Imperial Brands Plc · LSE:IMB
Imperial Brands — Imperial Tobacco Group — Investor Presentation (May 2003)
31 slides from Imperial Brands's investor presentation, May 27, 2003
Slide 1: Russia Market Presentation - Analyst Trip
Imperial Tobacco Group PLC Russia Market Presentation Analyst Trip 27th May 2003
Slide 2: Russia
Russia Background Tobacco market Imperial‘s portfolio Summary Sources for the presentation: The Economist, AC Nielsen, ex factory data (pooled), internal market forecasts 2
Slide 3: Background
Background Economic & political Route to market Taxation changes Price environment 3
Slide 4: Background - Economic
Background - Economic Measure Trend The Worlds Largest Country (better described as a number of regions) Population: 145m GDP: €335bn Inflation: 12.5% Employment: 90% Market Size: 275bn Hrs / Pack: 1.0 12 time zones 4
Slide 5: Background - Economic
Background - Economic GDP sustained at Increase in relatively high purchasing power levels % Change % Change V LY GDP V LY Inflation 6% 18% 4% Real Wages 12% 2% 6% Real RPI 0% 0% 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 5
Slide 6: Background - Economic
Background - Economic Organic Sales Growth High organic (last 2 years) % sales growth FMCGs 30-50 Potential retail Pharmaceuticals 20-50 sector boom Industrials 30 IT 25-35 Food & beverage 23-40 6
Slide 7: Background - political
Background - political General relatively stable series of reforms – post communism regionalised country Tobacco Industry “bright“ market high volumes in bottom, low & mid price price sensitive with no rpm market size & diversity – 900 SKUs 7
Slide 8: Background - Route To Market
Background – Route To Market Wholesalers > 1000 275 bn Food Kiosks Supermarkets Open Street Pavillions Stores 62,000 1,000 Markets Vendors 43,000 215,000 19,000 17,000 c.357,500 Outlets 41% 22% <1% 22% 3% 12% c. 40m Consumers 28% of Population 65% Male 8
Slide 9: Background - Taxation
Background - Taxation Total Industry Margins Tax incidence £3.3bn low, but rising Industry 57% specific/ad valorem mix High industry share Trade 9% average pack price = 20p Tax 34% low absolute margins 2003 % RRP Mid Price Segment 9
Slide 10: Tobacco Market
Tobacco Market At a glance Brand positioning Competition Outlook 10
Slide 11: Market - At A Glance
Market – At A Glance Key -ve flat +ve Total market FMC ITG PMI LD Other Manufacturers BAT JTI >Premium Low Price sectors High Mid Bottom Gender Female Male Taste Lights <Lights Plain Full 10% 20% 30% 40% 50% 60% 70% 80% 90% 11
Slide 12: Market - Brand Positioning
Market - Brand Positioning Total Market Share of % % Competitor Sector Volume Value Brands Above Parliament 11% Davidoff 2.4 Premium 12.1 Mild Seven >65p Vogue Virginia Slims R1 Premium 6% Fusion 5.7 >40p 16.0 Marlboro Kent Chesterfield West High 11% 14.7 21.6 L&M Prima Lux >25p Winston Bond/LD Mid
Slide 13: Market - Competition
13 Nasha Marka West Others = c.880 SKUs : 39% share Parliament Chesterfield Donskoy Overall : no market dominant brand Apollo SS Marlboro Top 20 Brands In Russia Pall Mall Apollo SW Maxim Cl Market - Competition Yava Troika Optima Winston Petr I Bond Steet Yava Gold LD Balkan Star L&M 8% 4% 0% Avera
Slide 14: Market - Outlook: Segments
Market – Outlook: Segments Growth segments % Market Share international image brands Premium 6% 7% High 15% mainstream low price 16% Mid 30% 28% Polarisation continuation of Low 25% 28% trends away from mid & bottom price Bottom 22% 18% sectors 2003 2006 Forecast 14
Slide 15: Imperial's Portfolio
Imperial’s Portfolio Brands portfolio outlook People market presence route to market focus 15
Slide 16: ITG Portfolio - Brands sector shares
ITG Portfolio – Brands sector shares Davidoff Prima Ovals R1 4% 5% 7% 25% Maxim West Prima Silver Prima Lux Other 59% Bottom Low High Premium > Premium 16
Slide 17: Russia - Brand Strategy
Russia – Brand Strategy “To develop and establish a brand portfolio relevant to both the consumers and trade”. “Focused, from a strong volume base, on driving value from the international brands” 17
Slide 18: Russia - West
Russia – West Positive image Fully supported 1.3% market share Index 350 300 250 200 150 100 50 0 2000 2001 2002 2003 45% CAGR 18
Slide 19: Russia - West
Russia – West StreamTec filter as a unique & viable selling proposition 19
Slide 20: Russia - West: Shop distribution
Russia – West Universal appeal across Russia Clear opportunities for continued growth Of 275bn Of 358k Sticks Outlets 2.5% 50% Shop distribution Average market share 2.0% 1.5% 25% 1.0% 0.5% 0.0% 0% Central Moscow NW Siberia South Urals 20
Slide 21: Russia - West: Volume Split
Russia – West Balanced appeal across brand family 100% Ultra 75% 49% Lights Volume Split 50% Medium 25% 51% Full Flavour 0% 21
Slide 22: Russia - Davidoff
Russia – Davidoff Low volumes High margin Exclusive offering Limited distribution 0.2% market share Index 600 400 200 0 2000 2001 2002 2003E 72% CAGR 22
Slide 23: Russia - R1
Russia – R1 Strong female franchise Round corner usp High margins 0.2% market share Index 300 200 100 0 2000 2001 2002 2003E 35% CAGR 23
Slide 24: Russia - Maxim
Russia – Maxim Traditional appeal New launches 2003 Mid segment entry 2.5% market share Index 1200 800 400 0 2000 2001 2002 2003E 123% CAGR 24
Slide 25: ITG Portfolio - Brand Summary
ITG Portfolio – Brand Summary Strong share & market position Breadth & depth Growth momentum Well placed to benefit from improved consumer purchasing power 25
Slide 26: ITG Portfolio - Presence
ITG Portfolio - Presence Managing Director Factory Sales & Administration Marketing & support (c.730) (434) (41) Key Driver: Distribution 26
Slide 27: ITG Portfolio - Route to Market
ITG Portfolio – Route to Market ITG Regional Office (6) Sub Regional Office (14) Regional Distribution Center (46) Murmansk St.Petersburg Arkhangelsk Tver Tver Smolensk lvanovo Moscow N.Novgorod Bryansk Kaluga Vladimir Tula Izhevsk Orel Ryazan Kazan Perm Kursk Ulyanovsk Lipetsk Tambov Naberzhny Chel
Slide 28: ITG Portfolio - Route To Market
ITG Portfolio – Route To Market The logistical challenge : 1.8m master cases across Russia factory to Vladivostok = 10,300km London to Cape Town = 9,667km annually - 1,200 trucks & 400 wagons 28
Slide 29: ITG Portfolio - Route To Market
ITG Portfolio – Route To Market Wholesalers > 1,000 1 Distribution Partner Food Open Street Kiosks Supermarkets Pavillions Stores Markets Vendors Outlet Volume Outlet Volume Outlet Volume Outlet Volume Outlet Volume Outlet Volume 60% 41% 18% 22% 1% 1% 5% 22% 5% 3% 12% 12% call coverage – distributio
Slide 30: Summary
Summary Largest country in the world sheer scale; distance, time, volume positive economic outlook increasing spending power of consumers Strong position market share & growth breadth & depth in portfolio market coverage Positive outlook positioned to leverage competencies 30
Slide 31: Summary
Summary ITG set for the future flexibility creativity speed cost leadership 31
Imperial Tobacco Group — Investor Presentation (May 2003) on 6ix