Cocktail Markets Day 2016 Huub van Doorne 24 March 2016 Disclaimer DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols¹s management and information currently available to the company. Lucas Bols cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. Lucas Bols disclaims any obligation to update or revise any statements made in this presentation to reflect subsequent events or circumstances, except as required by law. Certain figures in this presentation, including financial data, have been rounded. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures which precede them. 2 Lucas Bols’ mission & strategic framework Mission Lucas Bols We aim to create great cocktail experiences around the world. Strategic framework Lucas Bols Our strategy is to strengthen and grow our global brands in the international cocktail market and to maintain the competitiveness of our regional brands in regional and local markets Lead the Leverage Build the Accelerate global development of operational brand equity brand growth the cocktail market excellence In global brands we aim for average annual revenue growth of 3-4% in the mid term – supported by an additional € 2-3 million annual investment We aim to stabilize the regional brands, by compensating the decline of domestic spirits in the Dutch market by growth in other markets 10 Lucas Bols: Four strategic pillars Build the brand equity Lead the development of the cocktail market Increase market position of the global brands Use marketing techniques and strategic and maintain the competitiveness innovation to optimise the product of regional brands offering and positioning Accelerate growth global Leverage operational brands excellence Tailor growth strategies for the brands to Maintain and optimise current business model the markets within our four geographic segments with a mix of in-house and outsourced activities Our journey to become the leading cocktail brand worldwide started over 440 years ago More than 440 years of experience Original Recipes In more than 110 countries The World’s Oldest Distilled spirit Brand Ingredients from all over the World Bartender endorsement Important role in emergence of cocktail We outperform in independent flavour Traditional Production methods culture in the USA in 19th century testing Semper idem: Guaranteed and consistent Over 300 quality checks quality since 1575 Most awarded liqueur brand Building the brand equity – global brands • Position Bols Liqueurs as the leading branded liqueur range in the world • Number one range liqueur worldwide, excluding the US • Position white spirits as essential base spirit for cocktails • Lucas Bols is global market leader in the genever category • Bols Genever in high-end bars in cocktail cities worldwide • Bols Vodka in mainstream bars in an increasing number of selected markets worldwide • Damrak Gin as the premium original gin from Amsterdam in selected markets • Position Italian Liqueurs as unique super premium liqueurs, an add on to the Bols cocktail platform: • Galliano is a strong consumer and bartender brand, with a broad worldwide distribution • Vaccari is a strong brand in Mexico, Ireland and The Netherlands, and is distributed in various other markets Building the brand equity – regional brands • Strong portfolio of regional liqueur brands like Pisang Ambon, Coebergh, Goldstrike and La Fleurette • Market leader with Dutch genever portfolio in the Netherlands through market leading distributor Maxxium • Strong presence in Western Africa with Henkes and with Bols Brandy in South Africa and India • Maintain strong and stable cash generation resulting from limited A&P spending and working capital requirements • Maintain competitiveness by active brand management and trade marketing initiatives Innovations vital to strengthening brand equity In 2015 (already announced): In 2016 : In 2016: Bols Date Bols Pink Grapefruit Galliano Aperitivo Bols Pineapple Chipotle Bols Pear Pisang Ambon Spicy banana Bols Blackberry Bols Ginger 13 Building our brand equity translates into high margins Revenue split global/regional 100 30.7% 90 80 69.3% 70 Gross profit split global/regional 60 31.0% Regional 64.8%Global Revenu brands 50 Global brands Regional Gross margin 50.3% brands 25.6% 40 brands 69.0% Operating margin 30 74.4% 20 42.6% 41.7% Operating profit split global/regional 10 0 Global brands Regional brands 30.2% 69.8% *) based on 2014/15 revenue 65.3% Lucas Bols: Four strategic pillars Build the brand equity Lead the development of the cocktail market Increase market position of the global brands Use marketing techniques and strategic and maintain the competitiveness innovation to optimise the product of regional brands offering and positioning Accelerate growth global Leverage operational brands excellence Tailor growth strategies for the brands to Maintain and optimise current business model the markets within our four geographic segments with a mix of in-house and outsourced activities Global cocktail consumer base is growing rapidly Growth drivers Regional Cocktail development North America Western Europe • Sophisticated cocktail culture • Cocktail culture becoming more 2 1 sophisticated • Demand for more flavored spirits to use in cocktails • Key cities are getting more international Growing Urbanisation, population of • Cocktail culture in the home has disposable > 21 years income is taken off • UK is the trendsetter in cocktail increasing making innovation 3 7 Trend Trend • Authenticity and heritage • Classic cocktails with a modern Cocktail culture is expanding, both in Expenditure on • Classic cocktail with a modern twist twist on-trade and at spirits is increasing home.. Emerging markets Asia-Pacific Premiumisation, • Cocktail scene is emerging and • Developing cocktail culture & Bartenders set from domestic to bartender scene the quality international growing, particularly in big cities standard brands. • Urbanisation and per capita • Rapid expansion of modern bars 4 Cocktail scene is disposable income is increasing 6 growing. • Large group of female consumers • Growing population of > 21 years . Trend Trend • Premiumisation: consumers • Simple, colourful and sweet 5 becoming more aspirational in drinks cocktails and venue choices Lucas Bols plays a leading role in all regions New product innovations Bols Bartending Academy Online Bartender Community Strong quality recognition Bols Around the World Bols brand ambassadors Leading the cocktail culture Bols Business Class Bols.com for inspiration Trade shows Extensive cocktail database 11 Lucas Bols: Four strategic pillars Build the brand equity Lead the development of the cocktail market Increase market position of the global brands Use marketing techniques and strategic and maintain the competitiveness innovation to optimise the product of regional brands offering and positioning Accelerate growth global Leverage operational brands excellence Tailor growth strategies for the brands to Maintain and optimise current business model the markets within our four geographic segments with a mix of in-house and outsourced activities Tailored strategies per geographic region – North America Revenue* We aim at revenue growth in North America, predominantly in the US, by: • Increasing our market share of Bols Liqueurs 18.5% 45.9% 18.5% • Expanding our customer base on a state by state basis 22.7% • Growing superpremium brands: Bols Genever, Damrak Gin and Galliano • Investing in expansion and strengthening of our commercial organization • Increasing our investments behind our brands to accelerate growth *) based on 2014/15 revenue Tailored strategies per geographic region – Western Europe Revenue* We aim at stabilizing revenue in Western Europe by: • Growing our global brands in the Netherlands via Maxxium Growing the global brands in selective other countries • 45.9% • Expanding the distribution of our base spirits • Focusing on cash generation of regional brands • Optimising the challenging retail markets like Germany and Belgium • Growing our market share of domestic spirits in a declining market in The Netherlands Western Europe is a growing cocktail market: • Cocktail culture is growing in the big cities throughout Europe • The number of outlets with cocktails on the menu, is growing • UK and France are important markets; Southern Europe offers opportunities *) based on 2014/15 revenue Tailored strategies per geographic region – Asia Pacific Revenue* We aim at growth in Asia Pacific by: • Growing Bols Liqueurs on the back of emerging cocktail culture • Growing super-premium brands Galliano and Bols Genever • Expanding distribution of Bols Vodka and Damrak Gin • Underlying attractive demographical trends 22.7% • In South East Asia new distribution agreement (1-1-2016) will optimize our route to market: • Edrington Singapore (for Singapore, Malaysia, Indonesia and Philippines) • Alchemy Asia Trading (for Vietnam, Cambodia, Laos and Thailand) • The Philippines and Cambodia are new markets • Key markets are Japan (Bols Liqueurs, La Fleurette, Regnier) and Australia (Galliano) • Opportunities for growth in China and South East Asia *) based on 2014/15 revenue Tailored strategies