Diageo Capital Markets Day
Diageo outlines drivers of competitive advantage for sustainable long-term growth and provides medium-term guidance ahead of historical growth rates
- New medium-term guidance: expecting organic net sales growth in a range of 5% to 7% and organic operating profit growth in a range of 6% to 9% for fiscal 23 to fiscal 25.
- Introducing ambition to achieve a 50% increase in total beverage alcohol (TBA) market value share, from 4% in 20201, to 6% by 2030.
- Expecting strong organic net sales growth of at least 16% in the first half of fiscal 22 and organic operating profit growth ahead of organic net sales growth.
Today, Diageo is hosting its biennial Capital Markets Day in London. Ivan Menezes, Chief Executive, and the executive leadership team will discuss how Diageo is successfully executing its strategy to deliver consistent, sustainable growth. The executive leadership team will highlight Diageo’s competitive advantages and how its people and culture are delivering on its ambition to be one of the best performing, most trusted and respected consumer products companies in the world.
Ivan Menezes, Chief Executive, Diageo:
“Since our last Capital Markets Day, we have continued to invest in our brands, sharpened our focus on accelerating growth and quickly responded to shifts in consumer behaviour. We have also launched ‘Society 2030: Spirit of Progress’, our ten-year sustainability action plan, building on our strong track record of doing business the right way, from grain to glass.
Our culture of everyday efficiency is embedded in our business and we continue to challenge ourselves to achieve more. In fiscal 21, despite the challenges created by Covid-19, we delivered strong organic net sales growth, drove an improvement in organic operating margin and delivered strong cash flows, while continuing to invest in long-term sustainable growth.
We believe our sales growth trajectory has accelerated, underpinned by the strength of our advantaged position across geographies, categories and price tiers. TBA is a large, growing and attractive sector of which Diageo currently has a 4% value share. With continued investment in marketing, digital capabilities and our people, we have significant headroom for growth. This gives us the confidence that we can grow Diageo’s value share of TBA from 4% in 2020,1 to 6% by 2030.”
Lavanya Chandrashekar, Chief Financial Officer, Diageo:
“Our focus on everyday efficiency enables us to continue to increase investment in our brands and strategic growth initiatives, while underpinning organic operating margin improvement.
This self-sustaining growth model gives us confidence that we can accelerate our organic net sales growth within a range of 5% to 7% for fiscal 23 to fiscal 25. This compares to growth of 4% to 6% in fiscal 2017 to fiscal 2019. While we expect inflationary pressures to increase, we also expect to benefit from operating leverage, premiumisation, revenue growth management and productivity gains. As a result, we expect organic operating profit to grow sustainably in a range of 6% to 9% for fiscal 23 to fiscal 25.
As we announced in our AGM statement, we have made a strong start to fiscal 22. We are delivering organic net sales growth across all regions, as we benefit from resilience in the off-trade and continued recovery in the on-trade. This is benefitting organic operating margin, despite rising inflationary pressures, which are partly due to supply chain constraints. We expect organic net sales growth of at least 16% in the first half of fiscal 22 and organic operating profit growth ahead of organic net sales growth. We expect the strong growth momentum in the first half of fiscal 22 to continue through the remainder of the fiscal year. However, in the second half of fiscal 22 we will be lapping a tougher comparator.”
Copies of the materials from today’s Capital Markets Day will be available on www.diageo.com.
1IWSR, Diageo’s 2020 Retail Sales Value (RSV) % Share of Total Beverage Alcohol (TBA) Market