Diageo Plc · LSE:DGE
Diageo — Investor Day (May 2019)
39 slides from Diageo's investor day presentation, May 2019
Slide 1: Delivering Sustained Growth in Beer
DELIVERING SUSTAINED GROWTH IN BEER JOHN O’KEEFFE MARK SANDYS 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: Delivering Sustained Growth in Beer
DELIVERING SUSTAINED GROWTH IN BEER JOHN O’KEEFFE MARK SANDYS MAY 2019 JOK Good afternoon ladies and gentlemen, My name is John O’Keeffe, and I’m the President for Diageo Africa. With me today, is Mark Sandys the Global Head of Beer 3
Slide 4: What We Will Cover Today
WHAT WE WILL COVER TODAY Significant growth opportunity in Beer Unique Diageo beer model 5 clear growth drivers Delivering more consistent beer performance Beer is accelerating our spirits performance in Africa 4 Together , Mark and I will discuss Global Beer, and Diageo’s performance within that. W
Slide 5: What We Will Cover Today
WHAT WE WILL COVER TODAY Significant growth opportunity in Beer Unique Diageo beer model 5 clear growth drivers Delivering more consistent beer performance Beer is accelerating our spirits performance in Africa 5 JOK Okay, firstly lets understand what’s happening within Beer. 5
Slide 6: Global Beer Category Is Forecast to Accelerate Growth, Driven by Four Key Trends
GLOBAL BEER CATEGORY IS FORECAST TO ACCELERATE GROWTH, DRIVEN BY FOUR KEY TRENDS KEY TRENDS WORLD BEER MARKET GROWTH 3.8% (Volume CAGR%) 3.5% EMERGING MARKETS 2013-2018 FORECAST 2019-2023 PREMIUMIZATION 2.0% INNOVATION 1.6% 1.2% 1.2% FLIGHT TO FLAVOUR 0.3% 0.2% 0.1% 0.1% -0.3% -0.3% Africa LAC APAC
Slide 7: Emerging Markets Are Driving Growth, Particularly Africa
EMERGING MARKETS ARE DRIVING GROWTH, PARTICULARLY AFRICA AFRICA LPA+ POPULATION GROWTH PER CAPITA CONSUMPTION IS BELOW OTHER REGIONS TBA per capita consumption (equivalent serves) 200m 762 788 654 570m 570m 613 466 434 420 Europe NAM Developed Russia LAC Emerging Africa 2018 2030 APAC APAC INCOME GR
Slide 8: Consumers Are Trading Up to More Premium as Well as More Flavour
CONSUMERS ARE TRADING UP TO MORE PREMIUM AS WELL AS MORE FLAVOUR, FUELLED BY INNOVATION PREMIUM BEER IS GROWING RAPIDLY THE RATE OF INNOVATION HAS NEVER BEEN HIGHER (the greater the flavour the faster the growth) 5,8% 3,3% -0,6% -2,2% Premium Premium Mainstream Discount speciality Source : Global Da
Slide 9: Consumers Are Moving Out of Mainstream Lager to More Flavourful Beer
CONSUMERS ARE MOVING OUT OF MAINSTREAM LAGER TO MORE FLAVOURFUL BEER SHIFT IN CONSUMPTION US BEER MARKET TRANSFORMATION FROM MAINSTREAM BEER 2013-2018 +2.9% +2.9% +5.9% +5.9% 31% 41% 30% 21% -2.0% Mainstream Premium 21% 18% Accessible Craft & Speciality 11% 15% Sweet & Flavoured -1.4% -1.4% +6.3% +6
Slide 10: These Global Trends Play Directly to the Strengths of Diageo's Beer Portfolio
THESE GLOBAL TRENDS PLAY DIRECTLY TO THE STRENGTHS OF DIAGEO’S BEER PORTFOLIO EXPOSURE TO FASTEST DIFFERENTIATED SUSTAINABLE PLATFORM PREMIUM PORTFOLIO GROWING BEER REGIONS & FLAVOURFUL OF INNOVATION Diageo beer NSV % premium beer NSV share 67% Africa other beer other emerging markets premium beer d
Slide 11: What We Will Cover Today
WHAT WE WILL COVER TODAY Significant growth opportunity in Beer Unique Diageo beer model 5 clear growth drivers Delivering more consistent beer performance Beer is accelerating our spirits performance in Africa 11 MS Thank you John Our beer portfolio plays to the trends driving growth in the beer ma
Slide 12: We Have a Unique Beer Model That Enhances Profitability
WE HAVE A UNIQUE BEER MODEL THAT ENHANCES PROFITABILITY BEER FOCUSED MARKETS PREMIUM IMPORT MODEL Highly efficient, asset-light brewing model from Dublin Premium portfolio only, centred on Guinness IMPORTED BY IMPORTED BY DIAGEO PARTNER BREWER Full Beer portfolio driving scale through relative marke
Slide 13: Beer Focus Markets
BEER FOCUS BEER FOCUS DIAGEOTBA DIAGEO TBA THIRD PARTY MARKETS MARKETS MARKETS MARKETS MARKETS 1 1 2 3 1 1 1 2 GB 2 11 1 IRELAND CANADA 2 3 2 USA 2 KOREA 2 1 1 1 1 1 1 1 2 1 1 1 12 1 NIGERIA 12 3 3 ETHIOPIA 1 1 1 22 1 GHANA 1 CAMEROON UGANDA KENYA 1 2 TANZANIA 2 5/22/2019 13 13 Source: Global Data,
Slide 14: What We Will Cover Today
WHAT WE WILL COVER TODAY Significant growth opportunity in Beer Unique Diageo beer model 5 clear growth drivers Delivering more consistent beer performance Beer is accelerating our spirits performance in Africa 14 MS To use this route to market to generate sustainable growth, we have five clear grow
Slide 15: Drivers of Diageo Beer Performance
DRIVERS OF DIAGEO BEER PERFORMANCE 5 Priorities 1 2 3 4 5 Strong Guinness Strengthening Scaling Investing Driving brand health portfolio - local non-alcoholic to win productivity priority brands and innovation 15 MS There are five core drivers that are delivering our growth in beer currently. The fi
Slide 16: Guinness Is a Global Iconic Brand
1.Strong Guinness brand health GUINNESS IS A GLOBAL ICONIC BRAND Global Premium beer brands (value) Budweiser Heineken Corona Guinness Stella Artois Beck`s Carlsberg Tuborg 1664 no. of markets with 21 67 41 34 26 18 32 22 16 sales value >10m USD 16 Source: Global Data, 2018 Our route to market makes
Slide 17: We Punch Above Our Weight in Driving Talkability
1. Strong Guinness brand health WE PUNCH ABOVE OUR WEIGHT IN DRIVING TALKABILITY TOTAL Q3 SOCIAL MENTIONS BY BRAND Index to beer Distinctivity Salience 377k 337k GB 217 120 Ireland* 234 187 258k USA 140 79 Kenya 182 195 Cameroon 212 146 Nigeria 151 117 50k Ghana 172 164 40k 8k 4k 2k Indonesia 147 14
Slide 18: We Have a Consistent Growth Model That Is Delivering Guinness Performance
1. Strong Guinness brand health WE HAVE A CONSISTENT GROWTH MODEL THAT IS DELIVERING GUINNESS PERFORMANCE CREATIVE EXCELLENCE CREATING GUINNESS OCCASIONS BRAND TO BREWER IN CULTURE OUTSTANDING PHYSICAL AVAILABILITY – INTERRUPTING THE SHOPPER AT THE POINT OF PURCHASE 18 MS We have a consistent growth
Slide 19: Excelling in Physical Availability
Finally, with beer in particular, we also have to excel in physical availability. We have one job to do when someone walks into a bar, to stop them defaulting to lager and we use behavioural science and creative flair to do this 18
Slide 20: We Are Relentlessly Improving Media ROI Through Creative Flair and Rigorous Analysis
1. Strong Guinness brand health WE ARE RELENTLESSLY IMPROVING MEDIA ROI THROUGH CREATIVE FLAIR AND RIGOROUS ANALYSIS GUINNESS ROI IN GB AWARDED DOUBLE GOLD IPA EFFECTIVENESS +60% Source: Diageo internal data 19 MS We have used our catalyst programme to continuously improve our marketing We have impr
Slide 21: The Role of Lager in Our Portfolio Is Driven by the Route to Market
2. Strengthening portfolio - local priority brands and innovation THE ROLE OF LAGER IN OUR PORTFOLIO IS DRIVEN BY THE ROUTE TO MARKET DIAGEO BEER PORTFOLIO IMPORT MARKETS BEER FOCUSED MARKETS NET SALES BY BRAND DIAGEO / 3RD PARTY other beer Guinness Serengeti Tusker Malta Senator Winning relative ma
Slide 22: Diageo's Local Beer Portfolio Is Getting Stronger
2. Strengthening portfolio - local priority brands and innovation DIAGEO’S LOCAL BEER PORTFOLIO IS GETTING STRONGER OUTSTANDING GROWTH OF SERENGETI IN BELL IN HIGH SINGLE TANZANIA TO BECOME #1 BEER IN THE MARKET DIGIT GROWTH IN UGANDA SENATOR IN KENYA CONTINUES TO BUILD NEW SERENGETI TRADEMARK MARKE
Slide 23: Accelerating Our Pivot Towards Premium Lager Over the Past Five Years
2. Strengthening portfolio - local priority brands and innovation AND WE ARE ACCELERATING OUR PIVOT TOWARDS PREMIUM LAGER OVER THE PAST FIVE YEARS HOP HOUSE 13 SUCCESS IN GB, IRELAND ROCKSHORE LAGER RAPIDLY GAINING SHARE IN IRELAND GUINNESS GOLD LAUNCH IN NIGERIA RE-POSITIONED GUINNESS BLONDE 22 MS
Slide 24: Scale Non-Alcoholic Participation Across Africa and Rapidly Testing in Europe
3. Exploring the growth opportunity in non-alcoholic SCALE NON-ALCOHOLIC PARTICIPATION ACROSS AFRICA AND RAPIDLY TESTING AND LEARNING IN EUROPE SCALE & STRATEGIC ADVANTAGE IN AFRICA AGILE LEARNING AND INNOVATION IN EUROPE / US 23 MS We are rapidly testing and learning in non alc In Africa, our Malta
Slide 25: Supporting Future Growth with Long Term Investment in Capacity and Consumer Experiences
4. Investing to win WE ARE SUPPORTING FUTURE GROWTH OF BEER WITH SIGNIFICANT LONG TERM INVESTMENT IN CAPACITY AND CONSUMER EXPERIENCES INVESTING IN INVESTING IN INVESTING IN CAPACITY IN KENYA CONSUMER EXPERIENCES CONSUMER PLATFORMS Capacity to drive growth of US brewery: 6 year sponsorship deal for
Slide 26: Supporting Future Growth with Long Term Investment in Capacity and Consumer Experiences
4. Investing to win WE ARE SUPPORTING FUTURE GROWTH OF BEER WITH SIGNIFICANT LONG TERM INVESTMENT IN CAPACITY AND CONSUMER EXPERIENCES INVESTING IN INVESTING IN INVESTING IN CAPACITY IN KENYA CONSUMER EXPERIENCES CONSUMER PLATFORMS Capacity to drive growth of US brewery: 6 year sponsorship deal for
Slide 27: We Are Investing in Sustainability
4.Investing to win WE ARE INVESTING IN SUSTAINABILITY LOCAL RAW MATERIALS USE RENEWABLE ENERGY SOURCING LEADERSHIP IN REMOVAL OF % IN AFRICA PLASTICS 76% 78% 73% F16 F17 F18 26 JOK We’re also investing in Sustainability In Africa we source 78% of our raw material inputs locally - aiming at 80% next
Slide 28: Driving Productivity Helps Us Deliver Growth More Efficiently and Profitably
5. Driving productivity DRIVING PRODUCTIVITY HELPS US TO DELIVER GROWTH MORE EFFICIENTLY AND MORE PROFITABLY COGS PER EU / CAGR SJG BREWING CONVERSION COST PER HL -1,1% F14 F15 F16 F17 F18 F10 F14 F15 F16 F17 F18 27 Source: Euromonitor, Diageo internal data JOK We’re also driving productivity hard t
Slide 29: What We Will Cover Today
WHAT WE WILL COVER TODAY Significant growth opportunity in Beer Unique Diageo beer model 5 clear growth drivers Delivering more consistent beer performance Beer is accelerating our spirits performance in Africa 28 JOK As a result of executing these key drivers…. 28
Slide 30: Beer Is an Important Driver of Diageo Performance, Delivering Consistent Top Line Growth
BEER IS AN IMPORTANT DRIVER OF DIAGEO PERFORMANCE, WE ARE DELIVERING INCREASINGLY CONSISTENT TOP LINE GROWTH GLOBAL BEER DEVELOPED MARKETS EMERGING MARKETS NSV PERFORMANCE NSV PERFORMANCE NSV PERFORMANCE 4.4% 5.8% 4.0% 3.9% 3.7% 3.5% 4.2% 3.0% 2.1% 2.2% 0.3% F17 H1 F17 H2 F18 H1 F18 H2 F19 H1 F17 F1
Slide 31: What We Will Cover Today
WHAT WE WILL COVER TODAY Significant growth opportunity in Beer Unique Diageo beer model 5 clear growth drivers Delivering more consistent beer performance Beer is accelerating our spirits performance in Africa 30 JOK Finally, we’re participating in Africa first and foremost to access the very signi
Slide 32: Diageo Is Well Placed to Take Advantage of the Growing Spirits Opportunity in Africa
DIAGEO IS WELL PLACED TO TAKE ADVANTAGE OF THE GROWING SPIRITS OPPORTUNITY IN AFRICA AFRICA SPIRITS GROWTH DIAGEO SHARE OF SPIRITS (value CAGR%) (value %) 60% 5.9% 50% 4.7% 40% 30% 20% 10% 0% F13-F17 F18-F22 South Nigeria Ghana Angola Kenya Tanzania Cameroon Uganda Ethiopia Total Africa Africa Share
Slide 33: Leveraging Synergy Between Beer and Spirits to Drive Accelerated Growth
WE CAN LEVERAGE REAL SYNERGY BETWEEN BEER AND SPIRITS TO DRIVE ACCELERATED GROWTH DIAGEO AFRICA SPIRITS BEER AND SPIRITS PENETRATION ORGANIC NSV GROWTH (% OF DRINKERS VS TOTAL) (F11-F18 CAGR %) NIGERIA KENYA 14.2% 13.5% 33% 44% 30% 38% 1% 4% 2% 11.5% 5% 10% 8% 16% 15% 22% 20% 24% 18% 3yr CAGR 5yr CA
Slide 34: Strong Performance of Our Brands Supported by Innovation Agenda
RESULTING IN STRONG PERFORMANCE OF OUR BRANDS SUPPORTED BY STRONG INNOVATION AGENDA SPIRITS GROWTH 5YR CAGR% AFRICA INNOVATION (NSV F13 – F18) 45% 26% 15% 14% 10% 7% 5% JW Black Smirnoff VAT69 JW Waragi Kenya Tanqueray Label 1818 Reserve Cane TM Source: Diageo organic 33 JOK Our performance within s
Slide 35: And Spirits Becoming Increasingly Important
AND SPIRITS BECOMING INCREASINGLY IMPORTANT DIAGEO AFRICA TBA CATEGORY SPLIT (NSV) 24% 30% 6% 8% 70% 62% F13 F18 Beer RTD Spirits Source: Diageo organic 34 JOK As a result , spirits have become an increasingly important part of our portfolio. Now accounting for 30% of our business in Africa up from
Slide 36: In Closing
IN CLOSING Beer is attractive and growing category We have business model to access growth We execute on clear priorities with Guinness at the heart of what we do Our Africa RTM enables us to grow beer fast and spirits faster Diageo beer delivers consistent sustained performance 35 JOK So in closing
Slide 37: By Gareth Edwards
5/22/2019 By Gareth Edwards 36 36 36
Slide 38: 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 39: •movements in the value of the assets and liabilities related to Diageo’s pension plans;
•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