Diageo PLC Capital Markets Day Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Laurence Bruce Whyatt - Barclays Bank PLC, Research Division - Analyst : It's Laurence from Barclays. Debra, on Slide 19 about the power of the middle class. You highlighted some statistics on both India and Latin America about the potential of those growing middle classes. Now when we look at other sector companies, whether in spirits or in wider beverages, often China is highlighted as a key area for the growing middle class. You didn't put it on your slide. Is there a reason behind that? Do you see as your potential growth expectation for China changed recently? How do you at... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2023 / 2:00PM, DGE.L - Diageo PLC Capital Markets Day

Question: Laurence Bruce Whyatt - Barclays Bank PLC, Research Division - Analyst : Laurence Whyatt at Barclays. I'd like to continue again on tequila. I know as you have another question on China. When you talk about your Scotch portfolio, a lot of the cocktails that are made typically come from Johnnie Walker Red and Johnnie Walker Black, which retail at around sort of $20 to $40 a bottle. Yet in your main tequila brands are a bit of a premium to that, yet most of the growth driver is coming from the cocktail occasions. Given that consumers are a bit more financially constrained at the moment, why are you confident that consumers are happy to pay up for products that go into cocktails when they, I guess, historically wouldn't in the category like Scotch?

Question: Laurence Bruce Whyatt - Barclays Bank PLC, Research Division - Analyst : Can I just ask one on China, if that's possible. When we look at the growth rate of the Chinese business since the anticorruption campaign has typically been double digits. But of course, you mentioned that the luxury consumer is becoming younger, that younger demographic is set to shrink by almost 1/4 over the next decade. We're already seeing youth unemployment quadruple over the past decade as well documented issues in the real estate market. When you think forward over the next decade in China, do you think it's reasonable to continue at that same sort of double-digit growth rate?

Question: Laurence Bruce Whyatt - Barclays Bank PLC, Research Division - Analyst : Laurence with Barclays. You talked about taking brands global, particularly tequila. But I guess, Guinness is one of the brands that actually has a relatively few countries that is sold in U.K., Ireland, Africa, I mean, is in other places as well. But obviously, beer has massive markets elsewhere. You've got Brazil, Mexico, much of Southeast Asia, where some of your competitors have big positions. Is there potential to take Guinness to more places?

Question: Laurence Bruce Whyatt - Barclays Bank PLC, Research Division - Analyst : Could I ask one about guidance. So in terms of you've got the sort of medium-term guidance with limited margin expansion over the next -- over the medium term. Going into next year, we're sort of assuming that some of the issues you've had in LAC, you're going to start to lap and so potentially to the operational leverage that you'll lose, you should get back next year. And some of your competitors in tequila have talked about the benefits of the agave price. Presumably, you would be getting some of those as well. Some of your competitors have quantified that as well, as well all of the COGS deflation that's coming into the market right now and again, well documented by some of your peers. With that sort of environment, it seems like a huge amount of A&P to put back into the business to be able to get a flat margin. Why are you just not being very conservative here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2023 / 2:00PM, DGE.L - Diageo PLC Capital Markets Day