Britvic — Investor Day (March 2009)
64 slides from Britvic's investor day presentation, Mar 12, 2009
Slide 1: Investor Seminar
Investor Seminar 12th March 2009
Slide 2: Agenda
Agenda Britvic Soft Drinks Report Paul Moody 4.30 z Resilient performance in a tough year z Branded soft drinks remain a staple item Group Update John Gibney 4.50 z Guidance from Q1 IMS z Group structure; a natural progression Britvic Ireland – Investing for future growth Andrew Richards 5.00 z Enab
Slide 3: Britvic Soft Drinks Report
Britvic Soft Drinks Report z Overview of the GB soft drinks category in 2008 z Take-Home and Licensed On-Premise performance z The impact of the consumer downturn on soft drinks
Slide 4: Another resilient performance… ...an even tougher year
Another resilient performance… ...an even tougher year z Sales held up well despite economic downturn and another poor summer z Value sales down just 1% to £8.4bn z Volumes down 2% to 7.4bn litres z Soft drinks remained one of the most important categories in the take home and licensed sectors z A y
Slide 5: Take-Home sales held up well
Take-Home sales held up well z Value sales grew 1% to £6.1bn z Volumes fell 2% to £6.9bn litres z Value growth driven by glucose/stimulant drinks and sports drinks z Traditional favourites – cola, squash and juice drinks did well as economic conditions worsened z Smoothies and bottled water suffered
Slide 6: Another challenging year for the Licensed On-Premise market
Another challenging year for the Licensed On-Premise market z Value sales down 4% to £2.3bn z Volumes were down 6% to 0.5bn litres z Soft drinks proved more resilient than alcohol as food and family occasions increase Fruit juice and juice drinks performed most strongly Cola and lemonade remaine
Slide 7: The impact of the consumer downturn
The impact of the consumer downturn Trend Impact on soft drinks Economy overshadowed the 3 key Health and wellbeing still relevant consumer trends from last year Five-a-day remained important Health and wellbeing but consumers traded down from smoothies Ethics and environment Products with f
Slide 8: Soft drinks are a small-ticket item, offering affordable every day enjoyment
Soft drinks are a small-ticket item, offering affordable every day enjoyment Trend Impact on soft drinks 50% of GB shoppers cutting down on Over 60% of branded soft drinks grocery spending: 28% were not, 22% sold on promotion were undecided Price differential between own label Looking out for
Slide 9: In summary
In summary z Another resilient performance in a tough year z Mainstream brands performed A year of two halves well z Take-Home sales held up well z Cola, Squash and Juice drinks particularly resilient z Licensed On-Premise market remained challenging z Soft drinks a small ticket item, providing af
Slide 10: Group Update
Group Update John Gibney Finance Director
Slide 11: A reminder of our outlook for 2009
A reminder of our outlook for 2009 Q1 IMS Guidance 28th January 2009 •Business reorganisation benefit in 2009 • GB £1.0-1.5m in 2009, £2.0-3.0m from 2010 • Ireland €1.0-1.5m in 2009, €7.0m from 2010 • Exceptional costs £10m this year • €6.0m incremental synergy benefit next year •Reduction in raw ma
Slide 12: Key elements of the additional synergies in Ireland
Key elements of the additional synergies in Ireland •Supply-chain benefits • Centralised distribution approach – closure of 3 depots with consolidation into Dublin • Production efficiencies at Ballygowan •Group structure benefits • Centralisation of IT systems & support • Group Shared Services
Slide 13: Britvic's New Group Structure – a natural progression
Britvic’s New Group Structure – a natural progression Group GB Ireland z Group functions for Supply Supply Chain Chain, Innovation and IT Innovation z Opportunities for front and back office efficiencies IT z New subsidiaries can slot in easily and can be integrated Marketing Marketing more quickly
Slide 14: In summary
In summary z Cost savings and additional synergies will underpin the group performance against challenges in the Irish market The board remains confident of its expectations z Additional synergies in Ireland are a further demonstration of our ability to add value through M&A z Our new group struct
Slide 15: Investing for future growth
Investing for future growth Andrew Richards Managing Director
Slide 16: Andrew Richards
Andrew Richards z 24 years commercial experience in FMCG (Cadbury’s, Kraft, PepsiCo - Walkers) z Joined Britvic in 1998 as Grocery Trading Director z August 2000, appointed Take-Home Director z In 2003, appointed to the Executive Committee as Customer Management Director. z March 2009, appointed Man
Slide 17: Creating Value in Ireland
• Creating Value in Ireland • The investment case • Rationale for the acquisition • An update on synergies • The Irish Soft Drinks Market • Changing trends • Challenging times • Drivers of Change • Systems and processes • Strategic review • 2009 brand plans
Slide 18: Overview of Britvic Ireland
Overview of Britvic Ireland Key facts: z Ireland’s 2nd largest branded soft drinks business by volume • 800 Over half of volumes sold from wholly-owned employees brands Similar brand and category profile to Britvic GB • 1 carbs/stills factories z Strong positions in all key categories z 253m lit
Slide 19: Rationale for the acquisition
Rationale for the acquisition Growth Acceleration z Leveraging the Pepsi relationship z Building on existing presence for Britvic brands in market z Scope to achieve real cost savings and other synergies Mid- To Long-term Potential... z to drive top-line growth of the combined portfolio z to introdu
Slide 20: Acquisition & Integration Chronology
Acquisition & Integration Chronology z Business acquired from C&C August 2007 €249m z Integration, SAP implementation and capital investment €45m z Cumulative synergies to be achieved by 2011 €27m z A strategy to create value 2008 activities Business Integration Product Portfolio Processes Refining
Slide 21: A Summary of the Synergies: Britvic Group
A Summary of the Synergies: Britvic Group
Slide 22: Drivers of change
Drivers of change SAP & I.T. Infrastructure zGB In house knowledge and expertise will minimise disruption zKey enabler to allow major process redesign Capital Investment zMajor “catch up” capital programme in Dublin and Newcastle West – allowed closure of Cork facility Organisational Restructure z N
Slide 23: Current Ireland Economic Environment
Current Ireland Economic Environment Property prices declined 13.2% in real terms in 2008 Unemployment expected to peak at 14% in 2009 12% of the Population are non-nationals and 80,000 are believed to have left in 2008 Standard of living expected to drop by 10% Category performances are challenging
Slide 24: Shifting Channel Mix
Shifting Channel Mix 13% Economic environment in Ireland is driving down footfall in the pub and leisure channels 10% Declines in the Convenience Channel are exacerbated by the collapse of the Construction Sector Channels perceived by shoppers as “best 15% 5% value-for-money” are gaining market shar
Slide 25: 2008 Soft Drinks Market Performance
2008 Soft Drinks Market Performance Carbs Cola +1.4% Lemon / Lime -2.5% Fruit Carbs -5.3% Stills Water -2.4% Energy +1.5% Cordials +0.4% Sports +0.1% Mixers +0.3% 0 50,000 100,000 150,000 200,000 000's Litres The second half performance declined markedly Source: AC Nielsen Scantrack: ROI Grocery MAT
Slide 26: In 2009 the position has worsened
In 2009 the position has worsened Carbs Cola -0.4% Lemon / Lime -3.7% Fruit Carbs -9.1% Stills Water -6.6% Energy +1.1% Cordials -3.3% Sports -6.2% Mixers -0.7% 0 50,000 100,000 150,000 200,000 000's Litres All categories except Energy are now in decline Source: AC Nielsen Scantrack: ROI Grocery MAT
Slide 27: Our strong portfolio is well placed to perform
Our strong portfolio is well placed to perform. Britvic Ireland - Brand performance highlights from 2008 Consolidated strong leadership Pepsi the fastest growing 7up and Club maintaining their position in Dilutes with 70% carbonate brand in 2008 strong leadership positions in volume market share – M
Slide 28: In summary
In summary z A business with great potential though trading conditions are exceptionally tough z Strong delivery of synergy benefits z An investment plan in equipment, systems and people and processes that enables the delivery of future growth z An organisation that is changing to meet the demands o
Slide 29: Marketing
Marketing Simon Stewart Marketing Director
Slide 30: Agenda
Agenda z Our evolving marketing strategy A stronger commercial bias Category credentials z Core and Seed brand plans 2009 Our most intense year so far Investing in top-line growth zMeeting consumer needs through innovation
Slide 31: Marketing... Our strategy
Marketing... Our strategy To provide superior shareholder value through the value growth of core brands and focused innovation z Trademark z Provide z Service the z A focused z A Marketing Strategies superior customer Innovation culture that consumer management Strategy drives z Strategic and team v
Slide 32: Category thinking is core to our success
Category thinking is core to our success In the last three years we have invested significantly in category resource Investment approaching an incremental £4m Category Vision Partnership approach Inspiring our customers with plans which build sustainable category growth Four key need states driving
Slide 33: Marketing will take more of a Commercial bias
Marketing will take more of a Commercial bias Focus on P&L Understand and develop management, strategy based on the not purely brand financial performance of the management brand Marketing Growth Focus Cost Focus Pricing strategy PVO opportunities consistent Quality distribution with brand strategy
Slide 34: A Core & Seed focus
A Core & Seed focus \@ BRITVIC
Slide 35: GB Core Brands
\I BRITVIC plc GB Core Brands
Slide 36: A fantastic year for Pepsi
zA fantastic year for Pepsi highest market share for five years Bought by 1m extra households in 2008 zAdding value through innovation with Pepsi Xtra Cold and Pepsi Raw zDriving further growth in 2009, leveraging our sporting and music credentials Driving the cola category Source: AC Nielsen Sc
Slide 37: Max it for a £1 Million with Pepsi
Max it for a £1 Million with Pepsi Twenty20 is the emerging Cricket format Strong synergies with the Pepsi brand values Headline sponsor of the Twenty20 world cup in June 2009 in England Major on-pack promotion Win £10k every day Announcing an 8-year deal with the International Cricket Council
Slide 38: Joining forces with Nokia
Joining forces with Nokia z “Comes with Music” is Nokia’s biggest launch of the year z Win Nokia “CWM” handsets & music downloads z A major on-pack and in-store execution programme Music is part of the Pepsi DNA
Slide 39: Rediscovering its roots
Tickle • ‘Save Tango campaign’ reached 200m consumers Slap • Achieving growth in “On-the-Go” • Entertaining summer campaign aimed fairly and squarely at our target audience • Vision to make Tango a teen icon again • New packaging and media campaign aimed at core consumers Rediscovering its roots
Slide 40: Driving category growth
z Driving category growth z 9.3% value growth in 2008 z A strong player in GB and Ireland z New packs launching in Spring z Design refresh in April z Seven Natural Wonders of the World platform for summer Going from strength to strength Source: AC Nielsen Scantrack: Take Home 52 weeks to WE 27.12.20
Slide 41: Continues to be the No1 Packaged Drink
z No.1 packaged soft drink in Licensed On-Premise z One drunk every 6 seconds z A £300m retail value brand z £6m marketing programme to drive consumer engagement Continues to be the No1 Packaged Drink Source: AC Nielsen Scantrack: Take Home 52 weeks to WE 27.12.2008, Total Brewers AC Nielsen to Nov
Slide 42: An integrated plan to engage consumers
z A modern, impactful new look from May z A limited edition flavour for licensed z Grape & Kiwi z New pack formats, accessing broader occasions z 250ml PET “On the Go” z 750ml PET Family sharing” z Heavyweight TV from April z “it’s metter to bix things up” An integrated plan to engage consumers *Sou
Slide 43: The biggest kids brand in the UK
z UK’s number 1 kids brand now worth more than £100m z Adding value through innovation in juice & water z Relaunch programme to broaden appeal with mums and kids The biggest kids brand in the UK Source: AC Nielsen November 2008 52-week Scantrack to 27.12.08
Slide 44: Major Summer relaunch campaign
16 hours of prime time Kids TV Major Summer relaunch campaign z A new pack design across the range z Flavour reformulation z Sponsorship of the ‘The Fruit Shoot Skills Academy’ programme on ITV & CITV z National Kids TV advertising z Feature advertising in Kids Magazines & digital
Slide 45: Extending Britvic's Global Reach
z Extending Britvic’s Global Reach Fruit Shoot now in southern states in the US Already listed in Wal Mart, Winn Dixie and Bruno’s A successful trial since January 2008 z Overseas Opportunities A partnership approach model for the future A real example of Licensing & Franchising opportunit
Slide 46: Strengthening Market Leadership
• Strong performance against the market • 4.1% value growth against a flat squash category • Drunk in 1.2million more households than last year • The 7th most valuable grocery brand • Driving long term value growth through year round activity and innovation Strengthening Market Leadership Sources: A
Slide 47: Year-round engagement with consumers
• Two major campaigns this year • Wimbledon • Back on TV after a 3 year gap • On-pack to win tickets • New player sponsorship (tbc) • Pantomime • A first for Robinsons • Engages 12m core consumers • More squash drunk at Christmas than cola Year-round engagement with consumers
Slide 48: GB Seed Brands
\I BRITVIC GB Seed Brands
Slide 49: Sports drink brand progress
zAlready in nearly 70% of the “points of sweat” zOur efforts are paying dividends, since Christmas we have achieved value share of 5.6% zSponsorship of the Guinness rugby premiership and key endurance events reinforces our credentials with serious athletes zNew blackcurrant flavour in 2009 broadens
Slide 50: Drench: growing volume and value share
zThe only water brand driving penetration in the category zDrench has added over 700,000 new households to the category z“Brains” enjoyed the highest standout of any ad in the last 5 years zMajor on-pack promotion to win Smart cars, IPhones and other great prizes Growing volume and value share Sourc
Slide 51: Seed brands: RAW, V Water, Lipton
SEED BRANDS RAW V Water LIPTON Natural born cola Value-add water A portfolio gap filled z Available in over 1,500 z Production brought in- z Available in 500ml and managed bars house Jan 2009 1.5L z In Boots it achieved z Now listed in the major z Available in 4 flavours 40% rate of sale of Max mult
Slide 52: Innovation
Innovation Innovation is at the heart 2009 will see... of the company Brand extensions rather than new brand launches Innovation is a balance of consumer pull and 2009 will see... technical push A gap closed in the “On-the- go” portfolio We will focus on scale 2009 will see... opportunities An exten
Slide 53: Squash is a huge Category
Squash is a huge Category (3.4bn litres annually) 37.3m Meets most shopper & glasses consumer needs per day Value for money Convenient NAS & Regular The importance of squash is not Resulting in some consumers buying natural ingredients satisfying this more natural alternatives or only is growing.. n
Slide 54: Introducing Robinson's "Be Natural"
Introducing Robinson’s “Be Natural” The 1st everyday family squash with only naturally sourced ingredients 3 Flavours: Orange & Passionfruit 600ml plastic bottle (makes 17 Blackcurrant & Pear servings) Apple & Strawberry Only natural Large scale ingredients TV advertising 90% see it as a great fit w
Slide 55: Current offerings not meeting consumer needs
Current juice drinks deliver against taste or healthy hydration, not both Deliver guilt-free Lower penetration & frequency than water or cola hydration that tastes good Event the most health conscious don’t want to compromise on taste Water the lowest PPL value category in soft drinks Add value into
Slide 56: Crisp, clean taste
Crisp, clean taste High taste appeal 3 modern, familiar combinations spring water + fruit juice Affordable everyday pricing No artificial, flavours, colourings or Real Taste More ‘natural’ sweeteners Real fruit taste No artificials Not too sweet Closer to water Modern flavours Crisp and refreshing A
Slide 57: Hitting 42 million consumers
hitting 42 million consumers z Launch into impulse and foodservice channels z Impactful in-outlet visibility and presence z Driving awareness through continuing the drench approach of innovative, breakthrough communications
Slide 58: Slide 58
Slide 59: In summary
In summary • A marketing team focused on driving value through both brand equity and financial performance • A core and seed brand focus that in 2009 will deliver our most exciting marketing activity yet • A targeted innovation plan that addresses both consumers needs and closes portfolio gaps
Slide 60: Agenda
Agenda Britvic Soft Drinks Report Paul Moody z Resilient performance in a tough year z Branded soft drinks remain a staple item Group Update John Gibney z Guidance from Q1 IMS z Group structure; a natural progression Britvic Ireland – Investing for future growth Andrew Richards z Enabling a business
Slide 61: Q&A
\I BRITVIC Q&A
Slide 62: Appendix
\I BRITVIC Appendix
Slide 63: Examples of packaging innovation and on-pack activity
Examples of packaging innovation and on-pack activity
Slide 64: Examples of in-store execution and brand equity investment
Examples of in-store execution and brand equity investment