Diageo: Africa Webcast - 14 April 2011
Slide 1
• Title Slide – No script.
Slide 2
• Good morning and welcome to our Africa webcast. I‟m Nick Blazquez and I‟m the
president of Diageo Africa.
• Today‟s session is going to be slightly different to the webcasts we‟ve run in the
past, as I‟m going to be joined by the managing directors from our key African
markets. I‟m going to kick off the presentation by taking you through what we are
doing to capture the great opportunities in Africa, and then I will be joined by Seni
Adetu from East Africa Breweries, Gerald Mahinda from our South African
venture, brandhouse, and Devlin Hainsworth from Guinness Nigeria. They will
take you into a bit more depth on their individual markets and then I will close.
• Let‟s move now to the presentation.
Slide 3
• As you can see from the chart, Africa‟s demographics are very favourable. There
are over a billion people in Africa today and it is estimated that in the next 20
years, 30-40% of global population growth will stem from Africa. Sub-Saharan
Africa is expected to be the fastest growing and largest absolute contributor.
• Africa also has the world‟s youngest population with two-thirds under the age of
25. By the middle of this century, the working population of 500 million is set to
increase to 1.1 billion – more than India or China. In Nigeria alone, roughly 1
million consumers reach legal drinking age each year, and it is estimated that
overall there will be an extra 100 million consumers above legal drinking age in
five years time.
Slide 4
• In addition to favourable demographics, African countries have strong GDP
growth rates. This is driven by a number of factors including increasing political
stability in key markets, continuing investment in infrastructure, high demand for
raw materials and commodities and increasing regional economic integration in
East, West and Southern Africa.
• The result is that the GDP growth rate of African countries is predicted to outstrip
Asian GDP growth by 2015, and there are close correlations between GDP and
beer and spirits growth.
Slide 5
• With the rise in GDP, it is estimated that consumer spending in Africa will reach
$1.4 trillion by 2020 from just over $800 billion today.
• And therefore it is anticipated that over 50% of the households in Africa will have
increased discretionary spending power. This is a 40% increase versus 2000.
• The emerging African middle class, estimated currently at 350 million people, is
set to increase driven by urbanisation and increased incomes. This consumer
group aspires to premium branded products that provide a symbol of their new
found status.
• Furthermore, consumption of branded beverage alcohol is still relatively low
compared to more developed markets, and there is a great opportunity to trade
people out of the large informal or illicit sector into regulated branded products.
This is a great opportunity for Diageo.
• Diageo is able to access this growing number of middle class consumers with our
extensive range of brands that cover an array of price points across a number of
categories. From Senator in Kenya that sells for $0.26 for a 300 ml serve, to
Tusker at $0.75 or from Smirnoff 1818 at 8 Rand per serve to Johnnie Walker Red
Label at 15 Rand in South Africa we are able to offer consumers a great choice of
products and prices. I‟m going to return to this later.
Slide 6
• Diageo has a very strong presence in Africa and our brands resonate with African
consumers.
• If we look at the top 10 markets for total beer and spirits they account for 77% of
the volume in Africa.
• Diageo has established businesses at scale in 7 of those top 10 countries. Our
brands are enjoyed in 40 countries – no other beverage alcohol company has this
geographic spread on the continent.
Slide 7
• Each market in Africa is different, so we deploy an approach that is fit for purpose
and reflects our strategic intent and specific market dynamics.
• In markets with the greatest opportunity, we have built our own in-market
businesses with distribution access to trade channels, enabling us to directly
invest in the growth of our brands. These are truly local businesses, some of
which have listings on local stock exchanges with local shareholders, and have
active boards and management teams creating long-standing relationships with
authorities and customers.
• In other markets, we will look to partner with a local business, through licencing
our brands or through third party distributors, to tap into the local insights,
knowledge and distribution to build our brands quickly.
• As a result, we have a highly successful venture company in South Africa that is
gaining share in spirits and beer. In Nigeria, Ghana and East Africa we have
listed companies on local exchanges. In Cameroon, we have a wholly owned
business, and in Ethiopia and Angola we are looking to establish our own in
market presence.
Slide 8
• This fit for purpose approach is consistently driving strong results.
• The business has roughly doubled in size in the past 5 years to £1.2 billion in net
sales, with a 5 year compound annual growth rate of 18% on beer, 13% on spirits,
and 16% in total. Our operating profit CAGR for that period was 12%.
• In the first half of this fiscal year, volume grew 9% and net sales were up 10%.
Marketing spend increased 10% as we continued to invest behind brand growth
drivers.
• We‟re proud of this performance, and we aim to do even better in the second half
of this fiscal year.
Slide 9
• The consistency of Africa‟s growth has made the region increasingly important to
Diageo.
• 5 years ago, Africa represented just over 8% of Diageo‟s total net sales. Today
that figure is edging up toward 13%. In net sales it is our largest emerging market
region, bigger than Latin America, and bigger than Asia Pacific. Africa delivers
just under half of our International region‟s net sales, and over the past 5 years,
International has delivered over 60% of Diageo‟s growth.
• Africa‟s growing importance is even more apparent when one considers beer on
its own. Whereas five years ago Africa represented 29% of Diageo‟s beer net
sales, today it represents 41%.
• And nowhere is Africa‟s growing importance more evident than in its people.
Africa now employs over 20% of Diageo‟s total work force. We take a pan-African
view of our talent pipeline and have developed some fantastic local leaders, some
of whom you‟ll see today, and I‟ll touch upon how we will continue to build
capabilities and invest in people development.
Slide 10
• There are 3 key drivers of Diageo‟s performance in Africa that will stand us in
good stead going forward.
• First, our range of beer and spirits in Africa is extensive. Alongside our iconic
global brands we have a wide array of successful local brands that have a great
deal of resonance and loyalty. These brands cover a wide range of price points,
providing consumers an affordable entry point and a ladder to trade up in a range
of categories.
• Second, we successfully invest in and build brands. We‟re continuing to invest in
sales capabilities, a very active innovation agenda and integrated marketing
campaigns required to support our growth in the future. We are also investing
heavily in our local supply footprint, increasing capacity to meet growing demand.
• Finally, as you saw before, our operating models are very market specific. Diageo
is a global company bringing to Africa outstanding brands, new categories and
knowledge and experience, but in Africa our businesses are local. Our
management teams are focussed on building local businesses through a
combination of global and local brands, developing great relationships with
customers, and are integrated into the communities in which we operate. We are
close to our consumers and dedicated to developing local talent.
Slide 11
• Diageo‟s business in Africa covers many categories. While beer delivers the
majority of our net sales, spirits account for a quarter of our business and are
growing in importance.
• Diageo is the leader in premium spirits in Africa with a 43% share. The next
competitor has less than 30% and no other competitor has more than 10%.
Outside South Africa, our spirits volume is roughly four times that of our nearest
competitor.
• This combination of beer and spirits gives us a unique and very strong position.
Opportunities exist in markets and categories to drive synergies and growth
across beer and spirits.
Slide 12
• Our brand range in Africa is extensive. It covers the categories. It covers the
price points. And it includes strong international and local brands. We offer more
accessible entry points to branded beverage alcohol than any other African
company.
• In beer, Guinness sits at the premium end and is one of our flagship brands. It is
enjoyed in over 20 markets across the continent, and excluding South Africa, is
the second largest beer brand by volume. In its largest markets of Nigeria,
Cameroon and Ghana it sells at a significant price premium – up to 80% versus
mainstream lager brands in these countries. Guinness is the only beer brand with
such pan-African appeal, and many of our consumers consider it their own – a
global brand that has effectively been made local by the people who adore it.
• Alongside Guinness, we have a stable of strong local brands that are performing
really well. From Serengeti in Tanzania, to Harp in Nigeria, Windhoek in South
Africa and Senator and Tusker in Kenya, consumers can access our brands at a
range of price points. They have an affinity with these brands and their local
meaning and heritage. As the Tusker strap line says – “My country, my beer”.
• A number of our global spirits brands have established a presence in Africa and
this presence is growing. African consumers have the same aspirations as
consumers in other parts of the world. International spirits brands such as
Johnnie Walker and Smirnoff, with their heritage and premium credentials,
resonate with African consumers as they do elsewhere.
• This is evidenced by the success of our recent 20cl spirits launch in West Africa.
We have made our international spirits brands accessible to more African
consumers by packaging them in smaller sizes and I have seen consumers in
Ghana put a small bottle of Johnnie Walker on their table surrounded by mixers,
creating the same kind of visible consumption occasion that many Asian
consumers experience.
Slide 13
• There are 3 reasons why the synergies of beer and spirits accelerate growth.
• First, the consumer insights that are relevant in one category are also relevant in
the other. Understanding how consumers make their beverage alcohol choices
across both categories broadens our perspective and makes us more effective in
our consumer and customer marketing. Our consumers choose from alcohol as a
whole, so our customers benefit from us taking a category approach as well.
• Importantly, one of the biggest constraints to growth in Africa for Diageo is talent,
and the combination of beer and spirits at scale is helping us to recruit and retain
the best people. A great example of this is Nigeria where the reputation of the
Guinness brand and the reputation of Guinness Nigeria helped us to recruit 27
high calibre individuals to our sales force, focused on selling spirits.
• Second, it helps us to build more effective routes to market. Managing beer and
spirits together improves outlet callage by increasing both coverage and
frequency. In addition, with our knowledge of the market and our customer
insights, we are well-positioned to help wholesalers to build their businesses. We
are partnering with our customers in a way we haven‟t done before and we are
creating distribution synergies for us and for them.
• Finally, our presence in beer in Africa has given us time to develop the
relationships and networks that are helping us build our spirits business more
quickly and efficiently. For example, in Cameroon, we worked with the
government to introduce strip stamps on spirits to help regulate the market. Our
long term presence in the market meant that we were well-positioned to support
the government.
• We‟ve built the distribution channel with beer and now we‟re using it to build
spirits.
Slide 14
• In some markets like Nigeria, where there is more headroom for beer growth, we
don‟t want our teams to lose focus on either category, so we tend to keep back
office functions together to drive efficiencies, but maintain separate sales teams.
• In countries like South Africa and Ghana, distribution is completely integrated.
• As this chart clearly shows, we are able to lead in category management in South
Africa because we are the only player with the breadth of the portfolio to do so.
Slide 15
• This is from South Africa, where we have the most experience with beer and
spirits together. You will see that over the past 10 years, spirits have benefitted
from the combination with beer. While this is probably not surprising for spirits – it
makes sense that distributing spirits through a broader beer distribution footprint
would increase sales – the same is true of beer.
• Adjusting for Amstel, as the chart on the right shows, brandhouse has consistently
gained share of total beer in South Africa over the past few years.
• Our brands resonate with African consumers who have similar aspirations as
consumers in other emerging markets and it is quite powerful to see Johnnie
Walker being consumed alongside our beer brands in the townships of South
Africa.
Slide 16
• Now that I‟ve taken you through how beer and spirits together drives growth, I‟ll
turn to our investments behind brands.
• With the increasing numbers, affluence and sophistication of African consumers
we are investing in our sales capabilities to better meet their needs.
• The rapid growth of the African business is expected to continue and we need to
develop young African talent to feed this growth. We have recruited an additional
400 sales people across Africa this year and we are rolling out the Diageo Way of
Selling which will establish world class capabilities in our sales force across the
continent. As we expand our geographic footprint and our brands continue to
grow, we will need to invest in even more sales talent.
• To enable this capability build, we‟ve rolled out a field sales automation solution to
over 1000 of our direct salespeople. In fact, Africa is now one of the most
automated sales regions in Diageo. This gives us real-time transparency into
what is happening in markets where quality data is often difficult to come by.
• Roughly 90% of Diageo Africa‟s net sales is delivered by our 550 distributors and
wholesalers so building the sales capabilities of these partners is critical. Many of
our distributors are small, family businesses that are working to extend their
networks. The training we provide through our recently launched “Platform for
Growth” programme provides them with the tools, structures and support
necessary to grow these businesses. With over 100 distributors in more than 10
countries joining the “Platform for Growth” programme in this fiscal year, this is a
rollout that is happening at scale and with pace.
• Our strategy is to keep it local and fuel growth. Our ambition for the next fiscal
year is “Every call a sale”, measuring what we‟ve done and embedding and
sustaining the improvement in capabilities.
Slide 17
• Diageo Africa has a strong track record of building our brands through innovation
and the brands pictured here are 3 of our biggest.
• Take Senator Keg for example. Launched in 2006, it was developed on the
insight that much of the Kenyan alcohol market was unlicensed and unregulated,
and caused a significant public health problem for the government. People
wanted to consume quality products, but didn‟t have the money to do so. In
response to this, we developed Senator, a low cost beer made from local cereals
such as sorghum which is served from kegs rather than bottles. The Kenyan
government waived duties on Senator Keg, effectively reducing the price,
enabling us to create a well-known brand with the quality consumers desire at a
price they can afford. Since its launch 5 years ago, Senator has grown to nearly
£60m in net sales.
• The second example is Smirnoff Ice. The growth of Smirnoff Ice in Africa is due to
our ability to take a consumer insight, quickly develop a product suitable for
individual markets, bring our marketing capabilities to bear and use our
distribution footprint to grow quickly. This brand has roughly doubled in 5 years,
and this has been continent-wide.
• And last but not least, is Harp in Nigeria. A number of years ago, we did not have
a serious play in Nigerian lager. By re-launching Harp and using consumer
insights to adjust the product and its marketing, we‟ve roughly quadrupled the
brand in the past 5 years, building a lager brand that now has double-digit share
and is the fastest growing beer brand in Nigeria.
• Innovation is as important in Africa as it is anywhere else, both to keep brands
fresh and drive growth, but critically, as these three examples show, to access
consumers. The competition in innovation is growing as evidenced by the fact
that of the 17 beer brands in Nigeria today, more than half were launched less
than 10 years ago. We do this well. 5 years ago the three brands on the chart
above accounted for a little over 10% of our African business. Today that figure is
nearing 20%.
Slide 18
• Our marketing strategy is tailored to the size and nature of the African opportunity.
On each category and brand we identify what stage of development the market is
in. We then assess whether our global growth drivers address the issues that the
category or brand faces in that geography. If it does, we implement with a bit of
local adaptation.
• I want to show you an example of a recent television commercial that I‟m
particularly proud of. It builds on a proven global Johnnie Walker growth driver,
“Walk with Giants” and is aimed squarely at the high growth spirits market in
Africa.
• Video of “Walk with Giants” featuring Haile Gebrselassie played.
• Many of the people in Africa don't have the chance today to use a computer.
However mobile phone penetration is predicted to reach 60% by 2012. Accessing
consumers and encouraging them to participate with our brands using digital
channels is more important than ever before, but in Africa we need to be
innovative and think beyond the internet.
• In Kenya, we integrated digital marketing into the launch of the first ever football tv
game show, the “Guinness Football Challenge.” It was a prime time, weekly 1
hour show that ran for 10 weeks on Kenyan National television and every facet of
it involved consumer participation. Guinness held auditions in towns and cities all
over Kenya for the opportunity to be a contestant on the show. But it wasn‟t just
the show‟s contestants that participated in the campaign. We introduced limited
edition Guinness bottles so that viewers at home could participate as well. These
bottles had unique codes under each crown, and by simply texting the code
during the show, consumers had the chance to win 1 million shillings live on
television. Over 5 million text entries were received, each triggered by the
purchase of a limited edition pack.
Slide 19
• As we invest in the growth of our brands, so we have taken actions to build
capacity and efficiencies throughout our supply chain.
• As you will know, we have dedicated £230 million to build extra capacity in Nigeria
to support the growth of Guinness and Harp, and the development programme is
already well underway.
• In East Africa we have also added further production bottling facilities to our
brewing site in Kenya, and I am pleased to announce that, as of last week, our
third brewery in Tanzania at Moshi is now producing beer.
• In South Africa the building of Sedinbeng brewery with Heineken early last year
not only gives us an important local supply footprint, but also means we are able
to introduce a returnable bottle system, greatly enhancing our route-to-market.
• As we look forward, we will continue to identify opportunities throughout Africa and
selectively allocate capex to support top line growth.
Slide 20
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Increasingly we are developing „inclusive‟ business models across our markets.
Why? Because it helps us to develop a supply chain that benefits all.
Video of Sorghum footage played.
Our local sourcing programme across Africa provides education and a sustainable
source of income for small scale farmers, while local procurement acts as a
catalyst for local supply chains thus further benefitting communities. Today we
source our cereal inputs from over 100,000 farmers across the continent
amounting to over 300,000 tonnes.
While clearly benefitting local communities, being able to source locally helps us
manage fluctuating foreign currency exchange rates and, in some cases, attracts
favourable tax rates. Today, Diageo sources approximately 60% of its cereal
inputs from local sources and intends to increase this figure as the business
expands.
Water continues to be an area of increased focus for us as a business as it is for
everyone in Africa. More than 60% of our production sites are in water stressed
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areas with obvious implications for production, agriculture and the communities in
which we operate.
We have a responsibility as a leading business on the continent to play a part in
setting the agenda around water and lead by example. We have worked hard so
that our facilities are optimising their water usage and have significantly improved
effluent treatment at plants in Kenya, Uganda, Cameroon, Ghana and Nigeria,
which now return water to its source in a cleaner state than when we extract it in
many instances.
We are also moving more to using sorghum as a grain source for brewing.
Sorghum, a zero tillage crop, is more drought resistant than other cereal grains
and is able to be cultivated on more marginal land. Advances in technology mean
it is now a viable and available alternative to barley for the brewing of lager and
Guinness.
Video of Water of Life played.
Further to the actions we have taken to improve our usage of water in the
production cycle, we are also providing access to clean water and sanitation for
the communities in which we operate. From its start in 2007, the “Water of Life”
programme, in partnership with agencies such as WaterAid and AMREF, has
brought clean and safe drinking water to 4 million people and we aim to reach a
further one million people every year until 2015.
This is not new for Diageo. We have been working to build our links to the
communities in which we operate for years and now have the depth in our
relationships to make a real difference.
Slide 21
• One of the largest challenges we face in Africa is the recruitment of talent. We
invest heavily on building capabilities and developing our people at all levels to
provide the skills required to grow our business for the long term.
• We employ over 5000 people in Africa which as I‟ve mentioned, accounts for
about 20% of Diageo‟s global workforce. To keep pace with the anticipated
growth rates for the business, we intend to increase our total headcount
significantly over the coming years, and increase our leadership population
proportionately.
• Equally as important as increasing our employee base is investing in our leaders
for the future. Our “Growing Leaders Programme” was introduced last year to
raise the visibility and accelerate the development of our internal African talent for
leadership roles in the future. Each year the Africa Exec team select a proportion
of our best people at junior management level and invest in fast-track
programmes for rapid leadership development. We also share our talent across
Diageo – providing global opportunities for African talent. At present 15 Africans
are on assignment outside of Africa.
• As a leading business, we also believe that investing in the next generation of
leaders is critical. To build our talent pipeline, we run a pan-regional Diageo
graduate scheme taking on 100 graduates every year.
• With that I‟d like to turn the presentation over to one of our African leaders, Seni
Adetu from East Africa Breweries.
Slide 22
• Good morning. I‟m Seni Adetu and I‟m the Group Managing Director of East
Africa Breweries. Our reach extends across Kenya, Tanzania, Uganda, Rwanda
and Burundi.
• In our largest markets in East Africa, EABL has a leadership position and has had
for some time. There are huge organic growth opportunities due to the favourable
demographic and economic trends, and we are actively looking to expand our
footprint to other countries.
• In beer, we have a strong brand portfolio right across the consumer spectrum from
premium priced Guinness to Senator Keg, our low cost beer that offers
consumers an alternative to illicit brews.
• Spirits are rapidly developing and offer us a great opportunity in East Africa, and
we are investing behind building the premium spirits category. As Nick explained
earlier, our beer footprint provides us with a great platform on which to grow our
great spirits brands, and we are already seeing impressive growth in brands such
as Johnnie Walker and Smirnoff.
• Whilst we believe that the trading bloc in East Africa, which will include Kenya,
Tanzania, Uganda, Rwanda and Burundi could create opportunities for supply
optimisation and cost savings, the associated tax harmonisation is an issue that
we are actively supporting and watching closely. However, the industry is also
facing an increasingly restrictive regulatory environment, including excise tax rises
that have made our premium brands like Guinness even more expensive for the
average consumer.
Slide 23
• With our market position in East Africa, EABL will clearly benefit from the
favourable socio-economic trends. We will continue to work with our distributors
to maintain our beer share in Kenya, Uganda and Tanzania, and to drive further
beer growth, we are continuing to pursue geographic expansion in „new frontiers‟
like Rwanda and Burundi.
• Importantly however, we are working to build upon our extensive beer footprint
with an expanding spirits business. We believe using our beer footprint,
particularly in the off trade, is the best way to grow our spirits portfolio quickly in
our rapidly developing spirits market. As a result, we have begun to repatriate
some of our spirits distribution and have ended relationships, with the appropriate
contractual exits, with some of our third-party distributors in favour of directly
managing our spirits brands.
• Building brands is at the heart of EABL. We do this through innovation, as you‟ve
seen with the success of Senator, and we take a creative approach to marketing.
Our Tusker “Project Fame”, a television talent show, is now in its fourth series.
The show drives brand growth through participation in live shows in bars, the
development of a loyal consumer database, and branded sales opportunities at
the pre-competition auditions. Current viewership is estimated at over 10 million
adults across the region, with SMS voting in the last series just over 1.1million
responses. It is helping to drive growth on one of our key brands – Tusker net
sales were up over 15% in the first half of this fiscal year.
• Finally, EABL has a strong reputation. We are widely recognised in the region for
our corporate responsibility agenda which includes local sourcing, water,
reforestation and responsible drinking initiatives. We will continue to work closely
with the relevant authorities to help these markets develop a balanced public
policy environment that will benefit consumers, governments, and our business.
• I will now turn the presentation over to Gerald Mahinda who will discuss our
business in South Africa.
Slide 24
• Thanks, Seni. I‟m Gerald Mahinda and I‟m the Managing Director of brandhouse,
Diageo‟s venture with Heineken and Namibia Breweries in South Africa.
• Unlike East Africa, brandhouse is currently in a position where we have a smaller
share than our primary competitor who is the world‟s second largest brewer in one
of its most important markets. That‟s what makes my job so exciting.
• Recognising this position, we took the decision to capture the opportunities in
South Africa by going to market through a venture company. These kinds of
arrangements can be difficult but we‟ve made brandhouse a success. This is
largely due to three key factors:
– First, as one of the top 10 beer markets in the world and the most developed
spirits market in Africa, the size of the opportunity and the market dynamics
were such that we saw the need to collaborate to achieve critical mass;
– Second, because spirits are so well developed in South Africa, we saw clear
benefits in combining spirits and beer, providing a comprehensive brand
range to our customers and consumers; and
– Third, the partners in brandhouse have complimentary skill sets. Heineken
and Namibia Breweries bring brewing experience and production capabilities
in Africa and Diageo has a history of building great brands. When you put
those skills together it makes a very attractive combination.
• Over the course of the past 6 years we‟ve made huge progress. We‟ve gone from
just over 200 employees to over 1000 and we now have 19% of total alcohol
sales. We‟re investing in brands and we‟ve made investments in breweries,
recently spending 4 billion rand to get our facility in Sedibeng up and running.
Slide 25
• Going forward our strategy is simple – gain share and enhance returns. We will
do this by focusing on 3 things:
– At brandhouse, we aim to reach our customers and consumers as a
category captain. We‟re investing in sales capabilities and using our
excellence in sales execution to expand our footprint beyond the main
markets, and we are seeing results. Our sales capabilities are helping to
drive the trend toward premiumisation and we are seeing very healthy
growth coming from the main markets which are outside the formal markets,
where high end outlets are developing in order to serve consumers without
having to move from their homes in the main market but are eager to enjoy
their newfound prosperity.
– We are continuing to invest behind our brands. We‟ve had some great
results recently on a wide variety of campaigns, including the Smirnoff
“Nightlife Exchange Project”, the Bell‟s “Give that man a Bell‟s” campaign,
and the Windhoek “Win a Tour Down Under” rugby platform, but most
importantly, this year we‟ve decided to prioritise Johnnie Walker Red Label.
We‟ve up-weighted our investment behind Red Label, with a through the line
campaign that includes television commercials and in-bar activations
focused on building Red Label‟s style and sophistication credentials with the
Grand Prix platform. We‟re also leveraging the Haile Gebrselassie
advertisement you saw earlier and expanding that global programme with
local “Giants”. This investment behind the brand on proven growth drivers is
yielding positive results, with net sales of Red Label up over 14% in the first
half.
– We are continuing to work to realise the value of the Sedibeng brewery and
have moved to returnable bottles which is a game-changer for us in South
Africa because it involves a large up-front capital expenditure, and once the
returnables system is settled we expect it to create significant long term
benefits for our business.
• We may not have the largest market share in South Africa but at brandhouse we
see ourselves as leaders. We‟re one of the best places to work, we have
premium brands, and we are a young, dynamic organisation not tied to the past,
but instead looking to the future.
• With that, I‟ll now hand over to Devlin Hainsworth of Guinness Nigeria.
Slide 26
• Thanks Gerald. I‟m Devlin Hainsworth and I‟m the Managing Director of Guinness
Nigeria.
• We are well-placed to grow share in a highly competitive market. Off the back of
a proven growth model Guinness Nigeria has gained more than 4 points of share
in 2 years and our share is now over 30%. We are also well-placed for further
growth because of our strong brands, strategic focus and both our local
experience and corporate reputation. Earlier this fiscal year we also established
Diageo Brands Nigeria as a separate entity to accelerate the growth of our spirits
brands.
• The market economics are favourable with a large and growing population, an
emerging middle class and healthy GDP growth. Nigeria is a large country and
the states do differ in their socio-economic composition, so we manage each one
accordingly. It was over 60 years ago that we started brewing Guinness in
Nigeria, with the first Guinness brewery outside of Ireland and Great Britain.
Today Nigeria is the second biggest Guinness market in the world. Over the past
2 years Guinness Nigeria has grown net sales more than 60% to over £400
million and operating profit more than 44%, and it accounts for a significant share
of Diageo‟s total beer and beer growth.
• Expanding our brand range, extending the reach of our route to market, investing
in our supply strategy and of course investing in our people to create a winning
organisation have been the four key strategic focus areas that have driven our
growth.
Slide 27
• Going forwards we will build on these areas of strategic focus and further dial up
spirits. There is certainly scope for the continued growth of our brands in Nigeria
and we are focused on gaining further share for our expanding brand range.
Guinness, our flagship brand and an icon in Nigeria is performing strongly with
clear focus on the growth drivers. Harp is the fastest growing brand and now has
scale but further opportunities exist to widen its reach. Malta Guinness is the
number one malt brand. There are exciting growth prospects for Smirnoff Ice as
well as our regional plays of Satzenbrau and Armstrong. We are, through DBN,
pushing hard on our spirits agenda. We have separate spirits and beer sales &
marketing teams to maintain focus on individual categories and brands, but our
spirits are already benefitting from our route to market in beer, sharing
distributors, creating synergies and driving growth, especially for Baileys and
Johnnie Walker. We are also continuing to innovate with formats, particularly
cans, to increase the accessibility of our brands and the innovation pipeline itself
is robust.
• We are building brands with innovative campaigns that increase consumer
participation. For example the Guinness brand has taken a market leadership
role in mobile phone marketing in Africa with the launch of the “Guinness VIP”
platform. With half a million members in just its first four months of launch it is on
track to have over one million members by the end of June. This enables us to
market directly to consumers in an engaging way that conventional media
channels do not. “Guinness VIP” generated over 15 million page impressions in
its first three months – 6 times the interaction of the average mobile phone
platform.
• We are extending our route to market to cover the length and breadth of Nigeria
so that our expanding brand range has optimal reach. This entails working
closely with transporters and distributors to implement the Diageo “Platform for
Growth” sales capability programme, which builds our distribution footprint and is
a model for sustainable growth, and implementing an end to end supply chain
strategy. And finally we are investing behind our manufacturing strategy to deliver
the quality and continuity of supply to meet this opportunity. You may have seen
in the press recently our decision to invest £230m to increase our brewing
capacity in Ogba and Benin. This will not only create jobs in those communities, it
will give us the capacity to deliver the growth potential of our brands.
• I am also proud of the investment we are making in our communities with eye
hospitals and water projects. I am very excited about the progress we have made
but more so about the future potential ahead. I am now going to hand back to
Nick.
Slide 28
• Thanks Devlin
• In summary then before we close.
• Africa is a large market and its favourable demographic and economic trends are
creating huge opportunities.
• Diageo is well placed to capture these opportunities as we have strong market
positions, a track record of delivery and deep local knowledge. We‟ve been doing
business successfully in Africa for a long time and our growth is accelerating.
• We are proving that the concept of beer and spirits together works. It works for
consumers, it works for customers, it works for our business partners, and with
our brand range and distribution footprint, it works for us.
•
Furthermore we have the marketing, innovation, sales capabilities and supply
base to build on the investments we‟ve made and drive future growth on our
brands.
• And as you saw today, Diageo Africa‟s got talent.
• I have confidence in these countries and confidence in our business. Thank you
and I look forward to taking your questions this afternoon.
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END
For Cautionary Statement, please see accompanying slides.