Britvic — Investor Day (March 2008)
70 slides from Britvic's investor day presentation, Mar 12, 2008
Slide 1: Investor Seminar
Investor Seminar 12th March 2008
Slide 2: Introduction
Introduction Paul Moody Chief Executive
Slide 3: Agenda
Agenda Review of the soft drinks market Paul Moody • Britvic Soft Drinks Report 2008 Chief Executive Recategorisation of carbonates & stills: Chris Haskins • Market data Head of Insight • Britvic’s GB carbs/stills split Cost reclassification John Gibney An update on Britvic Ireland Finance Director
Slide 4: Review of the soft drinks market: Britvic Soft Drinks Report 2008
Review of the soft drinks market Britvic Soft Drinks Report 2008 Paul Moody Chief Executive
Slide 5: Content
Content • Overview of the soft drinks category in 2007 • Take-home and on-premise performance • The challenges facing the industry • A global perspective • What’s next for soft drinks
Slide 6: A resilient performance in a tough year
A resilient performance in a tough year • A challenging year for soft drinks • Consumption reduced 2% to 7.6 bn litres • Sales value increased 2.4% to £8.5 bn • Driven by growth of added value offerings
Slide 7: Soft drinks remain a key category
Soft drinks remain a key category
Slide 8: Take-home performance robust despite poor summer
Take-home performance robust despite poor summer • Sales value increased 2.8% to £6.07 bn • Volumes fell 2% to 7.01 bn litres • Highest growth categories play to the health & wellbeing and natural agenda • Most weather dependent categories lost ground
Slide 9: Changing consumer attitudes start to rebalance trends in take-home
Changing consumer attitudes start to rebalance trends in take-home Stills versus Carbonates Diet versus regular
Slide 10: Strong start for on-premise hindered by weather and smoking ban
Strong start for on-premise hindered by weather and smoking ban • A year of two halves for on-premise • Poor summer impact exacerbated by smoking ban in England • Sales value increased 1.3% to £2.4 bn • Volumes fell 2% to 556 m litres • Strongest performance in foodservice – up 12%
Slide 11: Draught and diet drinks are the winners in on-premise
Draught and diet drinks are the winners in on-premise Draught versus Packaged Diet versus Regular
Slide 12: The challenges facing the industry
The challenges facing the industry • Weather • Summer 2007 the worst on record • Regulatory environment • Smoking ban introduced in England • Renewed efforts to tackle obesity • Advertising restrictions • Labelling debate continues • Sustainability • The complex consumer
Slide 13: The complex consumer
The complex consumer • Four key consumer trends • Health and wellbeing • Indulgence • Ethical values • Convenience • Health and well-being is fragmenting into three distinct consumer concerns • The rise of the triple decker shopper
Slide 14: Global trends in soft drinks
Global trends in soft drinks • Health and wellbeing is a global trend • Soft drinks manufacturers are driving value growth in all countries, even where volumes have fallen • USA up 5% • Australia up 9% • Germany up 1% • France up 2% • Ireland up 7%
Slide 15: What's next for soft drinks?
What’s next for soft drinks? • Innovation to meet evolving and fragmenting consumer preferences • Existing products remain important • Health and wellbeing will be a key driver • Naturalness • Functional benefits • Soft drinks industry must address sustainability issues • Continued consumer insight
Slide 16: The Insight Department and Category Reclassification
The Insight Department and Category Reclassification Chris Haskins Head of Insight
Slide 17: Insight – our role
Insight – our role What’s the availability? Leveraging value Understanding the What's the value? consumer What’s the value driver? & adding value to Brands Where's the value?
Slide 18: Insight – adding value
Insight – adding value Understanding the consumer is key • Drinker and purchaser perspective Identifying gaps and opportunities • Brands • Innovation • Category Huge number of products • Need to group and classify • Meaningful & manageable • Based on consumer understanding • Pragmatic compromise on
Slide 19: A Familiar Chart
A Familiar Chart Cola -0.8% -0.8% -0.8% Lemonade -5.3% -8.8% -7.0% Fruit Carbs -8.1% -9.2% -8.8% Carbs Diet/ Low Cal Functional +17.7% Regular/ Full Sugar Non Fruit Carbs +6.4% -2.9% -1.0% Water -5.6% Pure Juice -4.0% Squash +2.6% -12.1% -2.5% Juice Drinks -7.3% -0.9% -2.4% Stills Mixers -1.8% -3.2%
Slide 20: An example of the reclassification: Functional
An example of the reclassification: Functional Carbonated Still
Slide 21: A Familiar Chart
A Familiar Chart Cola -0.8% -0.8% -0.8% Lemonade -5.3% -8.8% -7.0% Fruit Carbs -8.1% -9.2% -8.8% Carbs Diet/ Low Cal Functional +17.7% Regular/ Full Sugar Non Fruit Carbs +6.4% -2.9% -1.0% Water -5.6% Pure Juice -4.0% Squash +2.6% -12.1% -2.5% Juice Drinks -7.3% -0.9% -2.4% Stills Mixers -1.8% -3.2%
Slide 22: Carbonates – new categories highlighted in green
Carbonates – new categories highlighted in green Non-Fruit Lemonade Carbs Glucose / Fruit Carbs Stimulant Traditional Cola Total Mixers CARBONATES
Slide 23: Stills – new categories highlighted in green
Stills – new categories highlighted in green Water Plus Plain Water Smoothies Dairy & Dairy Juice Drinks Substitute Pure Juice Sports Drinks Total STILLS Squash Cold Hot Drinks
Slide 24: Where will our brands go?
Where will our brands go? Carbonates brand Where it now sits Change Pepsi Cola No Change 7UP Fruit Carbs No Change Tango Fruit Carbs No Change R. Whites Lemonade No Change Britvic 55 Fruit Carbs Moved from Adult Ame Fruit Carbs Moved from Adult Red Devil Glucose/Stimulant Moved from Functional Purde
Slide 25: Relative size of categories and growth
Relative size of categories and growth Cola -0.8% -0.8% -0.8% Fruit Carbs -6.7% -8.1% -7.6% Lemonade -5.4% -8.5% -7.0% Carbs Non Frt Carbs 7.1% -2.0% 0.2% Glu/Stim 27.6% 18.7% 19.2% Trad Mixers -1.8% -3.0% -2.6% Plain Water -4.6% Diet/ Low Cal Pure juice -4.4% Regular/ Full Sugar Juice Drinks -7.4%
Slide 26: John Gibney, Finance Director
John Gibney Finance Director
Slide 27: Recategorisation: the effect on GB numbers
Recategorisation: the effect on GB numbers 2007 Q1 2008 Proforma Actual Proforma YOY growth YOY growth Carbs 865.3 885.2 Volume (million litres) Stills 463.4 443.5 Carbs 39.6 40.7 Average Realised Price per litre (pence) Stills 72.1 71.3 Carbs 342.6 360.6 0.4% (0.1)% Revenue (£m) Stills 334.3 316.3
Slide 28: GB modeling implications from secondary retail distribution outsourcing
GB modeling implications from secondary retail distribution outsourcing 2007 2008 Impact 2009 Impact Brand Contribution (£m) 299.4 (5.8)-(6.3) (3.0)-(4.0) Fixed Supply Chain (66.2) 7.8 8.0 (£m) Overheads & Other Costs 1.0 (61.3) - (£m) Impact on Operating Profit 1.5-2.0 5.0-6.0 (£m)* * As per guidan
Slide 29: Transfer of trading from Britvic International to Britvic Ireland
Transfer of trading from Britvic International to Britvic Ireland: the effect on International’s 2007 numbers Proforma Britvic Britvic International 2007 Effect of Transfer International 2007 Volume (million litres) 37.7 15.0 22.7 Average Realised Price per 68.0 66.7 69.2 litre (pence) Revenue (£m)
Slide 30: Additional clarity on Britvic Ireland's performance
Additional clarity on Britvic Ireland’s performance Britvic Ireland proforma Britvic Ireland y/e Feb 2007 Effect of Transfer y/e Feb 2007 Volume (million litres) 251.0 15.0 266.0 Average Realised Price per 0.73 0.92 0.74 litre (€c) Revenue (€m) 268.8 14.3 283.1 Brand Contribution (€m) 94.1 6.6 100.7
Slide 31: Investor events 2008
Investor events 2008 Interim Results Announcement • 21st May 2008 • 28 weeks to 13th April 2008 Interim Management Statement • 25th July 2008 • 40 weeks to 6th July 2008 Investor Day • Dublin, 10th September 2008 52-week Trading Update • 16th October 2008 Preliminary Results Announcement • 27th Nove
Slide 32: Appendix
\I BRITVIC
Slide 33: Recategorisation: the effect on H1 and H2 2007 GB carbonates
Recategorisation: the effect on H1 and H2 2007 GB carbonates Actual 2007 Proforma 2007 H1 449.1 460.0 Volume (million litres) H2 416.2 425.2 H1 39.0 40.1 Average Realised Price per litre (pence) H2 40.2 41.4 H1 175.2 184.6 Revenue (£m) H2 167.4 176.0 H1 68.0 72.7 Brand Contribution (£m) H2 68.4 72.7
Slide 34: Recategorisation: the effect on H1 and H2 2007 GB stills
Recategorisation: the effect on H1 and H2 2007 GB stills Actual 2007 Proforma 2007 H1 229.9 219.0 Volume (million litres) H2 233.5 224.5 H1 72.6 71.9 Average Realised Price per litre (pence) H2 71.7 70.8 H1 166.8 157.4 Revenue (£m) H2 167.5 158.9 H1 76.9 72.2 Brand Contribution (£m) H2 77.8 73.5 H1
Slide 35: Innovation and product launch programme 2008
Innovation and product launch programme 2008 Andrew Richards Customer Management Director
Slide 36: Our approach to innovation is clear
Our approach to innovation is clear
Slide 37: Fruit Shoot – a case study in successful innovation
Fruit Shoot – a case study in successful innovation Driving scale innovation Fruit Shoot the number one kid’s brand* Unlocking further opportunities Fruit Shoot launched into two new categories in the last two years: Water Plus – Fruit Shoot H2O Pure Juice – Fruit Shoot 100% Speed to scale Fruit Sho
Slide 38: Our 2008 innovation plan
Our 2008 innovation plan Continuing to leverage our strong relationship with PepsiCo Building on our strength in on-premise Closing an obvious gap in a major growth category
Slide 39: History of Gatorade
anes WUEMENED | gee FORMULA FOR HYDRATE. REPLENISH. REFUEL.
Slide 40: Gatorade: The Original
The Original The most $5bn global Developed on the researched sports worth field of play drink and 48% global over 40 years ago in the world market share* Used by more athletes and teams than any other drink – scientifically proven to rehydrate faster than water * Source: Canadean Global
Slide 41: Sports drinks are a scale opportunity
Sports drinks are a scale opportunity 49% UK growth in last two years but... penetration static and frequency of consumption some way behind other soft drinks £M VALUE GROWTH LtrsM VOLUME GROWTH MAT to w/e MAT to w/e MAT to w/e MAT to w/e MAT to w/e MAT to w/e 28.01.06 22.01.07 26.01.08 28.01.06 22.
Slide 42: Three key barriers
Three key barriers to growing penetration and frequency Key avoidance factors for It’s not for me sports drinks More for younger people 1. Relevance More for males Only appropriate for certain occasions Don’t understand the product 2. Understanding Too expensive 3. Health Artificial ingredients
Slide 43: Gatorade overcomes these barriers
Gatorade overcomes these barriers Used by the more athletes than any other sports drink in the world 1. Relevance It’s for anyone who wants to rehydrate fast - professional & leisure, male & female, young & old Gatorade is the most researched 2. Understanding sports drink in the world The Gatorade S
Slide 44: Launch of natural Gatorade
Launch of natural Gatorade A world’s first for PepsiCo… delivered by Britvic Rehydrates Water Help replace what is lost through sweat Electrolytes Rehydrates by stimulating drinking Optimal level for fast absorption into the body Provides carbohydrate energy to working Carbohydrates (6%) muscles to
Slide 45: Brand positioning
Brand positioning The most credible sports drink on the market Core target Committed Exercisers - 2m UK adults audience Male and female Play to win Media bullseye c.8m UK Beating your personal best adults 20% adult penetration vs Social Players – 5.8m UK adults 9% category Mostly males penetration*
Slide 46: How we will build the brand in the UK
How we will build the brand in the UK using a proven global model Build the equity and develop trust Grow: drive penetration and frequency SCIENTIFIC FIELD OF CONSUMER BROAD COLD INTEGRITY PLAY EDUCATION AVAILABILITY Demonstrate It Prove it’s used It’s also for me! It’s there when works! by the best
Slide 47: Scientific Integrity
Scientific Integrity a Gatorade in every gym bag Brochures / leaflets Outlet awareness Conferences / seminars Educational resource
Slide 48: Getting out on the Field of Play
Getting out on the Field of Play Partnerships in high profile spectator sports to drive awareness Chelsea FC Participatory events for relevance Marathon sponsorships Triathlon / Ironman sponsorships 10k / 5k running events etc. Donate product to sports teams and events in contract for sidelines pres
Slide 49: Educating the consumer with a £6m campaign
Educating the consumer with a £6m campaign Consumer education Outdoor Press “It’s also for me!” To inspire, create relevance, and educate consumers ‘It’s not just for the Pros… It’s for me’ Reinforce Gatorade as the expert on hydration The Gatorade Sports Science Institute was founded over 20 Web ye
Slide 50: Activation Plans
Activation Plans High visibility in outlets – Supporting materials linking into sports drinks benefits Utilise customer media to drive mass awareness and penetration In outlet media Direct mail (targeted) Home shopping – to target large families Off-shelf display using gondola end & display units Ch
Slide 51: Launch Schedule 2008
Launch Schedule 2008 Jan - Mar Apr - June Jul - Sept Oct - Dec Jan-Mar 09 Scientific Establish UK GSSI Rep / PR UK GSSI Conferences Professional Marketing Toolkit Integrity campaign Field of Support and add to relevant Play High visibility ‘sidelines’ high participatory events sponsorships Activatio
Slide 52: Gatorade Summary
Gatorade Summary World’s number one sports drink Britvic chosen by Pepsi to launch natural Gatorade – a world first Investment in aseptic technology enables in-house production with improved margins Closes a clear portfolio gap for Britvic in a major growth category Production starts next week
Slide 53: Delivering real on-premise innovation in 2008
Delivering real on-premise innovation in 2008
Slide 54: Temperature and taste are vital for cola in the on-premise occasion
Temperature and taste are vital for cola in the on-premise occasion On-premise channel - biggest by volume for Pepsi in the UK Consumers primarily choose cola in on-premise because it’s cold with a unique taste* Cold Taste With Food Thirst Refreshment Rehydration Energy To Be Social Wind down Treat
Slide 55: Britvic develops the next generation of dispense – Pepsi Xtra Cold
Britvic develops the next generation of dispense – Pepsi Xtra Cold Britvic-patented dispense system Consistently improves carbonation, syrup mix and temperature Wins across all key consumer satisfaction attributes Impactful, condensing font design will heighten presence of brand and soft drinks on t
Slide 56: Innovation in on-premise drives Mitchells & Butlers contract win
Innovation in on-premise drives Mitchells & Butlers contract win New 4 year contract to supply total Mitchells & Butlers estate Over 2,000 UK pubs and restaurants An incremental 10m litres per annum Increases managed retail market share to >70%* 1st account to give nationwide coverage for Pepsi Xtra
Slide 57: Pepsi Raw – another global first for PepsiCo and Britvic
Pepsi Raw – another global first for PepsiCo and Britvic in 2008 • Working closely with PepsiCo as global lead-market to launch Pepsi Raw • Many consumers love the taste of cola but have concerns about artificiality • By developing a more natural product we reach a new, more premium adult market for
Slide 58: Pepsi Raw - genuine new news in the Cola category
Pepsi Raw - genuine “new news” in the Cola category in on-premise What is Pepsi Raw? Lightly sparkling water and ingredients from natural sources No artificial colours, preservatives, flavourings or sweeteners A delicious and distinctive tasting, premium cola The perfect mixer: does not mask the tas
Slide 59: Innovation in on-premise continues in juice drinks for females
Our innovation in on-premise continues in juice drinks for females 42% of visitors to the on- premise are females Females buy 3 times more soft drinks than males in on-premise Females consume more cola than in-home suggesting a default purchase Female requirements from soft drinks in on-premise Fema
Slide 60: Introducing Lime Grove
Introducing Lime Grove ‘a little sip of sunshine’ A refreshing soft drink made with pressed lime juice and sparkling spring water, for a crisp taste Designed for the adult palette – target market of 25 to 45 females No artificial flavours, sweeteners or preservatives Available in three light, refres
Slide 61: A new flavour to the J2O range: Apple & Blueberry
A new flavour to the J20 range Apple & Blueberry Strong consumer response A natural addition to the J2O range Volume increase through both current users and non users Equal appeal across take-home and on- premise channels In store from April 2008
Slide 62: An outstanding year of innovation in on-premise
An outstanding year of innovation in on-premise .......delivering a competitive advantage • Strength of Pepsi relationship delivers two new Pepsi innovations - Pepsi Xtra Cold and Pepsi Raw • Further on-premise innovation with Lime Grove and J2O Apple & Blueberry • Innovation drive wins new Mitchell
Slide 63: Launches into take-home
Launches into take-home
Slide 64: Smooth Juice singles – extending the Smooth Juice proposition
Smooth Juice singles – extending the Smooth Juice proposition £73m* category growth opportunity for pure juice ‘on the go’ 250ml format is perfect for ‘on the go’ Priced to sit between Tropicana and Just Juice Ambient supply chain offers margin advantage In trade March 2008 *Source: AC Nielsen Scant
Slide 65: Drench – a unique brand positioning
Drench – a unique brand positioning The next phase of our water plan Building on unique ‘mental hydration’ positioning Scale launch into grocery multiples supported by... • Aggressive brand launch programme - £5.5m in 2008 • A significantly expanded range of pack formats
Slide 66: Developing a further presence in international markets
Developing a further presence in international markets Nordic market is the 3rd largest squash market in Europe worth over 125m litres* Taking our innovation into markets with strong price premiums Squash category pence per litre by market** The < 750ml glass segment accounts Norway 2.22 for 36% of
Slide 67: Britvic's first international innovation – a new premium squash
Britvic’s first international innovation – a new premium squash for the Nordic market A premium squash made entirely with natural ingredients Available in two unique flavours April 2008 Denmark launch - full roll out across the Nordics in 2009 Listings confirmed in two largest retail chains RSP of D
Slide 68: Our 2008 plans continue our ambition to drive significant innovation
Our 2008 plans continue our ambition to drive significant innovation into the largest categories consistently 2008 H1 2008 H2 February March April May
Slide 69: Summary and questions
Review of the soft drinks market A resilient performance in a • Britvic Soft Drinks Report 2008 challenging year Recategorisation of carbonates & stills: Reflects our unique consumer • Market data insight capability • Britvic’s GB carbs/stills split Impacts on how you view our business and the marke
Slide 70: Investor Seminar
Investor Seminar 12th March 2008