Reinforcing leadership in China

Transcription

1 Con Constandis Horace Ngai Managing Director of PR China Deputy Managing Director of PR China Reinforcing leadership in China 28 May 2013

2 An ambitious mid-term objective Expand leadership Value Share (2) > 50% in Premium + Western Style Spirits (1) by pts vs Grow organically Double-digit profit growth (1) Above 7 USD (2) Gross margin 2

3 Profitable since day one 2 nd market for Pernod Ricard 1bn in Net Sales Profit X 50 Net Sales X Note: Seagram acquisition in end 2001 Index 1 in

4 PR China -the undisputed leader in imported spirits Volume (2012) Value leader in Cognac Others PR China 43% Competitors Martell 60% 56% 40% 44% A12 Volume A12 CM +2 pts vs Value (2012) Others PR China 47% +3 pts vs Profitable player in Whisky Competitors 48% 39% PRC Whisky 52% 61% A12 Volume A12 CM +2 pts vs pts vs

5 The foundation of Pernod Ricard leadership Portfolio Distribution People / Talent Culture Leading premium brands in all key segments driven by premiumisation and innovation The most comprehensive geographic footprint with global channel coverage Most experienced network Unmatched pool of talents Decentralized, entrepreneurial, innovative and accountable THE SPRINGBOARD TO CAPTURE FUTURE GROWTH 5

6 The foundation of Pernod Ricard leadership (A12) Scotch Whisky Value Share (1) % Market Position Whisky PRC Value Share (1) % 34% No. 1 Whisky 15% No. 3 Whisky 72% No. 1 Prestige Whisky 9% No. 4 Malt Whisky Ultra Premium + Super Premium Total Whisky 58% 61% 82% Cognac 44% No. 1 Cognac Cognac Prestige + 0% 25% 50% 75% 100% 46% Other Segments 40% No. 1 Vodka 56% No. 1 Total Champagne Ultra Premium 40% Total Cognac 44% 0% 25% 50% (1) Gross margin 6

7 Driven by premiumisation and innovation Chivas J&J Martell Noblige SOM (2) Before (in A06) 7% Re-launch in 2006 Achieved 27%SOM (1) in A12 After 34% (1) In Ultra Premium Whisky (2) in Ultra Premium Cognac 7

8 The most comprehensive geographic footprint 423 Cities 6 regional offices 53 local offices Northwest Volume 7% Headcount 9% Mongolia Volume 0.4% Headcount 0% Beijing North Volume 13% Headcount 16% 7 tier-1 & 340 tier-2 wholesalers Southwest Volume 6% Headcount 7% Chengdu Wuhan Guangzhou Shenzhen Shanghai Xiamen Central Volume 24% Headcount 18% East Volume 14% Headcount 8% Macau Volume 3% Headcount 0% South Volume 26% Headcount 19% 8

9 The most comprehensive geographic footprint Volumes by city tier 100% COVERAGE DOWN TO TIER 3 CITIES T3 26% T4 9% T1 29% CITY TIER BASE # COVERAGE # T1 4 4 T T T Total T2 36% 9

10 Best in class route to market PR China T1 Wholesalers (7) T2 Wholesalers (340) T3 Wholesalers % 75% 15% OUTLETS (65% ON / 35% OFF) Consumers 10

11 With global channel coverage 100% 100% 100% 80% 80% 80% 60% 60% 60% Martell 32% 40% 20% 69% 64% 40% 20% 84% 78% 40% 20% 68% 61% Others 60% PRC Whisky 8% 0% Share of Volume Share of Spend Modern On-trade Channel (Among 301 Premium+ Outlets) 0% Share of Volume Share of Spend KTV Channel (Among 248 Premium+ 0% Share of Volume Share of Spend Family KTV Channel (Among 113 Premium+ Outlets) PRC Total: 40% Outlets) Key ON Trade Channels A12 Volume Share OFF Channel LEADERSHIP IN ALL KEY CHANNELS 11

12 Most experienced network and unmatched pool of talents Headcount x6 since 2002 Turnover <10% Geo expansion and wine sales model Luxury network set-up Channel Development / National Trade Marketing set-up Divisions established (17) x6 860 Development of region sales model Frontline (ex. Promoters) Enabling

13 Culture: decentralization, entrepreneurship To be covered in the Breakout session 13

14 2013, a year of converging challenges 14

15 Short-term: pressure on consumer purchasing behavior Slowing GDP growth 10%+ 7% Trade/market holding patterns due to Government transition Restricted Government investment prior to election 12th 5-year plan (2011): Anti-extravaganza Balance GDP growth Control inflation Balance income divide Environment Luxury Good companies Entertainment / Dining Visible Lifestyle brands New Policies announced at CNY 2013 Advertising limitations on luxury brands Anti-extravaganza focus, overreaction to luxury 15

16 Pernod Ricard China best positioned to weather recent challenges and deliver sustainable growth 16

17 Mid & long term: fundamentals extremely strong Purchasing Power Government capacity to influence economy Underdeveloped imported spirit market (<1% consumption) GDP strength (#2 economy) Urbanization >50%+ now Portfolio 1.3 Billion consumers >400 Million MAC s, 2020 Cultural dynamics Celebration, sharing HNWI Female consumers Distribution / Scale People / Talent Culture Evolving on-line & digital behaviors 500M+ cell phone users, 2.6 Trillion RMB on-line buying (2015) Premiumization and trading up At home consumption & meal occasion (80%+ among all drinking occasions) Growing affluence in T3/T4 17

18 Key battlegrounds and ambitions Further leverage our core brands New emerging categories: wine, champagne, vodka Reinforce leadership in dominant segments: cognac and whisky Ensure leadership position Luxury penetration Reinforce position in ultra-prestige + New consumption pools MACs expansion Innovate to tap into Meal occasions / Beer conversion / Female Leverage the width and depth of our Route to Market 18

19 Further leverage the strength of our core brands Cognac Whisky Expand the Category Martell Nobligepenetrating into young leading consumer Le Baron Home Party T3/T4 Penetration Build Iconic Brand Martell Cordon Bleu Centenary Celebration New Chivas TV Commercial Chivas Collective 19

20 New emerging categories Wine Champagne Vodka Absolut Unique build Brand Affinity & Creativity Image Build Brand Equity Tailor made China TVC to drive Brand Awareness & Image PJ Ultimate Champagne experience to build premium Brand Image Win the Trade & Consumer Absolut Ritual On-trade recruitment Barrel Selection Range China Off-Channel exclusive Mumm Golden Bottle editiontop Bars exclusive 20

21 Luxury penetration VIP Team build direct HNWI relationship, serve their needs on social occasions Unique Multi-Category Portfolio HNWI partnership on private LC Club (BJ), deepen long term relationship Luxury Events for recruitment and HNWI customization Value-added service on luxury lifestyle/ travel experience Exclusive Signature Products & Offerings LC Fund to support Craftsmanship protection in China 21

22 New consumption pools Meal Occasions Beer Conversion Female ChivasHI A Mix-Drink, Communication & Education Machine New Drinker Recruitment & Beer Conversion in F-KTV behind tasting, merchandising, promotion & education Female Drinker Recruitment with both wines & spirits in On & Off trade Meal Education Digital Platform & Partnership Program with No. 1 Restaurant Directory in China New Product Development Illustration Only New Product Development Illustration Only 22

23 MACs expansion Off-trade Traditional Off-Trade Convert Group Purchase from local Wines & Spirits through partnership WS stores & mentoring activities On-Trade Influence Frequent Bar Goers Expand CRM Platform from pilot cities to more T1 &2 cities to influence their consumption behaviour + Modern Off-Trade Drive recruitment through In-store Excellence Program Active Outlet Portfolio Management Expand leadership nationally & optimize profitability New Channel E-Commerce Expand flagship outlets at T-mall and 360.com & cooperation with more emerging operators Digital Eco-system Integrate all digital engagement & communication resources to enable our Relationship Marketing Intelligence for personalized brand relationship & experience 23

24 CSR commitment, industry leadership, global alignment No drinking and driving campaign with RTSAC and local authorities Digital Platforms to support public education Responsib all Day Reduce underage drinking, education and research program with MOH/CDC 2012 Outstanding Enterprise Contributing to CSR - China CSR Conference 2012 China s Outstanding Corporate Citizen - China Corporate Citizenship Forum 2012 Most Influential CSR Public Event - CSR and Public Communications Summit 2012 Best Enterprise Image Award - China Finance Summit 24

25 Best positioned for sustainable and responsible growth Portfolio MAC People/ Culture Short Term Challenge HNWI Mid/ Long Term Opportunity Channel/ Geography Innovation 25

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