Diageo Investor Conference North American Whisky November 2013 North American whisky is HOT • Classic cocktails • Pop culture • Ties to local/American pride 3 NAW is the second largest spirits category in the US and a key driver of growth NAW* is 23% of spirits value driving over 50% of growth Share of total spirits sales (USD) Share of spirits value growth vs. prior year OTHER 2% IRISH 2% BRANDY/ PPC COGNAC 5% GIN 3% 4% IRISH WHISKEY 6% NAW 23% SCOTCH 5% SCOTCH 12% NAW 53% TEQUILA 7% CORDIALS 9% VODKA 30% VODKA 27% RUM 12% Source: Nielsen xAOC, 52 wks ending Oct 12, 2013 *North American whiskey 4 Diageo has a strong portfolio of brands well positioned for growth $ share of NA whiskey Hood River 2% Laird 2% A/O 1% Crown Royal #2 North American whiskey Crown Royal Maple #1 Spirits Innovation1 Luxco 3% Campari 3% Diageo 23% Constellation 5% Heaven Hill 6% Sazerac 12% Bulleit Fastest Growing Bourbon2 Bulleit Rye #1 Leader in Rye whiskey Brown Forman 23% George Dickel #2 Tennessee whiskey Beam 21% George Dickel #3 Rye whiskey 7 Crown #1 Blended American whiskey Source: NABCA, 12 months ending September, 2013 Notes: (1) Nielsen xAOC, through September 2013, (2) mainstream brands, defined as > 30K cs / yr NABCA 5 Premiumisation is driving NAW growth Super premium+ brands are ~50% of category value but delivering ~90% of growth % of NAW value % of NAW growth Premium & lower 11% Premium & lower 47% Super premium & higher 53% Super premium & higher 89% Value growth by price tier Source: Nielsen xAOC, 52 wks ending Oct 12, 2013 6 Flavour innovations are driving NAW growth Flavours make up 11% of NAW sales… … and drive 53% of value growth Flavoured 11% Unflavoured 47% Flavoured 53% Unflavoured 89% Source: Nielsen xAOC, 52 wks ending Oct 12, 2013 7 Bourbon and Rye are growing rapidly Value growth – retail sales (USD) 51% 12% Bourbon Rye Source: Nielsen xAOC, 52 wks ending Oct 12, 2013 8 Diageo North American whiskey portfolio 9 10 Crown Royal is strong and building momentum 6% CAGR 2% CAGR F07 - 11 F11 - 13 Crown Royal net sales growth Year ended 30 June 11 Crown Royal’s consumer franchise is more diverse than category competitors Skews more Female and Multicultural than the NAW category 17% 30% 14% 14% 12% 26% Female African American Crown Royal Franchise Hispanic NAW Category Source: Milward Brown brand tracking survey Sept 2013 12 We’re investing in powerful platforms for greater growth CONSUMER ENGAGEMENT INNOVATION INTEGRATION IN POPULAR CULTURE 13 “Reign On” campaign: Launched Jan 2013 PURPOSE Inspire men to become modern-day kings BRAND GOAL Become a contemporary symbol of status REIGN ON = WINNING We inspire all men. We enable each man. Crown Royal puts royalty on your side so you can win at the game of life. 14 “Reign On” platform is strengthening brand equity “Reign On” is more than a celebration of getting to the next level – it is about continuing to strive. Jul-Sept 2012 Jul-Sept 2013 22% 19% 14% 19% 24% 20% 15% 11% Regular consumption "Brand that I love" "Brand for "Brand that is someone like me" leading the way" Source: Milward Brown brand tracking survey Sept 2013 This makes me proud of Crown Royal. 15 Print 16 Outdoor 17 Outdoor 18 Outdoor 19 Digital 20 Recent innovations are attracting new consumers Recruiting younger LPA and multicultural consumers interested in higher proof bourbons +20% CAGR since launch SRP: $30 Recruiting women, multicultural and younger LPA consumers into the whiskey category SRP: $25 Black and Maple now make up ~15% of Crown Royal net sales 21 Innovation will continue to be a growth engine Strengthens ultra premium image: SRP $50; 2x Crown Royal Deluxe 22 Crown Royal XO: Luxurious indulgence Creative 23 Innovation: Celebrating our heritage Special 75th anniversary blend honors King George VI inaugural visit to Canada Luxury positioning: SRP $75; 3x Crown Royal Deluxe 24 25 Bulleit is capturing the hearts and throats of America Increased net sales five-fold in the past 3 years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year ended 30 June 26 Bulleit exists to champion the conquering of new frontiers A brand of substance Inspired by Tom Bulleit, who quit his successful law practice and risked everything to revive his great-great-grandfather’s bourbon recipe 27 Built from the bottom up • Tom Bulleit, inspirational entrepreneur • Inclusive and culturally relevant 28 Bulleit engagement model – Discovery CHARM THE TRADE TURN GATEKEEPERS INTO EVANGELISTS BUILD CONSUMER AWARENESS CONSUMERS 29 Consumers are discovering Bulleit on premise On premise is leading brand growth 102% 64% Off-premise Off premise On-premise On premise Depletions growth 2012-13 30 Print and outdoor 31 Recent innovations are accretive to Bulleit’s fast growing base business Bulleit 10 Bulleit Rye Bulleit Bourbon 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year ended 30 June 32 Bulleit is now the BEST SELLING RYE 10% Jan 2012 22% Jan 2013 33% Present Bulleit share of total Rye Source: Nielsen xAOC, 52 wks ending Oct 12, 2013 33 Bulleit is an award-winning whiskey 34 Bulleit international expansion Plans are in development to launch in more than a dozen markets 35 36 George Dickel is founded in a world where integrity is the true measure of success We believe that if it’s worth doing, it's worth doing right: • Small, dedicated staff • Chill charcoal filtered – smooth sippin’ whiskey • Everything made on-site – in “Cascade Hollow” “Don’t change a damn thing” – made the same way from George Dickel’s original recipe 37 A finely crafted whisky: “Hand Made the Hard Way” 38 George Dickel Rye expands appeal • Uniquely finished in the style that made George famous A unique rye whisky put through the George Dickel chilled, charcoal filtering process • Impressive success since November 2012 launch: • The #3 selling rye in America • Gold Medal – SF World Spirits Competition • 91 points – Beverage Testing Institute • 4 stars – Spirit Journal • SRP - $24.99 Source: combined open states shipments (DISCUS) and control states depletions (NABCA), P12M as of 6/30/13 39 George Dickel in the news 40 George Dickel: A highly awarded whisky SRP $ 750ml $17.99 Gold Medal ’10 Silver Medal ‘11 $24.99 $24.99 Double Gold Medal ’07 Gold Medal ‘05, ‘10, ’11 Gold Medal ‘07, ‘10, ’11, ‘13 Gold Medal ‘13 Silver Medal ‘06, ‘08, ‘11 ‘12: Very Good, Strongly Recommended: 97 points Silver Medal & Best Buy: 89 points ‘12 $44.99 Silver Medal ‘06, ‘11 Bronze Medal ‘08 13: Extraordinary, Ultimate Recommendation, 93 points ’11, ‘13: Chairman’s Trophy Winner: Extraordinary, Ultimate Recommendation: 97 points ‘12: Chairman’s Trophy Winner: Excellent, Highly Recommended: 91 ‘12: Very Good, Strongly Recommended: 89 points ‘10: Very Good, Strongly Recommended: 89 points Best Buy ’12 Gold Medal, 92 points in ’07, ’12, ’13 Gold Medal ‘02-’06, ‘12, ’13 Scored 90 points w/ Exceptional Rating ’06 Scored 91 points w/ Exceptional Rating ‘13 Scored 92 points w/ Exceptional Rating ’06 41 George Dickel “Buy the Barrel” programme • Special crafted offering for consumers • Provides retailers premium customised offer & display • Ultra premium pricing halo: SRP $50 - $70 42 42 42 Upcoming innovation reinforces craft, heritage and adoration from whisky enthusiasts • Crafted in spirit of Prohibition Era • A whiskey that’s “Mellow as Moonlight” 43 INNOVATION FOR WHISKEY ENTHUSIASTS 44 Flavoured innovations will continue to recruit new consumers to North American whiskey 1 out of 5 flavoured whiskey triers are new to whiskey 45 Expanding reserve – Blade & Bow concept Aged and beautifully finished Kentucky bourbon entrenched in our historic Stitzel Weller distillery site 46 Expanding Reserve – Orphan Barrel Concept 47 More exciting innovation to come 48 In summary, North American whiskey offers Diageo an exciting opportunity for growth • Strong and growing portfolio of brands • World class innovation capabilities • Well positioned to capitalize on trends in premiumisation, flavours and craft Diageo is positioned for success! 49 Cautionary statement concerning forward-looking statements This presentation contains ‘forward-looking’ statements. These forward-looking 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 express forecasts, expectations, plans, outlook and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability or cost of financing to Diageo, anticipated cost savings or synergies, the completion of Diageo's strategic transactions and restructuring programmes, anticipated tax rates, expected cash payments, outcomes of litigation, anticipated deficit reductions in relation to pension schemes, general economic conditions and all statements on the slide “outlook statements”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. 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 statements, including factors that are outside Diageo's control. These factors include, but are not limited to: changes in political or economic conditions in countries and markets in which Diageo operates, including changes in levels of consumer spending, failure of customer, supplier and financial counterparties or imposition of import, investment or currency restrictions; changes in consumer preferences and tastes, demographic trends or perceptions about health related issues, or contamination, counterfeiting or other circumstances which could harm the integrity or sales of Diageo’s brands; developments in any litigation or other similar proceedings (including with tax, customs and other regulatory authorities) directed at the drinks and spirits industry generally or at Diageo in particular, or the impact of a product recall or product liability claim on Diageo’s profitability or reputation; the effects of climate change and regulations and other measures to address climate change including any resulting impact on the cost and supply of water; changes in the cost or supply of raw materials, labour and/or energy; legal and regulatory developments, including changes in regulations regarding production, product liability, distribution, importation, labelling, packaging, consumption or advertising; changes in tax law, rates or requirements (including with respect to the impact of excise tax increases) or accounting standards; and changes in environmental laws, health regulations and the laws governing labour and pensions; the costs associated with monitoring and maintaining compliance with anti-corruption and other laws and regulations, and the costs associated with investigating alleged breaches of internal policies, laws or regulations, whether initiated internally or by external regulators, and any penalties or fines imposed as a result of any breaches; ability to maintain Diageo’s brand image and corporate reputation, and exposure to adverse publicity, whether or not justified, and any resulting impacts on Diageo’s reputation and the likelihood that consumers choose products offered by Diageo’s competitors; increased competitive product and pricing pressures and unanticipated actions by competitors that could impact Diageo’s market share, increase expenses and hinder growth potential; the effects of Diageo’s strategic focus on premium drinks, the effects of business combinations, partnerships, acquisitions or disposals, existing or future, and the ability to realise expected synergies and/or costs savings; Diageo’s ability to complete existing or future business combinations, restructuring programmes, acquisitions and disposals; contamination, counterfeiting or other events that could adversely affect the perception of Diageo’s brands; increased costs or shortages of talent; disruption to production facilities or business service centres, and systems change programmes, existing or future, and the ability to derive expected benefits from such programmes; changes in financial and equity markets, including significant interest rate and foreign currency exchange rate fluctuations and changes in the cost of capital, which may reduce or eliminate Diageo’s access to or increase the cost of financing or which may affect Diageo’s financial results and movements to the value of Diageo’s pension funds; renewal of supply, distribution, manufacturing or licence agreements (or related rights) and licenses on favourable terms when they expire; and technological developments that may affect the distribution of products or impede Diageo’s ability to protect its intellectual property rights. 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 factors and the ‘Risk factors’ contained in Diageo’s annual report for the year ended 30 June 2013. Any forward-looking statements made by or on behalf of Diageo speak only as of the date they are made. Diageo does not undertake to update forward-looking statements to reflect any changes in Diageo's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Diageo may make in any documents which it publishes and/or files with the US Securities and Exchange Commission. All readers, wherever located, should take note of these disclosures. This document includes names of Diageo's products, which constitute trademarks or trade names which Diageo owns, or which others own and license to Diageo for use. All rights reserved. © Diageo plc 2013. The information in this presentation does not constitute an offer to sell or an invitation to buy shares in Diageo plc or an invitation or inducement to engage in any other investment activities. This presentation includes information about Diageo’s target debt rating. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organisation. Each rating should be evaluated independently of any other rating. Past performance cannot be relied upon as a guide to future performance. The contents of the company’s website (www.diageo.com) should not be considered to form a part of or be incorporated into this presentation 50
© Copyright 2024