Slide 1: Diageo Greater China President's Call
DIAGEO GREATER CHINA PRESIDENT’S CALL SAM FISCHER
Slide 2: Introduction
INTRODUCTION • Sam Fischer President of Diageo Asia Pacific and Global Travel • Responsible for Global Travel business, from January 2021 2
Slide 3: China is an increasingly important part of Diageo plc
CHINA IS AN INCREASINGLY IMPORTANT PART OF DIAGEO PLC Diageo reported net sales by region, F15 Diageo reported net sales by region, H1 F21 Corporate* LAC LAC 10% 9% North America Africa 11% Africa 13% 32% North America 39% F15 H1 F21 Asia Pacific 20% Asia Pacific 20% Greater China Greater China 2% 5
Slide 4: Fast growing premium businesses strongly positioned in Greater China
FAST GROWING PREMIUM BUSINESSES STRONGLY POSITIONED IN GREATER CHINA BAIJIU INTERNATIONAL SPIRITS & BEER Shui Jing Fang Mainland China Taiwan, HK & Macau Category size* $157Bn* Market size* $51Bn* Market size* $3.8Bn* UNDERPINNED BY STRONG TECHNICAL, INNOVATION AND ORGANISATIONAL CAPABILITIES *Sourc
Slide 5: Greater China is the world's largest TBA market, $224 billion
GREATER CHINA IS THE WORLD’S LARGEST TBA1 MARKET, $224 BILLION AND GROWING AHEAD OF GLOBAL RATES Global RSV1 growth (%) 2015 – 2019 Greater China category RSV1 ($Bn) 2019 Excludes ‘low’ and ‘value’ price bands Excludes ‘low’ and ‘value’ price bands Global 11% Greater China International spirits2 Win
Slide 6: Greater China market continues to premiumise
GREATER CHINA MARKET CONTINUES TO PREMIUMISE Greater China share of TBA1 retail sales value by price band: 2015, 2019, 2024 excludes ‘low’ and ‘value’ price bands 100% Prestige 9% 90% Prestige 19% Prestige 21% Super and Ultra Premium 14% +13 ppt +5 ppt 80% Super and Ultra 70% Premium 17% Super and U
Slide 7: Attractive trends underpin long-term market growth
ATTRACTIVE TRENDS UNDERPIN LONG-TERM MARKET GROWTH Shifts in TBA occasions Health and wellbeing From status to discernment Chinese culture Urbanisation Digitalisation 7
Slide 8: Baijiu category is large, fast growing and premiumising
BAIJIU CATEGORY IS LARGE, FAST GROWING AND PREMIUMISING Baijiu category growth projection Value CAGR Value CAGR (CY2020-2024) CY15-CY19 CY20-CY24 Prestige & Prestige+ 35% 10% Baijiu (ex-Low Price/Value) 25% 6% Super & Ultra Premium 22% 19% 11% 8% Premium 23% 11% 10% 0% Baijiu (Total) Standard 31% 11
Slide 9: Diageo placed to win with fast growing premium and super premium Scotch
DIAGEO PLACED TO WIN WITH FAST GROWING PREMIUM AND SUPER PREMIUM SCOTCH Mainland China Whisky RSV1 2015, 2019, 2024 Mainland China Whisky RSV1 growth (%) 2016 – 2019 Excludes ‘low’ and ‘value’ price bands Excludes ‘low’ and ‘value’ price bands China Whisky CAGR 2016-2019 $1.2Bn Scotch 13% Others Ble
Slide 10: Delivering our strategy for Greater China
DELIVERING OUR STRATEGY FOR GREATER CHINA To be the best performing, most trusted and respected international alcohol company in Greater China WIN IN DISRUPT WIN WITH TAIWAN & BAIJIU WHISKY SCALE BEER FIT-FOR-PURPOSE DEEP CONSUMER SUPPLY & RTC TO E2E DIGITAL INNOVATION ORGANISATION INSIGHTS MEET DEM
Slide 11: Diageo Greater China growth has been sustainable and is poised for recovery
DIAGEO GREATER CHINA GROWTH HAS BEEN SUSTAINABLE AND IS POISED FOR A RECOVERY POST-COVID Greater China organic net sales value/growth 15% CAGR H2 Strong recovery in H1 F21, ahead of pre Covid-19 levels H1 F16 F17 F18 F19 F20 F21 Source: Diageo internal 11
Slide 12: We are growing faster than our peers
WE ARE GROWING FASTER THAN OUR PEERS WE HAVE BEEN GROWING AHEAD OF KEY COMPETITORS IN CHINA DRIVEN BY OUR SUPER DELUXE STRATEGY AND COMPETITIVE ADVANTAGE ACROSS INTERNATIONAL SPIRITS AND BAIJU Diageo China1 growth Organic sales growth vs Key Competitor Diageo China Key Competitor H1 H1 F18 F19 F20 F
Slide 13: Shui Jing Fang has shown strong growth
SHUI JING FANG HAS SHOWN STRONG GROWTH SJF HAS BEEN A GROWTH ENGINE AND HAS BEEN GAINING SHARE SJF GSV 2015-2019 GSV CAGR RMB million +19% post-COVID recovery SJF 43% from H2 CY19 to H2 CY20 Fenjiu 30% Moutai 27% 3,539 Jiuguijiu 26% Wuliangye 23% 3,006 Luzhoulaojiao 23% 2,819 ST Shede 23% Shunxin 22
Slide 14: Shui Jing Fang is focused on key growth drivers to win market share
SHUI JING FANG IS FOCUSED ON KEY GROWTH DRIVERS TO WIN MARKET SHARE CORE STORE CORPORATE PROGRAMME BANQUET INNOVATION PURCHASE 14
Slide 15: Scotch penetration is faster than Cognac with significant runway
SCOTCH PENETRATION IS FASTER THAN COGNAC AND THERE IS SIGNIFICANT RUNWAY TO GROWTH Estimated3 penetration of total beverage alcohol Whisky growing ahead of Cognac across Greater China China Usage & Attitude study1 16% >50% 2015 2020 Whisky 9% 16% +7ppt >40% Cognac 9% 13% +4ppt >30% ~30% ~30% Tmall n
Slide 16: We have a proven strategy to grow our whisky business
WE HAVE A PROVEN STRATEGY TO GROW OUR WHISKY BUSINESS DRIVE CATEGORY WIN WITH DELIVER VIBRANT GROWTH OUR BRANDS INNOVATION EXPAND SCALE AND ROUTE TO MARKET FOOTPRINT E2E DIGITAL EXCELLENCE 16
Slide 17: Whisky spaces
52 WHISKY SPACES >15,000 DIAGEO WHISKY ACADEMY (DWA) GRADUATES
Slide 18: Strong double-digit net sales value growth
STRONG DOUBLE-DIGIT NET SALES VALUE GROWTH OVER THE PAST 3 YEARS ~2.5 x BIGGER THAN CLOSEST COMPETITOR
Slide 19: The Singleton is one of the top three single malt brands
THE SINGLETON IS ONE OF THE TOP THREE SINGLE MALT BRANDS
Slide 20: Double digit contribution to growth from innovation
DOUBLE DIGIT CONTRIBUTION TO GROWTH FROM INNOVATION
Slide 21: End-to-end digital excellence is key to success
END-TO-END DIGITAL EXCELLENCE IS KEY TO SUCCESS AND WE ARE GROWING SHARE IN ECOMMERCE Digitalise Our Business Win With Consumers Win With Our Customers X 21
Slide 22: RTM scale and expansion is key for winning in whisky
RTM SCALE AND EXPANSION IS KEY FOR WINNING IN WHISKY Territory expansion • Expanded coverage to all 30 cities in the South North China • Doubled distribution in key T1 & T2 cities in the East West China Channel expansion % of IS Population contribution • Increased # of Liquor Store ‘core stores’ by
Slide 23: Diageo's role in society
DIAGEO'S ROLE IN SOCIETY PROMOTING CHAMPIONING INCLUSION PIONEERING GRAIN TO POSITIVE DRINKING & DIVERSITY GLASS SUSTAINABILITY 23
Slide 24: Confidence in the future of our business
CONFIDENCE IN THE FUTURE OF OUR BUSINESS Greater China is a large and attractive market with strong consumer fundamentals Diageo is uniquely positioned as the only international spirits player with presence in both super-premium baijiu and whisky A robust and proven strategy, that is delivering grow
Slide 25: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This presentation contains ‘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 statements include all statements that expres
Slide 26: Continued from the previous page
Continued from the previous page • changes in the cost of production, including as a result of increases in the cost of commodities, labour and/or energy or as a result of inflation; • any litigation or other similar proceedings (including with tax, customs, competition, environmental, anti-corrupti
Slide 27: Other Information
Continued from the previous page Other Information All oral and written forward-looking statements made on or after the date of this presentation and attributable to Diageo are expressly qualified in their entirety by the above risk factors and by the ‘Risk factors’ section contained in the annual r
Slide 28: Diageo
DIAGEO CELEBRATING LIFE, EVERY DAY, EVERYWHERE