Cocktail Markets Day 2016 Huub van Doorne 24 March 2016 Disclaimer - - PowerPoint PPT Presentation

24 March 2016

Cocktail Markets Day 2016

Huub van Doorne

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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.

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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

Build the brand equity Lead the development of the cocktail market Accelerate global brand growth Leverage

• perational

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

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

More than 440 years of experience Semper idem: Guaranteed and consistent quality since 1575 The World’s Oldest Distilled spirit Brand Original Recipes Traditional Production methods Ingredients from all over the World In more than 110 countries We outperform in independent flavour testing Bartender endorsement Over 300 quality checks Important role in emergence of cocktail culture in the USA in 19th century Most awarded liqueur brand

Our journey to become the leading cocktail brand worldwide started over 440 years ago

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

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In 2016 : Bols Pink Grapefruit Bols Pear Bols Ginger In 2015 (already announced): Bols Date Bols Pineapple Chipotle Bols Blackberry In 2016: Galliano Aperitivo Pisang Ambon Spicy banana

Building our brand equity translates into high margins

Regional brands Global brands

69.0% 31.0%

Global brands Regional brands

42.6% 41.7% 64.8% 50.3%

10 20 30 40 50 60 70 80 90 100 Global brands Regional brands Revenu Gross margin Operating margin

Revenue split global/regional

69.3% 30.7%

Gross profit split global/regional

74.4% 25.6%

Operating profit split global/regional

65.3% 69.8% 30.2%

*) based on 2014/15 revenue

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

Global cocktail consumer base is growing rapidly

• Sophisticated cocktail culture
• Demand for more flavored spirits to

use in cocktails

• Cocktail culture in the home has

taken off Trend

• Authenticity and heritage
• Classic cocktail with a modern twist

North America

• Cocktail culture becoming more

sophisticated

• Key cities are getting more

international

• UK is the trendsetter in cocktail

making innovation Trend

• Classic cocktails with a modern

twist Western Europe

• Cocktail scene is emerging and

growing, particularly in big cities

• Urbanisation and per capita

disposable income is increasing

• Growing population of > 21 years

Trend

• Premiumisation: consumers

becoming more aspirational in drinks and venue choices Emerging markets

• Developing cocktail culture &

bartender scene

• Rapid expansion of modern bars
• Large group of female consumers

Trend

• Simple, colourful and sweet

cocktails Asia-Pacific Growth drivers Regional Cocktail development

Urbanisation, disposable income is increasing Expenditure on spirits is increasing Premiumisation, from domestic to international brands. Cocktail scene is growing.

.

Bartenders set the quality standard Cocktail culture is expanding, both in

• n-trade and at

home.. Growing population of > 21 years

1 2 3 5 4 6 7

New product innovations Strong quality recognition Bols Bartending Academy Bols Business Class Bols Around the World Online Bartender Community Bols.com for inspiration Bols brand ambassadors Trade shows Leading the cocktail culture Extensive cocktail database

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Lucas Bols plays a leading role in all regions

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

Tailored strategies per geographic region – North America

We aim at revenue growth in North America, predominantly in the US, by:

• Increasing our market share of Bols Liqueurs
• Expanding our customer base on a state by state basis
• 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

45.9% 22.7% 18.5%

Revenue*

18.5% *) based on 2014/15 revenue

Tailored strategies per geographic region – Western Europe

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
• 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

Revenue*

45.9% *) based on 2014/15 revenue

Tailored strategies per geographic region – Asia Pacific

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
• 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

Revenue*

22.7% *) based on 2014/15 revenue

Tailored strategies per geographic region – Emerging Markets

We aim at growth in Emerging Markets by:

• Growing the global brands in general
• Pursuing selective growth opportunities for regional brands
• Expanding to new countries
• Underlying attractive demographical trends
• Eastern Europe:
• Our key markets are Poland and Russia; we continue to invest in Russia
• We entered new markets Turkey and Caucasus (8 countries) by signing new distribution contracts
• The Caribbean and South America:
• In Mexico we signed a new contract for the Bols Brands, Galliano and Damrak Gin with Monarq
• Africa / Middle East & India:
• In Southern Africa we reviewed our route to market; including change per 1 April 2016 to ABV Brands in South Africa
• In Western Africa we are building on our strong historical position with the Henkes brand
• In India we make additional working capital investments in our JV Bols Kyndal to further build our footprint there

Revenue*

12.9% *) based on 2014/15 revenue

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

Asset-light business model creates strong platform for growth

Leveraging our strong distribution and production platform to accelerate growth could be considered by:

• adding brands to our strong platform, through add on acquisitions, which should be

complementary to our portfolio and have synergies in distribution and production

• adding third party brands to our distribution channels, either in the Netherlands (Maxxium) or in

the US (Lucas Bols USA)

• adding more volume to our production capacity at Avandis with third party brands

Outlook 2015/16

• The announced steps to optimize the route to market, aimed at improving the longer term

performance of our brands, have a short term negative impact on revenue.

• In 2015/16, we experienced one-off stock reductions in Australia and South East Asia. In

addition, in the second half, one-off stock reductions are experienced in the US. The underlying in-market performance in these markets remains healthy and in-line with expectations

• The overall economic uncertainty and increased foreign exchange fluctuations also have an

impact on markets globally, including the travel retail sector.

• As a result of the above, revenue for the full year 2015/16 is expected to be 4-6% lower

compared to 2014/15.

• Excluding currency effects and one-off stock reductions (around € 2 million), operating profit is

expected to be around 8-9% lower versus full year 2014/15 (excluding IPO costs).

• The net profit is expected to increase from € 3.8 million in full year 2014/15 to € 11 - 12 million

in full year 2015/16.

The Lucas Bols proposition

Lucas Bols’ strategy for growth

Organic growth from global brands High profit margins Strong cash conversion At least 50% dividend pay out Scalable platform

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Build the brand equity Lead the development of the cocktail market Accelerate global brand growth Leverage

• perational

excellence