Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Investor Day (2019)
26 slides from Yum China's investor day presentation, 2019
Slide 1: Building Coffee Portfolio in China
BUILDING COFFEE PORTFOLIO IN CHINA Steven Li | CMO
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements. This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor
Slide 3: The Strategic Intention
WHY COFFEE ? WHY YUMC ? WHAT VISION ? The Strategic Coffee Represents a Large, Growing and YUM China is a Leader in Coffee Capabilities & Assets Yum China Coffee Powerhouse Intention Attractive Market in China Leverage Existing Assets to Integrated Drive Meaningful Growth Coffee Value Chain Empowere
Slide 4: Coffee Market Growing Rapidly
Market Size of China Coffee Shop $ Bn +11% CAGR Coffee Market +18% 7.5 CAGR Growing Rapidly… 4.5 2.3 2013 2017 2022E Coffee shops correspond to “coffee-themed” outlets, which focus primarily on serving coffee Source: Euromonitor, McKinsey Analysis 4
Slide 5: Very Low Penetration in China
Very Low Penetration in China Coffee Cups per Capita 3.7 335 263 8 29 # Coffee stores per 100k population 0.7 Data as of 2017 Source: Euromonitor, McKinsey Analysis 5
Slide 6: Upgrading Potential 5x
High Instant Coffee Instant coffee consumption Mix Indicates 5x 84% 87% UPGRADING Freshly ground coffee Instant coffee Freshly ground coffee POTENTIAL in China 16% 13% Freshly ground Instant coffee coffee Source: CBNData, USDA (United States Department of Agriculture), ICO (international coffee orga
Slide 7: Multiple Drivers of Coffee Demand
Multiple Drivers of Coffee Demand Generational Shift Entry-level Coffee Specialty Coffee Social-Status-Coffee In Tier 1 Cities Marketing 7
Slide 8: Multiple Drivers of Market Supply
Multiple Drivers of Market Supply STORE FORMAT COFFEE EXPANSION INNOVATION DIVERSIFICATION Convenience store Sweet, milky coffee new drinkers Ultra- convenient deliveries Coffee Specialist Roasted coffee From Tier 1 sophisticated drinkers to Tier 2&3 cities 8
Slide 9: Strong Coffee Capabilities & Assets
Strong Coffee Capabilities & Assets 1,600 tons 100% Arabica Domestic Coffee Roasting Volume Premium Quality Bean Regions ~1 month 8,000+ From Bean to Cup Imported Coffee Machine 9
Slide 10: Leverage YUMC Ecosystem To Drive Coffee Growth
Leverage YUMC Ecosystem To Drive Coffee Growth 1,200+ 30 mm+ 6,000+ 1,100+ City Supply Chain & Coffee Buying Members Cities with Delivery Store Bold Store Development Out of 180 MM YUMC Membership Delivery Services 10
Slide 11: Yum China's Vision
Yum China’s Vision A COFFEE POWERHOUSE 11
Slide 12: Coffee Portfolio in China
COFFEE PORTFOLIO IN CHINA “Convenience & Value “ “Artisanal Coffee & Experience” Targeting : Mass Consumption Targeting : Young professionals Product : Freshly ground Product : Inspired by handcraft Price : Value for money Price : Friendly (vs. luxury) Stores : ~6,000 and expanding Stores :13 and ex
Slide 13: K COFFEE
K COFFEE - Quality, Convenience & Value for Money 90 Million cups 2018 volume 1 Billion Yuan 2018 sales 30 Million 2018 coffee buying members 13
Slide 14: K COFFEE – Strong Growth Drivers
K COFFEE – Strong Growth Drivers Format & flavors All day occasions Delivery Membership 14
Slide 15: K COFFEE – Connecting with Millennials
K COFFEE – Connecting with Millennials Art Comic Celebrity Fashion 15
Slide 16: A trendy & handcrafted specialty coffee brand for the young
A trendy & handcrafted specialty coffee brand for the young 年 轻 人 的 手 冲 精 品 咖 啡 潮 牌 16
Slide 17: Focused Approach to Growth
FOCUSED APPROACH TO GROWTH COFFEE INSPIRED CRAFT & ESPRESSO PREMIUM BEVERAGE CRAVEABLE FOOD DELIVERY 17
Slide 18: Building Awareness Around China
BUILDING AWARENESS AROUND CHINA New Disruptive Digital Openings Products Membership 18
Slide 19: Flexible Models
CONCEPT COMPACT EXPRESS FLEXIBLE MODELS Size: 150m² Size: 40-80m² Size: 20m² 19
Slide 20: Brand Development within 7 Months
Brand Development within 7 Months CITIES STORES BARISTAS 20
Slide 21: Boutique Coffee Shop in Office
Boutique Coffee Shop in Office 办 公 室 里 的 精 品 咖 啡 馆 21
Slide 22: Case Study: Wework Sharing Offices Rollout
CASE STUDY Phase 1: 2019 Mar-Apr Shanghai: 9 Wework sharing offices Phase 2: 2019 first half Bejing: 4 Wework sharing offices Shanghai: 2 Wework sharing offices 22
Slide 23: Building Coffee Supply Chain to Support our Coffee Vision
Building Coffee Supply Chain to Support our Coffee Vision Farmer Wet Mill Dry Mill Exporter Importer Roaster Retailer Trees & Cherries Cherry Process Parchment Process Green Exports Green Imports Coffee Roasting Final Product Upstream Sourcing Green Coffee Create YUMC Coffee • Cost Optimization • Qu
Slide 24: Coffee City Coverage Map
Harbin Shenyang Urumqi Beijing Hohhot Tianjin Dalian Shijiazhuang Qingdao Jinan Lanzhou Xian Xuzhou Zhengzhou Suzhou Nanjing Shanghai Lhasa Chengdu Wuhan Hangzhou Ningbo Chongqing Nanchang Changsha Fuzhou Xiamen Kunming Guangzhou Shenzhen Nanning Haikou 24
Slide 25: Significant Opportunities to Build Coffee
SIGNIFICANT OPPORTUNITIES TO BUILD COFFEE Best in Class Capabilities BUILD COFFEE POWERHOUSE Leading Digital Ecosystem BUILD INTEGRATED COFFEE VALUE CHAIN Enormous Membership 25
Slide 26: Thank You
Thank You Steven Li | CMO Joey Wat | CEO, Yum! China 26