Cocktail Markets Day 2016 - Lucas Bols · •Classic cocktail with a modern twist North America •...

24 March 2016

Cocktail Markets Day 2016Huub van Doorne

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Disclaimer

DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols¹s management and

information currently available to the company. Lucas Bols cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual

performance and position to differ materially from these statements. Lucas Bols disclaims any obligation to update or revise any statements made in this presentation to reflect subsequent events or

circumstances, except as required by law.

Certain figures in this presentation, including financial data, have been rounded. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown

as totals in certain tables may not be an exact arithmetic aggregation of the figures which precede them.

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Lucas Bols’ mission & strategic framework

Mission Lucas Bols

We aim to create great cocktail experiences around the world.

Strategic framework Lucas Bols

Our strategy is to strengthen and grow our global brands in the international cocktail market and

to maintain the competitiveness of our regional brands in regional and local markets

Build the

brand equity

Lead the

development of

the cocktail market

Accelerate global

brand growth

Leverage

operational

excellence

In global brands we aim for average annual revenue growth of 3-4% in the mid term – supported

by an additional € 2-3 million annual investment

We aim to stabilize the regional brands, by compensating the decline of domestic spirits in the

Dutch market by growth in other markets

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands

and maintain the competitiveness

of regional brands

Leverage operational

excellence

Maintain and optimise current business model

with a mix of in-house and outsourced activities

Accelerate growth global

brands

Tailor growth strategies for the brands to

the markets within our four geographic segments

Lead the development of

the cocktail market

Use marketing techniques and strategic

innovation to optimise the product

offering and positioning

More than 440 years of experience

Semper idem: Guaranteed and consistent

quality since 1575

The World’s Oldest Distilled spirit Brand

Original Recipes

Traditional Production methods

Ingredients from all over the World

In more than 110 countries

We outperform in independent flavour

testing

Bartender endorsement

Over 300 quality checks

Important role in emergence of cocktail

culture in the USA in 19th century

Most awarded liqueur brand

Our journey to become the leading cocktail brand worldwide

started over 440 years ago

Building the brand equity – global brands

• Position Bols Liqueurs as the leading branded liqueur range in the world

• Number one range liqueur worldwide, excluding the US

• Position white spirits as essential base spirit for cocktails

• Lucas Bols is global market leader in the genever category

• Bols Genever in high-end bars in cocktail cities worldwide

• Bols Vodka in mainstream bars in an increasing number of selected markets worldwide

• Damrak Gin as the premium original gin from Amsterdam in selected markets

• Position Italian Liqueurs as unique super premium liqueurs, an add on to the Bols cocktail platform:

• Galliano is a strong consumer and bartender brand, with a broad worldwide distribution

• Vaccari is a strong brand in Mexico, Ireland and The Netherlands, and is distributed in various other

markets

Building the brand equity – regional brands

• Strong portfolio of regional liqueur brands like Pisang Ambon, Coebergh, Goldstrike and La Fleurette

• Market leader with Dutch genever portfolio in the Netherlands through market leading distributor Maxxium

• Strong presence in Western Africa with Henkes and with Bols Brandy in South Africa and India

• Maintain strong and stable cash generation resulting from limited A&P spending and working capital

requirements

• Maintain competitiveness by active brand management and trade marketing initiatives

Innovations vital to strengthening brand equity

13

In 2016 :

Bols Pink Grapefruit

Bols Pear

Bols Ginger

In 2015 (already announced):

Bols Date

Bols Pineapple Chipotle

Bols Blackberry

In 2016:

Galliano Aperitivo

Pisang Ambon Spicy banana

Building our brand equity translates into high margins

Regional

brands

Global

brands

69.0%

31.0%

Global

brands

Regional

brands

42.6% 41.7%

64.8%

50.3%

0

10

20

30

40

50

60

70

80

90

100

Global brands Regional brands

Revenu

Gross margin

Operating margin

Revenue split global/regional

69.3%

30.7%

Gross profit split global/regional

74.4%

25.6%

Operating profit split global/regional

65.3%

69.8%

30.2%

*) based on 2014/15 revenue





of regional brands


excellence




brands




the cocktail market




Global cocktail consumer base is growing rapidly

• Sophisticated cocktail culture

• Demand for more flavored spirits to

use in cocktails

• Cocktail culture in the home has

taken off

Trend

• Authenticity and heritage

• Classic cocktail with a modern twist

North America

• Cocktail culture becoming more

sophisticated

• Key cities are getting more

international

• UK is the trendsetter in cocktail

making innovation

Trend

• Classic cocktails with a modern

twist

Western Europe

• Cocktail scene is emerging and

growing, particularly in big cities

• Urbanisation and per capita

disposable income is increasing

• Growing population of > 21 years

Trend

• Premiumisation: consumers

becoming more aspirational in drinks

and venue choices

Emerging markets

• Developing cocktail culture &

bartender scene

• Rapid expansion of modern bars

• Large group of female consumers

Trend

• Simple, colourful and sweet

cocktails

Asia-Pacific

Growth drivers Regional Cocktail development

Urbanisation,

disposable income is increasing

Expenditure on spirits is increasing

Premiumisation, from domestic to

international brands.

Cocktail scene is growing.

.

Bartenders set the quality standard

Cocktail culture is expanding, both in

on-trade and at home..

Growing population of

> 21 years

1 2

3

5

4

6

7

New product innovations

Strong quality recognition

Bols Bartending Academy

Bols Business Class

Bols Around the World

Online Bartender Community

Bols.com for inspiration

Bols brand ambassadors

Trade shows

Leading the cocktail culture

Extensive cocktail database

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Lucas Bols plays a leading role in all regions





of regional brands


excellence




brands




the cocktail market




Tailored strategies per geographic region – North America

We aim at revenue growth in North America, predominantly in the US, by:

• Increasing our market share of Bols Liqueurs

• Expanding our customer base on a state by state basis

• Growing superpremium brands: Bols Genever, Damrak Gin and Galliano

• Investing in expansion and strengthening of our commercial organization

• Increasing our investments behind our brands to accelerate growth

45.9%

22.7%

18.5%

Revenue*

18.5%


Tailored strategies per geographic region – Western Europe

We aim at stabilizing revenue in Western Europe by:

• Growing our global brands in the Netherlands via Maxxium

• Growing the global brands in selective other countries

• Expanding the distribution of our base spirits

• Focusing on cash generation of regional brands

• Optimising the challenging retail markets like Germany and Belgium

• Growing our market share of domestic spirits in a declining market in The Netherlands

Western Europe is a growing cocktail market:

• Cocktail culture is growing in the big cities throughout Europe

• The number of outlets with cocktails on the menu, is growing

• UK and France are important markets; Southern Europe offers opportunities

Revenue*

45.9%


Tailored strategies per geographic region – Asia Pacific

We aim at growth in Asia Pacific by:

• Growing Bols Liqueurs on the back of emerging cocktail culture

• Growing super-premium brands Galliano and Bols Genever

• Expanding distribution of Bols Vodka and Damrak Gin

• Underlying attractive demographical trends

• In South East Asia new distribution agreement (1-1-2016) will optimize our route to market:

• Edrington Singapore (for Singapore, Malaysia, Indonesia and Philippines)

• Alchemy Asia Trading (for Vietnam, Cambodia, Laos and Thailand)

• The Philippines and Cambodia are new markets

• Key markets are Japan (Bols Liqueurs, La Fleurette, Regnier) and Australia (Galliano)

• Opportunities for growth in China and South East Asia

Revenue*

22.7%


Tailored strategies per geographic region – Emerging Markets

We aim at growth in Emerging Markets by:

• Growing the global brands in general

• Pursuing selective growth opportunities for regional brands

• Expanding to new countries

• Underlying attractive demographical trends

• Eastern Europe:

• Our key markets are Poland and Russia; we continue to invest in Russia

• We entered new markets Turkey and Caucasus (8 countries) by signing new distribution contracts

• The Caribbean and South America:

• In Mexico we signed a new contract for the Bols Brands, Galliano and Damrak Gin with Monarq

• Africa / Middle East & India:

• In Southern Africa we reviewed our route to market; including change per 1 April 2016 to ABV Brands in South Africa

• In Western Africa we are building on our strong historical position with the Henkes brand

• In India we make additional working capital investments in our JV Bols Kyndal to further build our footprint there

Revenue*

12.9%






of regional brands


excellence




brands




the cocktail market




Asset-light business model creates strong platform for growth

Leveraging our strong distribution and production platform to accelerate growth could be

considered by:

• adding brands to our strong platform, through add on acquisitions, which should be

complementary to our portfolio and have synergies in distribution and production

• adding third party brands to our distribution channels, either in the Netherlands (Maxxium) or in

the US (Lucas Bols USA)

• adding more volume to our production capacity at Avandis with third party brands

Outlook 2015/16

• The announced steps to optimize the route to market, aimed at improving the longer term

performance of our brands, have a short term negative impact on revenue.

• In 2015/16, we experienced one-off stock reductions in Australia and South East Asia. In

addition, in the second half, one-off stock reductions are experienced in the US.

The underlying in-market performance in these markets remains healthy and in-line with

expectations

• The overall economic uncertainty and increased foreign exchange fluctuations also have an

impact on markets globally, including the travel retail sector.

• As a result of the above, revenue for the full year 2015/16 is expected to be 4-6% lower

compared to 2014/15.

• Excluding currency effects and one-off stock reductions (around € 2 million), operating profit is

expected to be around 8-9% lower versus full year 2014/15 (excluding IPO costs).

• The net profit is expected to increase from € 3.8 million in full year 2014/15 to € 11 - 12 million

in full year 2015/16.

The Lucas Bols proposition

Lucas Bols’ strategy for growth

Organic growth from global brands

High profit margins

Strong cash conversion

At least 50% dividend pay out

Scalable platform

18

Build the

brand equity

Lead the

development of

the cocktail market

Accelerate global

brand growth

Leverage

operational

excellence

Cocktail Markets Day 2016 - Lucas Bols · •Classic cocktail with a modern twist North America •...

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