Africa Conference - Nigeria

7/24/2019 Africa Conference - Nigeria

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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


pa


pa


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.

Africa Conference - Nigeria

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