Diageo Plc · LSE:DGE
Diageo — Investor Day (May 2019)
45 slides from Diageo's investor day presentation, May 2019
Slide 1: Scotch
SCOTCH JOHN KENNEDY 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: Scotch - John Kennedy introduction
SCOTCH JOHN KENNEDY MAY 2019 • Welcome back and thank you Cristina and Ed. • Good Morning, my name is John Kennedy. I am the President of Europe, Turkey and India • I have been with Diageo for over 20 years wearing many hats across many geographies. Marketing Director in Australia, ran innovation in
Slide 4: Ensuring Sustainable Scotch Performance
ENSURING SUSTAINABLE SCOTCH PERFORMANCE International Whisky is buoyant with broad based momentum Scotch is the leading category within whisky Diageo has a leadership position in Scotch Scotch delivers consistent performance for Diageo Our strategy and track record give us confidence for the future,
Slide 5: Scotch Performance Continues to Improve
SCOTCH PERFORMANCE CONTINUES TO IMPROVE SCOTCH PERFORMANCE LAST 5 YEARS (Organic NSV, %) 7.0% 4.7% 1.9% 0.4% (4.9%) F15 F16 F17 F18 F19 H1 Source: Internal data 5 • At our last Capital Markets Day I shared a similar slide to this showing the return to growth of Scotch within Diageo. • The drivers of
Slide 6: Breadth and Depth Across the Portfolio
BREADTH AND DEPTH ACROSS THE PORTFOLIO PRESTIGE ULTRA-PREMIUM SUPER-PREMIUM PREMIUM STANDARD PRIMARY 6 * Indicative relative pricing • Again, a familiar slide, but one worth emphasizing. • Diageo has breadth and depth across all price points; from Primary Scotch, to recruit selectively emerging midd
Slide 7: We Continue to Invest for Growth in Our Supply Assets
WE CONTINUE TO INVEST FOR GROWTH IN OUR SUPPLY ASSETS • We are the world’s biggest Scotch producer, with 28 malts distilleries and we’ve recently invested £35m to reopen Brora and Port Ellen, distilleries which closed in 1983. • We have over 10m casks of maturing stock all of which gives us a strong
Slide 8: We Continue to Invest for Growth in Our Supply Assets
WE CONTINUE TO INVEST FOR GROWTH IN OUR SUPPLY ASSETS • For example will be at our own cooperage and coppersmith, I’m also proud to say that these two women pictured in the bottom right-hand corner, Angela Cochrane and Kirsty Olychick are our first two female coopering apprentices. They are breaking
Slide 9: International Whisky, the Largest Category, Is Gaining Share and Premiumizing
INTERNATIONAL WHISKY, THE LARGEST CATEGORY, IS GAINING SHARE AND PREMIUMIZING INTERNATIONAL WHISKY SHARE OF INTERNATIONAL WHISKY IS PREMIUMIZING INTERNATIONAL SPIRITS (RSV $BN) CAGR 31.2% 30.8% 30.9% 21.5 28.4 30.3% 7.2% 29.7% 16.2 19.2 4.3% 4.8 5.1 1.3% 2013 2014 2015 2016 2017 2013 2017 Internatio
Slide 10: Scotch, the Biggest Category, Added Over $1bn to International Whisky in 2017
SCOTCH, THE BIGGEST CATEGORY, ADDED OVER $1BN TO INTERNATIONAL WHISKY IN 2017 CATEGORY CONTRIBUTION TO VALUE GROWTH VALUE SHARE OF INTERNATIONAL ($BN) WHISKY +$1bn vs PY 11% 24% 6% 5% 55% 2013 2014 2015 2016 2017 Canadian Whisky Irish Whiskey Japanese Whisky US Whiskey Scotch Whisky 10 Source: IWSR,
Slide 11: Scotch Has Experienced Consistent Growth
SCOTCH, THE LARGEST CATEGORY IN INTERNATIONAL WHISKY HAS EXPERIENCED CONSISTENT GROWTH SCOTCH GROWTH BY PRICE TIER 35.0 30.0 Retail Sales Value $bn 25.0 20.0 5.1% CAGR 15.0 10.0 1.7% CAGR 5.0 1.4% CAGR 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Value Standard Premium and above Source
Slide 12: We Are Well Positioned by Region & Price Tier
WE ARE WELL POSITIONED BY REGION & PRICE TIER SCOTCH VALUE SHARE BY REGION - 2017 SCOTCH VALUE SHARE BY PRICE TIER - 2017 12% 24% 30% 38% Premium 44% 25% 31% 19% 52% 56% 13% 26% 21% 12% Standard 41% 20% 40% 69% 64% 19% 40% 44% 36% 25% Value 22% 15% 63% Global LAC Africa Asia Pacific North Europe Ame
Slide 13: Our Brands Hold Leadership Positions in All Key Whisky Markets
OUR BRANDS HOLD LEADERSHIP POSITIONS IN ALL KEY WHISKY MARKETS #1 13 Source: IWSR, 2017 data • Our Scotch brands have leadership positions in all key markets • Johnnie Walker is the #1 International Spirits brand in the world. 13
Slide 14: Our Brands Hold Leadership Positions in All Key Whisky Markets
OUR BRANDS HOLD LEADERSHIP POSITIONS IN ALL KEY WHISKY MARKETS #1 #2 #2 #1 #1 #1 #2 #1 #3 14 Source: IWSR, 2017 data • In LAC we have the 3 leading whisky brands – all Scotch’s. • In Africa we are number 1 with Johnnie Walker– three times as big as our nearest competitor • In Europe we are #2 with p
Slide 15: We Have a Consistent Strategy for Growth
WE HAVE A CONSISTENT STRATEGY FOR GROWTH Recruit Emerging Market Recruit with our Global consumers with Primaries Giant: Grow Johnnie Walker Scotch WIN IN INTERNATIONAL WHISKY Premiumize Full portfolio play: Win aspirationally with Local Stars Build vibrancy through Innovation Drive Price / Mix • We
Slide 16: Recruit with our Global Giant: Grow Johnnie Walker
Recruit with our Global Giant: Recruit Emerging Market Grow Johnnie Walker consumers with Primaries Scotch WIN IN INTERNATIONAL WHISKY Premiumize Full portfolio play: Win aspirationally with Local Stars Build vibrancy through Innovation Drive Price / Mix • Lets now take a look at what we have been a
Slide 17: Strong, Accelerating Growth on Johnnie Walker
STRONG, ACCELERATING GROWTH ON JOHNNIE WALKER JOHNNIE WALKER: ACCELERATING GROWTH (Organic NSV, % yoy) 10.0% 6.0% 5.4% 0.7% -9.2% F15 F16 F17 F18 F19 H1 17 Source: Internal data • As you can see from this chart on the left hand side our performance on Johnnie Walker has continued to improve since F1
Slide 18: Our Vision Has Not Changed
OUR VISION HAS NOT CHANGED MOST MOST MOST TALKED DESIRED ENJOYED ABOUT • To continue to deliver sustained growth on Scotch and deliver against our Scotch ambition to win share in International Whisky, Johnnie Walker is key to our success. We continue to execute against our vision to become the most
Slide 19: Overhauled Visual Identity
OVERHAULED VISUAL IDENTITY MOST WARM & INVITING DESIRED 19 • You saw a great example of Johnnie Walker’s overhauled visual identity in the Madrid Store earlier in the Marketing presentation. • This visual identity is what inspired that space and is what inspires everything we do on the brand. • It i
Slide 20: Upweighted Media and Iconic Brand Presence
UPWEIGHTED MEDIA AND ICONIC BRAND PRESENCE MOST LONDON HEATHROW DESIRED • Over the past 5 years we have invested over £1bn in scotch, behind both brand building and capital investments. • We have step changed our brand investment led by Johnnie Walker, upweighting our media presence especially in ic
Slide 21: Revamped Influencer Strategy
REVAMPED INFLUENCER STRATEGY MOST TALKED BARTENDERS ARE THE GATE KEEPERS ABOUT 21 • In order to really drive our serve to scale, we need to embed it with those who are influencing drinks decisions at the point of purchase. Our most important gatekeepers: the bartenders. • Over the years, we have dab
Slide 22: Creating a Consumption Revolution for Scotch
MOST ENJOYED CREATING A CONSUMPTION REVOLUTION FOR SCOTCH MOST THE HIGHBALL ENYOYED 22 • Our influencer programmes will also make a hero of the highball, with Johnnie Walker Black Label playing a central role amongst the worlds’ best bartenders. Many of you will have had an opportunity to taste this
Slide 23: Big Shift in Culture and Partnerships
BIG SHIFT IN CULTURE AND PARTNERSHIPS MOST TALKED WHITE WALKER ABOUT • We have to celebrate and recognise the enormous success of Johnnie Walker White Walker. • It has represented a true step change in how we innovate and the level to which we can execute at launch, rolling out simultaneously to ove
Slide 24: Johnnie Walker White Walker results
globe . o Johnnie Walker became the most talked about whisky, leading share of voice. 23
Slide 25: Immersive Consumer Experiences
IMMERSIVE CONSUMER EXPERIENCES INVESTMENT IN SCOTLAND MOST TALKED ABOUT Confidential • One of the most important places to celebrate Johnnie Walkers 200th is Edinburgh. • We expect to open up the doors to an amazing visitor experience near the end of 2020. • The historic building on Princes Street i
Slide 26: Recruit Emerging Market consumers with Primaries Scotch
Recruit Emerging Market Recruit with our Global consumers with Primaries Giant: Grow Johnnie Walker Scotch WIN IN INTERNATIONAL WHISKY Premiumize Full portfolio play: Win aspirationally with Local Stars Build vibrancy through Innovation Drive Price / Mix • We re-entered primary Scotch 5 years ago, w
Slide 27: Primaries Are a Key Tool in EMC Markets
PRIMARIES ARE A KEY TOOL IN EMC MARKETS TO RECRUIT THE NEXT GENERATION OF SCOTCH DRINKERS DIAGEO VALUE SCOTCH MARKET SHARE (IWSR, 2017 Data) LAC: APAC: 46% AFRICA: 20% Source: IWSR, 2017 data; value share of Value Scotch 50% • We have delivered against these objectives, growing to a strong market sh
Slide 28: Full portfolio play: Win with Local Stars
Recruit Emerging Market Recruit with our Global consumers with Primaries Giant: Grow Johnnie Walker Scotch WIN IN INTERNATIONAL WHISKY Premiumize aspirationally Full portfolio play: Win with Local Stars Build vibrancy through Innovation Drive Price / Mix • We have a full portfolio of brands and our
Slide 29: We Participate with a Full Portfolio Which Includes Local Star Brands
WE PARTICIPATE WITH A FULL PORTFOLIO WHICH INCLUDES LOCAL STAR BRANDS 28 • We have 3 local stars brands that together make up over half a billion in NSV • These brands are leaders in their respective countries: • Buchanan’s in Mexico, • Which has grown at a 10 year CAGR of 8.2% (IWSR 2007 – 2017) •
Slide 30: Premiumize aspirationally
Recruit Emerging Market Recruit with our Global consumers with Primaries Giant: Grow Johnnie Walker Scotch WIN IN INTERNATIONAL WHISKY Compete through full Premiumize aspirationally portfolio participation Build vibrancy through Innovation Drive Price / Mix • Turning to the final pillar of our scotc
Slide 31: Consumer Behaviours and Trends That Will Fuel the Future
CONSUMER BEHAVIOURS AND TRENDS THAT WILL FUEL THE FUTURE Flavour & Craft & Authenticity Casual Get Together Experimentation 30 • There are three big consumer trends that give us confidence in the longevity of the opportunity in Malts: • Craft - Malts play perfectly– made by real people, recognized f
Slide 32: Malts Outpaces Category Growth, But We Have More Work to Do
MALTS OUTPACES CATEGORY GROWTH, BUT WE HAVE MORE WORK TO DO MALT SCOTCH VALUE SHARE OF DIAGEO VALUE SHARE OF MALTS INTERNATIONAL WHISKY 52.7 (MALT SCOTCH RSV $BN IN GREY) (IW RSV $BN IN GREY) 6.3 20% 12% 18% 18% 10% 8% 2007 2012 2017 2007 2012 2017 Source: IWSR, 2017 data 31 • Malts as a category ha
Slide 33: 4 Brands Targeting 4 Growth Pools
4 BRANDS TARGETING 4 GROWTH POOLS Easy drinking & talking Wild spirited Bold luxury Blended malts SINGLETON TALISKER MORTLACH COPPER DOG SPEYSIDE SMOKY DISCOVERY LUXURY BLENDED 50% (of volume pool) Source: IWSR, 2017 data 10% (of volume pool) 3% (of volume pool, 11% of value pool) 6% (of volume pool
Slide 34: Example: Talisker
• Let’s look at an example of how these trends and insights show up in execution of one of our strongest Malt Brands: Talisker 32
Slide 35: Talisker brand example
• Talisker is a great example of a brand that fits with the consumer desire for craft and authenticity, with a unique flavour in an easily accessible, but differentiated, occasion. • Let me show you: 33
Slide 36: Unique Experiences
UNIQUE EXPERIENCES ATLANTIC CHALLENGE • We take the theme of wild spirits further through a physical experience – the Talisker Atlantic Challenge • A rowing race across the Atlantic Ocean. • This life changing adventure takes teams from in the Canary Islands, to Antigua, 3000 miles across the Atlant
Slide 37: Serves & Rituals
SERVES & RITUALS ON-TRADE • The smell and taste of Talisker conveys a sense of provenance instantly connecting the drinker with the rugged environment – like a warm welcome from a wild sea. • Our on-trade strategy takes this into a powerful approach through serve and ritual. • The Talisker Sour – ou
Slide 38: Premiumise Aspirationally Through Our Prestige Portfolio
PREMIUMISE ASPRIRATIONALLY THROUGH OUR PRESTIGE PORTFOLIO BUILD ICONIC BRANDS THROUGH QUALITY & DRIVE DESRE THROUGH COMMS, PARTNERSHIPS & CREDENTIALS EXPERIENCES 36 • An important pillar of our strategy to continue to strengthen our reserve portfolio through our increased focus on our Prestige Brand
Slide 39: Building the Scotch Category in China
BUILDING THE SCOTCH CATEGORY IN CHINA CREATE CATEORY BUZZ & RECRUIT & EXCITE HNWI EDUCATE AT SCALE WHISKY RETAIL SPACES ENGAGEMENT THROUGH PRESITGE DIAGEO WHISKY LOVE WHISKY SOCIAL WHISKY BOUTIQUES & NEW PRODUCTS & ACADEMY MEDIA PLATFORM WHISKY RESERVE SHOPS INNOVATIONS 37 • There is a significant m
Slide 40: Diageo China leading the whisky category
• This focused strategy has driven significant progress. Diageo China is now leading the whisky category in terms of value and driving the growth in the category. 37
Slide 41: China Opportunity
CHINA OPPORTUNITY • Although Johnnie Walker leads our scotch presence in China, with Johnnie Walker Blue Label as our #1 strategic brand. • Our prestige portfolio including special release malts, as well as rare, full cask sales are also delivering strong growth. The Whisky summit I spoke about earl
Slide 42: Ensuring Sustainable Scotch Performance
ENSURING SUSTAINABLE SCOTCH PERFORMANCE Scotch is an attractive and growing category Diageo has exceptional brands with scale across geographies and price tiers Performance has improved and is increasingly consistent Clear, evolving strategy that is delivering Increasing, targeted investments behind
Slide 43: Diageo - Celebrating Life, Every Day, Every Where
DIAGEO CELEBRATING LIFE, EVERY DAY, EVERY WHERE
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 concerning forward-looking statements (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