Coca-Cola Hellenic Field trip presentations. Dimitris Lois, CEO

Transcription

1 Coca-Cola Hellenic Field trip presentations Dimitris Lois, CEO

2 Forward-looking statements Unless otherwise indicated, the condensed consolidated financial statements and the financial and operating data or other information included herein relate to Coca-Cola HBC AG and its subsidiaries ( Coca-Cola HBC or the Company or we or the Group ). This document contains forward-looking statements that involve risks and uncertainties. These statements may generally, but not always, be identified by the use of words such as believe, outlook, guidance, intend, expect, anticipate, plan, target and similar expressions to identify forward-looking statements. All statements other than statements of historical facts, including, among others, statements regarding our future financial position and results, our outlook for 2014 and future years, business strategy and the effects of the global economic slowdown, the impact of the sovereign debt crisis, currency volatility, our recent acquisitions, and restructuring initiatives on our business and financial condition, our future dealings with The Coca-Cola Company, budgets, projected levels of consumption and production, projected raw material and other costs, estimates of capital expenditure, free cash flow, effective tax rates and plans and objectives of management for future operations, are forward-looking statements. You should not place undue reliance on such forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect our current expectations and assumptions as to future events and circumstances that may not prove accurate. Our actual results and events could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in the UK Annual Financial Report and the annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (File No ) for Coca-Cola HBC AG and its subsidiaries for the year ended 31 December Although we believe that, as of the date of this document, the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we, nor our directors, employees, advisors nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. After the date of the condensed consolidated financial statements included in this document, unless we are required by law or the rules of the UK Financial Conduct Authority to update these forward-looking statements, we will not necessarily update any of these forward-looking statements to conform them either to actual results or to changes in our expectations.

3 Italy is important to the Group

4 Significant part of the Group Group Italy GDP per capita 12,800 US$ Population 585m Plants 68 Share in revenue GDP per capita 31,100 US$ Population 1 56m Plants 2 5 NARTD volume 3 2,354m u.c. 1 Excludes Sicily 2 Three sparkling beverages plants and two water plants 3 Source: Canadean 4

5 Nigeria Ukraine Coca-Cola HBC Russia Italy France Romania Poland Europe average Bulgaria Switzerland Spain Great Britain United States Mexico Growing the top line 660 Increasing sparkling beverages consumption within NARTD Growing value share in water, tea and juice Working with customers to increase availability and value creation 2013 Total sparkling category servings per capita Per capita consumption: Average number of 237ml or 8oz servings consumed per person per year in a specific market. Coca-Cola Hellenic s per capita consumption is calculated by multiplying our unit case volume by 24 and dividing by the population. Source: The Coca-Cola Company, 2013 data 5

6 Growing the bottom line Business impacted by the Eurozone crisis c.40% EBIT decline in the last four years Significant restructuring of the manufacturing base Consolidation of plants Reduction in operating expenses Taking out fixed operating expenses Further opportunities in warehousing, logistics and route-to-market 6

7 Executing strategy in Italy

8 Winning in the market Combine demand creation and demand delivery Brand investment Joint initiatives with customers Execution in the market Strong leadership position in sparkling beverages Room for further growth, particularly in flavours Low share in still drinks Grow value profitably and sustainably 8

9 Growing revenue ahead of volume Occasion-based brand, price, package, channel (OBPPC) strategy Growing single-serve multi-packs in the modern trade Increasing presence in the immediate consumption channel Making products relevant to the consumer Addressing affordability 9

10 Taking cost out Optimising infrastructure Reducing the number of plants from five to three Centralising IT and procurement SAP Wave Shared Services Centre More to come Outsourcing of warehousing Phase 2 of deployment to Shared Services Centre 10

11 Generating cash Sharp focus on working capital management 40% of cash-flow from operations channeled into revenue-generating investment Cold drink equipment Modernising production 11

12 Five elements of strategy in Italy Sparkling is our top priority Driving profitable volume in still drinks OBPPC, Customers profitability, Execution Tight control of expenses Optimising infrastructure Working capital management 12

13 Agenda Dimitris Lois Italy in the context of the Group Jenny Stoichkova, Coca-Cola Italy Italy: Opportunity to grow Sotiris Yannopoulos and Enrico Galasso Capturing the opportunity in Italy Dimitris Lois Closing remarks Q&A 13

14 Italy: Opportunity to grow Evguenia Stoichkova Operations Director TCCC

15 Recovering confidence: Priority for Italy Germany UK France Spain Italy Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Nielsen Consumer Confidence Research 15

16 Job security is the biggest concern Job security Italy - Unemployment Rate (%) The economy Debt Increasing utility bills (electricity, gas, heating, etc) Health Biggest concern Childrens' education and/or welfare Political stability Second biggest concern 7.7 Work/life balance Increasing food prices Crime 3 5 No concerns 2 Source: Nielsen Business Indicators; Nielsen Global Consumer Confidence 16

17 Consumption behaviour is deeply impacted by the crisis There are signs of recovery in 2013 more savings & holidays even though spending is still decreasing for many categories. In Italy crisis has changed purchase behaviours more than in other EU countries Compared to this time last year, have you changed your spending to save on household expenses? Nielsen Consumer Confidence 17

18 As well as shopping behaviour 63% (+4 pp vs 12) have a strict budget and buy only what they need 86% (=) prepare a shopping list before the trip 45% (+2 pp vs 12) usually purchase only what they planned Source: Nielsen shopper trends 18

19 TCCC Country Key Italy insights 1. In the last four years Italy has had the lowest consumer confidence index among the big western European countries 2. Job security is the biggest concern for Italians, as unemployment doubled since As a reaction to uncertainty, Italians modified consumption behavior more than other Europeans, down-trading (more discounters) and down-grading (more private label) 4. There are however signs of recovery: in 2013, a growing number of Italians are able to save money. These trends are expected to continue in the coming years. 1. Italy has the highest Coke Brand Love (5.6) in Europe 2. Number 2 in Europe in % of households buying Coke classic on an annual basis 3. Italy shows low % of people that reject / never tried the Sparkling category 4. Coke Regular is the most preferred NARTD brand for 50% of Italians NARTD: Non Alcoholic Ready To Drink Beverages 19

20 The Italian NARTD market landscape NARTD Volume (2,354m u.c.) Retail Value (14,891m ) SSD Colas SSD Flavours Water RTD Teas Juices Energy SSD Colas SSD Flavours Water RTD Teas Juices Energy Sport Sport Source: 2013 Internal estimates based on Canadean and Red Book CCH territory only 20

21 We have a strong position in a small portion of the market Source: Internal estimates based on Canadean and Red Book CCH territory only 21

22 Capturing more value Source: Internal estimates based on Canadean and Red Book CCH territory only 22

23 New trends - Mindset HEALTH & BEAUTY 57% of Italians feel overweight 46% are trying to lose weight (fitness & diet) INNOVATION & QUALITY 56% do not withdraw from quality and are willing to pay more for it 39% love trying new brands and new products GREEN 42% consider buying green/low impact products 24% bought more green products than in the past 26% are keen to pay a premium for organic, 23% low-impact and fair-trade products INTERNET 38.9m had access to the Internet in 2012 (+7.8%) +40% penetration of smartphones 26M consider Internet as the main source of information 21M read opinions of other consumers about products and services Source: Nielsen shopper trends 23

24 Expected development of the Italian beverage landscape Italy is the 2 nd country worldwide in terms of ageing population; this will drive still beverages volume growth In the short term, decreasing Disposable Income (index 88 in 2014 vs ) will further impact high value NARTD categories Growing health and wellness concerns will favour still beverages and especially infused RTD Tea which in Italy is perceived as one of the healthier drinks NARTD m u.c. SSD m u.c. Still m u.c. +8 servings per capita vs today Water m u.c. 24

25 How we plan to capture these opportunities Grow Sparkling per capita (Italy per cap is 91 vs EU average of 141) 1 Gain share in Still Beverages (currently 4%) 1. Consumption with home is #1 occasion (39% of total beverage consumption) and TCCC share is 7% 2. Socialising out of home is #3 occasion (13% of total beverage consumption) and TCCC share is 9% 3. Category permissibility with shoppers is the entry point to improve incidence and frequency 4. Leverage portfolio of brands to maximise user base (adults aged are 31% of Italian population) 1. Become a significant player in water and improve the profitability 2. Re-launch RTD Tea business to become a strong #3 player in volume and #2 in value 3. Create a dedicated business model to drive volume and value in small profitable categories and innovation 1 Consumption per capita per annum of TCCC sparkling soft drinks 25

26 Our success comes when we have LOVED BRANDS FROM A TRUSTED COMPANY IN A RELEVANT CATEGORY 26

27 Entrenched in Italian society Reasons to Believe Crazy for Good Sharing the passion for football Own the summer: Say it with Coke and a song Leverage our Flavours sparkling portfolio to gain new consumers Restart advertising behind Lilia 27

28 And the At Home with Food occasion Family Couple Friends Point of Sale Activations Extrinsic POS Visuals Intrinsic POS Visuals POS: Point of sale 28

29 With dedicated programmes for Coke Zero & Light Double-digit growth through recruitment Targeting women with fashion Coke Regular, Coke Zero & Coke Light Execution Coke TM Asset in-store activation 29

30 Ensuring Category Acceptance 4 Commitments of Coca-Cola with Italians SMALLER PACKS FOR EVERYONE MORE CHOICE FOR EVERY LIFESTYLE WE ENCOURAGE THE PASSION IN SPORT. SINCE ALWAYS. INFORMATION FRONT OF PACK and responsible communication policy 30

31 From a trusted company Participation in EXPO to support the Refresh 2020 commitments Coca-Cola Cup promotes active healthy lifestyle in Italian schools 2,806 schools 330,000 students Commitment to the environment Package innovation Decreasing our footprint yoy Supporting local communities and the economy Coca-Cola has an Italian Heart 31

32 Our enablers Aligned System vision Joint scorecard Monthly review between country teams Quarterly review with Regional Teams / BU Increased marketing investment Up to date and relevant marketing approach TCCC: Demand Creation CCH: Demand Delivery 32

33 Capturing the opportunity Sotiris Yannopoulos General Manager, Italy

34 Our reference point is our Strategic Framework 34

35 Based on that we have a clear Job Ticket for Italy Grow Per Capita & Share while defending profit 1 GET BACK TO GROWTH 2 TAKE CHARGE 3 WIN TOGETHER Create Demand with: Permissibility Relevance Deliver Demand with: Best-In-Class Execution Customer Service Increase Productivity with: Governance & Control Engaged Talent 35

36 Get back to growth

37 Get Back to Growth elements Sparkling Beverages Drive per capita consumption and share of MyCoke Grow market share in SSD premium flavours Still Beverages Revamp Water business profitably Claim our fair share position in RTD Tea 37

38 We have a strong market share position in SSDs +5.3pts CAGR CAGR Source: Internal estimates based on CANADEAN & Market Sizes 38

39 Growth drivers for SSDs 70% of beverages consumption is water (2 nd highest in Europe) Low SSDs per capita despite highest brand love SSDs are more profitable than Water for retailers 39% of beverages consumption is with meals - MyCoke share with meals is only 7% Socialising Out of Home is the #3 occasion with 13% of consumption My Coke share in socialising is only 9% Italian population is ageing Adult Flavours (tonic, lemonades, bitter) are the only growing segments Source: TCCC syndicated researches 39

40 Creating Demand with focused initiatives REFRESH 2020 COCA-COLA CUP MEALS SOCIALISING ASSET EXPLOITATION Enabled with a focused and segmented OBPPC strategy OBPPC: Occasion-Brand-Pack-Price-Channel 40

41 Our OBPPC supports our strategy to increase consumption Meets all shopper needs and creates value Implementation The right pack, in the right zone All prices are RECOMMENDED.Pricing decision are at sole discretion of the retailer Modern Trade: the right sizes & recommended prices to meet all shopper needs and basket types Entry Frequency Upsize Upscale RSP /lt Pet 1L /lt Pet 1.75L /lt Can 0.33x /lt Pet 1.5L x /lt Pet 1.5L x /lt Pet 0.5L x /lt Can 0.15x /lt INCIDENCE ZONE 1. Dairy NEW 2. Water Section 3. Check-out&cooler 4. Bakery FREQUENCY ZONE 1. Cheese&Cold Cuts (Counter) 2. Ready Meals 3. Fruit & Vegetables 4. Pasta UPSIZE ZONE 1. Promotional Main Hall 2. Promotional Area UPSCALE ZONE 1. Cookies&Snacks 2. Juices for Minican 3. Check-out 4. Spirits NEW +1 zone Vs py +1 zone Vs py 1L 0.50L 1.75L 6x0.33L 2x1.5L 4x1.5L 12x0.15L 4x0.5L 41

42 Modern Trade key pillars KBIs Delivering demand in Modern Trade flawlessly Extra Displays: right packs in the right zones Permanent COMBO deals Coke Regular, Zero & Light instore activation Claims & POS materials Co-marketing with food Big & impactful Extra Displays Quarterly Household Penetration, focus Female 30+ Basket Incidence, focus Small Baskets Total Volume on Extra-Display 42

43 KBIs Fragmented Trade key pillars As well as in Fragmented Trade 3-pack strategy activation (quick stop, meals, on the go) Permanent meal solutions Dedicated Artwork Coolers Visibility & Quality Glass bottle conversion & distribution Dedicated point of sale materials (Menu boards, etc) Coke incidence with meals 3-packs & Glass distribution Coke incidence in Socializing occasion 43

44 Leveraging our portfolio to excite teens New Teens advertising campaign Back to advertising support Local asset exploitation NBA asset exploitation 44

45 Leveraging our portfolio to win with adults Brand relevance with Kinley Capitalise Fanta Lemon success Population is ageing Launch of Kinley in 2013 Opportunity to more than triple the business in five years Advertising support Doubled volume in share points in Lemonades +0.2 share points in SSDs Won Product of the Year Award Product of the year is a consumer award issued every year by consumer Association s worldwide (35 countries) 45

46 KBIs Demand Delivery key pillars Playing to win market share with Flavours Dedicated Assets exploitation in Extra Displays NBA Asset exploitation in store Glass exploitation Extra Displays with Fanta Availability and Visibility Rainbow ED with MyCoke Share on Extra-Display Users base Volume Share 46

47 Working with our retailers Lower cost of doing business Higher EBITDA for the point of sale Driven by Premiumness Higher sales rate Value added services 1400 Margin/pos vs. leading candies +900 vs. crisps +600 vs. chocolate +500 vs. leading crisps Source: DPP Carrefour, BAIN 2013; Internal estimate based on ad-hoc test 47

48 Moving into Water CAGR CAGR Source: Internal estimates based on CANADEAN & Market Sizes 48

49 Addressing brand equity, availability and sustainability in Water to build and sustain brand equity to drive distribution with customers to drive product sustainability Source: TCCC syndicated researches 49

50 Building a national brand with Lilia NEW POSITIONING CONTINUOUS MEDIA SUPPORT PACK INNOVATION Lilia, a simple choice that matters LILIA A SIMPLE CHOICE THAT MATTERS 3.5m / year - Highest ever Share of Voice 6 th biggest investor in the Water category Plant Bottle, up to 30% from plants 50

51 Demand Delivery key pillars KBIs Recovering profit with value and cost efficiency, while improving execution Increased availability (Distribution in Modern Trade from 34% to 65%) Command better value: Retail sales price index from 72 to 90 vs. average Light Weighting (Best in Class) - Short neck finish Highest ever number of points of sale activated - New Squared Bottle 1.5l Focus on single-serve and HoReCa (0.5 liter in HoReCa is the most profitable water SKU) Zero touch logistics Distribution in Modern Trade Number of points of sale activated Single-serve availability in Fragmented Trade 51

52 Ample room for market share gains in RTD Tea Our Vol. Share (RTD Tea) 12.7% -6.9pts 5.8% RTD Tea Volume Sales (MUC) CAGR RTD Tea Retail Value Sales (M ) CAGR Source: Internal estimates based on CANADEAN & Market Sizes 52

53 Driving growth in RTD Tea with relevant taste, brand equity and availability to build & sustain Brand equity Brand Leader = Estathé, 7m / year Infused formulas = 40% of volumes and growing Lemon & Peach flavours = 90% of market Full distribution and in-store activation Source: TCCC syndicated researches 53

54 A new and relevant proposition for Italians NEW PREMIUM POSITIONING PRODUCT FORMULATION A sip of freedom 5 m investment New infused Tea formula with lemon and peach 54

55 Demand Delivery key pillars KBIs Delivering results with the right execution Increased distribution (Modern Trade target from 45% to 85%) Step up in-store presence through in-store promotions, extra-displays, leaflets, trade kits, point of sale material (posters, rotairs, etc) Relevant line-up to meet shopper & consumer needs WD WD Distribution in Modern Trade & Normal Trade Number of stores activated 55

56 Take charge Enrico Galasso National Sales Director

57 Creating value for our customers We are Italy s #1 Beverage Supplier Our route-to-market fits the Italian trade landscape We understand the customer strategies and tailor our plans for our Key Accounts to meet their needs Our best-in-class sales force provides our customers with services at the point of sale and unparalleled brand activation We have shopper insights that drive our OBPPC and plans JVC: Joint Value Creation; OBPPC: Occasion-Brand-Pack-Price-Channel; RED: Right Execution Daily; RTM: Route To Market 57

58 Driving customer satisfaction through Joint Value Creation (JVC) BeverageWorld Category reinvention at On Shelf Availability Top to Top Routines with all customers Up to 440 POS activated in 2014 Out of Stock reduction Store based action plan 58

59 Step-changed execution Number of Extra Displays (,000) FC RED Score RED: Right Execution Daily is our holistic KBI measuring execution excellence 59

60 Modern Trade Fragmented Trade Source:Nielsen 2012 Italian trade landscape drives our Route-to-Market strategy Less concentrated trade vs. rest of Europe with strong regional focus Weight of Top 3 retailers Multifunctional customer teams Strong national and regional customer management focus Multi-level interface with customers Tailored Joint Value Creation programs RTM reflects opportunities of specific Channel structure Food & Bev Producers sell-in (20 Bn ) Direct Sales Intermediaries 18% 57% 16% 8% WHS C&C GDO IC Channels (Day Time Bar, Restaurants, etc) Direct Sales and Wholesaler management capabilities in place Partnership with wholesalers Segmented approach to outlets coverage and activation 60

61 Excellent sales and execution capability OBPPC and RED Sales and negotiation Shopper Insights and Category Management Revenue Growth Management Financial basics Project management 61

62 Win together

63 We work across all areas to be #1 in cost leadership SLE (System Line Efficiency) & productivity Energy cost Production network review 2.5pp reduction* Logistics network review Plant warehouse outsourcing Customer collaboration & service level (DIFOTAI) Total inventory days Forecast accuracy * Supply Chain cost reduction as % of net sales revenue over three years ( ) 63

64 2012 We have optimised our supply chain network 2014 Core production network 5 PLANTS Core production network 3 PLANTS Opportunities to address - Network complexity - Leverage the size of our plants - Asset utilisation - Reduce fixed cost - High speed line High speed of implementation 14 months What we have executed - 3 plants near the biggest demand areas - No plant under 40 M UC % on asset utilisation - New high speed line in Nogara 64

65 Improving competitiveness and better service to customers Supply chain cost 1 % NSR Service Level (DIFOTAI 2 ) +620bps 18.3% -90 bps 96.2% 17.4% 90.0% Supply Chain cost: Production Overheads+Warehousing+Distribution+Haulage 2 DIFOTAI: Delivered in full on time accurately invoiced 65

66 Taking full charge of our operating expenses Cost leadership Accountability efficiency Lean organisation Standardisation Integration Business knowledge Discipline Efficiency Partnership Focus on business 2.1pp reduction* * Reduction in operating expenses as a % of net sales revenue over three years (2013 vs. 2010) 66

67 Contributing to our Zero Working Capital journey -Product rationalisation -Forecast accuracy 22% reduction in working capital 2013 vs

68 Generating significant Cash Flow To CCHBC Group from operations last 3 years 173m 290m 0.19 (60%) Investments for growth 0.32 per UC sold 117m 0.13 (40%) 68

69 Becoming a source of good for the local communities 69

70 Developing internal talent Fuel leadership pipeline at all layers Key Positions covered by Key People (KPe/KPo) Make our managers talent builders Management trainee program Talent acquisition program Internal promotions Fast Forward program Performance Management and Development process Individual Development Plans (IDP) KBIs in country scorecard KPe/KPo and IDP completion as incentivised objective in MBOs for senior leaders Our KPe/KPo grew by 21% Successors rate to KPo grew by 10% 70

71 Engaged and values driven people +12% +6% 70% 67% 58% 61%

72 External endorsement Award for FINANCIAL STRENGTH World s largest employer branding online survey (7,000 respondents aged 16-65; 150 largest companies assessed) 72

73 We are ready to step up As the external environment gets better 73

74 Closing remarks

75 Trading conditions Looking ahead Underlying trading environment continues to be challenging First quarter was weak due to timing of Easter and liquidity constraints in the market Good trading during Easter and in May, recouping some of the volume lost in the first quarter Profitable and sustainable growth through a combination of economic recovery and our efforts 75

76 Q&A