On 9 May, Diageo is hosting its latest Capital Markets Day for analysts and investors, in London. Ahead of the group’s presentations, Anthony Bucalo, global beverages analyst at HSBC, has prepared a list of questions for the senior executive team, for what he describes as a “crucial” day for Diageo.
- How satisfied is Diageo with the overall progress of its current GBP500m (US$641.6m) cost savings plan? How close is the company to meeting its objective of outperforming peers on specific cost metrics like consulting or travel & entertainment?
- Is the previous guidance of being in the ‘top quartile’ of global consumer companies on sales growth still relevant?
- Which parts of the business are currently looking weak and in need of help? Which operating units/brands have surprised to the upside?
- What are the next frontier issues that Diageo is looking at right now? What will be the most important determinant of success in the future? Is Diageo comfortable with the company in its current form to achieve that?
- Spirits in the US suffered a slowdown in the first three months of 2017 – is this indicative of a broader problem or is this a one-off? If it’s a one-off, what is the likelihood of a rebound to historic growth rates?
- How would the group characterise the progress of Smirnoff in the US and globally? Are the marketing objectives presented to the market in 2015 – Diageo targets Millennials for Smirnoff growth – still relevant?
- How sustainable is the flavour strategy at Crown Royal? What has the company learned about flavour extensions from other brands and categories that are now being applied to Crown Royal?
- India is a market that is under pressure due to regulatory change – Drinks industry “shocked” as India’s highway liquor ban kicks in – and government actions – India’s demonetisation fallout to last at least a year – which seem negative for beverage alcohol. What is Diageo’s prognosis of the current situation and has the company’s long-term outlook changed at all? What are the practical steps that can be taken to mitigate any pressure on the business due to these changes?
- After several years of severe market pressure, Europe appears to be having a sustained rebound. What’s driving this and how sustainable is it in the long term?
- Greater China has been very strong in recent reporting. How sustainable is that rally and what does Diageo see as the ongoing growth rate? Why has the company been more successful than Pernod Ricard in Scotch in China?
What’s coming up in spirits in 2017? – Predictions for the Year Ahead – Click here for a just-drinks comment
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