Reputation – A Critical Driver of Business Value, by Ian Wright MPRCA, Corporate Relations...

The economics of reputation are built on Strategy, Leadership and Accountability Diageo's 3 Key Drivers of Success in Reputation Building,

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Ian Wright , Global Corporate Relations Director , Diageo

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THE WORLD ’S LEADINGPREMIUM DRINKS BUSINESS

Selling the world’s best known brands in

180 marketsWORLD CLASS MARKETING

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THE WORLD ’S LEADINGPREMIUM DRINKS BUSINESS

25,000 talented employees

in around 80 countries

Over £10bn turnover

Over £1bn operating profit

Diageo invests over

£1.5bn in marketing and

promotion each year

42% of businessin fastest growingmarkets – accounting

for 21% ofoperating profit growth

50% of net salesin fast growing marketsexpected from 2015

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Our Heritage

1986DistillersCompanyLimitedtaken overby Guinnessand renamedUnitedDistillers

1884James Buchanan establishes his business

1877DCL established by John Haig ofCameronbridge distillery and others

1871James & Samuel Greenlees, of Old Parr,establish their business

1863William Sanderson, creator ofVat 69 establishes his business

1825Thomas Sandeman starts trading& Arthur Bell joins business in 1845

1820John Walker opens for business

1749Justerini & Brooks founded

1627Haig family start distilling

1890White Horse trademark registered

1997Diageo formed

2001Seagramaquisition

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Societal Trust is Low and Declining

Trust in Business

Trust in Business Leaders to tell the truth

50%

18%

Global

-32

2013 Edelman Trust Barometer

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Business as Soap Opera

…loss of trust is the new media narrative

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Changing Regulatory and Legislative Framework

EU calling for greater corporate accountability

Top companies in India must spend 2% of profit on CSR

RSA requires firms to have Social & Ethics Committees

China is toughening environmental legislation

Elsewhere sustainable reporting requirements are in place

MNCs to protect human rights along whole supply chain

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New Consumer and Customer Priorities

CONSUMERS:

66% consumers expect brands to be sustainable*

46% consumers are prepared to pay a premium for brands seen as sustainable*

Expectations are particularly strong among millennials and consumers in high growth markets**

*Source: ACNielsen 2012** Futures Group 2013

CUSTOMERS:

Walmart to disclose sustainability scores on shelf labels for 70% of products

Safeway wine suppliers rejected on environmental grounds

Sainsbury’s and Marks & Spencer to reduce abv of alcohol products and increase fair trade sales

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Reputation Trackers 2012

Ireland: 4.2GB: 4.1

Scotland: 4.4marked / 5

scores > 3 +ve

Diageo Hellas Platinum CSR award

(90% + score)

Ranked 2nd in food and beverage, scored 4.8/5

• Ireland & Nigeria No. 1 • Portugal 3rd

• Mexico 4th • Germany & Venezuela 7th

• Greece top ten

Reputation is Made Locally

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- REPUTATION STRATEGY

Our Ambition:

To create the best performing, most trusted and respected consumer company in the world

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We Define Our Stakeholders As:

• Investors

• Employees

• Government and NGOs

• Commercial Partners (Customers, Suppliers, Partners…)

• Community and Special Interest Groups

• Media

• Consumers of our brands

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Responsible drinking

Sustainability

Employer attractiveness

Product innovation

Relationship Management

Leadership

Contribution to society

TRUST&

RESPECT

Brand builder

Accountability - Diageo reputation drivers

Diageo reputation attributes and local market attributes to be defined

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- REPUTATION FUTURE TRENDS

Global business trends in reputation management

Reputation is becoming a critical business driver

Reputation strategies are more robust and thoughtful

Leadership expect-ations are increasing

Leadership engagement is increasing

Leadership reputation capability is required

Leadership account-ability is increasing - KPIs & scorecards

Global FUNCTIONAL trends in reputation management

As reputation becomes a critical business driver:

Functions develop more robust and thoughtful reputation strategies

Strategies and programs are more integrated and less siloed

Functions are changing to meet new demand

Push and pull between HQ & big market infra-structure versus fastest growing markets

Reputation capability

Reputation Tracking

Reputation Forecasting

Reputation Tracking

and Insights

Reputation Workshops

Functional Planning

Conversations

Changing infrastructu

re and skillsets

Changing ways of working

Resource where

needed

Big bets from the centre

Delivered for leaders

Delivered for

functions

Cascading and impact

Comprehens-ive & tailored