africa webcast slides diageo - final

8/2/2019 Africa Webcast Slides Diageo - FINAL

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Africa Webcast14 April 2011


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Nick BlazquezPresident, Diageo Africa


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Africas potential is based on favourabledemographics. . .

Source: McKinsey strategy review 2010.

2010 Sub-Saharan AfricaSouthEast Asia

North Africa andMiddle East

MiddleAsia-Oceania

IndiaNorth and Latin AmericaChina EU-Japan 2030

Populationgrowth, CAGR

6,905

Population growth by geography, millions of people8,306

444

117

126

270(19)

108

195

160

+1,401

0.9

3

2.1 1.9 1.4 1.0 (0.1)0.41.3 0.9


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. . .and promising GDP prospects. . .

4

* Forecast.Source: The Economist, January 2011.

2

3

4

5

6

1970s 1980s 1990s 2000s 2011-15*

GDP growth, unweighted annual average, %

Asiancountries

Africancountries


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. . .that translate into consumer opportunities

5Source: McKinsey strategy review 2010.

0

400

800

1,200

1,600

2000 2008 2020e

Africa private consumption, $bn

34

2418

29

32

29

3744

53

2000 2008 2020e

Share of households in each income

bracket, % millions of households163 196 244

Basicneeds

Discretionary

income

Basic needs ($2,000-$5,000 pa)Struggling ($5,000 pa)

4.9% p.a.


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Diageo has the widest geographic coveragein Africa

6Source: Market interviews; Euromonitor; Plato Logic; IWSR.

Total beer and spirits volume in Africa, 2009

South Africa

Nigeria

KenyaTanzania

Uganda

Cameroon

Ghana

Other

Angola

Ethiopia

DRC

Subsidiary

License brewing

Third party distribution

Diageo operating model


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Our operating models are fit for purpose

7

Subsidiary

Associate

License brewing

Third party distribution

Joint Venture withInternational Brewer


Listed on localstock exchange

Fully ownedsubsidiary


Diageo operating model


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We have a track record of delivering growth

8* Year ended June 30. **6 months ended 31 December 2010.

500

750

1,000

1,250

F06 F07 F08 F09 F10

Net sales*, m

Total 16

Spirits 13

Beer 18

5 Year

CAGR, %Net sales*

Marketing spend 10

Net sales 10

Volume 9

F11 H1

Organic,%**

5 Year OP CAGR 12


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Africa is growing in importance to Diageo

9Year ended 30 June.

Africa beer as % of Diageo beer

2

4

6

8

10

12

14

2006 2007 2008 2009 2010

Africa as % of Diageo net sales2006

29%

2010

41%


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Our Africa strategy is founded on 3 principles

10

Local business with globalstrengths

Consistent investment behindour brands

Beer and spirits a keydifferentiator


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Beer and spirits: A key differentiator

11

Diageo Africa net sales, %

Spirits, 25%

RTD, 6%

Guinness, 26%

Lager, 43%

6 months ended 31 December 2010.


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Beer and spirits: Diageos unique in its range

12

Lower Higher

Spirits

Beer

Price points


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Beer and spirits: Accelerating growth

13

Drives efficiencies and enhances pace

Improves routes to market

Improves capabilities


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Beer and spirits: South Africa example

14
http://www.esnell.co.za/home.php


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Beer and spirits: Together winning share

15Year ended 30 June.Source: AC Nielsen National Off-trade, internal estimates.

Diageo share of spiritsin South Africa, % volume share

26

27

25

26 26

28

30

31

33

20

25

30

35

F02 F03 F04 F05 F06 F07 F08 F09 F10

1.82.0 2.0 2.0

2.2

2.5

3.5

4.1

5.2

0

2

4

6

F02 F03 F04 F05 F06 F07 F08 F09 F10

Windhoek and Heineken share of beerin South Africa, % volume share


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Consistent investment: Building sales capabilities

16

Platform for Growth must be in

our DNA

- Kenya

Its obvious that we have not even

started to scratch the surface in termsof being a distributor, I thank GuinnessNigeria for this opportunity

- Nigeria

For the first time I foresee a clear future in

partnership with Guinness, not just buyingand selling products- Cameroon


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Consistent investment: In innovation

17Year ended 30 June.

Net sales, m

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010

5 YearCAGR,

39%

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010

5 YearCAGR,

31%

5 YearCAGR,

21%


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Consistent investment: In marketing

18

Proven growth driver,high-growth geography

Integrated digitalmarketing campaigns


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Consistent investment: Building capacity

19


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Local business: Partnering with communities

20

300k Tonnes of grain 4 Million people with water


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Local business: Developing people

21


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East Africa: Business context

22

Clear leadership position

Rapidly developing spiritsmarket

Trading bloc benefits withsome offset of taxrationalisation


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East Africa: Growth drivers and opportunities

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Actively managing corporateresponsibility agenda

Leveraging proven pan-regionalmarketing

Building our spirits distributionfootprint


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South Africa: Business context

24

Successful joint ventureoperating model

Gaining share versus

market leader

Full brand range in Africas

most developed spiritsmarket


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Nigeria: Business context

26

Well-placed in a highlycompetitive market

Opportunity fuelled by scale

and economic growth

Brand range, route tomarket and capacity key tofurther growth and

profitability


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Nigeria: Growth drivers and opportunities

27

Investing in our manufacturingstrategy

Extending the reach of our routeto market

Expanding offering of beer andspirits


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Summary: Well-placed to deliver continued growth

28

Diageos management team has deep experience

in growing African businesses

Diageo has the right capabilities across allsales drivers

Diageos beer and spirits range is unique

Diageo is connected to communities

Diageo has scale in the biggest African markets


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29

For further information on Diageo, please visit the

Investors section of: diageo.com

The Investor Relations team can becontacted on:

UK +44 (0)20 8978 4267US +1 202 715 1110

or by email at: [email protected]


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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 trendsin 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 costsavings 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 and general economic conditions. By their nature, forward-looking statements involve risk and uncertainty becausethey 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 differmaterially 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: global and regional economic downturns; increased competitive product and pricing pressures and unanticipated actions by competitors that could impact Diageos market share, increase expenses and hinder

growth potential; the effects of Diageos 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; Diageos ability to complete existing or future business combinations, restructuring programmes, acquisitions and disposals; 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 environmentallaws, health regulations and the laws governing labour and pensions;

developments in any litigation or other similar proceedings (including with tax, customs and other regulatory authorities) directed at the drinks and spirits industry generallyor at Diageo in particular, or the impact of a product recall or product liability claim on Diageos profitability or reputat ion;

developments in the Colombian litigation, Turkish customs litigation, SEC investigation, Korean customs litigation or any similar proceedings; changes in consumer preferences and tastes, demographic trends or perception about health related issues, or contamination, counterfeiting or other circumstances which

could harm the integrity or sales of Diageos brands; changes in the cost or supply of raw materials, labour, energy and/or water; 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;

levels of marketing, promotional and innovation expenditure by Diageo and its competitors; renewal of supply, distribution, manufacturing or licence agreements (or related rights) and licenses on favourable terms when they expire; termination of existing distribution or licence manufacturing rights on agency brands; 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; technological developments that may affect the distribution of products or impede Diageos ability to protect its intellectua l property rights; and 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 Diageos access to or increase the cost of financing or which may affect Diageos financial results and m ovements to the value of Diageos pensionsfunds.

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 abovefactors and the Risk factors contained in the Annual Report on Form 20-F for the year ended 30 June 2010 filed with the US Securities and Exchange Commission (SEC). Anyforward-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 reflectany 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 SEC. All readers, wherever located, should takenote 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. Allrights reserved. Diageo plc 2011.

This presentation also includes names and images of brands and products which constitute trademarks and trade names which are not owned by Diageo and Diageo herebyacknowledges that it will not gain any right, title or interest in such trademarks and trade names.

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 otherinvestment activities.

This presentation includes information about Diageos target debt rating. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revisionor 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 companys website (www.diageo.com) should not be considered to form a part of or be incorporated into thi s presentation.

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