data;
Slide 51: Strong early performance for Alto
Strong early performance for Alto CONSISTENT OFF-TAKE - GROWTH ALTO % Share of Starter Kits ALTO % Share of Cartridges and ml 10.6% 6.9% 3.1% 1.4% 0.8% 0.3% Sep Oct Nov Dec Jan Feb Sep Oct Nov Dec Jan Feb Share of millilitres (off take) Share of cartridge (off take) Source: Company data
Slide 52: Alto growth narrowing the gap with JUUL
Alto growth narrowing the gap with JUUL OFF-TAKE - SHARE OF CONSUMABLE KITS 69% 43% 35% 28% 29% 10% 11% Feb ’18 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ’19 Feb Vuse Alto Vuse JUUL Source: Marlin Off-Take data; Vuse share includes all Vuse products
Slide 53: ePen3 rated 'Product of the Year'
ePen3 rated ‘Product of the Year’ OUTPERFORMING COMPETITOR PRODUCT ACROSS KEY PARAMETERS ePen3 vs JUUL CONVENIENT GOOD VALUE TO USE FOR MONEY +2651bps +2008bps HIGH QUALITY PURCHASE DEVICE INTENTION +936bps +1773bps ePend3 rated ‘Product of the Year’ in e-cigarette category in UK Source: UK Consumer
Slide 54: ePen3 | Superior product enabling solid performance in UK
ePen3 | Superior product enabling solid performance in UK ePen3 DRIVING HIGHEST-EVER - ePen SHARE STRONG ePen3 REPURCHASE RATIO Value share | 4-weekly - Refill pack to Device ratio | weekly 5.4% ePen 3 MyBlu 7.9 Juul 4.7% Logic Compact 3.5% 4.8 2.5% 4.2 1.2% 0.2% Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 J
Slide 55: Strengthening market leadership in UK
Strengthening market leadership in UK SIGNIFICANTLY AHEAD OF ALL COMPETITORS AND GROWING Value Share in measured retail 41% 16% 10% 4% 3% BAT Imperial JTI JUUL PMI Source: Nielsen scan data in measured Retail (YTD WE 23.02.19)
Slide 56: Full integration of traditional and digital channels
Full integration of traditional and digital channels BUILD BRAND EQUITY, REACH AND DRIVE CONSUMER LONG-TERM - VALUE MAXIMISE OWN RETAIL FOOTPRINT AWARENESS IN TARGET GROUP - AND LOYALTY THROUGH E-COMMERCE Vape Bloggers, Events, OOH, Media Market leader in Vaping stores network Ecommerce Platform ful
Slide 57: Vype market leader in France through ePen3 success
Vype market leader in France through ePen3 success STRONG ePen3 GROWTH DRIVING VYPE -–ALL TIME HIGH SHARE HIGHEST-EVER - ePen SHARE AND RETAIL LEADERSHIP ePen 3 Value share Vype Family value share 23.7% 14.8% 8.5% #6 #1 Value share of market 7.3% Value share of closed system 25 Nov 30 Dec 03 Feb Jul
Slide 58: Vype attracts more new consumers & has higher conversion
Vype attracts more new consumers & has higher conversion OUTPERFORMING COMPETITION COMPETITIVE CONVERSION IN DEVICE SALES RATES FOR VYPE Total Devices sold in retail since launch (’000) Device Conversion rates amongst smokers JUUL 97.0 Consideration to Trial 48% 46% 59.7 Trial to Total Penetration 6
Slide 59: Vype | 100k+ consumers in 6 months
Vype | 100k+ consumers in 6 months CONTINUED STRONG SIGNIFICANTLY SUPERIOR OFF-TAKE GROWTH MARGINS VS. FMC Vype Closed systems GM per pack Weekly Off-take Volume 14,279 >3x Vype Refill packs ~2x 15 Jul 18 21 Oct 18 24 Feb 19 FMC ePod ePen3 Source: Sell-out refills and device volumes in measured reta
Slide 60: Winning with recent offers in key markets | Vapour
WINNING WITH RECENT OFFERS IN KEY MARKETS | VAPOUR VYPE ePEN3 AND VYPE ePOD / VUSE ALTO GOOD INITIAL MARKET RESULTS FOR SUPERIOR TO COMPETITION VYPE ePEN3 & VYPE ePOD / VUSE ALTO #1 #1 #2 #2 EXCITING MARKET LAUNCH PLANS FOCUS ON STRENGTHENING BRAND EQUITY 2.4 NIC LAUNCH EUROPE LAUNCH Q2’19 Q2’19 #1
Slide 61: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY NEW CATEGORIES ENHANCE PROFITABILITY WINNING WITH RECENT OFFERS IN KEY MARKETS A STRONG PIPELINE OF TRANSFORMATIONAL TECHNOLOGIES
Slide 62: Transformational Technologies to overcome the key barrier | Satisfaction
Transformational Technologies to overcome the key barrier | Satisfaction SENSORIAL SATISFACTION: Barrier #1 X 0.85X 0.75X FMC THP E-Cig Source: Quantitative cross-category consumer research (by Kantar) among Nicotine Users, 2017
Slide 63: Distiller plate | Delivering 6X Satisfaction Efficiency
1. Distiller plate | Delivering 6X Satisfaction Efficiency TODAY COMING IN 2019 6X Satisfaction Efficiency 145 Patent Filings High Performance Battery GLASS FIBRE COTTON CERAMIC Coil & Wick Micro-engineered steel blade
Slide 64: Vype iSwitch | A world first in Vaping
1. Distiller plate Vype iSwitch | A world first in Vaping AROUND 99% REDUCED TOXICANTS* | HIGHER SATISFACTION | AUTHENTIC TASTE OUTPERFORMING COMPETITION ON TASTE SATISFACTION iQOS JUUL iSwitch 79 65 65 66 57 50 51 41 38 35 19 19 Authentic Taste & Flavour (%) Taste Intensity (%) Satisfaction (%) Pur
Slide 65: Induction heating | Up to 3 times higher satisfaction
2. Induction heating | Up to 3 times higher satisfaction* TODAY COMING IN 2019 Up to 3X more satisfaction* Up to 4X Faster ramp up time ^ 25% faster charge 110+ Patents Filings * Comparison of nicotine delivery in BAT lab experiments with glo heating technologies using different ranges of blends and
Slide 66: glo Express | Improved satisfaction and design aesthetics
2. Induction heating glo Express | Improved satisfaction and design aesthetics ICONIC SMOOTH SOFT, TWO SIMPLICITY SOFT ROUNDED TONE SLIDER EDGES FINISH
Slide 67: Taste Fusion Technology | Superior tobacco taste and flavour
3. Taste Fusion Technology | Superior tobacco taste and flavour NEW TO THE WORLD Reinvented Tobacco Granules Tobacco Leaf Extract Advanced heating design AUTHENTIC 2X Satisfaction* TOBACCO TASTE 3X TASTE DELIVERY^ *Comparison of Nicotine delivery in BAT lab tests vs. competitive product ^ 3X higher
Slide 68: Taste Fusion Technology | glo significantly better than competitor offer
3. Taste Fusion Technology glo | Significantly better than competitor offer TASTE VAPOUR SATISFACTION % Just Right % Just Right Mean Score 57 3.9 47 3.3 42 32 Co m p iFuse Co mp iF use Co mp iF use Ploomtech glo Ploomtech glo Ploomtech glo Source: Total Offer Test, Japan, Q4 2018 (Product Ratings am
Slide 69: Big opportunities in Modern Oral
4. Big opportunities in Modern Oral A NEW GENERATION OF ADDRESSING KEY POTENTIALLY REDUCED RISK PRODUCTS CONSUMER NEEDS High quality ingredients Discretion & Gratifying Consideration Convenience Stimulation NATURALLY DERIVED FOOD GRADED WATER PINE TREE & NICOTINE FLAVOURING EUCALYPTUS FIBRES
Slide 70: THP | New technologies will strengthen footprint
THP | New technologies will strengthen footprint OUTER DIRECTED Taste Fusion Technology INNOVATION ENTHUSIASTS FOLLOWER SEGMENTS Induction Heating AFFILIATION INDIVIDUALITY CONSIDERATES INNER DIRECTED
Slide 71: Vapour | Stronger pipeline targeting all key segments
Vapour | Stronger pipeline targeting all key segments OUTER DIRECTED INNOVATION ENTHUSIASTS FOLLOWER SEGMENTS Distiller plate AFFILIATION INDIVIDUALITY CONSIDERATES INNER DIRECTED
Slide 72: New Categories portfolio well positioned to win across all segments
New Categories portfolio well positioned to win across all segments OUTER DIRECTED INNOVATION ENTHUSIASTS FOLLOWER SEGMENTS AFFILIATION INDIVIDUALITY CONSIDERATES INNER DIRECTED
Slide 73: Transforming to accelerate our delivery
Transforming to accelerate our delivery INSIGHTS DESIGN TALENT RAPID PROTOTYPING FORESIGHTS BRANDS EXTERNAL PARTNERSHIPS INNOVATION DIGITAL HUBS FOCUS
Slide 74: Step-Changing New Categories
STEP-CHANGING NEW CATEGORIES BACK IN A GROWTH INDUSTRY WITH GOOD RESULTS OF RECENT OFFERS IN KEY MARKETS ENHANCED PROFITABILITY CONSUMERS RETAIL VALUE FOCUS ON BUILDING TRANSFORMING CAPABILITIES STRONG BRANDS TRANSFORMATIONAL TECHNOLOGIES WILL ACCELERATE GROWTH
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