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Diageo Africa Conference

Nigeria
15 October 2013

This is Nigeria

The macroeconomic indicators are strong


2nd largest economy in Africa

500
400

15

300

12

Inflation rate is now low and forecast to continue to


decline

200

6
100

0
2010

2011

Cameroon
12

2012
Ghana

2013

2014

Nigeria

2015

2016

South Africa

2017

0
2010

2011

2012

2013

2014

2015

2016

2017

Egypt
A new generation of affluent consumers

GDP growth is forecast to remain top quartile

10
8

6
3

4
2

0
2010

0
2011

Brazil

2012
China

2013
India

2014

2015

Nigeria

2016

2017

South Africa

People earning People earning People earning People earning


more than $10k more than $20k more than $30k more than $40k
pa
pa
pa
pa

2010

2015

2020

Source: Euromonitor International World Economic Outlook ; Nigeria Bureau of Statistics, Central Bank of Nigeria , IMF

However, there are some challenges


megawatt

Power supply declining and lower than


requirement

Oil price a major factor that drives government


revenue Bonny light
US$/barrel

4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

140
120
100
80
60
40
20
0

2010

N Trillion

2011

2012

2013

Government revenues are declining due to falling


oil output and pricing

12

2010

2011

2012

2013

Government spending has also dipped


N Trillion

14
12
10
8
6
4
2
0

10

8
6
4
2
0
2010

2011

2012

2013E

2008

2009

2010

2011

2012

2013

Source: BusinessDay Aug. 9 2013, Central Bank of Nigeria , Federal Ministry of Finance Nigeria, IMF
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The Nigerian beverage alcohol market


Sales value 2012

Super premium
spirits

7%

11%

Premium
Spirits

Premium beer 31%

4%

Champagne

Sparkling
Wine

Premium
spirits

38%

Mainstream
Spirits
Malt

Malt

Mainstream
spirits

17%

Mainstream beer 54%

Value
Spirits

Wine
Wine

Value
spirits

38%
Value beer 15%
Beer

Malt

RTD Spirits Wine

Note: data includes TBA and non-alcoholic malts. Source: A.C. Nielson data, IWSR, Euromonitor, EIU, interviews, market analysis
5

The beer market is traditionaly volatile and correlates


to GDP
Beer market volume (m HL)
14,000

30000

12,000

25000

10,000

20000
8,000

15000
6,000

10000
4,000

5000

2,000

0
F92

F95

F98

Beer market volume

F01

F04

F07

GDP constant prices (Nbn)

F10

F13

F16

Government expenditure (Nbn)

Source: Plato Logic, Nielson, IMF world economic outlook database Oct 2012, internal estimates

The per capita consumption of beer and spirits is


relatively low in Nigeria
120
100
80
60
40
20
0

25

109

97

Per capita consumption of beer 2012 (litres per annum)

93
79

78

73

72

71

68

68

65

60

49

47

46
30
16

20.9

11

10

10

0.3

0.3

Per capita consumption of spirits 2012 (litres per annum)

20
15
10

10.7 10.4
7.8

7.4

7.4

6.5

6.3

6.1

5.8

5.7

5.2

3.7

3.0

2.4

1.3

1.3

0.9

0.7

0.4

0.3

Source :Plato Logic , Internal data, IMF, IWSR , UNDP


7

We are an iconic company in Nigeria

Diageo in Nigeria

Other investors

45.7%
owned

54.3%
owned

100%
owned

Diageo Brands Nigeria


Limited (DBN)

Guinness Nigeria Plc.

Business sectors:

Beer
Malt
Ready to drink

Premium and super


premium spirits

With presence across all categories ...


Beer

Ready to
drink

Malt

Whisk(e)y

Vodka & Gin

Other
spirits

Diageo

Heineken

SAB
Miller

Mot
Hennessy

10

... and a strong portfolio across all price segments


Ultra and
super premium

Premium

Mainstream

Value

11

We cover a variety of outlets


Prestige

Distinguished, individual, stylish,


sophisticated bars

Key Accounts

Chains of modern retail


supermarkets

Jollity

Bars for after work bonding, relaxed


and often with live music

Home base

Low priced neighborhood bars


located in crowded areas

Rhythm

Bars where young people come to


party and have fun

Recreational
Clubs

Sports or social clubs where


membership is required
12

We are well established with strong infrastructure


across the country

Abuja

Jos

Ibadan
Benin
2 in Lagos

Enugu
Aba

Production sites
Sales divisions
Distributor locations
Head office

13

We account for over a third of the beer, malt and


premium spirits categories with room for growth
Malt

Beer
Others
5%

SAB Miller
1%

SAB Miller
1%

Premium spirits

Others
2%
Distell
7%

Diageo
37%

Heineken
57%

LVMH
15%

Diageo
34%
Heineken
63%

Diageo
43%

Others
35%

Value share 2012


Sources: AC Nielson, IWSR and market intelligence, market estimates

14

Our performance track record is strong


Net sales

Spirits net sales

Operating profit

DBN
established

F09

F10

F11

F12

F13

F09

Harp net sales

F09

F10

F11

F10

F11

F12

F13

Malta Guinness net sales

F12

F13

F09

F10

F11

F12

F13

Year ended 30 June


15

Our Strategic Priorities


Strengthen and accelerate our premium core
brands
Win in reserve
Innovate at scale to meet new consumer needs

Build and then constantly extend our advantage


in Route to Consumer
Drive out cost to invest in growth

Guarantee our plans with the right people and


capability
16

Strengthen and accelerate our premium core


brands - Guinness
Stout volume share estimate
2012

Transformation of Guinness

Value Stout

18%
23%
Mainstream Stout

60%
Guinness
(Premium Stout)

Guinness Price Premium (RRP)


280 +40%

200

+64%

180
110

60cl

Guinness

33cl
Competitor

Source: A C Nielson
17

Strengthen and accelerate our premium core


brands- Harp
Significant up weight in
investment
Local football sponsorship
Work on new brand
positioning and campaign
underway
Capacity improvement will
support growth

18

Strengthen and accelerate our premium core


brands- Johnnie Walker
Johnnie Walker net sales

F11

F12

F13

The Johnnie Walker brand has grown


significantly since the establishment of DBN
We will continue to invest in marketing and
sales resources
Year ended 30 June
19

The opportunity for reserve is huge and Diageo is


the pace setter
Clear plans to achieve our ambition
A dedicated team
Owning the top outlets
Spectacular VIP parties
Distribution expansion
Mentoring and sales

JW Gold launch
Bespoke Croc & Johnnie Walker Blue branding

20

We have a proven capability to innovate across our


business
Dubic net sales by quarter

Recent spirits innovations

Q1 F13

Q2 F13

Q3 F13

Q4 F13

Snapp net sales by quarter

Q1 F13

Q2 F13

Q3 F13

Q4 F13

Year ended 30 June 2013


21

We have embarked on a Route to Consumer


transformation
Getting to the right places
Outlet
coverage

Key
Opportunities

Increase
availability
of our
brands and
share in key
outlets

Doing the
right jobs

With the
right skills

In the most
efficient way

Rural
distribution

Off trade
management

Sales
effectiveness

Working
capital

Increase
availability in
rural areas
where we are
relatively
weak

Increase our
share in the
growing off
trade
channel

Improve the
efficiency &
effectiveness
of our sales
organization

Sufficient
distributor
funding to
support our
growth
ambition

Quick Wins

22

Drive cost out to invest in growth


We have kept cost of goods per
unit increases below inflation
We continue to work hard to
minimise our production and
overhead cost base
As we make further savings we
will continue to invest in

F09

F10
Inflation index

F11

F12

F13

COGS/HL absolute

Up weighting our marketing


investment
Increasing our commercial
manning

23

Guarantee our plans with the right people and


Management Team
capability

Seni Adetu
MD / CEO

Sesan Adebowale
Corporate Relations
Director

Austin Ufomba
Marketing & Innovation
Director

Chizoba Ojielo
Afeez Jibowu
Regional Sales Director Regional Sales Director
East and North East
West and North West

Debola Falade
Controls, Compliance
and Ethics Director

Lisa Nichols
Finance &
Strategy Director

Cephas Afebuameh
Supply Chain Director

Wale Adeniran
Human Resource
Director

Innocent
Patrick Awotwi
Nwaononiwu
Route-to-Consumer
Sales Services Director
Director

Felix Enwemadu
GM Diageo
Brands Nigeria

Eyitemi Taire
Customer Marketing
Director

24

In conclusion, we have a winning business


strategy 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

25

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 they
do not relate only to historical or current facts. Forward-looking statements often use words
such 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 of
their experience and their perception of historical trends, current conditions, future
developments and other factors they believe appropriate. By their nature, forward-looking
statements involve risk and uncertainty, because they relate to events and depend on
circumstances that will occur in the future and circumstances could cause actual results and
developments to differ materially from those expressed in or implied by such forward-looking
statements. Although it is believed that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will prove to
have 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.

26

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