strategic plan update: big 3 - marie brizard wine...

STRATEGIC PLAN UPDATE: BIG 3.0 12 DECEMBER 2016

AGENDA

2

1. Recap of BiG 2.0: Rationalization and Optimization mostly finalized • Rationalization update • Optimization update

2. BiG 3.0: Delivering the growth component of the strategic plan • Business model: Capturing the mainstream growth opportunity • A portfolio of six pillar brands • Other businesses: Sobieski Trade and Private Label • Growth across four geographic clusters

3. A compelling investment case

4. Conclusion

2016 – A DECISIVE YEAR FOR MBWS

3

2016 has been a decisive year in the corporate and business development of Marie Brizard Wine & Spirits

• MBWS exited its recovery plan at end-June after paying off the entirety of its

frozen debt five years ahead of schedule

• MBWS is now a “normalized” company vis-à-vis the financial markets • Long-term loan of €62.5m (five-year maturity) • Positioned for strategic external growth

• Rationalization and Optimization components of the strategic plan largely completed

• MBWS is now laser-focused on profitable growth

2016 Guidance Reconfirmed: EBITDA on the order of €20m*

* Excluding impact of IFRS Standard #2

1 Recap of BiG 2.0: Rationalization and Optimization

5

RATIONALIZATION UPDATE

Achieved

~€30m

2016 cash-in ~€13m

2017 cash-in ~€17m

Disposal

• Real Estate

• Distribution: Galeria Alkoholi

• Production: Augustowianka

Restructuring

• Sobieski Trade (wholesale)

To be Disposed

• Real Estate

• Production equipment in Poland

• Others ~ €5m -

Assets Type Value 2016e EBITDA

impact

+€3.5m

Rationalization is completed, with Sobeski Trade remaining in the Group (BiG 2.0 target is exceeded pro forma for the preservation of Sobieski Trade)

Total ~ €35m +€3.5m

20

16

2

01

72

01

8

6

OPTIMIZATION PROGRAM ON TRACK

• 10 out of the 12 initiatives are now in place • Industrial footprint • Better sourcing (done) • Streamline the business (done) • Development of core capabilities (done)

2016e 2017e 2018e

Additional EBITDA impact

~€5m ~€12m

• Vodka manufacturing ongoing

• Insource distillation capability in Poland by end 2017

~€8m

• Route To Market in place, strenghtening of the distribution network in several key markets

Contribution to Growth as of 2017

Optimization in line with the €25m EBITDA impact of BIG 2.0 ~€5m of EBITDA impact in 2016e

~€20m to be delivered in 2017e-2018e

7

BIG 3.0: FINANCIAL OVERVIEW

20

16,8

~450

140 - 210 590

- 660

Net sales €m

EBITDA €m

% of net sales

2018e Rationalize Grow Optimize

4,4%

466,7

5,2

2014A

~20

28 - 37

2016e

-

12%

451,1

11,2

2015A

1,1% 2,5%

68 -

77

Self financed plan; 3-year capex ’16 – ’18: €52m Investments €m

2 BiG 3.0: Focus on profitable growth

BIG 3.0 BUSINESS MODEL AND ORGANIZATION IN LINE TO DELIVER PROFITABLE GROWTH

9

• Growth to be driven along two axes: Branded

Business Sobieski

Trade

Private

Label Business

• BiG 3.0 strategic plan enhancements:

Growth strategy built on six pillar brands, including Cognac Gautier, and key local brands

Strengthening of distribution networks

Four geographic clusters, including Asia Pacific

Possibility of returning cash to shareholders

• BiG 3.0 Business Model: Capturing the mainstream growth opportunity

Standard segment of the spirits sector provides the largest absolute growth

The standard segment of the market to drive growth in key geographies, given current macroeconomic, regulatory and demographic trends

Other Businesses

CURRENT TRENDS SUPPORT A MAINSTREAM GROWTH MODEL

10

• Macroeconomics drive reality: on-going sluggish growth in developed countries and slowing growth in many emerging markets

• Growth of the middle class across emerging markets. As an example, the middle class in China is forecast to double in size by 2022 to 220m people, with a growing appetite for quality but affordable imported products

• Advertising in the spirits sector increasingly curtailed by public health policies; ability to convey “emotional benefits” of premium products significantly constrained

• Growth of mainstream retailers, with more shelf space allocated to private label and mainstream brands, and limited shelf space available for niche/craft/premium SKUs

• Generation Y consumption preferences skew toward more “personal” experiences, and value-for-money

2018 GUIDANCE CONFIRMED

BIG 3.0 2018 branded

business

BIG 3.0 2018 Group

Sales €360m - €400m

EBITDA €61m - €69m €68m - €77m

€590m - €660m

EBITDA margin

17%

BIG 2.0 2018 Group

€67m - €75m

€450m - €500m

15%

Scope Group excluding Sobieski Trade

Group including Sobieski Trade and

private label

Pillar and local brands and branded

wines

BIG 3.0 Other

businesses

€230m - €260m

€7m - €8m

Sobieski Trade and private label

3% 12%

11

ORGANIC GROWTH OUTLOOK FOR PILLAR BRANDS: MOMENTUM SET TO INCREASE

12

Growth of six pillar brands

BIG 2018

+10%

2015

4,1

1

2,9

0,5

0,03

1,9

2014

3,4

1

2,7

0,5

0,03

1,8

2015 Achievements: o All pillar brands outperformed their

respective categories*: William Peel fastest growing top 10 Scotch

Whisky Krupnik 5th fastest growing top 100 spirits

2016 Achievements: o In France**:

MBWS largest contributor to spirits market growth YTD

WP Double Maturation spirit sector innovation generating the highest turnover for the off-trade YTD

o In the US***: MBWS is fastest growing supplier to the

on-premise spirits segment

o Globally: Relaunch of Marie Brizard and Gautier

Growth Drivers: o Strengthening of RTM o Consistent growth of A&P o Innovation and category management

capitalizing on leading market share o Continued expansion internationally o Rejuvenation of strong local franchises

2015 – 2018e CAGRs

7%

13%

26%

6%

14%

48%

5,0

1,5

1,0

3,4

3,0

0,1

Source: *Impact databank **Nielsen YTD P9 2016 *** Nielsen CGA MAT 8/2016

13

SIX PILLAR BRANDS: WILLIAM PEEL, SOBIESKI , KRUPNIK, MARIE-BRIZARD , FRUITS AND WINE & GAUTIER

Positioning: Accessible, quality Scotch whisky at an affordable price. Pricing: 10% below standard category leader. Primary markets: France, Spain, Poland, Baltics, China. Latest innovation: Double Maturation. #8 volume whisky brand in the world.

Positioning: Authentic vodka, deeply rooted in Poland, distilled from 100% pure Rye. Pricing: in-line with standard segment peers. Primary markets: USA, Poland, France & Lithuania. #2 vodka brand in France.

Positioning: Traditional Polish vodka, distilled from 100% grain, with a broad flavor range. Pricing: in-line with standard segment peers. Primary markets: Poland. Latest innovation: 4 new seasonal flavors. #5 fastest growing brand of the WW Top100 in 2015.

Positioning: Leading aromatized wine-based drink Pricing: Index 115 vs main competitors. Primary markets: France, USA, Spain, Japan. Latest innovation: Floral range & Mandarin. #1 in France in volume and value.

Positioning: Iconic, pioneering liqueur brand, dating from mid-18th century; Aromatic intensity / Mixologist recognition as a premium liqueur at an affordable price. Pricing: ~20% below premium sector leader. Primary markets: Spain, France, UK, Asia. Latest innovation: packaging, re-branding.

Positioning: Cognac born in 1755, credentials above premium cognacs; privileged aging facility that provides unique humidity conditions for optimal quality. VS, VSOP and XO offers at affordable prices. Pricing: ~10% below premium category leader. Primary markets: Canada, USA, China, Europe. Recognized twice as the world’s “Best Cognac”.

STEADY MARKET SHARE GAINS

14

Change in Volumes 2016 YTD Market MBWS

Market Share MBWS YTD change

France

William Peel Sobieski

Fruits and Wine

+1.3% +5.4% 24.4%

+2.0% +27.2% 14.7% -12.5% -9.8% 29.3%

+1.0 pts +2.9 pts

+0.9 pts

Poland

Krupnik Clear Krupnik Flavored

Total Krupnik Brand

+2.7% +3.7% 15.7%

+5.8% +43.4% 4.6% +3.4% +6.1% 13.1%

+0.2 pts +1.2 pts

+0.3 pts

Source: Nielsen P12 2016: FR Spirits – IRI P11 2016: FR Wines Nielsen P10 2016 Poland

OTHER BUSINESSES

15

Private Label: optimizes production and facilitates business development • Enables MBWS to optimize the capacity utilization of its

production facilities • As purveyors of private label wines to the large retailers in

some key markets, MBWS maintains stronger ties with key players for the distribution and sale of its strategic pillar brands

Sobieski Trade: a tactical tool for strengthening MBWS’ branded business in the Polish traditional trade • Sobieski Trade will be EBITDA positive from 2016 on • Provides MBWS with an additional tool to reach the

traditional trade in Poland (~50% of Polish spirits market) • Recently-signed deal with Coca-Cola HBC Polska expands

Sobieski Trade’s distribution reach, and provides access to new accounts in the traditional trade

• Complementary to MBWS’ strategic partnership with Eurocash

Financial Summary & Targets

2015 Net Sales (€m)

2018e Net Sales (€m)*

‘15-’18e Sales CAGR*

Other businesses

173.6 244 12%

Of Which:

Sobieski Trade

92.7 148 17%

Private label 80.9 96 6%

* mid-point of estimate range

FOUR GEOGRAPHIC CLUSTERS

16

Western European, Middle East & Africa cluster

Xavier Penas (France) Nikolaos Smyrnof (rest of cluster)

Asia Pacific Cluster

Henriette Holmgreen Americas Cluster

Nicolas Guillant

Central and Eastern Europe Cluster

Juozas Daunys

Americas Primary market: United States Other markets: Brazil, Canada Western Europe, ME, Africa

Primary market: France Other markets: Spain, UK, Denmark, Morocco

Asia Pacific Primary market: China Other markets: Japan, Australia

Central and Eastern Europe Primary market: Poland Other markets: Lithuania, Bulgaria

WESTERN EUROPE, MIDDLE EAST & AFRICA

17

Financial Summary & Targets

‘15-’18e Vol.

CAGR*



‘15-’18e Sales

CAGR*

Cluster 4% 145.6 164 4%

Of which:

France 3% 115.5 125 2%

Other 11% 30.1 39 9%

Achievements

Key Brands Growth Drivers

Pillars Local

• Ongoing market share growth for all pillar brands, becoming the fastest growing and the largest contributor to growth in France

• Commercial excellence in place with strengthened sales team in France & Spain

• Creation of customer marketing team in France to lead category management with trade

• Launch of successful innovations with William Peel Double Maturation, San José Margarita

• Secured new third party brands to reinforce portfolio relevance (Sazerac, Choya)

• Consistency of ATL investments

• Full benefit from Marie Brizard relaunch in Spain & France

• Full deployment of innovation

• Category management leadership in key categories

• Strengthening of RTM in the UK and Morocco

* Third party brands

*

*

* * *


CENTRAL & EASTERN EUROPE

18

‘15-’18e Vol.

CAGR*


2018e Net Sales (€m)

‘15-’18e Sales

CAGR*

Cluster 14% 95.6 150 16%

Of Which:

Poland 15% 65.5 102 16%

Rest of CEE 13% 30.1 48 17%


Pillars Local • Growth of pillars brands

• Full benefit of Krupnik flavored launch

• Growth of export markets within the cluster

• Distribution gains driven by new RTM

Financial Summary & Targets Achievements

• Strengthening of RTM in Poland with Eurocash

• Launch of William Peel, Fruits and Wine in main markets (Poland, Lithuania and Bulgaria)

• Successful relaunch of Krupnik clear and rejuvenation of Biala Dama in Poland

• Launch of successful innovations with Krupnik flavored

• New management team in Poland and in Bulgaria


AMERICAS

19

‘15-’18e Vol.

CAGR*



‘15-’18e Sales CAGR*

Cluster 18% 27.1 54 25%


Pillars Local

*

* Third party brands


• Strengthening of RTM in the US with SGWS & Empire

• Launch of Fruits & Wine at Publix (3rd largest grocery chain in the US)

• MBWS among fastest growing suppliers to the on-premise segment of spirits in the US (5.9% 12-mo. growth, compared to sector average of 1.7%) per Nielsen On-Premise Measurement Service

• New management team in Brazil

• Distribution drive for Sobieski in the US

• Distribution of Marie Brizard and Cognac Gautier distribution in the US taken in-house.

• Expansion of Fruits and Wine nationwide

• New customers in Brazil as well as new listings in Canada


ASIA PACIFIC

20

‘15-’18e Vol. CAGR*



‘15-’18e Sales

CAGR*

Cluster 14% 3.6 10 41%


Pillars


• Strategic review and plan

• New RTM in China with (i) COFCO for William Peel & Sobieski and (ii) HLX for Cognac Gautier

• Professionalized management at cluster level as well as in Japan and in China

• Mainstreamization and cocktails are growing trends in China

• Cognac market cleaned and back to growth in China

• Launch of new Marie Brizard platform in Japan from Q1 2017


3 A compelling investment case

A DISCOUNTED EV/EBITDA VS. PEERS…

Source: Bloomberg Consensus at 08/12/2016 Note: Small-Cap French Spirits include: Advini, Lanson, Laurent Perrier and Vranken-Pommery

• EV/2018E EBITDA

22

14,9x

13,6x

8,8x

16,4x

12,5x

14,0x

13,6x

7,6x

6,1x

Small-Cap French Spirits

Core Average

Stock Spirits

Remy Cointreau

Pernod Ricard

Diageo

Campari

MBWS - Consensus

MBWS - BiG 3.0

… DESPITE SUPERIOR EBITDA GROWTH…


• 2015A-2018E EBITDA CAGR

23

9,2%

6,6%

0,4%

12,0%

4,2%

8,1%

8,2%

71,5%

85,3%


Core Average

Stock Spirits

Remy Cointreau

Pernod Ricard

Diageo

Campari

MBWS - Consensus

MBWS - BiG 3.0

… HIGHER RETURN ON CAPITAL EMPLOYED …

Source: Bloomberg Consensus at 08/12/2016 Note: Small-Cap French Spirits include: Advini, Lanson, Laurent Perrier and Vranken-Pommery; Return on Capital Employed calculated based on consensus EBIT and latest reported balance sheet

• 2018E Return on Capital Employed

24

5,5%

11,2%

8,6%

12,1%

9,2%

15,9%

10,2%

15,5%

19,1%


Core Average

Stock Spirits

Remy Cointreau

Pernod Ricard

Diageo

Campari

MBWS - Consensus

MBWS - BiG 3.0

… AND HIGHER EXPECTED RETURN ON EQUITY


• 2018E Return on Equity

25

6,7%

14,0%

7,0%

12,0%

10,6%

28,0%

12,3%

19,2%


Core Average

Stock Spirits

Remy Cointreau

Pernod Ricard

Diageo

Campari

MBWS - Consensus

DISCIPLINED CAPITAL ALLOCATION

26

MBWS is in a position to offer new options for disciplined capital allocation

Return to Shareholders

Selective M&A

Balance sheet prudence

Organic Growth

• Strict financial discipline • Back to dividend distribution in the mid-term

• Share buyback program

• Innovation & new products • Further modernization of plants

• Digital platforms • Generating free cash flow

• Bolt-on acquisitions

• Strengthen the current RTM or add new outputs to the brand’s portfolio

• Relutive to EBITDA margin

• Acquisition EBITDA multiples below sector average

4 Conclusion

CONCLUSION

• Rationalization and Optimization components largely completed and contributing to EBITDA

• Growth model: Capturing the mainstream opportunity in the spirits market

• Tools in place to deliver profitable growth – 6 pillar brands with strong multi-regional recognition

– 4 geographic clusters

– Complementary businesses

– Strong RTM agreements in key geographies to secure the 2018 growth targets

• Confirmation of 2018 targets

28

30

APPENDICES

BUSINESS REPORTING STRUCTURE

31

61% 21%

18%

MBWS 2015 Sales*

Branded business Sobieski Trade

Private Label Wine

• Objective: provide greater visibility into top-line and profit drivers • Prior period results will be restated to fit new reporting structure; to be

communicated with FY 2016 results

2015 Net Sales

TOTAL Marie Brizard Wine & Spirits 451.1

Branded Business 271.9

Western europe, Middle East & Africa

145.6

Central & Eastern Europe 95.6

Americas 27.1

Asia Pacific 3.6

Other businesses 173.6

Sobieski Trade 92.7

Private label 80.9

Assets sold in ’15-’16 5.6

* Excluding assets sold in ‘15-’16 in the amount of €5.6m

EXTERNAL REPORTING BY GEOGRAPHIC CLUSTER

32

Geographic clusters

Volume Volume Growth

Net Sales

Net Sales Growth

EBITDA

1. Western Europe & MEA

France Balance of WEMEA

2. Central and Eastern Europe

Poland Balance of CEE

3. Americas

4. Asia Pacific

A. SUB-TOTAL BRANDED BUSINESS

B. OTHER BUSINESSES

Sobieski Trade Private Label

C. HOLDING

TOTAL = A + B + C

EXTERNAL REPORTING BY BRAND

33

Pillar Brands

Volume Growth

Net Sales

Net Sales Growth

Marketing Spend

William Peel

Sobieski

Krupnik

Marie Brizard

Cognac Gautier

Fruits and Wine

Others

Total

strategic plan update: big 3 - marie brizard wine...

Documents