Driving operational improvements across the whole supply chain Sue McGeorge. GB Supply Chain Director

Driving operational improvements across the whole supply chain Sue McGeorge GB Supply Chain Director

Driving out costs to invest in growth Sue McGeorge GB Supply Chain Director

Who we are Our brands and our purpose Celebrating Life, Every Day, Everywhere

Diageo s growth model A global leader with the ambition & capabilities to achieve more To create one of the best performing, most trusted and respected consumer products companies in the world Strengthen and accelerate our premium core brands Win in Reserve in every market Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out costs to invest in growth Ensure we have the talent to deliver our performance ambition 4

The game is changing for FMCG companies there are clear commercial challenges (1/2) 1 Growth is flat or slow in Developed Countries FMCG forecasted revenue for developed countries US$ Bn - at constant 2012 prices CAGR +0.7%p.a. 2,663 2,680 2,698 2,718 2,737 2,756 2012 2013 2014 2015 2016 2017 2 Commodity inflation & volatility is at an all-time high Weighted indices of non-energy commodity prices Index to 2005 = 100 Ø 86.1 102.2 84.0 72.2 Ø 191.3 173.9 209.9 190.0 174.9 175.1 1980 1990 2000 2010 2011 2012 2015 2020 Actual Projection SOURCE: Euromonitor; World Bank Development Prospects Group, July 2013; Team analysis 6

The game is changing for FMCG companies there are clear commercial challenges (2/2) 3 Pressure on service levels for basics, new products & promotions 10 Most important, 1 Least important Expectations from retailers on FMCGs Delivering what we ordered at the correct time Appropriate lead time and delivery frequency Master data accuracy and timeliness Effective collaboration Excellence in new products introduction Excellence in the management of promotions Efficient and effective customer care Excellence in product range management Excellence in e-commerce 1.0 6.0 5.2 5.2 4.7 4.1 3.9 3.4 7.9 4 Emerging markets are growing, but with increased competition FMCG revenue growth % - Last 5 years CAGR at current prices 11.1% Emerging markets 3.3% Diageo Organic revenue growth (Global) % - Last 5 years CAGR 4.8% InBev 6.4% SAB Miller 6.7% Beam 6.2% Pernod Ricard SOURCE: OECD; Euromonitor; Company filings; Team analysis 7

Diageo s Supply chain 3.5 billion litres of drinks 180 markets worldwide 135,000 customers 24,000 suppliers 7,856 Supply employees worldwide (+4,200 USL) 28,410 Diageo employees (+ 9,600 USL) 8

Transforming our Supply chain to unlock growth 1 Differentiation through our agile & responsive Supply chain 2 Innovation scale & differentiation 3 Sustainability 4 Best cost Supply chain model 5 Strategy supported by Structure 9

Differentiated approaches 10

Differentiated approaches to unlock growth Route to Consumer 11

Differentiated approaches to unlock growth Route to Consumer Luxury finishing centres Plainfield semi works E-commerce Mey Icki 12

From a One-Size-Fits all Supply Chain to an Efficient, Responsive & Agile Supply Chain focused on Value Creation 13

EFFICIENT Supply Chain RESPONSIVE Supply Chain AGILE Supply Chain High volume, predictable demand, low complexity Dedicated lines Direct cost effective distribution Lower volume, more complex more volatile demand Customisation stock holding close to market Highly unpredictable demand and critical time sensitivity Manufacturing and distribution agility 14

GUINNESS INNOVATION 16

Innovation scale and differentiation Liquid technologies Johnnie Walker Double Black Technology leadership transforming ability to develop liquids Premium positioning achieved without age statement Baileys Chocolat Luxe Most technically challenged liquid development since invention of Baileys Supply & Commercial working in partnership Ruut Extra Beer Ruut Extra, first Diageo new to world beer using cassava, a local root in Ghana Fast, flexible innovation: launched to market in 8 weeks 17

Innovation supporting Diageo's growth Premiumising our brands The female consumer Unlocking growth in developed markets Emerging middle class consumers 18

Innovation scale and differentiation New packaging and technology Packaging Formats The Cube Formats to make our brands available and accessible to consumers in new and exciting ways New packaging format with dedicated packaging lines Portable supply innovation allowing blending and bottling spirits locally in Africa Launched in Ghana Cost effective solution to meet growing consumer needs 19

Jon could we create a slide here that symbolises sustainability perhaps the one from the S&R report? 20

Investing for Sustainable Growth Bioenergy Roseisle/Cameronbridge Agriculture Nairobi Water Roundtable Earning External Recognition Highest score for environment in beverage sector # 2 global food and beverage company Best performing beverage company in the world 21

Focus areas to unlock growth Driving margin expansion Jon don t suppose we could create something similar that says Best cost 22

Best cost Supply chain model Investment to create lower cost Supply operations Line strategy in the US Footprint rationalisation & investment Scotland Footprint rationalisation & brewery investment Ireland Better planning efficiency Fewer changeovers Shipping direct to customers Invested 100m in leading technology Segmented SC for luxury/ innovative product launches Reallocation of volumes to Dublin Guinness brewery 23

Best cost Supply chain model Procurement efficiencies Delivering circa 100M savings a year, across Supply, indirects and demand 2500+ Procurement projects delivered every year Half of this is through cost of goods efficiencies Mitigating cost inflation Leveraging our global relationships Increasing efficiency and improving health and safety Demolition at Barnsley underway Vehicles loading for dispatch, Kenya Implementing new glass strategy New malt contracts for Ireland Lightweight trailers in key African markets 24

Operational excellence global governance, standards and execution Overall Equipment Effectiveness (%) Waste (%) Productivity (9L cs /man hour) 25

Operational excellence global governance, standards and execution Avg inventory ( m) Overall Equipment Effectiveness (%) Case fill rate (%) Cost per case ( ) Waste (%) Productivity (9L cs /man hour) 26

The right strategy, supported by the right people Talent Leadership & Development Building capability A great place to work Multi year Talent Planning Future stars empowerment Internships / Apprenticeships Graduate / Future Leaders Programmes Diageo Leadership Performance Programme Spirited Women Network Advanced Negotiation Capability Procurement End to End Supply Chain Capability Programme 8 th best multinational Only beverage and FMCG company in the Top 10 Received a distinction in 10 markets 28

Unlocking growth through differentiated approaches Customer service 30