REINFORCING LEADERSHIP AND SETTING UP A NEW PHASE OF GROWTH

Transcription

1 Pernod Ricard Asia REINFORCING LEADERSHIP AND SETTING UP A NEW PHASE OF GROWTH

2 WELCOME Philippe Guettat Chairman & CEO, Pernod Ricard Asia Philippe Guettat has been Chairman and CEO of Pernod Ricard Asia since July Philippe joined Pernod Ricard in 1991 as Export Area Manager at Renault Bisquit. After occupying various marketing and sales positions in Singapore and Hong Kong, he was appointed as Managing Director of Casella Far East Ltd. Hong Kong in In 1999 he was named Vice-President of Marketing & International at Pernod, then was appointed Managing Director of Pernod Ricard China in In July 2009, he became CEO of The Absolut Company. In October 2012 he became CEO of Martell Mumm Perrier-Jouët. He was appointed Chairman and CEO of Pernod Ricard Asia in July He holds a Master s degree from HEC Paris. Jean-Etienne Gourgues Managing Director, Pernod Ricard China Jean-Etienne Gourgues has been the Managing Director of Pernod Ricard China since July In 2001, after having worked in different industries, he joined Mumm & Perrier-Jouët Champagnes as Area Brand Manager, following which he was appointed to the position of Marketing and Development Manager in Jean-Etienne then became the Mumm & Perrier- Jouët Sales Director for Europe, with expanded worldwide responsibility in In 2008, he joined the Martell Mumm Perrier-Jouët Executive Committee as MMPJ Sales Director. In October 2011 he was appointed President and Chief Executive Officer of Pernod Ricard Japan, before becoming Managing Director of Pernod Ricard China in July He holds a Master s degree from HEC Paris. 2

3 VISION AND STRATEGY #1 A CLEAR VALUE LEADER IN IMPORTED SPIRITS OPERATIONAL EXCELLENCE Best in class operational efficiency TALENT DEVELOPMENT Recruit, develop and retain Asian talents SUSTAINABILITY & RESPONSIBILITY Lead the industry in sustainability & responsibility ROUTE TO MARKET / CONSUMER Enhance existing Route-To-Market Enter new geographies PORTFOLIO MANAGEMENT Diversify sources of growth by brands and markets PREMIUMISATION & LUXURY Seize pricing opportunities when relevant Foster consumer trade-up INNOVATION Focus on locally relevant innovation DIGITAL ACCELERATION Scale up digital activations Leverage Chinese digital eco-system A MODEL WITH STRONGER DIVERSITY AND BETTER AGILITY 3

4 9M FY18: RETURN TO STRONG GROWTH FUELLED BY CHINA AND INDIA PERNOD RICARD ASIA +11% vs stable LY China 34% 33% 33% Rest of Asia China +19% vs +2% LY Strong growth of Martell; Chivas responding positively to relaunch plan and growth of Premium Brands Korea (6)% vs (14)% LY Declining Imperial but trend improving thanks to Strategic Int l Brands Japan Continued dynamic of Champagne and Chivas +6% Regal Mizunara vs +7% LY India India Good performance across portfolio, enhanced by +14% favorable comparison basis vs +1% LY Taiwan Tough market combined with general destocking (9)% in trade vs stable LY Thailand Successful Royal Stag launch and end of +9% mourning period vs (3)% LY HKSAR / MSAR* Martell and Mumm/ Perrier-Jouët driving +15% growth vs stable LY Southeast Asia +7% vs stable LY Southeast Asia (excluding Thailand), growth driven by strong double digit growth in Vietnam and Philippines Note: % refer to 9M FY18 Sales (vs. FY17 in grey) *Hong Kong Special Administrative Region / Macao Special Administrative Region 4

5 DIVERSIFYING SOURCES OF GROWTH BY BRAND AND MARKET Martell strong growth across all price segments and markets +16% #1 Cognac in China and SEA Seagram s Whiskies with volume momentum in India, enhanced by favorable basis of comparison +13% #1 Bottled in India premium Whiskies Chivas returning to growth Strong acceleration of premium growth relays +11% +5% #1 Scotch Whisky in China +8%* #1 Premium Scotch Whisky in China +6% #1 Premium Vodka in Asia +44% Seeding momentum Note: % refer to 9M FY18 Sales * Ballantine s Finest Source: Ranking based on CY17 IWSR 5

6 INDIA BACK TO STRONG GROWTH AFTER REGULATORY HEADWINDS IN FY17 After a particularly challenging FY17 Pernod Ricard India is back to strong and diversified growth DEMONETIZATION November M FY18 Sales +14% vs +1% in FY17 HIGHWAY BAN April 2017 Goods and Services Tax July % 37% and expanding its value leadership Pernod Ricard India Key Competitor Volume Market Share * 39% 42% 42% 43% 38% 37% 37% 37% Value Market Share * over 45% 0 CY13 1 CY14 2 CY15 3 CY16 4 CY *IWSR Bottled in India Premium+ Western Style Spirits whiskies (>5 AVE PRICE) 6

7 INDIA S VALUE LEADERSHIP IS UNDERPINNED BY A ROBUST BUSINESS MODEL Unique Premium Brands Portfolio Seagram s whiskies leader in Premium+ Western Style Spirits Strong #2 in Bottled in Origin Whiskies, fast growing Commercial and marketing excellence Leadership equity and strong marketing reach and execution Dynamic pricing management New Royal Stag packaging (progressively rolling out) ~60 K outlets coverage: focus on last 3 feet activation Clear leader in value Leading engagement with community, and S&R programs Best in class operational efficiency 30 plants Flexible set-up Highly recognized quality manufacturer «Cool teens» program to fight underage consumption. Reached 100K students across India Achieve water neutrality by 2021 as part of sustainable initiatives on environment conservation 7

8 KOREA: EXECUTION OF TURNAROUND PLAN ON TRACK Completed company overhaul mid-2016 Clarified consumercentric priorities Revamped sales organization Restored cohesion and winning mindset YTD Mar (6)% vs (14)% LY Imperial (9)%* #3 In local whiskies Strategic International brands +5% #1 In vodka & Scotch Whiskies +5% +4% +27% Imperial with friends campaign Launch of low ABV products: Imperial 35 launched in Dec 16, The Smooth launched in Dec 17 Note: % refer to 9M FY18 Sales *Source: Market depletion reports 8

9 KEY GROWTH ACCELERATORS PREMIUMIZATION & LUXURY INNOVATION ROUTE TO MARKET NEW GEOGRAPHIES 9

10 PREMIUMIZATION & LUXURY STRONG CONSUMER TRADE-UP IN INDIA ACROSS LOCAL AND INTERNATIONAL PORTFOLIO Bottled in India Bottled in Origin Blender s Pride Reserve Collection 9M FY18 Sales +30% 9M FY18 Sales Price Index >120 vs. Blender s Pride Reserve Collection +24% Royal Stag Barrel Select +36% Strategic International Brands Price Index 120 vs. Royal Stag Barrel Select 10

11 PREMIUMIZATION & LUXURY PERRIER-JOUËT AND MUMM AS KEY ENGINES FOR GROWTH IN JAPAN Strong activation reinforcing Perrier-Jouët s equity Correcting value gap with Mumm Grand Cordon 9M FY18 Sales +12% 9M FY18 Sales +13%. Price Index (Competitor = 100) 90 Mumm FY Competitor 105 Mumm FY18 Perrier-Jouët and Mumm Sales doubled in the last 5 years 11

12 PREMIUMIZATION & LUXURY SUCCESSFUL LAUNCH OF MARTELL CORDON BLEU EXTRA AS SOLID TRADE-UP PROPOSITION TO CORDON BLEU Cordon Bleu Extra concept: The Extra-ordinary expression of Martell Cordon Bleu The original Martell Cordon Bleu blend boosted in Very Old Borderies CB CB Extra Price Index CB CB Extra Price Index CB CB Extra Price Index 12

13 INNOVATION LOW ABV INNOVATION WITH OBJECTIVE TO RESET GROWTH IN KOREA 0% Declining market shifting to low ABV Local Whisky market (CAGR -6%) Launch of a complete Low ABV portfolio Launch of 35 by Imperial First Low Abv that targets down to earth buddies (2016) 100% 51% 49% '12 '13 '14 '15 '16 '17 '18 Scotch Reg ABV Low ABV Source: Korea Wines & Spirits Importers Association (MAT Apr.) Results Launch of SMOOTH to target the discerning man within the down to earth buddies to expand penetration (2018) 40% of Imperial volumes in less than 18 months since launch 13

14 INNOVATION DISRUPTING THAILAND WITH ROYAL STAG AT VALUE SWEET SPOT Large market opportunity Focused activations that drive trial and repeat Local Admix Market 2011 to 2017 CAGR +4% 27.5 Volume pool of c.30m 9lc Source: IWSR 2017, PR analysis Competitive Price Point Competitor 1 Competitor 2 Results RSP (70cl) THB Launched in FY18 close to 80% of 100 Pipers volume 14

15 INNOVATION LOCALLY RELEVANT INNOVATION THAT DRIVES MARKET SUCCESS Address popularity and growth on Japanese craft whisky Premiumization of Chivas 18 Enter second largest western style spirits category in India Win market share in Taiwan Malts category Fine blend of Scotch finished in rare and unique Japanese Mizunara Oak Crafted with 1st and 2nd filled cask, aged for at least 18 years Superior proposition to premiumize Rum consumer Single malt aged 13 years in Sherry Oak Volume +54% 9M FY18 Price index: 120 vs. Chivas 12 Volume +44% 9M FY18 Price index: 120 vs. Chivas 18 Launched in FY18 Price index: >110 vs. key competitor Price index: 200 vs. The Glenlivet s Founders Reserve Taiwan Market 15

16 ROUTE TO MARKET VIETNAM: REDESIGNED ORGANIZATION DRIVING COMMERCIAL EXCELLENCE Prioritize distribution in 28 provinces (out of 83) Set up of 2-tier wholesaling system Vinh Phuc Hanoi Thanh Hoa NgheAn Bac Giang Hai Duong Thai Binh Nam Dinh 1 2 Champion Champion Preferred Partner Geographical Relay B2B/HNWI Driver Outlet Driver Tailored trade terms and sales/services support Data collection and management Thua Thien-Hue 70% coverage of household > USD 5K +income Tay Ninh Can Tho Quang Nam HCMC Quang Ngai Dac Lak Binh Dinh Gia Lai Ba Ria Vung Tau Lam Dong Khanh Hoa Delivering strong top line growth YTD volume growth of +29% 16

17 ROUTE TO MARKET CAMBODIA: START OF PERNOD RICARD CAMBODGE A small but attractive market for the mid-term with stable regulations for alcohol GDP Growth +6.9%* Inflation +2.2%* Fair and stable duty and tax system Accessible advertising and promotion environment Priorities: Capture and recruit emerging adult middle-class Lead whisky category development Current Size of Market 300K cases with 2/3 whisky Results: Successful 1st year of operations with undisrupted activity Profitable from day one *Source: National Institute of Statistics of Cambodia

18 NEW GEOGRAPHIES ESTABLISHING PRESENCE IN NEW GEOGRAPHIES: MYANMAR Promising and fast-changing country Large premiumizing local whisky market GDP growth +5.9%* Large & Young Population 54M incl. 62% below 35 yo 13M 9lc WSS** market growing 5-10% y.o.y 3 leading local players New Government (Apr16) willing to modernize the country Emerging Middle Class 10M in 2020, x2 in 10Y Rising income (+70% in 5Y) 26% 74% Local whisky Booming Tourism >5M tourists in % vs 2014 Soaring foreign investment USD >6Bn FDI in 2016, lead by MNCs Imported Spirits & Beer restricted to DF (wine allowed since 2015) Pernod Ricard entering Myanmar to: Seize the existing Whisky opportunity by premiumizing local offerings Secure critical capabilities to build sustainable platform for long-term growth *Source: Central Bank of Myanmar 2017 ** Western Style Spirit 18

19 NEW GEOGRAPHIES RECENTLY ANNOUNCED PARTNERSHIP WITH LOCAL WHISKY KEY PLAYER Pernod Ricard to acquire a controlling stake in new joint venture #3 brand in market Existing Route To Market Recognized local partners: Yoma Strategic and Win Brothers Target leadership in Myanmar s whisky industry 19

20 PLENARY SESSION - CHINA 20

21 WE HAVE A VERY CLEAR AND COMPELLING VISION & AMBITION FOR CHINA Mission: Créateurs de Convivialité Vision: Ambition: Build Pernod Ricard brands to become part of the everyday drinking repertoire of Middle and Affluent Classes Be recognized as a good corporate citizen creating positive influence on society Expand the Imported Spirits market to double its size by 2025 and gain share in Wines Volume Value Past 3 months consumer penetration 21

22 PERNOD RICARD CHINA IS UNIQUELY POSITIONED TO FULLY CAPTURE THE PRESENT AND FUTURE GROWTH OPPORTUNITIES IN CHINA 22

23 COGNAC MARTELL IS CONFIRMING BOTH LEADERSHIP AND SHARE OF MARKET Cognac by Quality Cognac by Brand 2, ,092 2, % 2, , QSS XO vs % +14% 2, ,092 2, % 2, , Others Competitor 2 vs % 0% Competitor 1 +17% 1,691 1,559 1,590 1,709 1,943 VSOP+ +14% 953 (40%) 918 (44%) 923 (44%) 993 (44%) 1,128 (44%) Martell +14% VS +14% Pernod Ricard China [Volume] Market Share 40% 44% 44% 44% 44% Data source: IWSR, K 9L cs. 23

24 WHISKY MARKET BACK TO GROWTH DRIVEN BY ALMOST ALL SEGMENTS, STRONG REBOUND OF BALLANTINES AND CHIVAS IN 2017 Whisky by Quality Whisky by Brand 1, ,124 (69%) 1, (66%) 1, (58%) +17% 1, Malt 1, Ultra Premium & Prestige Chivas 18, Chivas Royal Salute -12% 632 (54%) 770 (56%) Super-Premium Blended Chivas % Ballantine s 12 Premium Blended Ballantine s Finest vs % +9% 32 1, (33%) 24 1, (33%) 31 1, (31%) 34 1, (27%) +17% 35 1, (24%) Others Competitor 3 Competitor 2 Competitor 1 Ballantine s Chivas Regal vs % +4% +30% +45% +16% +5% Pernod Ricard China [Volume] Market Share 49% 49% 47% 43% 40% Data source: IWSR with Pernod Ricard segments, K 9L cs. 24

25 WHITE SPIRITS IMPRESSIVE GROWTH INDICATING ACCELERATED PENETRATION IN NEW MOMENTS OF CONVIVIALITY Total White Spirit by Product Focus on Vodka +32% 1,129 vs % 442 vs Liqueurs +57% Tequila Gin Rum +26% +34% +13% Others +28% Vodka +26% 112 (32%) 112 (32%) 112 (32%) 116 (33%) 141 (32%) Absolut +22% Pernod Ricard China [Volume] Market Share Absolut Market Share 28% 25% 29% 29% 26% Premium+ segment 32% 32% 32% 33% 32% 1% 1% 1% 1% 1% Standard segment Data source: IWSR with Pernod Ricard segments, K 9L cs. 25

26 MARKET LANDSCAPE IMPORTED WINE & IMPORTED SPIRITS, PREMIUM BAIJIU & PREMIUM BEER ARE ENJOYING FASTEST GROWTH Baijiu Beer Wine Imported Spirits 1, % 1, % 1, CAGR Premium 5,641 5, % % 4, CAGR SP+/Imported Premium+ Premium (20%) -1% 156 0% (28%) 61 (39%) CAGR Imported % +10% CAGR White Spirit Whisky 1,113 (95%) 1,149 (96%) 1,177 (95%) < 500RMB 4,611 (82%) 4,089 (77%) 3,532 (71%) Standard/ Value 128 (80%) 112 (72%) 95 (61%) Local Cognac Data source: IWSR with Euromonitor segments, M 9L cs. 26

27 CONSUMER LANDSCAPE A BROADER REPERTOIRE WITH GROWING DEMAND FOR EXPLORATION AND VARIETY. % of years old having consumed alcohol in past 3 Months Baijiu Beer Wine Imported Imported Baijiu Beer Wine Spirit Spirits % of years old having consumed imported spirits in past 3 Months White Spirits White Spirits Gin Liqueurs Cocktail/long Cognac Whisky Vodka Rum Liquor drink Gin Data Source: Internal Pernod Ricard China Significantly higher / lower vs. previous period (0,95) 27

28 CONSUMER LANDSCAPE WITH IMPORTED SPIRITS BEING DRUNK MORE FREQUENTLY BY CONSUMERS Consumption Frequency (among Past 3 Months category drinker) Premium Baijiu Baijiu Premium Beer Beer Wines ImportedSpirits Spirits Occasional drinkers decreasing Monthly drinkers increasing 4 Premium Baijiu Premium Beer Premium Wine Imported Spirits Weekly drinkers Data Source: Internal PR China Significantly higher / lower vs. previous period (0,95) 28

29 CONSUMER LANDSCAPE AND STRONG REBOUND OF PER CAPITA DRINKING VOLUME ON COGNAC AND WHISKY Average number of glasses consumed amongst past month drinkers Imported Spirits Imported Spirits Cognac Whisky White Spirits Data Source: Internal Pernod Ricard China Significantly higher / lower vs. previous period (0,95) 29

30 PERNOD RICARD CHINA TRANSFORMED ITSELF TO ADAPT TO THE FAST-PACED CHANGING CHINESE MARKET 30

31 CONSUMER CHANGES MAC POPULATION WILL CONTINUE TO GROW, DRIVEN BY DEVELOPMENT OF AFFLUENT MAC CAGR MAC CAGR MAC CAGR Total MAC** 336 M + 9.1% 437 M + 6.3% 525 M + 5.2% 611 M Individual (Million) Affluent : >25kRMB % % % 80 Upper middle: 13-25kRMB % % % 275 Middle Class: kRMB % % % 256 Emerging Middle: kRMB Aspirant: 3-5.5kRMB Poor: <3kRMB *Note: These are stated disposable income after tax in 2016 value **MAC = MHHI > 8,800 RMB, i.e. Affluent + Upper Middle + Middle Class Data Source: Internal Pernod Ricard China 31

32 CONSUMER CHANGES RISING SOPHISTICATION & INDIVIDUALITY LEADING TO NEW DRINKING OCCASIONS, EMPOWERED BY DIGITAL ENVIRONMENT HEALTH & WELLBEING Increasing awareness and desire for health which leads to more cautiousness when choosing food, drink and lifestyle. GROWING SOPHISTICATION With continuous rising affluence, there is growing demand for knowledge and discernment as social currency and badge of social status. CONNECTED LIFE Under the boom of smart phone and mobile internet, nowadays consumers are using digital in every single aspect of their life. RISE OF YOUNG GENERATION The young generation is becoming the major driver of business growth and adopting new media and consumption behavior with new demands. ALTERNATIVE WAYS OF HAVING FUN Consumers now are exploring new ways of gathering beyond just traditional venue or activities, esp. among the young people. Party out of channel/home is trending. FEMINISM 2.0 New gender roles and social norms with arising affluence and independence of Chinese female power. Greater engagement in alcohol category among females. COCKTAIL CULTURE With increasing need for diversification and personalization, cocktail is gaining traction driving accelerated penetration of white spirits. WHEN GLOBAL MEETS LOCAL Chinese consumers are looking for tailor-made product for China market and many brands are expanding with localization. Source: Pernod Ricard China consumer intelligence 32

33 TRANSFORM PERNOD RICARD CHINA 2 BUSINESS UNITS AND 2 ROUTES TO MARKET WERE CREATED IN JULY 2016 PRESTIGE BU PREMIUM BU MUST STOCK MUST STOCK PRIORITY PRIORITY DISTRIBUTED DISTRIBUTED 1 outlet is only visited by 1 Sales Representative of Pernod Ricard China 33

34 TRANSFORM PERNOD RICARD CHINA 2 BUSINESS UNITS AND 2 ROUTES TO MARKET WERE CREATED IN JULY 2016 PRESTIGE NIGHT Night Club, KTV E-Commerce & New Retail MEAL OCCASION Traditional Off-Trade, Restaurant Modern Off-Trade New On-Trade 30 priority cities ROUTE TO MARKET: 2 levels of wholesaler ROUTE TO MARKET: Maximum 1 level of wholesaler 34

35 PERNOD RICARD CHINA KEEPS TRANSFORMING ITSELF, DRIVING STRONG RESULTS 35

36 DIGITAL TRANSFORMATION ACROSS VARIOUS GEOGRAPHIES AND STRONG DIGITAL ACCELERATION Connectors Content Partnerships Connected bottle and consumer interaction video 2.8 billion views (for 12 episodes) and 6.9 billion online buzz Partnerships with key Chinese tech & digital partners 36

37 MARTELL TRANSFORMATION STRONG PERFORMANCE ACROSS 2 MOMENTS OF CONVIVIALITY WITH 2 CONSUMER TARGETS, NUMEROUS CHANNELS AND CONSUMER TOUCHPOINTS. PREMIUM MEAL OCCASION PARTY TO IMPRESS DISCERNING INSPIRERS SOCIAL STATUS SEEKERS Mostly OFF Trade Purchase Mostly ON Trade Purchase Meal activation Weddings & Banquets Gifting Parties Festivals Home Parties 37

38 MARTELL TRANSFORMATION DRIVEN BY SUCCESSFUL CONSUMER RECRUITMENT AND PREMIUMISATION R E C R U I T M E N T P R E M I U M I Z A T I O N PEOPLE/TARGET Younger consumers Baijiu consumers Existing consumers of Noblige & Cordon Bleu PRODUCTS/ PORTFOLIO - Distinction - Noblige - Cordon Bleu - Smaller formats - Cordon Bleu - Cordon Blue Extra - QSS - Large formats PROMOTION Digital Sponsorships, social viral & trial CRM, Loyalty programs, Dinners & Events 38

39 MARTELL TRANSFORMATION ACROSS VARIOUS GEOGRAPHIES AND STRONG DIGITAL ACCELERATION GROWTH RELAYS Geographical expansion Digital transformation E commerce & instant buy Social & Community Youku Premium Meal Hub Ten Cent Party Channel & live stream 39

40 WHISKY TRANSFORMATION CHIVAS REBOUND AND FULL WHISKY PORTFOLIO APPROACH DELIVERING DOUBLE DIGIT GROWTH Diversify in Prestige Night Grow in new Moments of Conviviality Party To Impress Indulge Time Fun Night Out Business Entertainment Trendy Experience Buddies/Besties Together Retain and Up-trade Consumer Accelerate Recruitment on MACs 40

41 RESULTS DELIVERING DOUBLE DIGIT PERFORMANCE ACROSS THE WHOLE PORTFOLIO THIS FINANCIAL YEAR 9M FY18 Sales Growth +19% vs +2% FY17 Martell +19% Chivas Regal +19% International Premium brands +21% Whole range achieving double-digit growth after strong CNY sell-out with both off-trade and on-trade in positive trend Price increase implemented in Q3 Lower pace expected in Q4 to ensure sustainable growth in coming years Rebound with first-year activation of new platform with NBA partnership and range extension with Chivas Regal 12yo Extra International premium brands benefit from 1 st full year of new sales and marketing organization to reach double-digit growth with solid e-commerce performance CNY = Chinese New Year 16 th February

42 CONCLUSION PERNOD RICARD ASIA IS UNIQUELY POSITIONED TO FULLY CAPTURE PRESENT AND FUTURE GROWTH OPPORTUNITIES ACROSS THE REGION Acceleration and diversification of growth in FY18 Strong regional performance fuelled by China and India Diversifying sources of growth by brand, channel and market Powerful business model to recruit consumers and transform future opportunities Clear value leadership in China and India, with continuous premiumization and business model transformation Ever-increasing exposure to middle-class consumers - notably in South East Asia - through digital acceleration, strengthened Route to Markets and expanding geographical footprint Superiorly skilled teams with unique commitment and strong winning mindset 42

43 THANK YOU