AD WEBINAR 2013
ALCOHOLIC DRINKS IN 2013: THE RECOVERY AND THE MACROECONOMIC BALANCING ACT
ALCOHOLIC DRINKS: SETTING THE SCENE
© Euromonitor International
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Economic recovery, but uncertainty remains
SETTING THE SCENE
-6
-4
-2
0
2
4
6
8
10
2008 2009 2010 2011 2012 2013
% R
eal
GD
P G
row
th
Real GDP Growth 2008-2013
World
© Euromonitor International
4
Economic recovery, but uncertainty remains
SETTING THE SCENE
-6
-4
-2
0
2
4
6
8
10
2008 2009 2010 2011 2012 2013
% R
eal
GD
P G
row
th
Real GDP Growth 2008-2013
World Developed Markets Emerging and Developing Markets
© Euromonitor International
5
Alcoholic drinks growth follows macroeconomic trends
SETTING THE SCENE
-2
-1
0
1
2
3
4
5
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Alcoholic Drinks Volume Growth Performance 2008-2012
World Developed Markets Emerging and Developing Markets
© Euromonitor International
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0%
10%
20%
30%
40%
50%
60%
70%
80%
Volume Value
Emerging Markets Developed Markets
0%
10%
20%
30%
40%
50%
60%
70%
Volume Value
Emerging Markets Developed Markets
Volume versus value
SETTING THE SCENE
% of Global Sales 2012 % of Global Sales 2017
© Euromonitor International
7
Gap in disposable incomes still significant
SETTING THE SCENE
Emerging Markets
Per Capita US $
Disposable Income
Alcoholic Drinks Spend
% Spent on
Alcohol
Russia 8207 531 6%
Brazil 7522 478 6%
Mexico 7005 406 6%
China 3598 130 4%
Developed Markets
Per Capita US $
Disposable Income
Alcoholic Drinks Spend
% Spent on
Alcohol
UK 24981 1309 5%
Japan 30490 1083 4%
Germany 27341 1034 4%
France 27215 1012 4%
© Euromonitor International
8
Emerging Markets Key to Growth
Diversify Presence Potential Volatility
Developed Market Opportunities
Innovation Brand Positioning
Key themes to the balancing act
SETTING THE SCENE
STATE OF THE INDUSTRY: REASONS FOR
OPTIMISM AND CAUTION
© Euromonitor International
10
Walking the line
STATE OF THE INDUSTRY: REASONS FOR OPTIMISM AND CAUTION
-1
0
1
2
3
4
5
6
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012
% y
-o-y
gro
wth
To
tal
vo
lum
e (b
illi
on
lit
res)
Alcoholic Drinks Performance 2007-2012
Alcoholic Drinks Volume Total Volume % Growth Total Value % Growth
© Euromonitor International
11
On-trade: a narrow lead
STATE OF THE INDUSTRY: REASONS FOR OPTIMISM AND CAUTION
0
1
2
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6
0
20
40
60
80
100
120
140
160
2007 2008 2009 2010 2011 2012
% y
-on
-y v
olu
me
gro
wth
Vo
lum
e (b
illi
on
lit
res)
On- vs Off-trade Performance 2007-2012
On-trade volume sales Off-trade volume sales
On-trade volume growth Off-trade volume growth
© Euromonitor International
12
The good, the bad and the ugly
STATE OF THE INDUSTRY: REASONS FOR OPTIMISM AND CAUTION
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
-4
-2
0
2
4
6
8
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0
To
tal
va
lue
% g
row
th 2
012
Total volume % growth 2012
Alcoholic Drinks Regional Performance 2012
REGIONAL ANALYSIS: THE GOOD, THE BAD
AND THE UGLY
© Euromonitor International
14
-4 -2 0 2 4 6 8 10
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
Total volume % growth
Total Alcoholic Drinks Volume Growth by Region
2012
2011
Regional divergences: A bird’s eye view
REGIONAL ANALYSIS: THE GOOD, THE BAD AND THE UGLY
© Euromonitor International
15
0
5000
10000
15000
20000
25000
30000
Beer Spirits Wine
Mil
lio
n l
itre
s
Western Europe Performance
2010 2011 2012
Sub zero: Western Europe and Australasia
REGIONAL ANALYSIS: THE GOOD, THE BAD AND THE UGLY
0
500
1000
1500
2000
2500
Beer Spirits Wine
Australasia Performance
2010 2011 2012
© Euromonitor International
16
Cautionary optimism : North America and Eastern Europe
REGIONAL ANALYSIS: THE GOOD, THE BAD AND THE UGLY
0
5000
10000
15000
20000
25000
30000
Beer Spirits Wine
Mil
lio
n l
itre
s
North America Performance
2010 2011 2012
0
5000
10000
15000
20000
25000
30000
Beer Spirits Wine
Eastern Europe Performance
2010 2011 2012
© Euromonitor International
17
Booming emergence: AMEA, Latin America, Asia Pacific
REGIONAL ANALYSIS: THE GOOD, THE BAD AND THE UGLY
0
2000
4000
6000
8000
10000
12000
14000
16000
Mil
lio
n l
itre
s
AMEA
2010 2011 2012
0
5000
10000
15000
20000
25000
30000
35000
Latin America
2010 2011 2012
0
10000
20000
30000
40000
50000
60000
70000
80000Asia Pacific
2010 2011 2012
CORPORATE STRATEGIES: OPPORTUNITIES
THROUGH DIVERSIFICATION
© Euromonitor International
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0%10%20%30%40%50%60%70%80%90%
100%
Top 3 Markets Other Markets
Geographic spread of leading alcoholic drinks companies
CORPORATE STRATEGIES: OPPORTUNITIES THROUGH DIVERSIFICATION
© Euromonitor International
20
0
5
10
-
5,000
10,000
15,000
2007 2008 2009 2010 2011 2012
% v
olu
me
sh
ar
e
Vo
lum
e S
ale
s ‘
00
0
litr
es
Captain Morgan Rum’s Performance in Western Europe 2007-2012
Volume Sales, '000 litres % volume share of rum
Mature markets still relevant
CORPORATE STRATEGIES: OPPORTUNITIES THROUGH DIVERSIFICATION
35
36
37
38
39
11,000
12,000
13,000
14,000
2007 2008 2009 2010 2011 2012
% v
olu
me
sh
ar
e
Vo
lum
e S
ale
s ‘
00
0
litr
es
Bacardi Rum’s Performance in Mexico 2007-2012
Volume Sales, '000 litres % volume share of rum
© Euromonitor International
21
Diageo’s change of focus
CORPORATE STRATEGIES: OPPORTUNITIES THROUGH DIVERSIFICATION
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2012 2012(including
UnitedSpirits)
Vo
lum
e s
ha
re
(%
)
Diageo Mature vs Emerging Market Volume Split
Emerging
Mature
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
MatureMarketGrowth
EmergingMarketGrowth
Vo
lum
e G
ro
wth
, ‘0
00
lit
re
s
Source of Diageo Volume Growth 2007-2012
AcquiredEmergingMarketGrowth
OrganicEmergingMarketGrowth
MatureMarketGrowth
INTOXICATING TRENDS AND SOBERING
PITFALLS
© Euromonitor International
23
Dark, non-alcoholic and premium
INTOXICATING TRENDS AND SOBERING PITFALLS
0
2
4
6
8
10
12
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Beer Category Performance 2008-2012
Dark beer Lager Low/non-alcohol beer Stout
© Euromonitor International
24
Polarisation redux
INTOXICATING TRENDS AND SOBERING PITFALLS
-2
-1
0
1
2
3
4
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Lager by Price: Performance 2008-2012
Premium Standard Economy
© Euromonitor International
25
From non-grape wine to still light grape wine: the transition
INTOXICATING TRENDS AND SOBERING PITFALLS
-6
-4
-2
0
2
4
6
8
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Wine Category Performance 2008-2012
Fortified wine and vermouth Non-grape wine Sparkling wine Still light grape wine
© Euromonitor International
26
Red dawn rising
INTOXICATING TRENDS AND SOBERING PITFALLS
0
1
2
3
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Still Light Grape Wine Category Performance
Still Red Wine Still Rosé Wine Still White Wine
-5
0
5
10
15
20
25
0
1
2
3
4
5
6
7
2006 2007 2008 2009 2010 2011
% t
ota
l v
olu
me
gro
wth
To
tal
vo
lum
e (b
illi
on
lit
res)
Red Still Light Grape Wine Performance: WE versus AP
Western Europe volume salesAsia Pacific volume salesWestern Europe volume growth
© Euromonitor International
27
Still light grape wine: quantifying polarisation
INTOXICATING TRENDS AND SOBERING PITFALLS
Portugal: Red Wine % Retail Volume Sales by Price Band 2007/2012
% volume 2007 2012
Under EUR1.99 29.0 27.0
EUR2 to EUR3.5 29.9 34.0
EUR3.51 to EUR8.5 24.7 24.0
EUR8.51 and above 16.4 15.0
Total 100.0 100.0
China: Red Wine % Retail Volume Sales by Price Band 2007/2012
% volume 2007 2012
Under RMB19.99 27.0 15.0
RMB20 to RMB29.99 30.0 28.0
RMB30 to RMB49.99 30.0 30.0
RMB50 to RMB59.99 9.5 18.5
RMB60 to RMB89.99 2.0 5.0
RMB90 and above 1.5 3.5
TOTAL 100.0 100.0
© Euromonitor International
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Champagne’s demise and other sparkling wine’s ascent
INTOXICATING TRENDS AND SOBERING PITFALLS
-5
-4
-3
-2
-1
0
1
2
3
4
5
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Champagne Versus Other Sparkling Wine
Performance
Champagne Other Sparkling Wine
2012 Champagne vs Other Sparkling Wine Volumes
Champagne
Other sparkling wine
89%
11%
© Euromonitor International
29
-4
-2
0
2
4
6
8
10
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Spirits Category Performance
Brandy and Cognac Liqueurs Rum
Tequila (and Mezcal) Whiskies White Spirits
Other Spirits
Spirits: Cognac, whiskies and the others
INTOXICATING TRENDS AND SOBERING PITFALLS
© Euromonitor International
30
Rtds: A new generation
INTOXICATING TRENDS AND SOBERING PITFALLS
-4
-3
-2
-1
0
1
2
3
4
5
6
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
RTDs/ High-strength Premixes Performance 2008-2012
High-strength premixes RTDs
RTDs/High-strength Premixes Regional Volume 2012 Breakdown
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
© Euromonitor International
31
Cider: Crossing the Atlantic
INTOXICATING TRENDS AND SOBERING PITFALLS
0
1
2
3
4
5
6
7
8
2008 2009 2010 2011 2012
% t
ota
l v
olu
me
gro
wth
Cider/Perry Performance 2008-2012
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Mil
lio
n l
itre
s
Cider/Perry Top 10 Markets
Others
Sweden
Finland
Spain
Ireland
Australia
France
USA
Argentina
South Africa
United Kingdom
FUTURE PROJECTIONS
© Euromonitor International
33
Mapping Out the Future: Alcoholic Drinks Projections for 2012-2017
PROSPECTS, DRIVERS AND RECOMMENDATIONS
>4% total volume CAGR
2-4% total volume CAGR
<2% total volume CAGR
© Euromonitor International
34
Beer: Post-lager
INTOXICATING TRENDS AND SOBERING PITFALLS
0
1
2
3
4
5
2012 2013 2014 2015 2016 2017
% t
ota
l v
olu
me
gro
wth
Beer Category Performance 2012-2017
Dark beer Lager Low/non-alcohol beer Stout
© Euromonitor International
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-3
-2
-1
0
1
2
3
4
2012 2013 2014 2015 2016 2017
% t
ota
l v
olu
me
gro
wth
Wine Category Performance 2012-2017
Fortified wine and vermouth Non-grape wine
Sparkling wine Still light grape wine
Wine: Healthy, steady and still advancing
INTOXICATING TRENDS AND SOBERING PITFALLS
© Euromonitor International
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-1
0
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016
% t
ota
l v
olu
me
gro
wth
Spirits Performance 2012-2017
Brandyand Cognac
Liqueurs
Rum
Tequila(and Mezcal)
Whiskies
WhiteSpirits
OtherSpirits
Cognac leads the future, vodka side-lined
INTOXICATING TRENDS AND SOBERING PITFALLS
© Euromonitor International
37
0
1
2
3
4
5
6
7
8
9
10
2012 2013 2014 2015 2016 2017
% v
olu
me
gro
wth
Cider/Perry On- vs Off-trade 2007-2012
Off-trade
Cider’s enviable projected trajectory
INTOXICATING TRENDS AND SOBERING PITFALLS
© Euromonitor International
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3
4
5
0
1
2
3
4
5
6
2012 2013 2014 2015 2016 2017
To
tal
vo
lum
e (b
illi
on
lit
res)
% t
ota
l v
olu
me
gro
wth
RTDs/ High-strength Premixes Category Performance 2012-2017
RTDs/high-strength premixes total volume
RTDs/high-strength premixes total volume growth
What does the future hold for RTDs?
INTOXICATING TRENDS AND SOBERING PITFALLS
THANK YOU FOR LISTENING
Andy Tiverton-Brown
Head of Alcoholic Drinks & Company Analysis
Spiros Malandrakis
Senior Analyst - Alcoholic Drinks
Jeremy Cunnington
Senior Analyst - Alcoholic Drinks