Diageo PLC: Last Call for Premiumisation

研报英文原文证据摘录

Diageo PLC: Last Call for Premiumisation

IdeaM

Summary assumptions and conclusions

The following sections run through the price repositioning strategy that we believe Diageo

will take, across different segments and markets. Before summarising our conclusions,

however, we make the following basic assumptions:

1) We have examined the price points of the various brands within each category in order

to understand where Diageo brands sit. Our price labelling is not to be taken as

comparable to industry terms such as Ultra-premium, Prestige, Value etc, as used by

IWSR, or with the DISCUS classification of Value, Premium, High-End Premium etc: the

point is simply to divide the market into clear segments of pricing, which obviously varies

by Spirit type.

2) We do not see this strategy as expanding the market in volume terms, but in permitting

Diageo to capture more volume share. As noted above, there are plenty of cheaper priced

options in tequila/scotch/vodka/gin etc, and we do not see Diageo as offering a

fundamentally new price point for alcohol. When considering volume share gains in

response to lower pricing, we consider the share gains in the context of the new pricing

tier into which the product moves.

3) Our pricing assumptions assume that Diageo achieves better OSG than it might

otherwise have done had these price adjustments not been made. We do not

automatically assume that Diageo can achieve positive OSG, however: the ultimate result

needs to be considered against the backdrop of a market where demand is fundamentally

weak and Diageo, and its peers, have negative OSG currently.

4) We note that Diageo also intends to push more aggressively into the RTD market; CFO

Nik Jhangiani has been flagging this strategy for some time, and we believe that it is