Diageo Plc · LSE:DGE
Diageo — Merger or Acquisition (March 2008)
12 slides from Diageo's merger presentation, March 2008
Slide 1: South Africa Joint Venture
South Africa Joint Venture March 2008
Slide 2: Introduction
Introduction > Builds on success of existing brandhouse JV > Builds integrated total beverage alcohol route to market > New JVs with Heineken and NBL for – Beer, RTD and cider with profit share – South African production entity > Strategically important transaction for all parties – Increased presen
Slide 3: Capturing value in total beverage alcohol in South Africa
Capturing value in total beverage alcohol in South Africa > Attractive South African beverage alcohol market > Success of brandhouse > Return of Amstel > The new joint ventures > Financial summary 3
Slide 4: South Africa beverage alcohol market
South Africa beverage alcohol market TBA market by category Volume growth by segment Volume (EUs m) (2004-07) 50m 47m Wine 25% 23% 43m 42m Spirits 19% RTDs/AFBs Premium beer 7% 6% 2% 1% Non-premium beer -6% 2000 2004 2007 2011 Brandy Beer Whisky White Spirits Premium Non-premium Source: Nielsen, Pla
Slide 5: brandhouse overview
brandhouse overview > Created July 1, 2004 as a 3 way cost sharing JV – Trading profit rests with brand owner > Outstanding TBA portfolio to compete more effectively > Diageo 4.7m eus – Johnnie Walker, Smirnoff, JεB, Bells, Smirnoff RTDs > Heineken 0.3m eus – Heineken > NBL 0.5m eus – Windhoek > Man
Slide 6: brandhouse performance
brandhouse performance brandhouse net sales (Index to 2004) 165 Share Share June 2004 June 2007 Beer 2.2% 3.0% 131 112 RTD/AFB 15.3% 21.1% Whisk(e)y 40.4% 44.7% Brandy 7.5% 0.0% Rum 61.9% 63.8% White Spirits 44.2% 48.9% 2004 2005 2006 2007 Year ending 30 June. Source: Nielsen. 6
Slide 7: Improved route to market following Amstel integration
Improved route to market following Amstel integration Up-scaling commercial organisation brandhouse coverage No. of employees No. of outlets 866 12,475 607 6,735 5,595 4,990 4,655 4,095 June 2007 June F2008 Off-premise On-premise Main market June 2007 June 2008 7
Slide 8: South Africa structures
South Africa structures Brands Supply Distribution Diageo : 42.25% DHN Drinks (pty) Supply Co. Brandhouse (pty) Diageo: 25% Diageo: 50% Heineken: 42.25% Distribution Profit JV Local Production JV Cost Sharing Heineken: 75% DHN Drinks: 50% NBL: 15.5% (Beer/RTD/Cider) (Beer/RTD/Cider) Distribution JV
Slide 9: Financial summary
Financial summary > Initial investment of £100m over 2 years – Subsequent investment in Supply Co as required > Economic profit breakeven within 3 years > Small EPS dilution in FY ‘08 and FY ‘09 > Accounting treatment: – Equity accounting as an associate – Gives rise to c£5 million P/L credit on acq
Slide 10: Summary
Summary > Enhancing our route to market in attractive South Africa TBA market > brandhouse is delivering great performance > Amstel integration transforms already successful route to market > A strategically important and exciting transaction which: – Builds on successful partnership with Heineken a
Slide 11: Questions
Questions (\" brandhouse WOH brate the moment Namibia Breweries Limited
Slide 12: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This document contains “forward looking statements” within the meaning of ‘Safe Harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and busin