Imperial Brands Plc · LSE:IMB
Imperial Brands — Imperial Tobacco Group — Corporate Update (May 2003)
29 slides from Imperial Brands's corporate update, May 27, 2003
Slide 1: Poland Market Presentation - Analyst Trip
Imperial Tobacco Group PLC Poland Market Presentation Analyst Trip 27th May 2003 1
Slide 2: Poland
Poland Background Tobacco market Imperial‘s portfolio Summary Sources for the presentation: The Economist, AC Nielsen, ex factory data (pooled), internal market forecasts 2
Slide 3: Background
Background Economic & Political Route to market Taxation changes Challenging pricing environment 3
Slide 4: Background - Economic
Background - Economic Measure Trend Population: 38.6m GDP: €200bn Inflation: 3.0% Employment: 81% Market size: 74.5bn Hrs / pack: 0.55 4
Slide 5: Background - Economic
Background - Economic % Change V LY GDP 6% No recession or 4% currency crisis 2% Outlook 2%-3% growth Inflation at 0% 2000 2001 2002 2003 manageable levels RPI Entrepreneurial spirit 6% 4% Outlook Direct foreign 2% 3%-4% investment 0% inflation 2000 2001 2002 2003 Unemployment issue Unemployment 20%
Slide 6: Background - Political
Background - Political General political stability series of reforms ahead of EU entry 2004 regionalised Tobacco Industry “dark“ market - direct & trade only bottom & mid price growth EU related tax increases 4th largest market in Europe 6
Slide 7: Background – Route To Market
Background – Route To Market Wholesalers c.500 74.5 bn Fragmented Food Kiosks Hotels Petrol Other Stores Restaurants (Bazaars etc) trade & Cafés structure 112,500 26,100 23,500 4,300 17,100 c.183,500 Outlets 39% 16% 2% 2% 41% c. 13m consumers 32% of population 57% male 7
Slide 8: Background – Taxation Changes
Background – Taxation Changes 4 tier system replaced Total Industry Margin €3.9bn €3.7bn now specific/ ad valorem mix 19% Tax incidence rising Industry 34% 12% price movements Trade 12% €25/000 sticks excise Effects of tax (mid price) State 54% changes over 69% time Lower RYO duty 1998 2003 % RRP Mi
Slide 9: Background – Challenging Price Environment
Background – Challenging Price Environment 6.25 2000/1 - what happened? Marlboro excise increase 5.75 Co m pe price cuts 5.25 L&M tit io n Im Consequences: Retail Price PLN pa West ct 4.75 price spread reduced Sobieski 4.25 margin decline segment changes 3.75 Mocne contraband 3.25 Fajrant Fox ct 2.7
Slide 10: Tobacco Market
Tobacco Market At a glance Brand positioning Competition Outlook 10
Slide 11: Market – at a glance
Market – at a glance Key -ve flat +ve Total market FMC Other ITG PMI BAT Manufacturers HOP Altadis Premium Mid Price sectors High Low Bottom Gender Female Male Plain Full Taste <Lights Lights 10% 20% 30% 40% 50% 60% 70% 80% 90% 11
Slide 12: Market - Brand Positioning
Market - Brand Positioning Total Market Share Of % % Competitor Sector Volume Value Brands Davidoff Premium Marlboro 8% 8.8 17.9 R1 >£1 Vogue High Golden American 3.5 >80p 6.6 Iris West Mid L&M 20% Mars 30.6 >72p 35.8 Jan Sobieski Mars 70 Low Klubowe 14% Ares 70 9.8 >65p 7.5 Spike Mocne 70 Fajrant B
Slide 13: Market – Outlook : EU Accession
Market – Outlook : EU Accession Current tax % of €25/000 (mid price) Current RSP + 94% of Current price EU min. requirements 200% €64/000 sticks 175% or 57% of RRP Tax increases 150% “doubling” of RSP 125% 3% Inflation Cross border flows 100% 2003 2005 2007 2009 RYO/MYO opportunities 70% real price
Slide 14: Market – Outlook : EU Accession
Market – Outlook : EU Accession RSP Indicator PLN 2002 – 2009* 10.50 price Tax driven price rises differential 3.00PLN narrows (40% of Base) prices double 7.50 6.50 MPI opportunities? 3.50PLN (116% of Base) 3.00 0 Current 2009 Prices Prices Highest price Lowest price * assuming all tax passed to con
Slide 15: Market – Outlook : Segments
Market – Outlook : Segments Growth segments % Market Share international mid Premium 9.1 8.8 6.8 3.2 High 5.0 3.5 bottom International 5.0 15.4 19.4 Polarisation Mid Price Domestic 31.3 15.2 7.6 11.7 urban – international 9.8 rural – big brand vfm Low 33.3 51.0 increased crossborder 36.6 Bottom 16.3
Slide 16: Imperial’s Portfolio
Imperial’s Portfolio Brands portfolio outlook People market presence route to market focus 16
Slide 17: ITG Portfolio – Brands
ITG Portfolio – Brands no 2 with 19% market share Davidoff R1 West 4% Mars Ares Mocne 70mm Morgan 70mm 33% Poznanskie Zawisza Other 56% 7% Mars 70mm Ares 70mm Route 66 Bottom Low Mid Premium 17
Slide 18: ITG Portfolio - Davidoff
ITG Portfolio - Davidoff Exclusive offering Limited consumer base Low volumes High margin Pack Shot Here 18
Slide 19: West - Average market share
ITG Portfolio - West Strong & sustained growth 5% Strong brand awareness Average market share 4% 3% 2% 1% 1.6% 1.3% 2.9% 3.7% 3.9% 0% 1999 2000 2001 2002 YTD 03 19
Slide 20: ITG Portfolio - West
ITG Portfolio - West Branded Outlets High distribution levels Clear opportunities Weighted Distribution 100% 86 75% 71 50% 60 60 25% 0% North East South West 20
Slide 21: ITG Portfolio – Route 66
ITG Portfolio – Route 66 Launched Dec 02 & Feb 03 Full support package Well received 21
Slide 22: ITG Portfolio - Morgan
ITG Portfolio - Morgan Launched March 03 25s hard box brand Target 70mm 25s Fox, Caro 22
Slide 23: Mocne - Average market share
ITG Portfolio - Mocne SKU consolidation 25s soft pack rural market 12% Average market share 11 9% 10 6% 7 7 6 3% 0% 1999 2000 2001 2002 YTD 03 23
Slide 24: Other Brands - Average market share
ITG Portfolio – Other Brands Mars 2.7% share Zawisza 1.8% share 10% Average market share 8% 8.7 8.2 7.5 7.1 6% 6.6 4% 2% 0% 1999 2000 2001 2002 YTD 03 24
Slide 25: ITG Portfolio – Brand Summary
ITG Portfolio – Brand Summary Strong share & market position Clear brand / portfolio strategy Clear growth momentum Benefit from value improvement 25
Slide 26: ITG Portfolio - Infrastructure
ITG Portfolio - Infrastructure Managing Director Administration Factory Sales & & Marketing Support (438) (262) (78) Clear focus on consumers & trade 26
Slide 27: ITG Portfolio – Route to Market
ITG Portfolio – Route to Market Wholesalers c.500 Partnership deals Hotels, Food Other Kiosks restaurants & Petrol Stores (Bazaars etc) cafés Outlet Volume Outlet Volume Outlet Volume Outlet Volume Outlet Volume 62% 39% 14% 16% 9% 41% 13% 2% 2% 2% Face to face contact through reps visits Trade loyal
Slide 28: Summary
Summary 4th largest tobacco market in Europe challenging history & future Strong position market share growth (now c.19%) clear brand/product portfolio strategy clear growth momentum Pole position market value improves 28
Slide 29: Outlook
Outlook ITG set for the future flexibility creativity speed cost leadership 29