africa conference - nigeria
TRANSCRIPT
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Nigeria
Diageo Africa Conference
15 October 2013
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This is Nigeria
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The macroeconomic indicators are strong
Source: Euromonitor International World Economic Outlook ; Nigeria Bureau of Statistics, Central Bank of Nigeria , IMF
0
3
6
9
12
15
2010 2011 2012 2013 2014 2015 2016 2017
Inflation rate is now low and forecast to continue todecline
0
100
200
300
400
500
2010 2011 2012 2013 2014 2015 2016 2017
2nd largest economy in Africa
Cameroon Ghana Nigeria South Africa Egypt
0
3
6
9
People earningmore than $10k
pa
People earningmore than $20k
pa
People earningmore than $30k
pa
People earningmore than $40k
pa
A new generation of affluent consumers
2010 2015 2020
0
2
4
6
8
10
12
2010 2011 2012 2013 2014 2015 2016 2017
GDP growth is forecast to remain top quartile
Brazil China India Nigeria South Africa
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However, there are some challenges
Source: BusinessDay Aug. 9 2013, Central Bank of Nigeria , Federal Ministry of Finance Nigeria, IMF
0
20
40
60
80
100
120140
2010 2011 2012 2013
Oil price a major factor that drives governmentrevenueBonny light
0
2
4
6
8
10
12
14
2008 2009 2010 2011 2012 2013
Government spending has also dipped
0
2
4
6
8
10
12
2010 2011 2012 2013E
Government revenues are declining due to fallingoil output and pricing
0
500
1,000
1,500
2,000
2,500
3,000
3,5004,000
2010 2011 2012 2013
Power supply declining and lower thanrequirementmegawatt US$/barrel
N Trillion N Trillion
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The Nigerian beverage alcohol market
Note: data includes TBA and non-alcoholic malts. Source: A.C. Nielson data, IWSR, Euromonitor, EIU, interviews, market analysis
Wine
Premium
Spirits
Value
Spirits
Mainstream
Spirits
Malt
WineSpiritsBeer Malt RTD
Value beer 15%
Mainstream beer 54%
Premium beer 31%
Malt
Wine
Champagne
SparklingWine
11%
4%
Premium
spirits
Super premium
spirits
Valuespirits
Mainstream
spirits
38%
38%
17%
7%
Sales value 2012
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0
5000
10000
15000
20000
25000
30000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
F92 F95 F98 F01 F04 F07 F10 F13 F16
Beer market volume GDP constant prices (Nbn) Government expenditure (Nbn)
The beer market is traditionaly volatile and correlatesto GDP
Source: Plato Logic, Nielson, IMF world economic outlook database Oct 2012, internal estimates
Beer market volume (m HL)
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The per capita consumption of beer and spirits isrelatively low in Nigeria
Source :Plato Logic , Internal data, IMF, IWSR , UNDP
10997 93
79 78 73 72 71 68 68 65 6049 47 46
3016 11 10 10 9 8 6 4
0
20
40
60
80
100
120 Per capita consumption of beer 2012 (litres per annum)
20.9
10.7 10.4
7.8 7.4 7.4 6.5 6.3 6.1 5.8 5.7 5.23.7 3.0 2.4 1.3 1.3 0.9 0.7 0.4 0.3 0.3 0.3
0
510
15
20
25Per capita consumption of spirits 2012 (litres per annum)
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We are an iconic company in Nigeria
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Diageo in Nigeria
Guinness Nigeria Plc.Diageo Brands Nigeria
Limited (DBN)
54.3%
owned
100%
owned
Other investors
45.7%
owned
Business sectors: Premium and superpremium spirits
Beer Malt Ready to drink
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With presence across all categories ...
Beer Ready todrink
Malt Whisk(e)y Vodka & Gin Otherspirits
Diageo
Heineken
SAB
Miller
Mot
Hennessy
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... and a strong portfolio across all price segments
Ultra andsuper premium
Premium
Mainstream
Value
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We cover a variety of outlets
Jollity Bars for after work bonding, relaxedand often with live music
Prestige Distinguished, individual, stylish,sophisticated bars
Key Accounts Chains of modern retail
supermarkets
Recreational
Clubs Sports or social clubs where
membership is required
Rhythm Bars where young people come toparty and have fun
Home base Low priced neighborhood bars
located in crowded areas
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We are well established with strong infrastructureacross the country
Abuja
2 in Lagos Aba
Ibadan
Jos
EnuguBenin
Production sitesSales divisionsDistributor locationsHead office
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We account for over a third of the beer, malt andpremium spirits categories with room for growth
Sources: AC Nielson, IWSR and market intelligence, market estimates
Value share 2012
Beer
Diageo
37%Heineken
57%
Others
5%
SAB Miller
1%
Malt
Diageo
34%
Heineken
63%
SAB Miller
1%
Others
2%
Premium spirits
Diageo
43%
Others
35%
LVMH
15%
Distell
7%
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F09 F10 F11 F12 F13
Spirits net sales
Our performance track record is strong
Year ended 30 June
DBNestablished
F09 F10 F11 F12 F13
Malta Guinness net sales
F09 F10 F11 F12 F13
Harp net sales
F09 F10 F11 F12 F13
Net sales Operating profit
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Our Strategic Priorities
Strengthen and accelerate our premium core
brands
Innovate at scale to meet new consumer needs
Build and then constantly extend our advantagein Route to Consumer
Drive out cost to invest in growth
Win in reserve
Guarantee our plans with the right people andcapability
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280
180200
110
60cl 33cl
Guinness Price Premium (RRP)
Guinness Competitor
Stout volume share estimate2012
Strengthen and accelerate our premium corebrands - Guinness
+40%
+64%
18%
60%23%
Value Stout
Mainstream Stout
Transformation of Guinness
Source: A C Nielson
Guinness
(Premium Stout)
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Strengthen and accelerate our premium corebrands- Harp
Significant up weight ininvestment
Local football sponsorship
Work on new brandpositioning and campaignunderway
Capacity improvement willsupport growth
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Strengthen and accelerate our premium corebrands- Johnnie Walker
Year ended 30 June
The Johnnie Walker brand has grown
significantly since the establishment of DBN
We will continue to invest in marketing andsales resources
F11 F12 F13
Johnnie Walker net sales
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The opportunity for reserve is huge and Diageo isthe pace setter
A dedicated team
Owning the top outlets
Spectacular VIP parties
Distribution expansion
Mentoring and sales
JW Gold launch
Bespoke Croc& Johnnie Walker Blue branding
Clear plans to achieve our ambition
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We have a proven capability to innovate across ourbusiness
Year ended 30 June 2013
Recent spirits innovations
Q2 F13 Q3 F13 Q4 F13Q1 F13
Q4 F13Q1 F13 Q2 F13 Q3 F13
Dubic net sales by quarter
Snapp net sales by quarter
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We have embarked on a Route to Consumertransformation
Increase
availabilityof our
brands and
share in key
outlets
Increase
availability inrural areas
where we are
relatively
weak
Increase our
share in thegrowing off
trade
channel
Improve the
efficiency &effectiveness
of our sales
organization
Sufficient
distributorfunding to
support our
growth
ambition
Outlet
coverage
Rural
distribution
Off trade
managementSales
effectiveness
Working
capital
Key
Opportunities
Quick Wins
Getting to the right places Doing theright jobs With theright skills In the mostefficient way
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Drive cost out to invest in growth
We have kept cost of goods perunit increases below inflation
We continue to work hard tominimise our production andoverhead cost base
As we make further savings wewill continue to invest in
Up weighting our marketing
investment Increasing our commercial
manning
F12F09 F11F10 F13
COGS/HL absoluteInflation index
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Guarantee our plans with the right people andcapability
Seni AdetuMD / CEO
Lisa NicholsFinance &
Strategy Director
Sesan AdebowaleCorporate Relations
Director
Austin UfombaMarketing & Innovation
Director
Cephas AfebuamehSupply Chain Director
Wale AdeniranHuman Resource
Director
Chizoba OjieloRegional Sales Director
East and North East
Afeez JibowuRegional Sales DirectorWest and North West
Eyitemi TaireCustomer Marketing
Director
Patrick AwotwiRoute-to-Consumer
Director
Felix EnwemaduGM Diageo
Brands Nigeria
Debola FaladeControls, Compliance
and Ethics Director
Management Team
InnocentNwaononiwu
Sales Services Director
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In conclusion, we have a winning businessstrategy in this attractive market
Nigeria remains attractive despite current market softness
Our business fundamentals and strategy will position us to win
Strong brands and strong track record
Successful innovation
Spirits growth
Increased investment
RtC transformation
Largely local senior management team
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Cautionary statement regarding forward-looking statements
This presentation contains certain forward-looking statements relating to the plans and
objectives of Diageo. These forward-looking statements can be identified by the fact that theydo not relate only to historical or current facts. Forward-looking statements often use wordssuch as anticipate,seek,target,expect,estimate,intend,plan,goal,believe,hope,aims, continue, will, may, should, would, could, or other words of similar meaning.These statements are based on assumptions and assessments made by Diageo in light oftheir experience and their perception of historical trends, current conditions, futuredevelopments and other factors they believe appropriate. By their nature, forward-lookingstatements involve risk and uncertainty, because they relate to events and depend oncircumstances that will occur in the future and circumstances could cause actual results anddevelopments to differ materially from those expressed in or implied by such forward-lookingstatements. Although it is believed that the expectations reflected in such forward-lookingstatements are reasonable, no assurance can be given that such expectations will prove tohave been correct and you are therefore cautioned not to place undue reliance on these
forward-looking statements which speak only as at the date of this presentation.