A strong business getting stronger Winter 2013 2 Welcome to the annual c Diageo Pensioner Newsletter o Thank you for your feedback on the new-look newsletter we introduced last year. As you’ll see, we’ve kept the same style and content to let you know how the Company is performing and to share with you some of the year’s highlights. n In March, the Pensions Team welcomed a new Director, Stuart P Stephen; former Group Pensions Director at Lloyd’s Banking Group. Having held similar roles at Barclays and Sainsbury’s, Stuart brings with him a wealth of pensions experience. Stuart has spent his first six months getting to know Diageo’s business needs to enable him to understand how the Pensions Team can shape our service in the future. t Diageo has achieved a good set of business results in 2013. Amid the soaring temperatures of August’s heat wave, the Diageo share price also rose to reach e a new all-time high of £21.525. You can read more about our results in the Diageo Company update. Like many large companies, we realise that it is increasingly important for our shareholders, employees and pensioners alike to understand not just n the importance of our financial performance, but also the way in which we manage our social, environmental and economic impacts. Read about our sustainability responsibilities on page 6 – we hope you’ll find it interesting and informative. You can also read about the exciting preparations currently taking place t at Gleneagles in readiness for hosting the 2014 Ryder Cup. In response to additional feedback, we’ve included a contact card with s useful telephone numbers on the inside back cover. Simply, pop out the card and keep it somewhere handy. That way, you can contact us easily without having to search through your paperwork for our details. So, here we are nearing the end of another busy and successful year. Whatever your plans and preparations for the festive season, on behalf of the Trustee and the Pensions Team, we would like to wish you all a happy and healthy Christmas, and send you our very best wishes for 2014. Diageo Pensioner Newsletter 3 c Welcome 2 Ivan Menezes succeeds Paul Walsh 4 o Company update 5 Diageo delivering for the future 6 n John Walker Voyager 7 Celebrating 40 years at Leven 8 t Cocktails anyone? 9 e Brandstores offers 10 Diageo Brandstores opening hours 11 n Gleneagles’ Ryder Cup preparations 12 Diageo Grant Scheme 13 Keeping us informed 15 t Contact card 15 s Diageo Pensioner Newsletter 4 Ivan Menezes succeeds Paul Walsh as Chief Executive Officer Paul Walsh (left) hands over to successor Ivan Menezes Many of you will recall that Paul Walsh took up the role Officer of Diageo since February 2012, Ivan was widely anticipated of Chief Executive Officer in September 2000. At that point, to move to the “top job”. Diageo shares were trading at £5.70 on the London Stock Ivan joined the business in 1997, just before the merger with Grand Exchange and the business was more broadly based with Metropolitan when it was Guinness plc. Working first of all in global interests in food manufacturing and retailing, as well marketing Ivan led the team that developed the iconic Johnnie as premium drinks. It was Paul who focussed the business Walker “Keep Walking” campaign. After marketing, he moved to take on premium drinks − an area where Diageo would go on to up the role of President of Venture Markets where he led business become a global leader. in 123 countries, accounting for 70% of the world’s population. In the years that have followed, Paul has overseen the acquisition Ivan moved again, to America, initially as Chief Operating Officer of Seagrams along with brands like Bushmills, Zacapa and Ketel and was instrumental in the growth programme that restructured One to name a few. In addition, he has delivered some great the route to market across the USA and laid the foundations for the business partnerships including Ypioca, Meta Abo, Mey Icki and advantaged position we enjoy today. More recently, he has taken United Spirits. Diageo’s net sales in these markets have grown from on additional responsibilities as the Chairman of Diageo Asia 25% to nearly 50%. Pacific and Latin America & Caribbean, broadening his leadership As one of the FTSE’s longest-serving CEOs, Paul led the business accountabilities further still. through some tough times but his determination and focus Like Paul, Ivan has a reputation for commercial focus and delivery, on what was most important for the business meant that we’ve and is passionate about our brands. remained ahead of the competition. Taking the helm Paul handed over to Ivan Menezes on 1 July 2013 and stood down from the Board at the September 2013 AGM. As Chief Operating Diageo Pensioner Newsletter 5 Company update Celebrating life, every day, everywhere We are the world’s leading premium drinks business with an outstanding collection of brands including Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan’s and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Baileys, Captain Morgan, Tanqueray and Guinness. Johnnie Walker Smirnoff Baileys Tanqueray Guinness No1 No1 No1 No1 No1 SCOTCH WHISKY PREMIUM VODKA LIQUEUR IMPORTED GIN STOUT in the world in the world in the world in the US in the world Another year passed, another year stronger In Africa, our strategy is to grow the leadership across alcohol As the year’s results demonstrate, Diageo has achieved beverages focusing on the emerging middle-class consumer and good growth in 2013. We’ve delivered a robust top line providing a brand choice for every occasion. performance, globally our brands are growing stronger In Eastern Europe, again the focus is on emerging middle-class through marketing and innovation, and our range includes consumers, whilst in Turkey our target is to grow both local and seven of the top twenty premium spirits brands worldwide. international spirit sales. During the year ending June 2013, we managed our business In Latin America and Caribbean, the priority is continued through five regions: North America, Western Europe; Africa; Eastern leadership in Scotch, whilst broadening the range to include vodka, Europe and Turkey; Latin America and Caribbean and Asia Pacific. rum, liqueurs and local spirits. This will be achieved by continuing 42% of our business is now in faster-growing markets in Latin to invest in routes to market, offering a range and depth of leading America, Africa, Asia, Eastern Europe and Turkey. This is balanced brands, and enhancing our supply footprint to provide an with our strong business in the most profitable beverage market, increasing number of wealthy customers with the premium the United States, and an integrated Western European business. brands to which they aspire. Here’s a more detailed look at our regions’ focus and results: Finally, in Asia Pacific, which has both developed and new North America is our biggest region by net sales and high-growth markets, our strategy is to operate across categories operating profit. participating in local spirits, international spirits, and beer, focusing on the highest growth categories and consumer opportunities. In Western Europe, Diageo is the largest premium drinks company. Western Europe is managed as a single market; country teams focus on sales, while marketing and back office functions are integrated to drive efficiency and flexibility. Diageo Pensioner Newsletter 6 Delivering for the future Making drinks is our business. Managing sustainability is key to our future success. St Croix, Rum distillery, US Virgin Islands Captain Morgan rum is supplied to the United States from Each year, we produce 3.5 billion litres of beer, spirits and wine this distillery. Water is a significant issue for the area. for our customers to enjoy. It’s an extensive business that requires Before building the site we made assurances that many resources – from cereals and water to make the drink; glass to wastewater from distillation would be purer than the bottle it; fuel to transport it and over 23,000 dedicated employees water from the surrounding area. 90% of all fresh water to produce, market and sell our brands globally. used in the distillation process is recycled. The water is Of course, we want our customers to continue enjoying our brands. cleaned through a series of processes, including anaerobic But, it’s incredibly important that we’re working, and producing our digestion, evaporation and reverse osmosis, before being products, sustainably – which is why we have taken a closer look at reused. This system removes the need for any water the ways we do business across all areas. Here are some of the inroads disposal into the Caribbean. we’re making towards becoming a more sustainable business. Halving our carbon footprint Energy is needed at all stages of production, and while there is no Premium and sustainable packaging single solution to reducing energy use and carbon emissions, we We sell around 1.55 billion bottles a year with a total packaging have focussed on three main areas: weight in the region of 900,000 tonnes. Glass bottles make up over • Improving energy efficiency 90% of this but it also includes cardboard cartons, cans and plastic. • Generating renewable energy By 2015 our packaging targets are: • Purchasing electricity from renewable or low carbon sources. • Reduce: We aim to reduce packaging weight by around 10%. • Reuse: Increase the average recycled contents of our Investments in distilleries in Scotland at Roseisle and the St Croix packaging to 42%. distillery in the US Virgin Islands, and in a new bio-energy plant • Recycle: All packaging will be 100% recyclable or reusable.