Diageo plc (DGE) Earnings Call Transcript & Summary

Good afternoon from Diageo's headquarters in London. Thank you for joining us today. I'm Ivan Menezes, Chief Executive of Diageo, and it's my pleasure to welcome you to our 2021 Capital Markets Day. As the world around us is changing at pace, we continually strive to be one of the best-performing, most-trusted and respected consumer products companies in the world. This ambition is firmly embedded across our business. From the results of our employee survey, 84% of responding employees can see a link between their work and Diageo's immediate priorities and performance ambition. And I am proud of the progress we have made against this ambition since we met 2 years ago. We've demonstrated resilience and agility in the face of extensive volatility, and we have emerged stronger. In fiscal '21, we delivered organic net sales ahead of fiscal '19 pre-pandemic levels by over 6% on a constant basis. We have up-weighted marketing, acquired 12 brands and continue to invest in future growth. We've launched Society 2030, the next phase of our 10-year sustainability action plan. We've delivered strong cash performance, demonstrating the everyday efficiency focus that's embedded into our business rhythm. We've increased our full year dividend per share for the 20th consecutive year in spite of the pandemic, and we commenced the return of capital program of up to GBP 4.5 billion to be completed by the end of fiscal 2024, of which about 1/3 has been completed by way of share buybacks to date. And as we will demonstrate throughout today, I believe the best is yet to come. Our executive team are a winning combination of homegrown talent who have held various roles across Diageo markets and new joiners who bring valuable outside perspective and a wealth of expertise. My world-class team of colleagues and I will discuss how Diageo's core capabilities and unique purpose-driven culture are sources of competitive advantage, enabling us to deliver long-term sustainable growth. Cristina, Debra, Alvaro and Sam will showcase how we are marrying outstanding creative flare and leading-edge analytics to nurture and build exceptional brands. Ewan and John O'Keeffe will demonstrate how our supply chain is a key driver of our competitive advantage even in the most challenging market conditions. Mairead, Hina and John Kennedy will bring to life how our people's passion for our purpose is driving performance as well as an ownership mentality. And finally, Lavanya will discuss our sustainable growth algorithm, including our new, higher, medium-term guidance. And we will have several Q&A sessions through the day. As we progress through today's agenda, there are 6 takeaways to keep in mind. Diageo is the #1 international spirits player, and spirits is rapidly premiumizing and gaining value share of global total beverage alcohol. Diageo has an advantaged portfolio with extraordinary brands across price segments, categories and geographies. Diageo actively shapes its portfolio towards higher growth opportunities and builds highly successful brands. Diageo has leading market positions with exposure to significant current and future growth opportunities. Diageo is building on its strong track record of ESG in pioneering grain-to-glass sustainability with a 10-year action plan, Society 2030: Spirit of Progress. And Diageo's people are passionate about its brands and their engagement with its purpose creates an ownership mentality, fueling better execution. The growth in the total beverage alcohol market is underpinned by strong consumer fundamentals in both developed and emerging markets. The first is population with an additional 550 million consumers coming of age this decade. The relentless rise of the middle-class continues, enabling a further 700 million consumers to access our brands. In India alone, we anticipate 100 million new potential consumers in the next 5 years. The second is penetration. Across the world, our iconic global giants recruit over 40 million new consumers each year to our brands. Even in our largest market, the United States, there's still a significant headroom as only 50% of households purchase spirits every year. The pandemic disrupted consumer behaviors, creating an exciting opportunity for spirits, with a significant rise in the at-home cocktail occasion. The third is premiumization. Purchasing powers remained resilient with the premium end of household staples continuing to gain share as consumers look for affordable luxuries. And total basket size for consumers who purchase spirits is considerably higher than for those who just purchase beer. The Google searches for premium spirits has increased tenfold in the last decade, reflecting consumers' desire to trade up to drink less but better. Let me start with why I believe Diageo has a long runway for exciting growth ahead of us. Firstly, total beverage alcohol or TBA remains a very attractive market. It is large and growing, and we are focused on increasing our market share. Diageo is already the leading international spirits player by retail sales value, 1.5x the size of our nearest competitor, but it is the TBA market that represents our overall consumer opportunity. Given that we hold only about a 4% value share of global TBA, we have significant headroom for long-term sustainable growth. Our ambition is to deploy our superior capabilities to outperform the market and deliver a 50% increase in Diageo's TBA share by 2030. I'm confident in our ability to achieve this ambition. Since our last Capital Markets Day, we've continued to build Diageo into a stronger and more agile business. We are more consumer centric than ever before with a stronger advantaged route to consumer. This means we see changing consumer trends and economic conditions more quickly. We're getting better, more timely and insightful data, enabling us to make faster, smarter decisions, all of which allows us to better anticipate and respond to marketplace changes. Over the past decade, the TBA market grew at 3.4% compound annual growth, with total spirits growing materially faster at 6.1% CAGR, gaining 9 percentage points of total TBA share. Within spirits, premiumization or trading up is a long-established trend with the total Premium Plus Spirit segment growing at double digits annually for the past decade. Going forward, we expect spirits to continue to win share from beer and wine and for the premiumization trends to continue, driven by the favorable consumer fundamentals I touched on earlier. Cristina will bring these to life in her presentation. In addition to being the largest international spirits player, we have the largest premium plus business. Premium Plus brands are those retailing at over $25 a liter, and so includes brands like Johnnie Walker, Black Label and above. On a stand-alone basis, our premium plus retail sales value is larger than the total retail sales value of each of our spirits peers, with the exception of just 1 competitor. Since fiscal '15, our Premium Plus spirits portfolio, net sales value, or NSV, has grown at a rate that is significantly higher than the Diageo average. Innovation has contributed to this growth of our premium portfolio, and Cristina will discuss our capabilities in this exciting area later this afternoon. And this dynamic and highly profitable business now drives over half our total NSV. In addition, we are the only international spirits player to compete in the large, growing and rapidly premiumizing Baijiu market with our majority stake in Shui Jing Fang in China. We expect the rapidly growing categories of agave, gin, international whiskey and scotch to drive international spirits retail sales value growth over the next 5 years. Let me tell you about our exciting positions in these categories. Tequila is a dynamic and exciting category, which we expect to continue to grow rapidly. As Debra will bring to life later, tequila is delivering on key consumer and cultural trends with its authentic blend of tradition and craft. We used our deep consumer insights to prepare for the category take off and built a powerful portfolio of brands, which are rapidly gaining share. In 2015, we just had a 1/6 share of the global tequila category. Since then, we've tripled our market share, driving over 30% of total category growth. In the United States, we're expecting the tequila category to deliver over 50% of incremental spirits growth in the market over the next 5 years, supported by the rapid premiumization of this category. We are very excited about the future of our portfolio in this category, which you will hear more of today. We are the #1 global gin company, over twice the scale of our nearest competitor with a strong portfolio that's driving category growth. At our last Capital Markets Day, Cristina highlighted Gordon's as an example of what great creativity can do for a brand. A few years prior to that, Gordon's was at risk of losing relevance and its leadership position. We showed you how through our radical brand intervention and by getting the fundamentals and creative right, it's possible to reignite growth. Today, Gordon's continues as the world's leading gin. In the past 5 years, Gordon's has driven almost 40% of total retail sales growth in the standard price point, recruiting new consumers into this dynamic category. Gin is rapidly premiumizing with premium plus price points growing at almost 20% CAGR over the past 5 years. We have fueled this growth, gaining 5 percentage points of share with Tanqueray growing strongly. Crown Royal, our iconic brand has driven over 50% of the growth of the total Canadian whiskey category over the past 5 years, increasing its share to almost 40%. With strong performance of flavors, such as Crown Royal Apple, it is also expanding into the explosively growing premium ready-to-drink market in the U.S. Scotch is forecast to grow at 7% CAGR, supported by strong premiumization trends, and we expect it to contribute at least 15% of total international spirits RSV growth over the next 5 years. We have the world's leading scotch portfolio with a 35% total share of RSV, over 1.7x the scale of our nearest competitor. Our flagship scotch brand, Johnnie Walker is 3x the size of its nearest competitor. And our premium plus scotch portfolio now drives almost 70% of our total scotch NSV. Many of our iconic brands have been built over decades or even centuries, while never losing sight of the importance of investing in the growth of these great brands. We use our insights to identify acquisition opportunities in fast-growing segments, both through outright acquisitions as well as taking smaller stakes through our Diageo-backed incubator, Distill Ventures. Examples include Don Julio and Casamigos acquired to capture the fastest-growing segment in our largest market; Tequila in the U.S.; Aviation American Gin and the Chase Distillery to broaden our portfolio in the fast-growing premium gin occasion; Lone River Ranch Water and Loyal 9 Cocktails to support our ambition in the rapidly growing ready-to-drink category in the U.S. And Seedlip, to meet consumer demand for sophisticated nonalcoholic options. We have active portfolio management discipline and dispose of assets that offer less attractive growth potential. For example, a strategic review of Diageo India's popular brands is currently underway to potentially streamline the domestic IMFL portfolio in pursuit of quality, sustainable growth. Through the acquisition of premium plus brands in fast-growing categories, alongside strategic disposals, we have actively strengthened our portfolio and geographic footprint. Since acquiring Don Julio and Casamigos, we've applied our core capabilities, the best brand-building expertise, which combines consumer insights with marketing creativity and flare, and then brought strong execution to accelerate the performance of these brands. They are the only 2 tequila brands in the top 5 to have gained market share over the past 5 years as we enhanced consumer awareness of their strong premium cues, craftsmanship and authenticity. Since acquiring Don Julio, we have increased its NSV sevenfold, and Casamigos, 11-fold. Tequila has recently seen accelerating growth in the U.S. And so we believe our tequila portfolio has significant runway ahead. You will hear more of this later. Diageo is the #1 spirits company in North America and is gaining share. This important region contributes 40% to Diageo's net sales value and over half of its operating profit. However, with only a 7% value share of TBA, we have a long runway for growth in key growth categories, such as Tequila and whiskey. Diageo is the #1 international spirits company in Europe, with a strong position in the fastest-growing premium plus segment. I'm particularly pleased that momentum in the on-trade continues to build as consumers reemerge from the pandemic. John will discuss how Guinness is at the heart of the conversation about recovery and the reopening in Ireland, and the off-trade remains robust in the region. Greater China is the biggest TBA market in the world, and we expect it to continue growing strongly over the next 5 years. And we have a clear ambition to be over 10% of Diageo's net sales over time. I'm particularly excited that we're building our first whiskey distillery in China, which will be in the environmentally stunning Yunnan province. It will produce a new superdeluxe, Chinese origin, single-malt whiskey. It will also feature an immersive and interactive visitor center, bringing whiskey to life for an even greater audience for generations to come. You'll hear more about this from Sam Fischer later. We are playing the long game in India where by 2030, McKinsey estimates, the country will have the third largest number of higher income households globally, a trend that is driving strong growth in the premium and above categories. Diageo is the #1 player in international spirits in India and #1 in the exciting premium plus segment, which is forecast to grow at twice the market forecast rate. We believe Africa will be another long-term engine for NSV growth, supported by highly favorable demographics. In this dynamic region, we have a wide portfolio of brands across beer, spirits and nonalcoholic categories in over 30 markets at multiple price points. John O'Keeffe will tell you more about Africa later. And in Latin America and the Caribbean, Diageo is the #1 international spirits company. The region is experiencing rapid growth and premiumization, with above-average contribution to Diageo's operating margins. Alvaro will speak more to this dynamic region later today. During the pandemic, consumption moved between channels towards the off-trade. We responded to this increased off-trade demand with focused commercial execution, up-weighted marketing and accelerated innovations, which delivered strong results. In fiscal '21, we held or grew off-trade share in over 85% of our net sales in measured markets. Another consumer trend that has accelerated meaningfully during the pandemic is e-commerce. By increasing the visibility and ease of purchase for our brands online, we've driven strong performance with some of our largest e-commerce customers. Diageo is the #1 in spirits retail sales on Amazon in Europe; the #1 in spirits retail sales on Drizly in the U.S.; and in China, we maintained our leadership in whiskey with a 26% share of whiskey retail sales on Tmall. In addition to building on our partnership with e-retailers and traditional trade channels, we're also developing our own e-commerce channels. In fiscal '21, we launched 9 new sites bringing the total to 28. In our measured markets, including China, the U.K. and Germany, in fiscal '21, we grew our spirits e-commerce share by almost 2 percentage points. We're pleased with the strong start we made to fiscal '22 with growth momentum across all regions. We expect organic net sales to grow at least 16% in the first half of fiscal '22 and organic operating profit to grow slightly ahead. Looking ahead to the next 3 years, we are confident in our ability to deliver our new medium-term guidance of consistent 5% to 7% organic net sales growth and sustainable organic operating profit growth ahead of net sales within a range of 6% to 9%. Lavanya will discuss our guidance for both the first half of fiscal '22 and the medium term in more detail during her presentation later today. Our strategy remains the right one, and it has mobilized our people. We are determined to use our superior capabilities to outperform the market and deliver a 50% increase in Diageo's TBA share by 2030. As I mentioned earlier, we are confident in the position the company is in today. We are the #1 international spirits player and spirits is rapidly premiumizing and gaining value share of total beverage alcohol. We have an advantaged portfolio with extraordinary brands across price segments, categories and geographies. We actively shape our portfolio towards higher growth opportunities and build highly successful brands. We have leading market positions, with exposure to attractive current and future growth opportunities. We're building on our strong track record of ESG in pioneering grain-to-glass sustainability with our 10-year action plan, Society 2030: Spirit of Progress. The passion now people have for our brands and their engagement with our purpose creates an ownership mentality, fueling better execution. I am very excited and optimistic about our ability to drive long-term sustainable growth. We continue to do business the right way for the long term. First, we invest in hiring and developing the most talented people creating a culture where we execute with discipline and urgency while doing business the right way. Second, our commitment to having a positive impact on society is firm. We continue to promote moderation and tackle alcohol misuse. We lead on carbon emissions and water use, and we support the communities where we live, work, source and sell. Finally, our focus is not just on delivering this year's results, but on building a truly sustainable business for the very long term. We're making investment decisions today that will take decades to play out, including reopening ghost distilleries and building new ones across the globe in a way which supports our sustainability and environmental goals. These long-term decisions will ensure many more of our brands enjoy 200-year anniversaries as Johnnie Walker did in 2020. Building on the rich cultural heritage of outstanding distinctive brands and weaving it into the fabric of a local culture is paramount to what we do. That means understanding key moments in people's lives and the meaningful role our brands can play in those moments, and connecting with consumers in unforgettable ways. Now let me show you how we deliver a global icon with a local heartbeat. [Presentation]

Now when I think of what we've accomplished, I am most proud of our ability to continue to balance driving long-term sustainable growth, while also supporting our people and our customers as well as making progress on delivering a positive social impact for generations to come, and as stakeholders, you should feel confident that we understand the balance. We have created significant value for all of our stakeholders, and we remain committed to doing so as we look to the future. We will continue to evolve to stay relevant, innovation and agility are now core competencies at Diageo. We are executing our strategic priorities and running the business for the long term, each and every day. I am excited and confident about Diageo's future because of the incredible talent of our people, our unrivaled category and geographic footprint and our proven ability to build fantastic brands for the long term. I believe the best is yet to come.

Hello, everyone. Thank you for joining me today. For those of you who don't already know me, I'm Cristina Diezhandino, Diageo's Chief Marketing Officer. I will be joined today by my colleagues; Debra Crew, President, North America and Global Supply; Sam Fischer, President, Asia Pacific and Global Travel; and Alvaro Cardenas, President, Latin America and Caribbean. Ivan started on brand building has something that defines us. Brand building is, in many ways, our most important capability. Much of the value we create as a business, above and beyond our amazing liquids, comes from the identity and meaning we make for our brands, for today and for the future. Brand building is fundamental to driving our business. It's how we recruit and we recruit consumers. We put our brands at the front of consumers' minds and make it as easy as possible for them to buy them. Let's start by looking at some of our exciting brand building work across our portfolio and around the world. [Presentation]

Today, I will show you how we're building leading brands that deliver sustainable long-term growth. I will demonstrate how our success in brand building comes from our combining of our superior understanding of consumers with brilliant creativity. I will also cover how we use tools and data analytics to determine how and where we deploy our marketing with position. This position ensures that we can connect with the right consumers at the right time, in the right place, with the right message. We're then going to take a short break. After that, I will show you some of the exciting ways in which we're using these capabilities to effectively reach our consumers in the digital and omnichannel world as well as our cutting-edge innovation. Finally, you'll see how we combine our marketing with best-in-class commercial execution to convert the consumer at the point of purchase. Let's start with what we mean by our superior consumer understanding. The consumer is at the heart of our business. You cannot be a great marketeer unless you understand people and recognize what drives them, motivates them and what is important to them. This makes a deep understanding of consumers the foundation of brand building. We use our proprietary tools and data to get a full picture of our consumers. Over the last few years, we have strengthened our ability to interpret and harness that data and deepen our consumer understanding. These powerful insights guide our marketing teams. We've developed a breadth of tools to understand consumer motivations and behaviors based on both their current and future context. These are a few of the key ones. We use our consumer choice framework to give us insights into occasions. It does these by surveying 200,000 people across 64 markets about the factors that drive their choices in moments of consumption. We collect detailed data, at scale, to understand where, when and why consumers are enjoying our products. Our foresight tool acts as an early warning and diagnostic system for consumer trends. It combines qualitative and quantitative data with AI-driven social listening. It helps us identify, monitor and anticipate shift in socialization, which impacts the brands and products consumers choose. These insights can inform new ways to market our existing brands or inspire new product innovation. Catalyst, our marketing optimization tool, enables our teams to evaluate what is working and not working, so we can be agile in deploying our resources behind our best-performing activities. We have embedded it into our planning process and continuously augmented to include more data points, giving us a faster, more in-depth understanding of the efficiency and effectiveness of our spend. The increased marketing effectiveness, enabled by Catalyst, has driven over GBP 400 million incremental gross profit since fiscal '17. The insights generated from these tools enable us to lead rather than follow trends. I want to share 2 great examples with you of where we have done this. The first is luxury. The second is Tequila. Both important growth area for us. Taking Luxury first. As you saw from Ivan, in the spirits category, the super premium and above segments have been the fastest-growing price points for 10 years as consumers choose to drink better, not more. We expect growth in the luxury category to be sustained by long-term tailwinds of income, growth and premiumization. We have the privilege of working with some of the finance luxury spirit brands in the world. They are valued by consumers and valuable to our business. We have built our portfolio and crafted our marketing to lever this breath and diversity. We use our data and tools to identify the need for a dual approach to the luxury marketplace. Core to luxury brands are high-net-worth individuals, the 55 million consumers with wealth above $1 million. In addition, there is a wider audience of approximately 600 million aspiring luxury consumers globally, who are starting their journey in luxury and will continue to trade up over time. For high-net-worth individuals, we have gained insights into the most effective way to bring our brands to life. We understand the role that social media, influencers and brand advocates play in creating desire for rare and exclusive products. So we create bespoke content with the right influencers. We know that they are heavy consumers of digital content. So we use friends' stories to engage with them online in one-to-one relationships. And we link this to personalized brand experiences, both online and off-line. We know they expect access to highly curated and exclusive experiences. Our brand homes such as s Brora, Talisker and now Johnnie Walker Princes Street provide us with the ability to deliver them. We have recognized high-net-worth consumers have high standards for brands and how they look. So we create exquisite packs and flawless virtual merchandising. In markets like China and the U.S., we are launching new consumer-led engagements. These include personalized gifting experiences and membership programs to reward loyal consumers. Here is Sam Fischer to share how our approach to one-to-one consumer engagement is coming to life in Asia.

Thanks, Cristina. In Asia, rising consumer wealth is driving growth in the luxury market. And in particular, the expanding middle-class in China continues to be a source of scale and growth for luxury brands. The region is also leading the way in setting digital trends and pushing the blurring boundaries of online and off-line. One of our initiatives in response to this has been to extend our existing rare and exceptional platform to be online. Diageo rare and exceptional is our exclusive platform for engaging with high-end luxury connoisseurs and collectors. We have historically had great success with our in-person events, including immersive brand education experiences. However, we now have built on this with the launch of Diageo rare and exceptional dot com to extend this personalized consumer experience online. The launch has helped us to significantly grow brand awareness with traffic to the site up by 40%, and our repeat purchase rate has been almost 40%. The e-commerce platform has also driven growth in the rare and exceptional private client business and many digital-first customers have also applied for off-line mentorship. As Cristina said, luxury consumers like content that is tailored for them. And in Asia, one of the ways we are responding to this is by working with spirits experts and influencers to create engaging and immersive online experiences. This video shows a fantastic example of content we created with Sam Lu, one of our wonderful whiskey ambassadors. Sam recently toured our brand homes in Scotland and interviewed our community of scotch makers. And from that visit, he produced bespoke videos in Mandarin, which we are now using in creative ways to bring a bit of Scotland to our luxury consumers in China. This content was also used last week for Singles Day, which is the single biggest online sales day in the world. We will do the same for Double 12, which is held on December 12, another important online shopping day in China preceding Chinese New Year.

Thanks, Sam. It's fantastic to see our luxury marketing work in China. In our other scale luxury market, the U.S., we see luxury category evolving. Our tools have enabled us to understand how a new generation is reshaping luxury. The traditional world of luxury, which was about history, heritage, craftmanship and rarity still exist. However, another world has come to the fore. It invites new consumers into a more modern, youthful, inclusive and dynamic world. By recognizing this evolution, we have been able to position our portfolio for success in this space and to deliver strong growth for our key luxury brands. This video will show you how we think about this evolving world and luxury consumer groups in the U.S. [Presentation]

As you saw from that snapshot, we have used our insight capabilities to understand the luxury marketplace and converted that deep understanding of our luxury consumers to ensure we connect with them. I'm excited by how we are marketing to luxury consumers in Asia, both online and off-line. And in the U.S., our brands are well positioned to capitalize on the evolving shape of luxury. Let's move onto the second powerful example of how we harness our consumer insights, our Tequila business in the U.S. I will now hand over to Debra Crew to show you how we did that.

Thanks, Cristina. I want to use the example of our tequila business in the U.S. to demonstrate the power of our consumer insights. We were able to identify an exciting growth opportunity in Tequila early on. And the decisive action we took based on our insights enabled us to build a leading portfolio in the fastest-growing category in the U.S. spirits market. Tequila had its strongest year yet in fiscal '21. Nielsen/NABCA showed the sales value of the Tequila category growing at 39%, while total spirits grew at 14%. As you heard from Ivan, by fiscal '26, we expect the tequila category to be #2 in value after whiskey, delivering over 50% of incremental growth for spirits. Although the success of this category has surpassed even our own high expectations, we identified and prepared for the opportunity well ahead of time, and here's how we did that. Our consumer insights tools gave us an early indication of the tequila trend. Years ago, we saw tequila starting to take off in California. We were able to understand what was driving this trend and assess its sustainability. We saw the tequila consumption was being fueled by the growth in the Hispanic population in California. In 2010, 28% of California's population were Hispanic, they were drinking tequila and culturally influencing the broader population. By 2030, 1 in 5 Americans are forecasted to be Hispanic. And by 2060, Hispanic is anticipated to be the U.S.' ethnic majority. This insight made it clear to us that tequila had the potential to grow at scale. Also led by California, we saw consumers becoming more interested in well-being, and therefore, the ingredients of their drinks. We knew they viewed tequila as a clean, plant-based spirit made from Agave. We saw it being talked about on social media as Keto and South Beach Diet friendly. We also saw consumers trending towards more casual, day drinking and with food occasions. We knew that the range of tequila variants enabled it to flex across those occasions and dayparts. It's a versatile liquid that can be mixed, blended, sipped and stirred. Moreover, it pairs well with food, especially Mexican cuisine, which is one of the most popular in the U.S. Across all spirit categories, we saw that consumers were increasingly interested in brands with prominence, heritage and craftsmanship. 50% of U.S. drinker say they choose authentic items, and 1 in 5 will pay a price premium for it. Tequila is an authentic category that blends tradition and craft. Further, our data told us that consumers were looking to drink better, and we see that premiumization has accelerated. In fact, super premium and luxury tequila are now driving approximately 85% of category growth. Finally, consumers have increasingly sought brands that are culturally relevant to them and their lives. Beyond the Hispanic cultural influence, tequila has taken an influential role in celebrity-driven culture with increasing participation in celebrity-associated brands. We understood the emerging tequila trend and anticipated the growth to be sustainable. And that insight drove us to build a tequila portfolio that includes some of the best-performing brands in the market. In fiscal '15, we took control of the remaining 50% of Don Julio, gaining full global ownership and management control of the brand and its supply assets. Then at the end of fiscal '17, we acquired Casamigos, the fastest-growing super-premium tequila brand in the U.S. Partnering with 2 of the founders, George Clooney and Randy Gerber. We also have exciting opportunities to scale De Leon and to develop Astral, our recent acquisition from Davos. Our consumer insights continue to fuel our marketing and our innovation against these great brands. We understand the importance to consumers of authenticity, mixability and quality. And this underpins our brand-building model for our ultra-premium brands, Don Julio and Casamigos. With Don Julio, we bring to life the devotion that the founder Don Julio himself had for the craft of tequila making. With Casamigos, we reflect the passion and personality of George Clooney and Randy Gerber. Don Julio 1942 is leading the fast-growing luxury tequila segment with 36% market share. Our successful growth model reflects our in-depth understanding of what consumers value at a luxury price point. Don Julio 1942 is a high-quality liquid in iconic, desirable packaging. And consumer desire has been built through targeted on-premise display, influencer partnerships and cultural collaborations. We have launched 2 new extensions: Don Julio Primavera, a limited edition reposado; and Ultima Reserva, which uses extra añejo tequila from Don Julio's final harvest. To give you a sense of just how desirable these brands are, Primavera, which regularly retails for $119 a bottle, has been selling on Drizly for over $600 a bottle. Both variants are built on key consumers' insights. Primavera is perfect for the informal and mid-tempo occasions. Ultima Reserva delivers an authentic incredible brand experience. And with their iconic luxury packaging, these bottles make beautiful and covetable personal gifts, which we know in these tumultuous times is highly motivational for consumers. I am really energized and excited by the potential of tequila in the U.S. By using our predictive tools, we were prepared for the category taking off, and our understanding of consumers has allowed us to build a powerful portfolio of brands with strong and unique positioning. In fiscal '21, our U.S. tequila sales grew 87%. This was more than twice the rate of the U.S. tequila category growth, driving significant market share gains. We are well positioned for continued growth.

Thanks, Debra. I want to move now to show you how we activate against our consumer insights. We call this approach we take to this "creativity with precision." This reflects the importance we see in both the art and the science of marketing. If consumer understanding is the engine of brand building, then creativity with precision is the fuel. Our portfolio includes some of the world's most famous brands, and those brands have been powered by memorable creating work since their inception. Creativity is inherent to what we do. We combine that creativity with precision. Using our data, tools and capabilities to deliver the right messages at the right time to the right consumers and to make it easy for consumers to find our brands when, where and how they want to purchase. This precision also includes the ability to interpret the drivers of our business, what's working and what's not working, and to use that knowledge to constantly optimize the business results of our marketing. One of the brands that I am most proud of for this is Baileys, where we have a truly amazing story. I will let you watch this come to life, now. [Presentation]

As you can see, Baileys is successfully tapping into consumer insights and trends. It is creating amazing content and executing with precision. This keeps Baileys relevant, strong and growing. So far today, I've set out our approach to brand building. I've demonstrated the power of our consumer insight tools. And I've shown you how our marketing teams use our consumer understanding to bring our brands to life in a way that connects with consumers. You also saw the precision with which we deploy our marketing. This is what ensures we are reaching the right consumers with the right messages at the right time and place. We are now going to take a short break. When we come back, I'll show you some of the exciting ways in which we're reaching our consumers and customers in an omnichannel world. [Break]

Welcome back. Before the break, you saw how we develop our consumer insights and how we bring that to the magic of our marketing. Now I want to show you how we are adapting our marketing approach to reach consumers and enable them to have a fantastic experience with our brands, in a world where we have so many more channels and opportunities to connect. We call this the omnichannel world. What do we mean by omnichannel? While you still hear terms like online and off-line to the consumer, there is no digital, there's no physical. They move seamlessly between virtual worlds and reality, never stopping to think about what channel or what space they're in. It's just the way they live their lives, and it means the path to purchase is less linear. Consumers spend more time and use more digital tools to explore and evaluate brands before they buy. 20 years ago, the average consumer typically use two sources of information when buying an item. Today, consumers use an average of almost six. In this omnichannel world, where consumer context changes constantly, success relies on our ability to preempt and respond to consumers at pace and with world-class creativity. We view this increased complexity as an amazing opportunity to engage more often and on a more personalized basis with consumers. To do this, we make sure our brands connect with consumers across a much broader range of touch points. Our brands need to do more than just engage with consumers when they are physically at a bar, at an event or in a store. We need to reach them on e-commerce sites, social media platforms, when searching online or watching a video on their phone, to give you just a few examples. In an interconnected world that blends digital and physical touch points, we are creating a singular brand connection that gives consumers inspiration, memorable experiences and easy solutions. This connection is what will inspire people to love and enjoy our brands and will drive sustainable brand growth. We have a breath of great examples across our portfolio of how we are engaging with consumers across all channels. I'd like to bring this to life through our scotch whisky portfolio. Our ambition for scotch is to drive recruitment into the category by shifting perceptions. To move from the traditional old world of scotch to a brave, bold and enticing new world. In an omnichannel world, we will show you how we are exciting our consumers with amazing content, sharing our brand experiences and creating direct engaging with them. Let's start with how we excite them. I want to start with our flagship scotch brand, Johnnie Walker. The brand is 200 years young and continues to walk strongly into the future. Its sales grew 12% in fiscal '21. And in the last 12 months, it has gained off-trade market share of whisky globally. We've just launched a fresh and modern Keep Walking campaign to recruit the next-generation of Walkers around the world. Here's a video to show how the brand is exciting new consumers across many channels. Then we will hear from Alvaro about how Johnnie Walker is being brought to life in Brazil. [Presentation]

Thanks, Cristina. I want to share a snapshot of how we are unleashing scotch whisky, and in particular, Johnnie Walker, to its full potential in Brazil. The scotch category grew at twice the rate of the premium beer category. Within scotch, Johnnie Walker is the most loved brand among Brazilians, gaining around 80 basis points of penetration in the last 12 months. This shift has been driven by our success in rooting Johnnie Walker as a brand in culture. We have ensured our brand campaigns reached consumers throughout their journeys, from discovery to purchase. The short video you will see now really shows this in a powerful way. [Presentation]

Through these activations, we've reached 80 million consumers in 10 days. That represents 50% of the legal purchasing age population in Brazil. It was fantastic to see Johnnie Walker delivering strong double-digit growth in Brazil in fiscal year '21: both performing strongly in the on-trade channel as it recovers from the impact of COVID-19 and maintaining a resilient performance in the off-trade. I am confident in the continued brand excitement and sustainability of future growth for our scotch category. Back to you, Cristina.

Thanks, Alvaro. The second area I'd like to talk to you about within scotch is brand experiences. We know that many consumers want to connect with our brands at a deeper level, exploring where they come from and how they're made. Experiences can start as well as strengthen the relationships consumers have with a brand. They're critical to our omnichannel strategy, and so we think through and obsess about every aspect and every component of them. Whether it's in-store, in a bar, at an event, at home or online, we want people's experiences to be meaningful, dynamic and seamless and to show up in new and innovative ways. The pinnacle of experiencing scotch whisky is to travel physically or virtually to the place where it's made and to meet the people who make it. Johnnie Walker Princes Street is the centerpiece of our investment in scotch whisky tourism. It is quite simply Diageo's most ambitious brand experience to date. Situated in the heart of Edinburgh, it is a 70,000 square foot celebration of the Johnnie Walker brand and its amazing story, which started in small Scottish town and spread around the world. It's an incredible space, and I'd love for you to hear it from Edith Bowman, a popular Scottish celebrity. [Presentation]

We knew that to reach the largest possible global audience, the experience also had to happen in the virtual world. So we put as much thought and effort into crafting the virtual experience, as we did into the physical one, ensuring each was both meaningful and memorable. Virtual guests to the grand opening were able to explore a gamified version of Johnnie Walker Princes Street, which included touring the location via 3D virtual representations, learning about their flavor profiles and chatting with our global brand ambassadors. They even received their own highball kit to provide these essential sensory element of the tour from the comfort of home. During our launch, we reached 3.6 billion consumers, changing the way many of them think about Johnnie Walker and scotch whisky. We've brought the same care and attention to detail to all of our brand homes. I'd like to encourage you to visit these amazing experiences. From the Lagavulin distillery in the Isle of Islay to the recently restored and reopened Brora ghost distillery in the Highlands. Diageo has a rich collection of distilleries, proudly staffed by a passionate community of whisky makers. Beyond excite and experience, we also engage. This is all about the genuine one-to-one connection, which we know is key to building true brand loyalty. Today, we are using our digital platforms to drive engagement with our scotch portfolio. We are providing personalized connections with whisky lovers, enthusiasts and premium collectors as well as the opportunity for them to purchase. Malts.com is the online home of our iconic malts, including Cardhu, Lagavulin, Mortlach, Oban, Talisker, The Singleton and many others. Over the last few years, we have mined our data to understand what consumers want from this platform. The insight was that they want true one-to-one relationships to provide personal connection to the authentic places and people behind our brands. We have reworked our content to now focus more on our distilleries, our distillers and our blenders to engage more deeply with consumers. We also now offer exclusive releases and curated experiences at Malts.com. For example, distillery-led innovations, like the Four Corners of Scotland collection and the Legends Untold series have been made exclusively available on the site, either completely or for a period of time. We are also producing a pipeline of direct-from-distillery innovations through sell-through direct-to-consumer and e-marketplace platforms. And we found that by driving connection, we are also driving more sales. Our sales on the Malts.com site tripled, we doubled our conversion rate and we increased repeat visits, a very encouraging set of results. And we use consumer relationship marketing tools to reward loyal shoppers and to maintain our ongoing relationship with them. In Great Britain, for example, we sent an exclusive e-mail about the launch of the Lagavulin Offerman Edition to the highest propensity consumers, and it sold out in just 6 minutes. We've set an ambitious plan to expand this personalized direct-to-consumer engagement around the world. Our omnichannel approach of creating excitement, memorable experiences and deep engagement is delivering on our strategy to reignite scotch for consumers. We are applying the same principles to one of our most important constituents, the bar professional. Through the challenges of the last 2 years, we have remained fully committed to the on-trade. Traditionally, this is where our brands have been built and where consumer loyalty and preference have been created. And we believe that this will continue to be true. Socializing in person will remain very important to people. The fully omnichannel world is fast paced, and we have to continue pushing the boundaries for our innovation to continue recruit and reengage consumers. To this end, we have built a market-leading, sustainable innovation model to bring new engagement, excitement and experiences to consumers. We use the deep consumer insights I spoke about earlier to develop purposeful innovation that drives long-term sustainable growth, strengthens our brand equity and wins market share. Let's take a look. [Presentation]

Our innovation stretches well beyond the amazing liquids, formats and packaging you just saw. The tools and capability that underpin our consumer understanding are also powerful sources of innovation insight. We consider multiple horizons simultaneously, balancing short-term and long-term opportunities and encompassing everything, from the core of our business today to the furthest edges of our business tomorrow. In all of these, we are guided not just by insight, but by 3 important principles for sustainable innovation. First, innovate expansively. We extend the footprint of our brands beyond their core and beyond their liquids. Second, innovate with purpose. We broaden celebration beyond the moment of consumption. Finally, innovate to premiumize. We elevate the social experience every day and every way, making it special, making it scalable. I'm going to show you some ways these principles have come to life. We have found that consumers are intrigued but sometimes slightly intimidated by the world of whisky. What's Your Whisky is a great answer to that. It uses artificial intelligence to help people find their perfect whisky by matching their flavor preferences with the perfect brand for them. We're partnering with key customers such as Amazon, Alibaba and major retailers in the U.S. and Great Britain to integrate this technology onto their platforms. Last year, an online exclusive with a leading Great Britain retailer resulted in their whisky category share growing almost 7 points faster than overall spirits and resulted in over 100,000 unique consumer profiles input into their system. Based on this success, we are expanding this technology to the broader world of cocktails with our Find your Flavor tool. We also know that people want gifts that show how much they care. Our perfect gift guide is a fantastic tool to help select the right gift for that special occasion. This is currently an integral part of our U.S. consumer site, The Bar, an online direct-to-consumer site, which we operate in partnership with ReserveBar. To make gifts even more special, we are giving consumers the ability to personalize them, whether on the bottle, the gift tag or the liquid itself. Our service, Message in a Bottle, leverages new digital technologies and allows consumers to personalize a bottle of Johnnie Walker with a bespoke video message. By uploading a selection of pictures and a message from a smartphone or PC, Message in a Bottle creates a 30-second video. A gift label on the bottle with a QR code allows the recipient to access the virtual personal message and even download it and share it on social media. It's a novel way for family and friends to celebrate some of life's unforgettable memories and occasions. We've also taken digital personalization to a whole new level with a machine that enables consumers to upload their selfies onto the foam of their pint of Guinness or their draught cocktail, and gives our customers like Waxy O'Connor's in Manchester, a unique and novel way to express their brands and delight their consumers. An important aspect of innovation is ensuring we deliver our brands with ease. Easy ways to have a great drink and enjoy it, simple and faster ways to prepare and serve fabulous drinks with our brands. This insight has recently driven disruptive innovation in this space. Let me share a few recent examples. Draught cocktails are enabling more bars to serve consumers quick and high-quality, delicious cocktails. Guinness NITROSURGE just piloted in Ireland, recreates our iconic pour at home. And Guinness MicroDraught, which is essentially a keg so small, it fits in a can, uses cutting-edge technology to bring beautiful, fresh Guinness draft on tap to outlets no matter their size or setup. Our innovation approach is to invest for the long term. We will continue exploring, expanding and ensuring that we are with our consumer everywhere they go, everywhere they want to go and even to places they've not yet imagined. Sam Fischer is now going to show you how we are building for the future in China and pushing the boundaries of our consumers' imaginations. Sam.

Thanks, Cristina. The successful transformation of our innovation model in the U.S. and elsewhere has enabled us to take learnings and insights to other markets like Greater China. As you heard earlier from Ivan, Greater China is a key strategic market for Diageo. And over the last 5 years, it has increased from 2% of Diageo's net sales to 5%, and I anticipate this growing to 10% over time. We have built strong foundations for growth in recent years, and we continue to invest in the critical enablers for future growth, including innovation and research and development. In 2021 alone, we have invested in a new regional logistics hub in Shenzhen, and we are investing in a new state-of-the-art research and development center in Shanghai set to open in 2022. This R&D center will help us to create a dedicated innovation ecosystem in China for China, enabling us to gain deeper consumer insights on areas like ingredients, serve and sensory perceptions across baijiu, whisky and other categories. I've spoken before about the exciting opportunities we see for scotch whisky in China. We've seen this through the emergence of whisky bars and boutiques in tier 1 and tier 2 cities across China, the growing popularity of whisky auctions and the successes of our own whisky summits and similar events. This month, we were delighted to announce a $75 million investment to build Diageo's first whisky distillery in China. The Diageo Eryuan Malt Whisky Distillery in Yunnan Province will produce our first Chinese-origin single-malt whisky. This is a strong demonstration of our commitment to bring our whisky expertise to China and another example of our investment to develop the whisky category in China. This distillery will be carbon-neutral when it opens, demonstrating our commitment to doing business the right way from grain to glass. We carefully selected Eryuan as the best location to produce our whisky, given its temperate climate and rich biodiversity and access to natural spring water. It will enable us to craft a world-class, Chinese-origin single-malt whisky that will delight premium whisky lovers in China and beyond. As you can see, we are truly embarking on the next phase of our Greater China journey, where we are investing in what we see as critical enablers to deliver growth and realize our Performance Ambition in this fast-moving and highly competitive market.

So that's how we bring it all together, the consumer insights, the creativity with precision, the understanding of the consumers' journey in an omnichannel world and the constant focus on reinvention and innovation. But that's not all. Our brand-building efforts are made more powerful through how we connect it to our commercial execution. A key differentiating factor for Diageo is our ability to bring to life and execute the great brand work we create for our consumers with excellence and precision. Our execution capabilities ensure that the work we do to excite, to create memorable experiences and to drive personalized engagement, reaches consumers in a way that feels high quality and special, and as a result, translates into a purchase. It's about having the right offering at the right place at the right time. As regional leaders, Debra and Alvaro work hand in hand with the global marketing teams to ensure that this final step of brilliant execution is delivered. Debra, over to you.

Thanks, Cristina. I'm going to talk about some key initiatives in North America that are fundamental to our executional success. We know our customers are looking for more insight than ever to grow in our category; and that by listening to and collaborating with them, we raise the standard of our execution. In support of this, we recently opened a state-of-the-art customer collaboration center just outside New York City. It is an interactive physical space, and it not only inspires our customers in a vibrant data-driven setting, but it also enables us to engage with customers at a new level, leveraging technology to build plans for growth. We are able to bring consumer occasions and shopping environments to life at in-person sessions with customers where we explore advanced analytics, virtual reality and holographic display technology. Another area where we have really strengthened our capabilities in recent years is our smart use of data and analytics. This has significantly increased our effectiveness in reaching consumers. Cristina showed earlier with Baileys how the key to building our brands and driving penetration is getting the right message to the right consumers in the right location at the right time. Specifically, data enables us to locate where people are in the moment, and we can target them based on their past and predictive future behavior. This means we can remind consumers about our brands at key purchase decision-making times. We know through measurement that this makes our media more effective, which means we get a higher sales volume from the same number of impressions. It also makes our media more productive, so that we get greater sales volume from the same spend. On Buchanan's, for example, we targeted consumers in markets where the brand was growing well with media that only showed up to consumers in those specific cities and featured customized creative with specific city landmarks and language. This nuanced local activation resulted in ROIs well over $2 for every $1 spent. We also use data analytics to determine what we call key battlegrounds. Battlegrounds are the locations or customers for a specific brand. This can either be where the brand is already strong or where it is under-penetrated, and we see an opportunity to win in the future. We then consolidate and focus all activity for that brand in the battleground. This ensures a consistent approach and enables us to maximize our spend productivity. For example, our data analysis identified that Johnnie Walker was underperforming in New Jersey. Specifically, we saw an opportunity to improve the penetration of Johnnie Walker Black Label. Having identified New Jersey as a key battleground, we executed hyperlocal marketing and programming across key ZIP codes and accounts. In fiscal '21, as a result of this approach, sales growth for Johnnie Walker in New Jersey grew over 20% and ahead of the strong double-digit growth that the brand achieved nationally. Back to you, Cristina.

The advancements Debra showed in the U.S. are really game changing. Equally powerful has been the pace at which we have built a digitally enabled, customer-focused organization. We started this in the U.S. in 2019, and we are rapidly rolling it out. By the end of fiscal '22, it would be fully deployed across our global markets. What we have built is an industry-leading execution ecosystem, which we call EDGE, Every Day Great Execution. EDGE is a suite of proprietary and highly advanced digital tools that enable us to execute with precision at the individual outlet level. This includes Diageo One, our business-to-business 24/7 customer engagement portal. We are continually testing, learning and expanding the functionality of our tools. As an example, in Kenya, we are using these tools to build a direct-to-consumer on-demand delivery service. Our EDGE tools are really transforming our business and our route to consumer by expanding our coverage, reducing our costs and simplifying our sales processes. Once fully deployed, we will have doubled our total customer called-on universe. This means you will soon be able to find us selling our brands to about 0.5 million more outlets than you would have done just 3 years ago. And more than 40% of our sales calls are now done digitally, up from just 5% a few years ago. Let's take a look at a video that demonstrates these tools in action. And then Debra and Alvaro will talk through the successes of EDGE in the U.S. and in LAC. [Presentation]

As the first Diageo market to implement EDGE, we are well advanced on our journey to transform our route to consumer by effectively leveraging the EDGE tools. EDGE is fully deployed across the U.S. spirits business, and we are expanding to Canada and our beer business later this year. We have continued to lead by adding new functionality, data sources and intelligence and are honing our analytics and insights ability. As a result, we consistently see the outlets that used our digital analytics outperforming those that didn't. When a retailer lists a product we recommend through EDGE, it's worth 3x more sales than a non-recommended product. Alvaro is now going to share more about how EDGE is rolling out in Latin America.

Thanks, Debra. Across Latin America and Caribbean, the customer landscape is very fragmented. It is dominated by mom-and-pop stores and local bars. Our success in Latin America depends on our ability to reach out and influence these outlets. And EDGE is enabling us to reach more customers more efficiently and effectively. It has also simplified our business and improved the way in which we support our sales teams to serve our customers. And we know this because we have consistently heard that from our sales teams, retailers and customers. I am going to share some of their feedback with you now. [Presentation]

Taking Colombia as an example, the introduction of EDGE 365 has driven improved business returns for both Diageo and our customers, and it has simplified our business. We have seen that for our customers using EDGE 365 tool, the sellout of Diageo brands has increased by over 30% on average compared to those that don't. We have improved the number of outlets holding our minimum product recommendation from 28% to 56% over the last 12 months, and we have expanded the reach of outlets by over 40% in fiscal year '21. In terms of simplification, it has enabled us to prioritize outlets based on both Diageo and customer business value. And it has reduced the number of applications that salespeople have to navigate during a call and made contract management easier. These simplifications have enabled our teams to increase the number of calls that each sales rep makes by an additional 1 call per day over the last 12 months. That's the equivalent of a 16% uplift, a significant improvement in productivity. As a result of this, we have invested in our sales force, increasing the number of sales reps and plan to increase reach of EDGE to over 135,000 outlets, up from 55,000 today. This would take our total EDGE 365 coverage to around 1/3 of the market. Beyond Colombia, we are continuing to roll out EDGE 365 and Diageo One throughout Latin America and Caribbean. Back to you, Cristina.

Thank you, Alvaro. In closing, these are the key elements that our teams focus on that drive sustainable, long-term brand-building and growth of our brands: a deep understanding of consumers using proprietary tools and data analytics; combining creative flair with advantaged digital capabilities to connect with consumers at the right time in the right place with the right message; connecting with consumers across multiple touch points; delivering cutting-edge innovation against consumer insights and opportunities; and deploying our content experiences and innovation with best-in-class execution. Thank you for joining us today. I really am so proud of our amazing brand-building and the teams that deliver this. And I am also very excited to continue on our journey and confident that our capabilities, our creativity and our amazing execution will enable us to deliver great future success.

Hello, and welcome to the Supply Chain Excellence session of our 2021 Capital Markets Day. I'm Ewan Andrew, President, Global Supply Chain & Procurement and Chief Sustainability Officer. I'm joined today by John O'Keeffe, President, Africa and Beer. We are delighted to be able to spend the next 30 minutes or so providing a deep dive into our supply chain and procurement capabilities around the world. The portfolio of brands we produce means we are constantly planning for the short, the medium and the long term. We produce beers, gins and vodkas which are on a ship within a matter of hours, at the same time as planning and running supply chains that support 12-year-old Johnnie Walker Black Label. Within our footprint, we have a significant scale operations, which utilize state-of-the-art high-speed lines. For example, our line in Shieldhall can produce 600 bottles per minute. We also run slower craft and handmade lines that deliver fewer than 4 bottles per minute of our most prestigious luxury products. Our supply chain teams are the guardians of our brands' quality and craftsmanship. Their skills and experience range from the craft of barrel-making and coppersmithing to blending scotch, brewing premium beer, designing packaging, and ensuring our complex modern supply operations are working to the highest standards. Our diverse supply chains are one of Diageo's key drivers of competitive advantage, enabling delivery of our performance ambition across the markets where we source, make and sell. To fuel this ambition, resiliency, agility, efficiency, customer-centricity and sustainability are at the heart of everything we do in supply chain and procurement. We produce a wide range of fantastic products globally for export and locally for domestic markets across geographies, categories and price points. But what does it take to produce these brands? What is the story behind each bottle? Let's take a quick look. [Presentation]

We are focused on building resiliency into our value chain. Through a more tailored and segmented approach to servicing our customers, we are simplifying our business, liberating our teams and maximizing the use of constrained capacities. We're also applying a sharper analysis of the products that drive the most value for our customers and for our markets. Together with our customers, we identify priority products that we aim to ensure are never out of stock, and therefore should receive the very highest levels of service, what we call our never-be-out stock-keeping units, or SKUs. As a result of this segmentation process, we have improved our case fill rate for these SKUs by over 2%, achieving rates that are considered leading when benchmarked. Working hand in hand with our suppliers and customers, we can unlock emerging capacity constraints and fill any continuity issues with alternative offerings. When we do this well, it continues to improve our reputation with customers. We welcome every opportunity to collaborate on wider value chain initiatives, such as joint sustainability and cost reduction goals. For example, we moved from plastic to paperboard packaging in beer, which will eliminate 600 tons of plastic per year as well as increasing our capacity by 30%. We've had a fantastic response from our customers who are in support of the removal of plastic and are seeking more sustainable packaging alternatives. Our scale and the strength of our relationships with our suppliers is a source of competitive advantage. In ocean freight, where we are the largest Scottish food and drinks sector exporter, our relationships with carriers and ports maximized our access to shipping capacity during the recent global shipping crisis. In recent months, glass and other packaging raw materials have been impacted by industry shortages in the United States and Europe. Through renegotiations with our existing suppliers and onboarding of new suppliers, our teams in the U.S. have increased glass capacity by approximately 25%. Furthermore, our dedicated glass furnaces with key suppliers in Europe give us the ability to prioritize our own portfolio needs. A culture of agility and enhanced insight allows us to adapt our supply chain to respond to the changing customer needs and consumer trends. One of our most recent and innovative supply chain solutions is Guinness' biggest dispense innovation since the launch of the widget 30 years ago. Guinness MicroDraught is a game-changing innovation that uses a keg so small, it comes in a can. While the Guinness used is brewed in exactly the same way, instead of placing it in a traditional keg, it is delivered in specialized cans which are simply slotted into the MicroDraught unit, ensuring a perfect pour every time. This innovation will introduce Guinness to thousands of additional outlets which do not have the required dispense equipment to serve our product today, whilst assuring the great taste of draught Guinness with every pour. In Africa, our teams saw opportunities to win in the ginnaisance movement in Kenya. In response to the rapidly growing interest in the gin category, our commercial and innovation teams worked seamlessly with the supply team to launch Chrome Gin, a premium offer at mainstream pricing. Launched successfully amidst the global pandemic, a nationwide lockdown and social distancing, Chrome Gin now boasts a 16% value share of the Kenyan gin market. Our investments in technology continue to power progress with our supply chain, bringing capabilities which support an agile response to changes in the environment in which we operate. A great example of this is our digital investments in real-time shipment tracking, which within just 1 hour enabled us to determine the status of all global customer shipments during the Suez Canal blockage. We identified that the ship blocking in the canal did not contain Diageo products, but that we would be impacted by the resulting backlog of vessels. This immediate insight allowed us to proactively communicate with our shipping lines and our customers. We used a virtual incident room within the tool, prioritizing our shipments and putting contingency plans into action. The technology is now at an exciting stage where we are starting to integrate with our customers to bring together trade terms and cost-to-serve initiatives as well as real-time transport performance visibility. Our embedded culture of everyday efficiency continues to generate savings that we can reinvest smartly, adding value back to the business. Since fiscal 2017, supply and procurement projects have contributed to approximately half of Diageo's total efficiency savings, averaging GBP 200 million per annum over a 5-year period. Procurement initiatives have delivered savings through partnering with our suppliers on joint value creation initiatives as well as mitigating inflation through hedging on key commodities. In manufacturing, our externally admired Manufacturing Excellence, or ManEx program, drives best practice efficiency across labor utilization, utilities and waste as well as through reviews of capacity and supply footprints. The balance is made up of logistics optimization and product redesign where, for example, we have taken an industry-leading position on glass lightweighting within our Johnnie Walker portfolio. For our Johnnie Walker Gold Label Reserve bottles, we are steadily increasing the percentage of recycled glass contents, moving from 0% to 40%. The bottles are now produced on higher-capacity machines, improving efficiency by 260%. Technology plays an ever-increasing role in delivering efficiency where the process flow is already fully optimized. We have deployed automation in our physical operations, including our investments in automated guided vehicles for the handling of finished goods in North America, which has delivered $1.4 million in annualized benefits. Even in more traditional environments where digital advancement is historically slower, we are driving efficiencies. For example, we are trialing automated racking solutions in our scotch cask warehousing. Racking shuttles will automatically select and bring the right casks of matured whisky to our operators, driving greater capacity utilization and speed in our warehouses. We are also employing blockchain technologies in our prestige portfolio and have recently implemented digital certificates of authenticity. The digitization of certificates provides our customers and our consumers with real confidence and gives Diageo full digital traceability for every bottle. We continue to implement targeted analytics projects, leveraging data science and artificial intelligence to drive performance. One of many examples in our spirits business includes improving fermentation yield efficiency by 2% at our Cameronbridge grain distillery, delivering GBP 200,000 of savings benefit by using mathematical modeling to target the process inefficiencies. Overall, our strong initiative pipeline and focus on everyday efficiency plays an important role in offsetting the inflationary pressures facing our business. When our customers grow, we grow too. We work closely with our customers to help grow their businesses and build sustainable ways of working. Customer connectivity is facilitated through our Diageo One platform, which provides a single digital point of engagement. The platform gives our customers the power to view our portfolio of SKUs, place new orders, review historic orders and view invoices and billing. Through great insights and execution, our customers have access to tools and the data that help them generate value and accelerate decision-making. Our actions are having a significantly positive impact with our customer base. In the most recent Advantage Group International U.K. Beer, Wines and Spirits report, Diageo ranked #1 for supply chain and customer service in the U.K., up from 15th and 16th places, respectively, versus last year. Overall, we were placed 4th in the survey, up 9 places from 2019 and 7 places ahead of our nearest spirits competitor. For our business to be sustainable, it needs to create enduring value for us and for those around us. Our Society 2030 spirit of progress ambitions take us further than ever before in our drive to accelerate to a low-carbon world, preserve water for life and become sustainable by design. To achieve our ambitions, we will need to partner across our entire value chain from grain to glass. The journey towards our industry-leading ambition to achieve net zero carbon emissions from our direct operations by 2030 is well underway. Three of our distilleries, Oban, Royal Lochnagar and Brora are already achieving carbon-neutral status. We also opened our first carbon-neutral distillery in North America in September. At 72,000 square feet, the bullet distillery in Lebanon, Kentucky is one of the largest carbon-neutral distilleries in North America. The distillery uses electrode boilers, powered by 100% renewable energy and uses 0 fossil fuels in the production process. It also boosts state-of-the-art automation. For example, electric forklift trucks and real-time virtual data technology, which helped reduce our operating costs by over $350,000 per annum. At COP26 earlier this month, we announced a partnership with the government of Quebec and Canada, along with Hydro-Québec, to support the electrical conversion of our value field manufacturing plant to become carbon neutral by 2025. The project will eliminate the consumption of approximately 21 million cubic meters of natural gas and 1,500 liters of heavy fuel oil. This is equivalent to an annual reduction of nearly 40,000 tonnes of greenhouse gas emissions in Quebec or taking more than 11,000 cars off the road for a year. Through our ambition to be sustainable by design, we are continuously looking for ways to partner and innovate to deliver more sustainable solutions. Recognizing that partnerships will be critical in driving progress, our Diageo Sustainable Solutions platform invites innovators to collaborate with us to develop their ideas for more sustainable technologies and solutions across the supply chain. We are piloting 6 projects and are looking forward to working with these innovators in the development of solutions that will support our 2030 sustainability ambitions. We are committed to preserving the natural resources on which we all depend and helping to create a more sustainable world. We expect to invest up to GBP 1 billion of capital over the next decade in environmental sustainability initiatives. The tequila category is a great example of how we have been able to leverage our core capabilities to deliver supply chain excellence. Tequila is one of the fastest-growing categories in the U.S. As you heard from Debra earlier, we have reacted with agility in response to changing consumer trends, and our investments in the tequila category has been a key growth enabler for our business. Our incredible market-beating growth presents both an opportunity and a challenge for our end-to-end supply chain, a challenge, I believe we are well placed to meet. Our procurement teams have implemented hedging strategies, which protect us from the cyclical impacts of agave pricing. And we have recently announced plans to expand our manufacturing footprint in Mexico by investing over USD 0.5 billion in new facilities. This exciting investment will build further resiliency into our supply chain, supporting growth in the category by expanding our production capacity. It will also support our Society 2030 sustainability goals by including environmentally friendly technologies, including solar and biofuel and will create over 1,000 jobs. In pursuit of increased efficiencies and improved sustainability, our teams are continually assessing and implementing opportunities to play in traditional and modern processes. For example, we have introduced the use of drones, known as, agribirds, which count a number of agave plants in a field with far greater accuracy and efficiency than manual processes. The agribirds also have important security and sustainability applications, allowing us to monitor the life cycle of each agave plant. In the future, we plan to use this drone technology at real scale. For example, we are assessing ways to use the drones to analyze plant health and apply fertilizer with precision, minimizing our impact on the soil and further supporting our ambitions to deliver sustainable agriculture. We are also proud to have a positive impact on the societies in which we operate. One of our agave suppliers has committed to achieving equal conditions and opportunities for both male and female field workers in historically male-dominated industry. As Debra mentioned earlier, we expect continued momentum in tequila, underpinned by the strong consumer trends. The actions that we are now taking and have those that we have planned for the future will enable us to meet customer and consumer demand in North America and around the world. I will now pass across to John who will share further examples of how our supply chains are helping our business win in Africa.

Thanks, Ewan. We operate 13 breweries in Africa and 10 facilities, which provide blending, malting and bottling services. We also distribute beer and spirits through several third-party relationships across the region. To help grow our business, nurture our brands and create new products, we directly employ over 4,000 talented people. We have scale, depth and a significant manufacturing and supply footprint as a committed local investor. Our operating model builds resilience into our African businesses. And we drive smart investments through local manufacturing, innovation and partnerships to unlock growth. Our resilient and thriving agriculture is fundamental for Africa. In our operations, we seek always to enhance productivity and build sustainable supply chains. Our local raw material, or LRM strategy, is based on the premise that we work to preserve the natural resources on which our long-term success depends. In 2021, we source 80% of the agricultural raw materials used in our African operations locally, up from 50% in fiscal 2013. This means that we are importing proportionately fewer raw materials from Europe and promoting economic development in local communities whilst maximizing the tax benefits of local sourcing. Our LRM sourcing agenda builds resilience and security into our value chain across Africa. Let's take Ghana, for example. The Ghanaian cedi devalued significantly over time, increasing the percentage of locally sourced raw materials used in the production process is, therefore, an effective natural hedge against foreign exchange risk. We recently commissioned a state-of-the-art brewhouse for our business in Ghana, which will materially increase our LRM usage. The new facility will boost the current production capacity by more than 1/3. In addition, we can now brew all products across both of our sites, increasing flexibility in our production as well as creating efficiencies to decrease logistics costs. Over time, Ghana has grown as percentage of LRM usage from 12% to 60% in fiscal 2021. Approximately 30,000 small holder farmers have already been positively impacted by our LRM program. The ambition for the new brewhouse is to reach 70% of materials sourced locally by 2024, creating additional local jobs in agriculture, manufacturing and in distribution and sales of our products. Our LRM programs builds deep-rooted connections with our communities. In partnership with farmers, local and national governments, our businesses provide agricultural skills and resources, building economic and environmental resilience for our communities in which we live, work, source and sell. Our competitive advantage in Africa is most certainly our total beverage alcohol offer. This creates agility in our portfolio offering and enables us to respond at pace to changes in our consumers' interests and preferences. We are #1 in retail sales value for both international premium spirits and mainstream spirits in sub-Sahara in Africa. For mainstream Spirits, we're almost twice the size of the #2 player in sub-Sahara Africa. For international spirits, we are 1.6x the size of the #2 player. The development of the TBA platform for growth is exemplified in our business in Nigeria. In fiscal 2016, 55% of our business was beer, with only 9% in the international premium spirits and mainstream spirits categories. Supported by investment in supply and production facilities, our category split at the end of fiscal 2021 was 36% beer and a 23% in international premium and mainstream spirits. A key enabler to delivering this portfolio shift in Nigeria was the creation of local mainstream spirits production capacity. In Nigeria and in other key markets, we have invested in stand-alone bottling facilities, nicknamed, The Cube. Each Cube consists of 5 preconstructed shipping containers. They are bolted together on site to provide a total spirits blending and bottling plant that can be immediately put into operation. These flexible and efficient mobile spirits production units provide up to an additional 600,000 equivalent units of capacity and allow us to test demand for local spirits while minimizing capital deployment. In Nigeria, as you can see from the graph, we've applied a modular test-and-learn approach to our mainstream spirits strategy. Following installation of a Cube in fiscal 2014, we made additional staggered investment into fixed lines of supply in fiscals 2017 and 2019. A further capacity expansion project is planned for this fiscal year. When it is completed, our production capacity for mainstream spirits will have increased by 147% since fiscal 2017. Today, Guinness Nigeria remains the only TBA business in Nigeria, manufacturing and selling drinks across all categories. Beyond Nigeria and across the wider region, mainstream spirits is a sizable and growing opportunity. We recently installed a Cube in our business in Tanzania, a major milestone in our delivery of our spirits ambition in that market. In line with our commitment to the inclusion and diversity agenda, we have taken the bold step to onboard an all-female team to run operations of the Cube. The 14 strong team will run the entire end-to-end operation, including spirits processing and packaging, quality assurance, asset care and warehousing. We believe that this will be the first female-only operational facility, not only in Diageo Africa but in FMCG across the continent. Finally, hand-in-hand with disciplined capital investment is our strong management of costs. Nigeria is a high inflation environment. The fiscal 2021 CPI in Nigeria represents a 5-year CAGR of 14% versus fiscal 2017. Despite this, the team have managed to hold the cost of goods per equivalent unit flat over the same period. Across all our markets, our goal is to win quality market share and to support this growth with disciplined capital investment. In our Tanzanian business, for example, we have been progressively growing beer market share. In addition to top line growth, through strong cost management, we have delivered a significant step-up in operating margin expansion. We have supported the growth in a disciplined manner, laying down additional beer volume capacity in a modular fashion, whilst driving huge improvement in our capacity utilization which has improved by almost 90% between fiscal 2017 and fiscal 2021. Having now established a strong presence in beer, we are now applying a targeted approach to our mainstream spirits strategy in Tanzania. Guinness offers a premium, differentiated, unique brand for African business to leverage. In fiscal 2021, Guinness in Africa grew 32%, and strong marketing. Supply chain efficiencies and route-to-market optimization have all played a part in delivering this success. We constantly endeavor to listen to feedback from our customers and our consumers. Let's start with flavor. Improved flavor means better tasting Guinness. We have worked on improving the performance of critical parts of the production process that controls flavor. Since fiscal 2018, we have tracked above our internal technical sensory scores for taste, peaking at 8.5 in fiscal 2021 versus our internal target of 7.5. Freshness is also a key driver of beer sales. I'm glad to share that our beer is fresher than ever before. We've optimized our route to market, reducing the length of the chain from brewer to consumer as well as ensuring more depots closer to the key points of consumption. We have maintained high levels of service to our distributors, consistently delivering case fill rates of plus 98.5%, which is considered leading when benchmarked. As Cristina mentioned, we consider ourselves experts in the art of brand building and in innovation. Our Guinness brand puts the consumer at the heart of its premise and offering. The potential to Guinness through innovation has never been stronger. Guinness Smooth is the newest member of the Guinness family, bringing a lower strength, sweeter, more price accessible Guinness variant to the region. Now in 6 of our African markets, Guinness Smooth grew 80% in fiscal 2021. In fiscal 2021, Guinness volumes for the region were 1.1x the volumes in fiscal 2019. I believe the brand has further runway for growth with African consumers and I'm excited about what lies ahead for Guinness in Africa. As Ewan has mentioned, our commitment to pioneering grain-to-glass sustainability is central to our strategy. Doing the right thing, the right way is the foundation of our business. And across Africa, we have put sustainability at the top of our supply agenda. We have made major investments in innovation and sustainability, driving efficiency and best-in-class operations. We have invested in state-of-the-art water treatment plants. And we are switching from fossil to renewable fuels, looking at ways to harness energy generated from solar and biomass plants. Water is our most important ingredient. Preserving this critical resource, particularly in water stressed areas has been a strategic priority for many, many years. Our grain-to-glass approach supports farmers, improves water use efficiency in our own agricultural and production operations, replenishes water in water stress catchments and provides clean water to our communities. In total, we've invested nearly GBP 20 million in water recovery across the region over the past 2 years. Since fiscal 2007, we've gone from using 9.5 liters of water per liter of production volume to just 3.6 liters in fiscal 2021. Our 2030 ambition for water efficiency is to deliver a 40% improvement from fiscal 2020, which equates to a water usage of just 2.6 liters per liter of production volume. At our Port Bell site in Uganda, our water treatment plant is delivering outstanding results. In 2005, the site used 8.4 liters for every beer produced. Now it is down to 3.2 liters. Now turning to carbon. Ewan has spoken about our ambition to reach net zero carbon across our operations by 2030. For our African operations, we are developing site-by-site road maps for carbon neutrality. For carbon between fiscal 2007 and fiscal 2020, we delivered a 16% reduction in carbon emissions. We are targeting net zero in our Scope 1 and 2 emissions by 2030. We're in the process of installing 3 biomass boilers, an investment of almost GBP 33 million at our East African breweries. Due to come online in late fiscal 2022, the biomass boilers will reduce our carbon footprint by 46,000 tonnes reducing our Scope 1 and 2 carbon emissions by 23%. On our journey to net zero carbon emissions by 2030, we also intend to increase our solar capacity. At our new facility in Kisumu, Kenya, 8% of the site's electricity consumption is now generated from on-site solar panels. We've extended this pilot project across our other African markets. Our amazing new solar network at our Achimota brewery in Ghana delivers 10% of electricity for the site. Africa represents one of the most exciting opportunities for Diageo over the decades to come. We expect to see growth of more than GBP 200 million in the legal drinking age population by 2030. 1 in 4 people in the world are expected to be African by 2050, with the African population doubling every 27 years. With over 100 brands sold in over 30 countries at all price points in beer, spirits and nonalcoholic categories, the depth and breadth of our product portfolio is second to none on the continent. Our strategy is to grow beer fast and spirits faster, and with the right agile and efficient supply structure alongside, I am confident that this is what we will do. Back to you, Ewan.

At Diageo, we never stand still. We are on a continuous journey to transform our supply chain, driving collaborative, simple and agile ways of working, which deliver improved business performance. Our business will continue to evolve to meet the future needs of our customers and our consumers. We will do this by continuing to invest in essential digital assets, continuing to grow trust and reputation in the societies where we operate as well as leading through inclusive and diverse teams. Our proven agility has allowed us to respond at pace, servicing demand in the complex and volatile environment over the last 18 months. I am proud of the way our teams have responded to the challenges that we faced, and I'm excited by the new opportunities to win that this scale of disruption has offered.

Hello. I am Mairead Nayager, Chief HR Officer for Diageo. I joined the company in 2006 and have held roles across Africa and Europe before being appointed to my current role in 2015. In this presentation, I will bring to life Diageo's unique culture. And with the help of Hina Nagarajan, our Managing Director and CEO of United Spirits in India; and John Kennedy, our President of Europe and India, we will provide examples of our culture in action, driving Diageo's performance and creating competitive advantage. Today, Diageo is a brand- and consumer-obsessed organization, delivering strong performance and growth with a restlessness to always do better. We have an accessible purpose to celebrate life, every day, everywhere, providing a holistic platform for us to be the best we can be at work, at home and in our communities. And an inspiring performance ambition to become the best performing, most trusted and respected consumer products company with clear consistent business priorities, driving high performance expectations, all of which is underpinned by strong values rooted in competence and character. In this presentation, we will show how the passion our people have for our brands and their engagement with our purpose and performance ambition creates an ownership mentality, fueling our desire to be the closest company to consumers and customers. We will show how we are building agile solutions-oriented teams able to meet the needs of our consumers and customers and drive growth. And we will show how we are winning and retaining talent in a fiercely competitive market. Achieving our performance ambition means delivering efficient growth and value creation for our shareholders, while doing business the right way for all of our stakeholders. Our people are the single biggest determinant of our success and critical to the delivery of the strong outcomes underpinning our leveraged growth model, which Lavanya will discuss in her presentation shortly. All of our 27,650 employees are very clear on the role they play in driving performance, both on the top and bottom line. For example, in our most recent global employee survey in fiscal '21, 84% of employees said they see a clear link between their work and Diageo's immediate business priorities. This is 13% higher than the external benchmark. In addition, 84% of employees said, they know what they can do to help Diageo win market share. Clarity of strategy and engagement has been key to the consistency of our performance delivery. Our people are highly engaged. Our recent survey showed 89% of our employees are proud to work for Diageo. Our overall engagement score increased by 1 percentage points to 81%, and our employee advocacy score has risen by 5 points since 2019. And just as our organic net sales have grown over the last 5 years, setting aside F '20 for COVID, of course, our 81% overall engagement score is not a one-off. Overall engagement has increased since fiscal 2017. High levels of engagement across the organization drives accountability for performance delivery. Our people feel and act like owners, no matter the circumstances or barriers they face. Two of my favorite examples of this are from either side of the world. The first took place last year at the start of the pandemic. Our team at the Guinness Open Gate Brewery in Baltimore, Maryland, needed to close their doors to the public due to statewide lockdown. The local team decided to pivot operations to help feed the local community by baking and donating brand for the Maryland Food Bank. 12,000 loafs of brewery bread were baked with 500 loafs donated each week. They also launched a successful curbside beer pickup program to enable local fans to try new beers in a safe, convenient way with all net proceeds over $35,000 benefiting the same Maryland Food Bank. Today, this is a sizable incremental business for the brewery. Alongside local craft beers brewed at the Open Gate, the team extended their innovation to partnerships with local community leaders, to make beers inspired by the flavors of their unique cultures and celebrate local diversity. It is this combination of craft and purpose that sets Guinness apart and has helped drive its market share to 3x the national average. The second example is from Australia, where in March this year, extreme rainfall on the East Coast of Australia led to devastating and widespread flooding in New South Wales. A particularly hard hit customer with celebrations [ with him ], his store was completely flooded. [ Diane Jethro ], their Diageo sales rep, went to help straightaway, and she stood side-by-side with them, helping to clean up the store and recover. They were able to open again in just 18 days, in no small part, thanks to Diane sense of community, ownership and purpose. These are just 2 of the countless stories of our purpose and culture in action through the pandemic. Being obsessed with consumers requires us to have diversity of backgrounds and experience in our talent base. We are committed to creating the most inclusive and diverse culture, not just because it's the right thing to do, but because we believe this commitment allows us to recruit and retain the best employees, achieve better performance and have a greater impact on society. Today, almost 2/3 of our executive committee members are homegrown talent with substantial experience in multiple roles across various markets. Each has worked in at least 3 different markets or regions and as a result, has a broad view of our consumer and customer base. We are building deeper ethnic diversity within our business. 37% of our global leadership population are ethnically diverse, with 8 nationalities represented on our Board and Executive Committees. 11 years ago, the Diageo Executive Committee were all men. Today, women make up 60% of the Diageo Board and 38% of the Executive Committee. And globally, 42% of our leadership population are women. Increasing diversity should be led from the top, but the responsibility for change and the benefits therein must be felt by the whole organization for it to be sustainable. In February, we announced specific performance measures and targets as part of the Diageo long-term incentive plan for our leadership population to drive clearer accountability for progress on diversity. With stretching goals to transform gender and ethnic leadership representation, we believe we will deepen our connection to our consumers, retain and recruit the best talent and increase preference for our brands. We are among the first companies to create such a clear link and direct accountability for our total ESG commitments with our senior management community. We believe the ultimate competitive advantage for any company is a culture that is able to adapt quickly to changing conditions and to finding new ways to succeed with customers and consumers. Our operating model is designed to ensure market general managers are fully accountable and agile in the decisions they make based on local consumer insight and performance opportunity, while, of course, leveraging the best of what Diageo creates globally when it comes to tools, technology, capabilities and insights. As Lavanya will discuss later, over the last 5 years, we have delivered significant savings in overheads that have been reinvested in areas to drive growth. And we've also created a simpler, more accountable organization for our people. As an example, we have significantly improved our spans of control that define how many direct reports a manager or leader has. Moving from an historical average of under 4 direct reports per manager to 7.2 today has driven greater autonomy and faster decision-making across the organization. We are building a culture that empowers every employee to take personal ownership for everyday efficiencies and acting on barriers that get in the way of performing at their best. We launched [ Radical Liberation ] earlier this year to fuel culture that enables speed by taking rapid action to reduce and stop processes and activities that do not add value, add complexity and drain the energy of our people. For example, we've simplified and automated controls for our travel and expenses reimbursement approval process, which has led to a 95% reduction in line manager approvals in less than a month. By removing excessive line manager approvals for IT equipment, annual leave requests and by simplifying processes, such as resourcing and procurement, we are freeing up time, energy and focus. Across nearly 28,000 employees, that really makes a difference. The way Diageo is structured is testament to our consumer centricity. 71% of our total employees are directly involved in the production, distribution, marketing and selling of our products. 75% of employees in our markets work in the front office, for example, sales and marketing. And this number jumps to 80% plus when we include our third-party sales teams in markets such as North America. Our operating model gives the general managers of our markets the freedom to win locally and ensures we stay as close as possible to consumers and customers. You'll hear from John shortly on how we have reorganized our European business to get even closer to consumers and customers. We channel our resources to the highest growth opportunities at speed. Overall, we've added 90 new roles into the U.S. and China in the last few years to seize opportunities in those key markets to drive performance and deliver results. In China, some of these new roles support our new state-of-the-art R&D center in Shanghai, the first of its kind in the beverage alcohol sector in Shanghai, together with the recent opening of our major logistics hub in Shenzhen. In the U.S., we created a new team to drive the North America RTD strategy to go after the significant opportunity we see in the convenience category. Across our business, we have established agile ways of working where we bring cross-functional teams together to work on our biggest priorities. We call these sprints, and they align to our quarterly goal setting, which I'll come back to. Later, John and Hina will share examples of how teams in Europe and India have moved quickly to reallocate resources, which is fueling a culture of speed and agility. Now I want to share 2 examples from other markets across our business, Uganda and Colombia. In Uganda, in less than 4 months, a cross-functional e-commerce team created and implemented a disruptive strategy of using boda boda motor bikes for the last mile delivery of our brands to consumers during the COVID lockdown. This led to more than double the NSV from the e-commerce channel in Q1 F '21. In F '22, NSV growth from this channel is expected to more than double again year-on-year. And in Colombia, we've reassigned 35% of our organization to the biggest business opportunities, including e-comm. This led to e-commerce NSV growth from 2% to 8% of sales and give our people the opportunity to develop new digital capabilities. Through these focused cross-functional teams, our people are gaining critical new skills while delivering work that's adding value quickly to some of our highest priorities. Looking ahead, we will continue to rapidly reallocate resources to enable the development of new capabilities, including data analytics, and strengthening our route to consumer in key markets such as North America and China to support our future growth ambitions. We take this focus on agility right through to our incentive programs. As part of the consideration of appropriate annual and long-term incentive outcomes, we consider performance against financial metrics and actions taken by leaders and employees to protect the longer-term interest of the business. Our annual incentive program, or AIP, performance measures and targets are reviewed carefully every year to align with the business strategy and ever-changing market conditions. We have made changes to our AIP structure in all of the 2 of the past 8 years to reflect the priorities in a given year, while keeping constant the key performance measures of NSV and operating profit. For example, in F '21, we introduced market share as a modifier and incentivized all employees against total Diageo performance targets rather than individual markets. This facilitated speed of reinvestment and allocation of resources across the globe to help the business emerge strongly. And to complement the introduction of Sprint to our ways of working in F '21, we shifted our performance management framework from half yearly performance conversations to quarterly goals, clearly linked to our performance ambition. This has increased the focus on every day, in-the-moment performance for teams. We believe these changes supported our delivery, enabling us to hold or grow our off-trade share in approximately 85% of measured markets in F '21. At Diageo, we have a strong pipeline of experienced talent with deep knowledge about the business. In the last 3 years, an average of 70% of our internal leadership roles were filled by internal talent. And since July 2020, 4 out of 6 appointments to the Executive Committee were internal promotions. We focus our external talent acquisition at leadership levels on bringing in new capabilities in areas such as digital and e-com, while also building greater diversity. In F '21, 56% of external hires into our leadership population were women and 44% were ethnically diverse. Increasingly, we are also hiring external talent from broader industries, especially for new capabilities such as digital, data and analytics. We have created a distinctive employer brand, which enables us to attract talent from leading consumer-focused companies as well as from other sectors, including major technology companies. We have high standards for leadership and talent. For example, at the point of recruitment, we benchmark our leaders against the top quartile of leaders from FTSE 100 companies. This allows us to hire only the best talent. We hire leaders for Diageo First, leaders who have the potential for bigger roles are those with new skill sets. In the last 18 months, 77% of our most senior leaders have joined us from large multinationals. Talent retention within our leadership population is strong, with only around 2% regrettable attrition in the last 12 months. And in our recent employee survey, 2/3 of leaders told us that the quality of our brands, people and leadership development were the main reasons they joined Diageo. We firmly believe we are retaining and recruiting talent in a fiercely competitive market as a result of our culture, purpose and performance ambition. Hina will now show how the passion of our people and their level of engagement has transformed our business in India.

Hello. I'm Hina Nagarajan, and I am the MD and CEO of United Spirits Limited, Diageo's business in India. Prior to taking up this role, I ran Africa regional markets for 2.5 years, having joined Diageo in 2018. Mairead talked about the extraordinary passion and engagement of our people globally. And Diageo India is no exception. Our culture has been transformed by igniting the power of purpose within the business and empowering individuals and teams. This has enabled bold performance delivery, along with significant productivity savings. While our business results are a strong measure, our own employee survey results from May 2021 are a testimony to how engaged our employees are. At 88%, overall engagement has increased 2 points since 2019, 93% of employees are proud to work for Diageo, and 87% of our employees would recommend working at Diageo to others, up 6 points versus 2019. And 93% of our employees know what they need to do to help Diageo win market share. An example to illustrate this is when our East region team turned the COVID disruption into an opportunity in West Bengal. They unlocked the home delivery channel in a short period of time. A cross-functional team cocreated policy with regulators and energized the retailers to participate. End of F '21, 300-plus retailers had signed up, 20% of prestige segment sales in the state came from this channel, and we won significantly against competition. Speed, agility and empowerment are the key pillars of our culture. Let me share a few examples with you. Post the COVID lockdown last year, our biggest challenge was to restart operations in line with stringent government guidelines. We empowered our employees to share ideas which enabled us to be the fastest in the industry to restart and ramp up our capacity to almost 100% of pre-COVID levels within 3 weeks. This helped us rebuild our business rapidly and outperform competition. In previous years, it would take on average 18 months to bring new innovation products to market. In 2021, thanks to strong consumer insights applied at pace, we were able to understand the opportunity, disrupt our conventional ways of working and create a new limited edition whiskey in 85 days from idea to delivery. A sprint team empowered and nonhierarchical acted with an entrepreneurial mindset, committed to its purpose of rapid innovation. They behaved like founders, making quick decisions. The India leadership team changed engagement from reviews to enablement and simplified the innovation process to manage risks while enabling speed. This experiment has created a significant new business growth opportunity, Indian craft and with it, exciting new ways of working for U.S. We are now using sprints to drive powerful outcomes across several critical business mandates and our business performance in F '21 is a strong proof point of our new ways of working. We outperformed the competition in F '21 with reported NSV growth of 13%, including 18% growth in scotch and 41% growth for Johnnie Walker. We were also able to generate productivity savings of almost GBP 70 million, ahead of target despite the commodity price escalation and challenges presented by COVID-19. In a traditionally male-dominated industry, inclusion and diversity has been an important pillar of our performance ambition in India. In the last 7 years, we have made tremendous progress in this area. With confidence, I can say that we lead the India marketplace in our policies, practices and outlook on inclusion and diversity. Today, 50% the USL Executive Committee in India are women. There were no women in leadership roles in 2014. And as a female CEO, I am proudly standing here representing the change we have brought about. 50% of our hires in the last 18 months are women. Across our overall employee base, female representation has changed from 6.6% to 22.5% in the last 6 years. In this year's employee survey, our Inclusion and Diversity Index score is strong at 86%. And 87% of our people believe they can be themselves and thrive at Diageo, a rise of 2% versus 2019. As producers of some of the country's best loved brands, we know we can make a difference in culture by changing the narrative for our brands and by showing progressive portrayals of gender and inclusivity, in line with what we stand for as a business. Whether it is changing yaari, friendship, by making it universal and gender agnostic through McDowell's #1 or bringing a strong message of women's individuality through black and white, our brands represent inclusion. Our recent #ChallengeAccepted campaign from Royal Challenge featured women cricketers promoting equality by accepting the challenge to play the first mixed gender cricket match. Let's watch. [Presentation]

Our purpose also comes to life through the way we are meeting our responsibilities to our communities, society and the environment. To promote positive drinking, we partnered with Network 18 to launch a nationwide anti-drink and drive awareness campaign, reaching nearly 90 million people. We have also trained almost 235,000 people in 300 schools across 15 states on the dangers of underage drinking. By 2030, we intend to change the attitudes of 800,000 people to drink driving in partnership with the United Nations Institute for Training and Research. We intend to educate 1.5 million young people, parents and teachers on the dangers of underage drinking and will reach 2 million people with responsible drinking messages. By 2030, we also intend to provide business and hospitality skills to 12,000 people through our learning for life and skills programs. Environmentally, we are also challenging ourselves to do more and more. We have replenished almost 408,000 cubic meters of water across our water stressed areas; improved our water use efficiency by 55%; reduced carbon emissions by 95%; and collected 20,000 metric tons of plastic waste. By 2026, we have also committed to replenish more water than we use in our operations. All our operations will be net zero by 2025, and we will be plastic positive by end F '22, meaning we will be collecting more plastic than we put out. Our business in India has undergone significant transformation in recent years. Our culture is strong, our people highly engaged in our performance ambition and proud to work for a company that can deliver sustainable, inclusive performance in the right way from grain to glass. John will now explain how our Europe business has been transformed to get even closer to consumers.

Thanks, Hina. Hello. I'm John Kennedy, President of Europe and India. In Europe, we're also building a culture where extraordinary engagement drives performance. I'll focus particularly on how our people have worked with agility and speed to drive significant success coming through the pandemic. Pre-COVID, the Europe business started from a strong base, as the best-performing major total beverage alcohol company over a 5-year period. For a number of years, we had operated with a One Europe structure which had allowed us to drive major efficiency gains and implement best practice in many areas. Yet, we believe there was more opportunity for growth by getting even closer to local consumers and customers. We, therefore, took the decision to move from the One Europe structure to create our new 6-market model. We announced the new organization in March 2020, during the week, Italy and Great Britain implemented their first major COVID lockdowns. In that environment with no travel and no in-person meetings, we completed consultations in dozens of countries, resourced 2,000-plus roles and hired 18 senior level external leaders. Critically, we stood up full marketing departments in Budapest, Hamburg, Amsterdam and Madrid for the first time. We also advanced on our IND goals moving from 42% to 52% of leadership roles filled by women through this change. We successfully launched our new market structure on time, 3 months later, on July 1. Our new local leadership teams were given the freedom to succeed at a simple brief, which was to emerge stronger from the pandemic. We implemented the new quarterly performance management system and market share metrics to ensure everybody was focused on a fast-moving external environment. Let me walk through examples of how a number of markets successfully tackled this challenge. In Great Britain, as consumers shifted to relaxing at home, the team pivoted to the whiskey category, which leads on these occasions. Building and implementing new plans across Johnnie Walker, Haig Club, Bulleit, Talisker and Bell's has led to a 330 basis point share increase in the category for Diageo. We also spearheaded the growth of no alcohol spirits with the launch of Gordon and Tanqueray 0.0%, creating excitement and momentum. In Great Britain, overall, Diageo shares of the spirits market in the last 3 months is 410 basis points above 2 years ago. In Northern Europe, going into the pandemic, the gin and aperitif categories were accelerating fast as the early evening drinking occasion grew. The gin category has grown 29% in the previous 2 years. So the team ramped up their innovation plan, including the launch of Tanqueray Royale and Gordon's Sicilian Lemon as well as tripling media investment to drive a 370 basis point increase in Diageo's category share. And overall, Diageo's share of the spirits market in Northern Europe has increased by 59 basis points compared to 2 years ago. In Southern Europe, whiskey has been our top priority. And with our new organization model, we've recruited high-quality local marketing talent and are seeing this translate into strong creative platforms. Johnnie Walker's Keep Walking together campaign focuses on promoting the return of live music and supporting the musician community. The local insight has been that artists and musicians are seen as having contributed significantly to helping people get through COVID and deserve to be supported in recovery. We formed partnerships with Dani Martin in Spain; Fedez, in Italy; and Konstantinos Argyros in Greece, each iconic and highly-visible artists. And the creative content has struck a chord in each country. Overall, our spirits market share in Southern Europe has grown by 68 basis points. And in Ireland, we experienced one of the longest pub lockdowns in Europe. Diageo has stepped in as a lead supporter to the on-trade, with our Raise the Bar program providing essential support for publicans throughout the island. We provided training and upskilling courses as well as supporting mental health for hospitality workers with 22,000 participating to date. We've supported the design of safe outdoor spaces for over 1,200 publicans with over 6,000 weatherproof pagodas, barrels, umbrellas and windbreakers installed so far. And during shutdown, all of the Guinness Storehouse staff switched to working as merchandisers in grocery stores. And when we reopened, a series of events to support the local community were put in place. All frontline workers were given free addition as a thank you and over 8,000 frontline staff visited. [ Clona Sexton ], a nurse from [ Cork ] was the first visitor when we reopened. And that story was flashed across the national media. These efforts put Guinness at the heart of the conversation about recovery and reopening. And we've seen a genuine surge of goodwill for the Guinness brand with share up 400 basis points in the on-trade versus pre-COVID and 251 basis points in the off-trade. In Ireland, as in other markets, Diageo's spirits market share has also increased, up 22 bps. Here's the Guinness ad we ran as pubs started to reopen. A few months ago. I think it's a brilliant demonstration of the passion, creativity and imagination that our teams continue to bring to their work every day. Take a look. [Presentation]

Now like Hina in India, I'm also delighted with the progress our people have continued to make bringing our purpose to life across our ESG goals in Europe. Just in the last year, we've trained 2,800 people for a career in hospitality through Learning for Life. We've educated 67,000 young people on the dangers of underage drinking through our Smashed program and reach 79 million consumers with messages of moderation. And all of this has been delivered through passionate, engaged people. The evidence demonstrates that our teams are focused and feel accountable for delivery. And our annual employee survey, 9 months after the launch of the new markets, 93% of our people in Europe said they know what they can do to help Diageo win market share. And the ownership mentality is well embedded in Europe with 84% of our employees saying that the people around them take accountability for business outcomes. This marks a 7-point improvement versus 2019. The changes we've made in Europe are working well. They brought us closer to our consumers and customers and enabled even greater pace across the business. As Mairead, Hina and I have hopefully illustrated, Diageo's progressive culture is providing us with significant competitive advantage. The passion of our purpose and our brands, the celebration of inclusion and diversity and the value we place on speed and agility are distinct and advantageous and will continue to drive our performance in the future. Thank you.

Good afternoon, and welcome to our final presentation today. I'm Lavanya Chandrashekar, and I'm delighted to be with you at my first Capital Markets Day as CFO of Diageo. As my colleagues have demonstrated today, Diageo has an advantaged portfolio and geographic footprint within spirits. And spirits is growing ahead of total beverage alcohol or TBA. We have built the core capabilities to combine world-class brand building with supply chain excellence. And we have an agile, efficient culture that is restless to always do better. In my presentation, I want to show you how all of this creates exciting opportunities to accelerate our productivity agenda, to reinvest in core capabilities, to drive accelerated top line growth ahead of historical rates and continued margin expansion and to outperform the market and deliver 50% TBA share growth by 2030. We expect this powerful growth algorithm to drive profitable long-term growth and shareholder value as we deliver our Society 2030 ESG ambition. Let me start with a brief reminder of our performance in the past few years. Prior to COVID, we consistently delivered top line growth in the mid-single digits. Growth was well balanced between developed and emerging markets and also between volume growth and improved price/mix. And while fiscal '20 was significantly impacted by the pandemic, our business bounced back strongly in fiscal '21, and our net sales were ahead of pre-COVID levels. As I shared at our fiscal '21 results, if we exclude Travel Retail and Guinness, which have been severely impacted by COVID, then our estimated 2-year CAGR was about 6% versus fiscal '19. We have consistently invested in our core capabilities and increased our marketing spend. We have delivered productivity savings to drive the smart reinvestment. At Diageo, we no longer talk about productivity as a program. Instead, everyday efficiency is a mindset that is firmly embedded in our culture. Over the last 2 years, this approach has delivered an annual run rate of around GBP 400 million of gross cost savings. This is in line with the productivity we delivered between fiscal '17 and fiscal '19 when we had a formal program. Everyday efficiency is delivered through 3 key areas of focus: one, simplifying the business to inject speed and agility into what we do; two, ensuring our resources are focused on delighting customers and consumers; and three, leveraging technology, data and analytics in our processes to drive efficiencies and insights. The largest cost savings have come from increased efficiency in our supply chain. Ewan shared some great examples of what we've already achieved, and we still have plenty to go after. Marketing effectiveness, supported by tools such as Catalyst, has also delivered substantial annual cost savings and enabled consistent reinvestment in brand equity. Top line growth, improved price/mix and productivity have enabled us to grow operating profit 1 to 3 percentage points ahead of NSV in the 3 years prior to COVID. This drove total margin expansion of approximately 200 basis points. In fiscal '20, COVID significantly impacted our organic operating margin by over 200 basis points, mainly driven by the widespread closure of the on-trade and disruption to global travel. The strong return to top line growth in fiscal '21 drove a slight margin recovery. We expect the continued recovery of on-trade and global travel businesses to provide a strong margin tailwind, particularly the recovery of our Guinness beer business in Europe. Prior to COVID, we delivered strong growth in pre-exceptional earnings per share. And following a decline in fiscal '20, EPS grew 7.4% in fiscal '21. With the exception of fiscal '20, we have delivered consistent cash flow generation in recent years. This reflects both growth in organic operating profit and improved working capital management. All of this has delivered significant value for our shareholders. We have increased our full year dividend every year for more than 20 years, and we have consistently returned excess cash to shareholders as part of our capital allocation framework. Due to the strong recovery of our business in fiscal '21, we resumed our return of capital program earlier than expected. The program is expected to return up to GBP 4.5 billion to shareholders by the end of fiscal '24. The first phase returned GBP 1.25 billion. And under the second phase, we will return up to GBP 1 billion by the end of fiscal '22. We have completed approximately GBP 450 million of the second phase to date, and we expect to commence with the next tranche shortly. Our total shareholder return has significantly outperformed comparable benchmarks on a 1-year, 5-year and 10-year basis. And on a 1-year and 10-year basis, it was in the top quartile of our peer group. Going forward, we expect to drive sustainable leverage growth by accelerating our top line growth above historical rates, driving improved price/mix through premiumization and pricing actions, upweighting our A&P investment to support market share gains, delivering COGS productivity savings and delivering continued overhead efficiencies. I will give you an overview of each of these. As Ivan set out earlier, our portfolio is well positioned to accelerate top line growth. Diageo is the #1 international spirits player, and spirits is growing 2 to 3x faster than beer and wine. Our portfolio has high exposure to 4 of the fastest-growing categories, and we have leadership position in 2 of these, gin and scotch. And within international whiskey, we are the market leader in Canadian whiskey. In the highest growth category of tequila, we are the fastest-growing top 5 player. We are also increasing our exposure to the fastest-growing price tiers. In fiscal '21, over half of our net sales came from premium-plus products and 25% came from super-premium-plus products, up from just 12% in fiscal '13. Our iconic global brand, Guinness, is well positioned for the key growth trends within the category as a premium, flavorful and differentiated beer. Our advantaged geographic footprint with leading positions in key strategic markets is another enabler of accelerated growth. Although we are both the largest spirit and largest whiskey company in the U.S. We still only have a 7% value share of TBA. Through increased investment in capabilities and marketing and active portfolio management, we have turned around our market share trajectory driving spirit share growth in the last 12-month period. Importantly, we are also growing volume in this large and profitable market. We expect our advantage portfolio and share momentum to drive U.S. spirits growth ahead of historical levels over the medium term. In Europe, we are the #1 international spirits company. But with only 4% value share of TBA, there is significant runway for growth. Our new market structure is enabling us to get closer to local consumers and customers. And we are pleased to see the on-trade recovering strongly, while the off-trade remains resilient. In the context of spirits growing faster than TBA, we have a well-positioned premium-plus portfolio and strong share momentum. In fiscal '21, we gained off-trade spirit share in 5 of our 6 markets and gained off-trade TBA share in all our markets. We see good growth potential in the emerging markets as well, underpinned by favorable demographics and income growth. We will continue to build on an already strong position as the #1 international spirits company in India, Africa and Latin America and the Caribbean. We are particularly excited about the growth opportunity in Greater China and our ability to accelerate the strong growth momentum we have built in both baijiu and Scotch. Innovation is a key accelerator to sustainable growth and market share gains, and it is margin accretive. Cristina discussed how our deep consumer insights are delivering cutting-edge innovation to successfully recruit new consumers. Now 65% of our innovation recruit new consumers. This capability, which we have built over a number of years, is a competitive advantage. In particular, we continue to lead the U.S. market in innovation. Diageo has 7 of the top 10 new spirit launches in the last 12 months. I'll demonstrate how this is driving growth and winning share with a couple of examples. In fiscal '19, we launched Crown Royal Peach in the U.S. with a flavor profile to recruit more multicultural consumers. It delivered triple-digit growth in fiscal '20 and strong double-digit growth in the next year. This success was a key driver of Crown Royal's 13% growth in fiscal '21 while gaining share of category. John O'Keeffe shared earlier how our Guinness Smooth innovation is recruiting new consumers with its lower strength, lower price and more accessible liquid profile. In fiscal '21, Guinness Smooth grew 80% in Africa and contributed just under 10% of the net sales of the Guinness trademark in the region. Across our markets, we will continue to accelerate and sharpen our consumer-led innovation. Recent examples are Guinness 0.0, The Johnnie Walker Blue Label Ghost and Rare series and Don Julio Ultima Reserva. Innovation is also building our next generation of brands. This includes new-to-the-world brands such as Roe & Co, our Irish whiskey, Blade and Bow bourbon in the U.S. and our China origin single-malt whiskey. I'm excited by the innovation pipeline for the rest of fiscal '22 and beyond, and I'm confident it will drive profitable growth and market share gains. We expect continued price/mix improvement to underpin top line growth and margin expansion. Our improved revenue growth management or RGM capability is a key enabler of price growth across both developed and emerging markets. With increased inflation and our strong investment in marketing, we are being bold with pricing action that balances both margin and share growth. Here are just a couple of recent examples. In the U.S., we increased price on Baileys in fiscal '20. In Nielsen/NABCA in fiscal '21, our price growth was 13%. We still delivered 5% volume growth and Baileys grew market share of U.S. spirits. In Brazil, we delivered price growth across our international spirits portfolio at an average of 12% in fiscal '21. That year, we also delivered over 45% volume growth and took market share across all measured spirits categories. We have the tools and capabilities to take RGM action with precision. We do this by differentiating strategies and actions by SKU, by market. We also optimize pricing and investments between different pack sizes and formats, which helps improve margins. In South Africa, we revised our brand and pack strategy to reach more optimal price points and basket sizes with our scotch portfolio. This delivered an improvement in NSV per case for scotch, which helped to offset COGS pressures. To date, in fiscal '22, Diageo has been gaining value share of the whiskey category. And in the U.S., our launch of RTD cocktails in cans has enabled us to tap into consumer occasions at a lower price point, driving incremental growth while also contributing a higher profit per serve. I have confidence that our RGM capabilities will continue to drive improvement in price/mix. Cristina demonstrated that we are the world's best brand builders. Consistent strong marketing investment drives long-term growth. It increases brand equity, enabling us to grow volume and take price while still gaining market share. Despite near-term uncertainty, we invested GBP 2.2 billion in marketing in fiscal '21. This was nearly twice as much as the next largest investment by a competitor. And we increased our reinvestment rate to 17%, up from 15% in fiscal '17. This is delivering strong results. In fiscal '21, we held or grew off-trade share in 85% of our net sales value in measured markets. Our marketing is driven by deep consumer insights and executed with both creativity and precision. And this precision is underpinned by smart investments in our tools and data analytics. Catalyst, our marketing effectiveness tool, is optimizing our investment choices across markets, categories and channels. It is significantly improving our return on investment. And since its launch 4 years ago, Catalyst has driven incremental gross profit of over GBP 400 million. We are continuing to strengthen Catalyst by investing in enriching the data set, which underpins it. In fiscal '20, we added Demand Radar to enable consumer demand forecasting at a granular level. Radar now covers about 80% of our marketing spend. And we have recently deployed a new tool in the U.S. called Sensor, which allows us to optimize spend within a specific marketing channel, such as paid social media. I want to demonstrate the power of our tools with a couple of recent examples. In Australia, catalyst data on Baileys gave us confidence to significantly upweight our marketing from a mid-single-digit reinvestment rate to a mid-teens reinvestment rate. This underpinned Baileys growth of 20% in Australia in fiscal '21. In the U.S., we have significantly increased our effectiveness of our Crown Royal marketing. Catalyst optimized our investment between TV and digital media, and Sensor optimized our publisher mix within each of these channels. In fiscal '21, our return on investment for Crown Royal increased by over 30%. Penetration growth was double digit and it grew category share. Beyond Catalyst, we are continuously looking for marketing efficiencies optimizing our agency spend, reusing content and reducing waste. There was some brilliant recent example of this in Ireland. Ahead of the reopening of the on-trade, we repurposed an old Guinness TV commercial. It featured our technicians getting pub draft systems ready to serve perfect pints of Guinness. This was a classic ad brought out of our asset hub and edited to great effect at low cost. [Presentation]

By consistently improving our return on marketing investment, we can accelerate top line growth while driving savings for reinvestment. We delivered sizable savings in our COGS over the last 5 years. Going forward, we have a strong pipeline of efficiency initiatives across 4 broad areas. Procurement is the most significant driver of savings. We continue to deliver efficiencies by aggregating our global spend, sourcing effectively and partnering with our suppliers on joint value creation and innovation initiatives. For example, our partnership with the strategic corrugate supplier enabled us to reduce cost while maintaining the structural integrity of our boxes. Across our business, we are also driving savings from the harmonization of contractual terms for glass and cans. Our value engineering team identifies product efficiency initiatives. You will remember Ewan shared the example of lightweighting glass. In logistics, we continue to identify new opportunities for optimization, including alternate routes to market and alternate distribution hubs and warehouse locations. And finally, in manufacturing, we deliver savings in a variety of ways, including energy metering and data analytics, which improves our energy usage, reduces cost and keeps us on track to deliver our 2030 sustainability goals. We have an agile, efficient culture that is restless to always do better. As Mairead discussed earlier, we are empowering and liberating our people to streamline processes and stop nonvalue-added activities, elevate complexity and further unleash their productivity. This frees up the time of our people to grow our business. Here are 2 examples. We recently implemented a background screening solution to renew low-risk suppliers, which will save 18,000 hours for us and our suppliers. We're also saving 1,500 hours for our HR team by reducing data quality issues relating to position and vacancy management. In shared services, we are continuously identifying efficiencies to deliver cost and value benefits. This includes standardization and simplification of global processes and new systems for faster and audit ways of working. All of the opportunities I've highlighted are supported by our embedded productivity culture, which has created a strong sense of accountability to be more efficient and effective in everything we do. As I shared before, we have a strong track record of delivering productivity. Over the next 3 years, we expect to deliver around GBP 1.2 billion of gross cost savings. Our culture of efficiency gives us the confidence to deliver this. As in the past, we expect savings to come from a mix of COGS productivity, marketing effectiveness and overhead efficiencies. And we expect COGS productivity to be the largest driver of cost reduction. We act like owners in our long-term investment decisions. Even during COVID, we continue to invest in capacity, capabilities and consumer experiences. Our investment in production includes additional capacity, such as our investment of more than $500 million to expand our tequila capacity in Mexico and the reopening of our Brora and Port Ellen Coast distilleries. It also includes investment in our environmental sustainability agenda to support our 2030 ambition such as water stewardship in our African breweries and renewable energy at our production sites. We are investing in our core capabilities, including our digital tools. We have significantly stepped up our CapEx investment in digital and technology. And in fiscal '22, nearly half of this is directed towards customer and consumer-facing initiatives. Debra and Alvaro brought to life how tools like EDGE are transforming our commercial execution. Investment in consumer experiences is key to our brand-building strategy. The Guinness storehouse in Dublin is the most visited paid tourist traction in Ireland. And earlier today, you virtually toured the amazing brand home we have opened for Johnnie Walker and our exciting plans for a Guinness taproom in Chicago. These are just some of the brand homes we are creating. Ivan outlined our strategic approach to active portfolio management. I want to highlight a couple of examples to demonstrate that our portfolio choices are improving our business performance and creating shareholder value. The acquisition of Casamigos in fiscal '18 was a step change in our exposure to high-growth ultra-premium tequila in the U.S. At that time, it was one of the fastest-growing brands with scale. And over the last 4 years, it has delivered outstanding growth. The pro forma impact of Casamigos on U.S. Spirits top line growth in fiscal '21 was approximately 460 basis points, and our share of the tequila category was around 17%, up from around 8% in fiscal '18. The second example is our disposal of 19 value brands in North America to Sazerac in fiscal '19. In the last full year prior to disposal, these brands were dilutive to Diageo's top line by around 55 basis points. The disposal enabled us to improve top line growth and market share trajectory. It also enabled us to return GBP 340 million of net proceeds to shareholders. As active portfolio managers, we will continue to acquire attractive brands in fast-growing categories and dispose of brands that offer less attractive growth potential. We will maintain our consistent and disciplined approach to capital allocation. We were extremely pleased to be back within our target leverage ratio range at the end of fiscal '21. Our priority is to invest in the business to drive sustainable organic growth and to acquire strategic brands that strengthen our exposure to fast-growing categories and occasions. Despite the challenges of COVID, we have stayed well invested in marketing, innovation and CapEx, and we have acquired new brands. We have a clear progressive dividend policy, and we continue to rebuild dividend cover back to be within our target range of 1.8x to 2.2x. When we have excess cash, we will seek to return it to shareholders. As I said earlier, our current return of capital will return up to GBP 4.5 billion to shareholders by the end of fiscal '24. To date, we have completed around 1/3 of the value of the program, and we expect to commence with the next tranche shortly. Our business is performing strongly in fiscal '22 with organic net sales momentum across all regions. Our North America business is delivering strong growth despite some supply chain constraints, driven by resilient consumer demand. Our business in Europe is recovering strongly with off-trade demand remaining robust and good momentum in the on-trade. Our businesses in Africa, Asia Pacific and Latin America and Caribbean are performing well. Travel Retail continues to be disrupted. In the first half of fiscal '22, we expect organic net sales growth to be at least 16%. We expect organic operating profit to grow ahead of organic net sales in the first half of fiscal '22. This reflects an improvement in organic operating margin, driven by further recovery in sales volume, positive channel mix and premiumization. We are continuing to invest in our marketing and commercial capabilities, while managing rising inflationary pressures, which are partly due to supply chain constraints. We expect the strong growth momentum in the first half of fiscal '22 to continue through the remainder of the fiscal year. However, in the second half of fiscal '22, we will be lapping a tougher comparator. As we expect near-term volatility to continue, including the potential impact of any future waves of COVID-19, we are not providing specific full year guidance for fiscal '22 at this time. We believe our top line growth trajectory has accelerated, underpinned by favorable trends in the spirits category and our advantaged position across geographies, categories and price tiers. We believe our commercial marketing execution is very strong, and we are gaining off-trade share across the majority of our measured markets. The TBA category is large and growing and spirits is consist gaining share from beer and wine. With only 4% value share of the global TBA market, we have significant headroom for continued growth. All of this gives us confidence in the medium-term outlook for our business and our ability to deliver strong and consistent top line growth. We expect organic net sales to consistently grow within a range of 5% to 7% in the period fiscal '23 to fiscal '25. This compares to growth of 4% to 6% delivered in the period fiscal '17 to fiscal '19. We will continue to strengthen the equity of our brands with smart investment in effective marketing, our digital transformation and grain-to-glass sustainability. While we expect inflationary pressures to increase, we will continue to benefit from operating leverage, premiumization, revenue growth management and productivity gains. As a result, we expect organic operating profit to sustainably grow in the range of 6% to 9% between fiscal '23, fiscal '25. What I have shown you today is that our advantaged portfolio and geographic footprint will enable us to accelerate top line growth ahead of historical rates. Our embedded culture of everyday efficiency will deliver consistent annual cost savings and margin expansion despite near-term inflationary pressures. Our capital allocation strategy is unchanged. We will invest strongly in long-term growth and continue our progressive dividend policy. This powerful algorithm gives me confidence in our ability to drive long-term, sustainable and profitable growth and create significant value for shareholders. Thank you very much.

[Operator Instructions] Our first question is, TBA grew 3.4% 2010 to 2020. Is this a reasonable proxy for TBA growth between 2020 and 2030, excuse me.

I'll take that question. Yes, a short answer would be, yes, 3% to 4% growth. And I think what's attractive about the TBA fundamentals is 3 things: demographics, including emerging market demographics, penetration, which is growing in many markets; and premiumization value growing faster than volume. So that would be a good proxy for the next decade.

Our next question is, Ivan, great presentation and welcome the new medium-term guidance this morning. Do you see any risk that pressure on disposable income and higher inflation could make that challenging?

What I would just spend a few minutes on is just talk about the affordable luxury nature of our category. And I'll use the U.S. as an example because I think it really brings it to life. Premiumization trends, as you've seen in the presentations, are really strong. But when you look at it from a household standpoint, the typical U.S. household is spending $17 a month on spirits. Half the households buy spirits. So for those who buy spirits, they're spending about $35 a month. That's $1 a day. Now when you look at the specialness of our brands and the ability to trade up and just look at the top end of the U.S. market, say, above $40, the ultra-premium end of that market, 50% of the top end of that market is from people who earn less than $100,000 a year. 60% of it is multicultural, and that's going to grow. And young people, 21 to 34 disproportionately buy ultra-premium products. In fact, twice the amount that they would buy of value and popular products. So when you put this all together, we are very fortunate to be in a category which has resilience because of its affordability, and it's a small part of the household budget. It's an affordable indulgence. And what you serve or what you order at a bar says a lot about you. And what we're seeing right across the world is people are trading up, whether it's from illicit alcohol into entry-level branded alcohol in Africa or moving from Black Label to Blue Label in China. Every step of the ladder, we are seeing trade-up. So I do see a resilience to premiumization continuing in spite of the economic volatility. And on inflation, we have multiple levers that we will deploy. Clearly, mix is in our favor. Our products, many of them are aged. We have productivity at place. We have revenue growth management capabilities that are strong. And we expect to be able to handle inflation because we've got multiple levers to work with it. So that's what gives us the confidence in this guidance that we laid out today.

How sustainable is the incredible growth that you've been seeing in the U.S.? When will it slow down? And how confident are you that you can keep gaining share of tequila?

I'll turn it to Debra.

So yes, as far as growth in the U.S., I think the one thing to remember is that, first of all, from a total spirits standpoint, from an industry standpoint, household penetration is still relatively low. And we've been continuously sourcing volume from both beer and wine. And so there's a lot of opportunity just for the spirits industry to continue its strong growth. Then if you look at Diageo, we're still only 6% to 7% of total beverage alcohol. So just a lot of runway to still go. And look, clearly, the move to -- during COVID to at-home and that occasion, certainly there was a stock up. However, we're still seeing -- even as bars have reopened and hospitality is largely open now, we are still seeing great resilience in the at-home occasion. And as Ivan just spoke about, when you look at the fundamentals of our portfolio, the multicultural appeal, there's just a lot of -- the demographics, everything is really kind of working in our favor for really long-term sustainable growth. When it comes to tequila specifically, I also really feel great for kind of the same reasons, as I discussed on the video. Once again, it's a really versatile liquid. And so tequila itself still has a lot of runway within the U.S. And then our brands specifically, I think, are really hitting with Don Julio and the authenticity, 1942 is a brand in its own right on the luxury end and then plus we've got Casamigos, which is a more modern interpretation. And so really, we feel like both of our brands, they complement each other and really set us up to continue to gain share within that fast-growing category.

How significant is Asia in contributing to your future growth, especially India and China?

I'll turn it over to Sam on China. On India, I would say we feel very good about the underlying demographics. Penetration of spirits is still low and is growing. Premiumization is very strong. We're seeing it in the performance. Even through the pandemic, it's accelerated. Scotch whiskey is doing very well. And as we know, a very young population, social morays are changing. All bodes very good -- very well for strong healthy growth and premiumization in the spirits category in India. So we feel very good about it. Indians love whiskey and long may that continue. Sam?

I think we also feel very good about the growth prospects for Asia and specifically China. I mean, we've talked a little bit about being 10% of Diageo over time. We've already come from 2% to 5%. So our progress has been terrific. And I guess we've got 2 really interesting pillars that are going to drive that growth. I mean Ivan has talked about premiumization and we're privileged to have a position in baijiu to through our Shui Jing Fang participation, which is going to really capitalize on that premiumization trend, which is not new. I mean baijiu has been premiumizing for a decade, and that's really what's going to continue to drive the growth in what is the largest spirits category in the world. So we are privileged to have a position there, an exciting position, and we've seen incredibly strong growth. And then in scotch, you have got kind of the opposite. We're a strong player in the scotch in China, but the category is still very undeveloped at less than 3% penetration. So we are working hard to drive the category development through whiskey summits and boutiques. And we're seeing lots of green shoots in scotch, as I mentioned, through what's happening with auctions. And also, 600 whiskey bars have now opened up -- scotch whiskey bars across China. So our job is to continue to develop that category and to continue to develop our brands in within the category. So huge runway in scotch, significant position in baijiu, which we think underpins that ambition to get to 10% of Diageo sales over time.

With regards to your tools, how advanced do you think you are relative to the peer group?

We got the tools?

Do you want to talk, Cristina?

Cristina?

Yes. I'll talk about that. So look, we, as you know, started to work on with Catalyst in a way that is really fit to our portfolio and to our industry back in 2017. That has given us an enormous amount of experience and also data points. Addition to that, we have worked to continue improving the methodology. We have added new tools, new layers that keeps us not only more data, but also an expanded time frame in which we analyze our investments to optimize it. Now we have had the ability, as I mentioned earlier in the video, to gather even more data points because we are touching consumers at more points of engagement with the brands than ever before. That in turn multiplies the degree of our insights. So we believe that we have fundamentally strong tools that give us an advantage insight into how our categories operate, what occasions are performing for consumers, how brands can play in those occasions and also what content do we put out there and how we have -- give ourselves the opportunity to improve it over time. So I'm really encouraged about the kind of not only the tools that we have in place today, but also the systems and methodologies and the capability that we have embedded across all our teams globally to continue improving them towards the future.

Cristina, I was going to say I'll jump in, too. I think you wanted to jump in, too. I do think probably the biggest proof point is the market share gains that we've been able to make, and I really feel like the tools are part of that. Certainly, in COVID, I think a lot of the U.S. share gains really were because we were able to pivot and adjust and really kind of micro targeted as various cities and states would open and close and various things were going on. And really, without these tools, it would have been quite difficult. And it was very clear that we were doing that quicker than some of our peer companies.

Yes. And it's quite similar in Latin America. So the fact that during the last 12 months, we have been able to expand our TBA value share in almost 100 basis points. When I look what has been at the core of that is our real understanding of what are the consumer occasions and how they have shifted. What are the new consumer motivations? And the fact that we have now tools like EDGE to allow us to get a scale with precision in a way that is sustainable and in a way that we are really disrupting consumer occasions that were, in the past, were predominantly owned by beer, wine and locally produced spirits.

For tequila: a, is there enough liquid to satisfy category and company aspirations? And b, Don Julio why is this the right time to introduce flavors into the brand franchise?

I'll turn it to Debra. But the first thing I'd say is if you spot a bottle of 1942, buy it.

Yes, I'll just add to that. We think we have enough liquid and then demand just continues to grow. And so there are certainly some of the things that I talked about in the video, these are limited edition offerings. So certainly, you should pick it up if you can find it. And you asked about Primavera specifically, it's actually not really a flavor. It's a reposado, and it's kind of aged in orange casks. So -- but it really is an aged tequila and it just finished just really well and great for that mid-tempo kind of informal daytime when you really want to treat yourself. So -- but yes, it really is great to actually see how well something like Primavera has sold out incredibly fast. And so I think it just shows us how much we can expand the brand and how much more opportunity there is.

The pandemic has disrupted consumer behavior. Do you think this represents an inflection for spirits' share of throat trends and why?

Cristina?

Sure. So look, the pandemic certainly has disrupted consumer behavior, and we observe very quickly. I mean, clearly, with the closure of the on-trade, people pivoted towards the at-home consumption. And what that, in turn, allowed for people, given the fact that they had more time and many fewer opportunities to enjoy themselves in socializing occasions was actually, as I would describe, as the discovery or the rediscovery of spirits and the beauty of mixing drinks to pamper yourself and those with whom you can socialize given their circumstances. So we have seen a tremendous growth of the at-home occasion and certainly spirits within that occasion. And we believe that, that will continue because, although, as I mentioned earlier, for sure, the on-trade will reopen as soon as it's safe and we have seen people really excited to reconnect with their friends or the families, et cetera, outside, that idea of when I'm at home, I can drink better, I can give myself a better experience, I can even experiment with flavor. And frankly, our portfolio gives us and everyone the opportunity to really enjoy a fantastic portfolio of great brands suitable for great occasions. So yes, indeed, the at-home occasion expanded. I believe that is there to continue. And I think we have enormous room to play in that space.

And if I can may just bring just a very light example because in Latin America, the on-trade is already coming back to life. And what we are seeing is that those consumer behaviors that -- in at-home and specifically occasions, they are sticking, which is encouraging to see in a market that we are already seeing back the on-trade coming back.

Your share gains accelerated during the pandemic given innovation and focused marketing. In the post-pandemic environment, are you confident that you can sustain these share gains?

I'll go. I'll take it. I mean we are very confident, and I think it's because this innovation, it really is kind of sustained innovation. You saw today things like Baileys Deliciously Light. That is -- it's the great taste of Baileys with a little less calories, that's something that is a sustained kind of well-being trend. And that type of innovation keeps paying off into the future. And I would also say the tools and some of this focused marketing that we're doing. As we expand these tools, I mean, in the U.S., where we've had these tools in a number of years, we just keep adding on more and more capability to it. And we continue to find opportunities where maybe we're underdeveloped in this market or we see this ZIP code that has a lot of former Colombians that are there. And so Old Parr is an opportunity. So we just -- we continue to find these targeted opportunities, and that's going to continue kind of well beyond the pandemic.

I would also just add in the Diageo culture and performance management, our focus on quality outperformance is very strong. And it's -- the things we review before we look at the financials, we look at the quality of market share performance around the world. And I'd say that muscle through the pandemic and through COVID has strengthened, and this is a team that enjoys winning. And I would say it's going to do its damnedest to keep on winning, and we're providing the support and the investments partly and with the analytics to do it. However, we've got tough competition. And there's no question. This is -- we've got to be at the top of our game and look at every aspect of our marketing and commercial and supply chain machines to make sure we're getting every bottle, every case and earning it in every part of the world. So I'm pleased with the momentum. As you saw, we have 85% of our business that's holding or gaining share, and we intend very much to continue to maintain that outperformance going forward. And that's what gave us the confidence in putting our ambition out there, the 2030 ambition to take our share from 4% to 6% of TBA.

A big focus on reserve premiumization. How do you balance premium packaging, which is often heavy versus the higher carbon footprint from heavy bottles? Can you turn this to your advantage in your brand storytelling?

Cristina?

So look, yes, indeed, a big focus on reserve and in premiumization. And what we see in luxury, in fact, is there's a high degree, as we mentioned earlier, of interest in understanding how liquids and products are made and where they come from. So yes, of course, we will be looking at the packaging. We will be engaging with -- actually, with consumers to have a conversation around what kind of packaging delivers on the promise that they're looking for in a way that is really exactly to the goals and ambitions that we set for us -- set up for ourselves for 2030. I think, indeed, there's a great opportunity. You may have seen some of the work that we've done on Johnnie Walker. If you ever go to Princess Street, the whole idea of how things are sustainable, even sustainable cocktails, fewer packaging in the delivery of highballs are present there. You can experience delicious liquids in that context. And certainly, the portrayal of our new paper-based bottle we have done with the consortium of other companies under Pulpex. And that will be made commercially available for 2023. So certainly, I think this is a fascinating area where a lot more work is going to be happening, and I'm sure that luxury consumers will be very, very interested.

Can you please touch on your strategy for RTD in the U.S., which appears to be gaining share?

Sure. The way we look at ready-to-drink, we're not going to play everywhere, but where we play, we want to win. And the way we're looking at it is RTDs are premiumizing. It's really an opportunity for us. And I think our Crown cocktails are probably the best example for it where, look, the seltzer trend has been huge, and it's certainly a huge category but you're starting to see consumers look for more in their air canned cocktails. And they are migrating up the price tiers. And so we see premiumization as an opportunity. We see differentiation, not just bringing sort of another flavor of seltzer but instead really bringing quality brands and kind of America's favorite cocktails into RTD. And then we also look for opportunities where it can really expand our brands. So once again, I'll use Crown, I'll use Tanqueray. Ketel One is an example. This really brings kind of some newer, younger LDA+ into sort of these brands. And so it's exciting to see how it's growing our brand penetration on some of our largest brands.

Thanks, Debra. Next?

Ivan, great presentation. Would like to understand what you believe is the sustainable level of growth for scotch global that underpins the medium-term net sales guidance of 5% to 7%. Thank you.

I would say we see as the whiskey trends long term is very healthy. I think you saw it in my presentation the faster-growing categories of agave, gin and scotch. So scotch will be mid-plus single-digit growth. And we certainly intend to perform and gain share against international whiskey over the next few years. So I'm very excited about the future for our total whiskey portfolio and specifically for scotch within it. Premiumization is accelerating. So we're seeing it really, really strong. And Diageo has phenomenal assets, the brands, the distilleries, the experiences and the quality of marketing we're putting behind our big brands and our malts portfolio. But most importantly, I'd say the consumer markets, and we take places like China and India, still have very attractive runway ahead in terms of growth. Latin America, we are a tiny player in TBA. And what you see with our brands like the deluxe scotch brands, Johnnie Walker Black Label and Buchanan's, we are recruiting young adults from beer locations directly into scotch whiskey. It's not coming into deluxe scotch whiskey, not coming in at entry-level price points. So I'd say the team and I feel very optimistic and confident about the future of scotch. And as you know, it's our most important category, and we certainly intend to keep it that way.

This concludes this Q&A session. If your question has not been answered, please contact the Diageo Investor Relations team. Thank you, and please stay tuned for the next session.

Thank you.

This leads us to our second Q&A session. [Operator Instructions] Our first question is, how much of Diageo's agave procurement is vertically integrated versus third-party? And how is that expected to evolve in coming years?

I'll turn that over to Ewan.

Yes. Hi, everyone. So look, we've been long planning for agave management strategies since pre-acquisition and then since the growth has come through. We have a dual source in both farming our own that has been increasing and also building the partnerships with our best growers, which have strengthened over the years and have got us into a strong position for the future. So we'll continue to evolve that in the coming years in line with the agave market. And we know that it's going to move into a period of increased excess agave. And we'll manage accordingly the split between our own agave and with our partner farmers.

Thanks, Ewan. Next question?

The next question is, does your global supply chain excellence provide you with the market share opportunity given inventory shortages in the trade?

Yes. What I would say on that question is that undoubtedly, our -- coming into the pandemic, what we've been setting up from this program to be end-to-end across our value chain, really integrate it across the business through to the markets, put us in a position where we came in with momentum on supply chain visibility and inventory visibility. And if you couple that with some of the advantages in particularly the global export supply chain and a lot of our volume comes out of the U.K. and Scotland, our scale, we're the largest containerized exporter in the U.K. out of Scotland. We do all of our exporting from the 2 ports there. And actually, that gives us both the scale advantage with the relationships with our suppliers and the global freight companies but also gives us access at times that not everyone else does. So we can access in at weekends, night shifts, and that puts us in a position where we can keep throughout the week really utilizing that type of capacity. And that does give us a commercial advantage. The last thing I'd say is that versus a year ago, our service levels, as you saw in my presentation, are up 2%. And when we benchmark that externally, that's at leading levels. So that will put us in a strong position to continue to support growth.

Thanks. Next question?

Our next question is, as you think about the long-term category and prospects of scotch, have you started to lay down extra inventory ahead of a potential change in tariffs in India? You see scotch growing 7% over the midterm. Does this include any assumption around lower import duties in India?

Yes, I can take that. I mean, firstly, the India FTA agreement still has to play out. So there's clearly -- while conditions are more favorable, we're by no means at the point of saying this is going to happen. So one of the beauties of our scotch business is that we lay down whiskey kind of for planning for decades ahead. And in our medium-term growth, to the question I answered earlier, scotch growing at mid-single digit, so value growth, we've not factored in a dislocation of India really opening up. But we have the ability to respond because we can allocate our whiskeys to the opportunities at the appropriate level. So we're watching it. We clearly know the scenarios of under various scenarios of what might happen on the tariffs. We do understand the implications. And Ewan and the team in Scotland are managing scenarios against potential outcomes, and we feel confident we'll be able to work our way through whatever happens in India and for our total scotch business.

Our next question is do you have a fixed idea as to whether talent should be homegrown or acquired?

Mairead?

No. I don't think we have a fixed idea because we like to be able to acquire the very best talent externally when we want to supplement our homegrown talent. Ideally, we would develop and grow people from within, and we've got some great stats around how we do that over a number of years. But where we need to get new skills, capabilities, we go out to the market. We've set ourselves a challenge of having 70% of our hiring happening through internal promotions, and then we'll supplement that with 30% or so that are acquired from the external market. I think that's a good balance for us for now. But as I said, we're not fixed because we think we need to be agile in how we allocate talent to the right opportunities.

I mean, John, in Europe, you've got that balance. What have you found?

What I think is I like the way we have about 2/3 of our internal promotions. Our promotions are internal, and about 1/3 of people who come outside. And what we found is the experience base in the market across a number of different countries and in our sector is valuable. But then you level that with specialist skills in data and analytics or e-commerce, and that creates a powerful result. So I think the balance we've got right now is working and bodes well for the future.

Next question?

Our next question is for Hina. What do you see as the biggest opportunities for India and the biggest challenges?

Hina?

Thanks, Ivan. Hello, everyone. I think our glass is half full as far as the opportunities in India are concerned. I mean, basically, the first opportunity for us is really accelerating premiumization, right? So a few years ago, we were at 50% of our portfolio being the premium end. Today, we are at 70%. And if we look at all the macros, they point to a much bigger scenario for us to accelerate this premiumization. I mean, 30% of our households in the next 3 years are going to be in the upper end high-income growth. And there is a McKinsey study, which says India will have the third highest number of high-net worth individuals. So clearly, that's a big opportunity for us on our scotch and luxury portfolio. And we have a fantastic portfolio of IMFL also to tap into this premiumization trend and really accelerate our growth, and our mission really is to sustain double-digit growth in our business. The other big opportunity there, I would say, is that we have actually taken leadership on Society 2030 goals. I mean if you look at the inclusion and diversity narrative, we have really played a very strong leadership role in changing the narrative for the alcohol industry, where today, women like myself are happy to work for a company like Diageo and actually work further to normalize it, right? Even on ESG, I shared some goals with you -- I mean, some of the achievements we've had and equally on positive drinking. So we have a real opportunity as the #1 spirits company in India to be able to really impact the communities around us and make a real positive change. On the challenge side, I would say our regulatory environment is tough. And we are also not a free pricing market. So in the face of inflation, I think, pricing and limited ability to take pricing and to deal with regulatory challenges, is a challenging thing. But the way we look at it, I mean, on the regulatory front, I would say, when some states come up with regulatory challenges, there are others, which gave very positive policy responses like Delhi, which has really changed the route to market and is transforming the retail environment for consumers, giving us huge opportunity. And on the pricing side, while we advocate strongly with the government, we are also working on the things we control. So all the levers that Ivan described, right, pushing the mix, looking at revenue growth management, a very strong productivity agenda and really pushing all the levers we have to tackle the inflation we have on hand, and we think we can manage it.

Thanks, Hina. Next question?

Our next question is with regards to U.S. sustainability ambitions throughout the supply chain, what are you doing to make peat used in scotch production more sustainable? Is this even possible?

Yes, Ivan. So look, it's a great question. Peat is a marvelous part of our business. It's part of our heritage, and we treat it very responsibly in how we source that. So as you'll know, 96% of peat that's extracted in Scotland is actually for horticulture, about 3% for fuel, and we are part of the less than 1%. So it's actually a relatively small amount. However, that doesn't mean that we are complacent in any way. We put big restoration projects that are quantums bigger than our actual use of the land. So for Lagavulin's 200th anniversary back in 2016, we started a project, which was restoring more than 280 hectares on Islay. As part of Johnnie Walker's celebration of 200 years, we also up in the Cairngorms National Park, together with the Scottish government, NatureScot and the Royal Society of Protection for Birds, the RSPB, put in place another large-scale project, almost 200 hectares of restoration. So we're doing this because it's the right thing to do, and it's part of biodiversity and restoration, and it's fantastic as a medium for capturing carbon. But we also make sure our extractions, which are very low, are very responsively managed. And when it comes to the question about if it's even possible, don't for a second think that it's something where we are tearing into the landscape and extracting. It's very much a curated process. And what we do is if you take Islay as a good example, we've got a license dating back to the 1980s that lets us extract peat from the land in about 65 hectares. We take from around 35 hectares, but we only actually extract from 1 hectare. So it's a relatively small impact, and it's an important part of the scotch whiskey industry and how we create flavor in our brands.

Thank you, Ewan. Next question on Africa?

How many markets across Africa are there Cubes in place? Can the model be used in other regions to target mainstream spirits?

John?

Great. Yes. Thank you. Well, look, I think before I answer the question on Cubes, which is our kind of agile way of putting spirits production on the ground, you've got to ask the question, why do we need it in the first place? And it's because the growth in spirits across Africa is now phenomenal. If you look at our LDA to 34 year olds, the penetration over the last 10 years has increased 700 basis points. So what we're seeing is a real interest in that LDA to 34-year-old category amongst men and women in spirits, in cocktails and mixing drinks. And so that's a very exciting development for us. And we're seeing spirits grow incredibly fast year-to-year. Now Cube is a very low CapEx way of us testing really the waters for whether an opportunity exists in a marketplace or not. If you look at what we did in Nigeria 4 or 5 years ago, we initially led with the Cube. And then once we proved to ourselves that the spirits opportunity was enormous, we then put in a higher cost but more efficient fixed-line operations. But then you look at other markets like Angola, where we don't have any underground presence heretofore. And now we've recently set up a joint venture with a local partner on the ground. And we've again used the Cube as a way to test the water, where we're now locally bottling spirits and taking some nice market share in spirits. So I think it's a very nice way for us to build on the growing kind of penetration of spirits to sit alongside our more -- alongside of brewing operations across the countries. And finally, I think it allows us to create kind of a beachhead in new markets, which previously were inaccessible to us.

Thank you for the presentation. What is your strategy for mainstream and economy beer in Nigeria and more broadly, Africa?

Right. Well, if I speak to Nigeria specifically, I mean the reality is we have exited mainstream beer and low-value beer. We felt that we didn't have the right to win there. We didn't need the capacity utilization benefit of that. And finally, we felt that the margin was very, very low. And so if you look at our portfolio that we now have pivoted to in Nigeria, it's quite exciting because I feel that we have a strategy that plays to our strengths, where we're focusing on Guinness, malt, RTDs, we're a big player and then finally into mainstream spirits and IPS. I think all of those play to our strengths. We feel there's some significant profit pools there, and we think there's some significant growth there. And I think that was shown out in F '21, where despite the challenges of COVID, we grew the business close to 60%. And so I would expect that new kind of focused portfolio strategy to allow us to continue to grow quite aggressively in Nigeria. I think more broadly across Africa, I think it's on a case-by-case basis. Where it makes sense, we would certainly play in value and lower mainstream beer, like in Kenya, for example, where given our market share position, but also given the tax regime there and the large illicit sector, it makes sense for us to play in that segment of the market and encourage people to trade up from the large illicit sector into more formal regulated drinks. So I think we look at that really on a country-by-country basis across Africa.

Thanks, John. Next?

In terms of your people capabilities, what do you need to add to achieve your 2030 ambitions?

Mairead?

Yes. I mean, not surprisingly, I'll say that we need to be continued -- to continue to be focused and invest in digital, data and analytics and new skills that are becoming more and more relevant over time. We've started with that investment. We're building the skills internally and acquiring where we need to. So we will continue to invest appropriately in those new skills. But I think over and above and beyond that, our absolute commitment is to grow talent and acquire talent that are very driven, curious, creative, capable of being agile. We certainly learned through COVID that, that ability to kind of work cross-functionally with pace is the most important set of attributes that we would have at Diageo. Jump in any of you, team. We can share many examples of how that's enabled us to get faster at innovation whether that be in Europe, in GB, in many of the markets across Europe or in India. You've heard some of the examples that John and Hina shared in the presentation. So agility, speed, drive and that creativity that's always been part of what Diageo is great at.

Yes, I'd add to that, Mairead.

Yes.

And so the capability is one way to look at it. But the culture, we talked about that in the last presentation. COVID really has been an accelerator for us. And the way we focused on working in sprints, much more external focus, winning market share, moving faster to understand and capitalize on consumer insight. We continue to do that well, and we believe we'll continue to win. And that's where culture and the attitude of our people really do give a competitive advantage. And we have also built a muscle over years on everyday efficiency. Just an orientation towards the world's changing fast, what won today is not going to be the formula for tomorrow. Therefore, you got to have significant reallocation of your resources and zero-base your thinking year-to-year and quarter-to-quarter. So we think some of the things we've seen in the last 18 months bode well for the future.

Yes.

You recently introduced 6 months paternity leave at Diageo in a number of markets. Can you talk about what uptake there has been?

I mean we're really proud of the rollout of this policy in particular. It's not easy to roll out a global policy in over 8 -- or 70 countries globally, particularly when you see cultural differences across those markets. We've seen great take-up in Europe, for example, and in the U.S., you'd expect me to say that. But what I'm really proud of is seeing the response of employees across the globe to that rollout. I particularly love seeing the faces of the men on the operating line in Brazil when we shared with them the news that this policy would be available. There was just absolute joy. And there was an anticipation in advance of that rollout that some markets in Latin America maybe a little bit further behind. But actually, that's not what we've experienced. We've seen many of our senior talent take up the new option on 6 months paid leave for men where they have had children introduced into their lives, and I think that's phenomenal. And in terms of a few stats, 23 days was the average or the maximum, I suppose, that men took on the arrival of a new child into their lives. And now that's gone up to 99 days over a 12-month period on average. So it's astounding, the impact it's had. We believe it creates opportunity for more diverse talent to fill in those roles when individuals go on leave, and it's definitely part of how we intend to be inclusive. If Hina can speak, I think it would be really interesting to hear from her because it was rolled out in India very recently. I'm not sure if we can patch her in.

Hina? No, she should be on.

Yes. If you can hear me, I mean, we rolled it out very recently, just a couple of months ago. And I mean, Mairead, you described the ecstatic look on everyone's face. And I think India, it was breakthrough. I mean, we got massive, massive social media engagement on this subject because it was so breakthrough in India. And we are already seeing uptake, men and women alike, on parental leave. And there are -- every day, there's an engagement from men saying that this has really changed their life in terms of being able to spend time with their babies. So it's quite leading here and another progressive policy that is making a big impact in terms of motivating other companies to look at.

Yes. I think the key point on that is the ability to then attract better quality talent to broaden the scope of who will join our business, and we think that's giving us a competitive edge from a performance perspective.

Great. Next question?

Our next question is for John Kennedy. Where is the on-trade channel in Europe versus pre-pandemic in recent months? And how is Diageo performing in the channel?

Yes. We've paid particular attention to our biggest countries, which would be GB, Ireland, Southern Europe. And what we've seen is encouraging. So we're running -- if you take beer, that's running in GB and Ireland at about 85-90% of pre-COVID. Spirits are actually doing better. So we see a strong snapback in the channel, which is encouraging. And actually, if you step back a little bit further, particularly if you look at the total spirits market across both channels, and to give you a bit of color on that in the last 3 months, spirits in volume terms have -- are actually growing versus pre-COVID in total. And they're outperforming beer and wine. We see some share shift into the spirit sector. And then within spirits, we're seeing an acceleration of the trade-up phenomenon. We're seeing premium-plus spirits grow at double-digit rates much faster than mainstream. And within that, we feel good about Diageo's performance. We've had -- you would have seen in our F '21 results, we won TBA share in 6 out of the 6 Europe markets. We won spirits share in 5 out of the 6. Those trends have continued in the last 3 months. We're seeing significant share gains for Diageo in 5 out of our 6 markets and at a Europe level overall. So it feels like -- it feels like there's some tailwinds for spirits and Diageo is well positioned in the sector.

Thanks, John. One last question.

Yes. Our last question in this session is how important is your ESG performance to attracting and retaining talent?

Yes, I can take this. Very important. And I think one of the distinguishing factors in our ability to attract -- and we are attracting really top-notch talent from some of the best leading reputed companies in the world. There's 2 things that go hand-in-hand. One is performance and the other is our purpose, which includes our ESG commitments around inclusion and diversity, grain-to-glass sustainability, and positive drinking. But I think -- and hopefully, you got this from the session from Mairead and John and Hina. The Diageo magic is both. So you've got to be a performing and winning company, and we have the privilege of really being a standout company on ESG as well. And that is something I'd say this leadership team takes really strongly. And it's also the kind of people we attract because we are looking for high performers but then very much people who are doing the right things by way of our people, society and the planet. And it is a big distinguishing factor of our employer brand. And it helps us retain talent and clearly helps us attract. Well, thanks very much for your questions in this session. We'll move on to the next session.

Thank you. This concludes the Q&A session 2. If your question has not been answered, please contact the Diageo Investor Relations team. Please stay tuned for the next session. Welcome back to our third Q&A session. [Operator Instructions] Our first question is, what are the assumptions behind your target of 6% TBA value share by 2030? Which geographies do you expect will drive the biggest step change in your TBA share? Do you think you can increase your share of TBA in the U.S. by 50% from circa 7% to over 10% by 2030?

Hello, everyone. Again, Debra, I will turn the U.S. question to you, but let me just start more broadly. The first point I just want to clarify, our 2030 TBA share goal is an ambition. We are not giving you 9-year guidance. It's an ambition. Now why is it important? It's important for our people and for our partners as to how we think about the business. You will have noticed we're talking TBA. That's where we see the opportunity for us to grow, and we are a small player. And we want our teams, our leaders to approach the business with a strategic sense of possibility and ambition. We will give you guidance, and we will call it guidance as we have for the 3 years we've laid out. So that's what's behind the 6% ambition going from 4% to 6%. The second thing on geographies, I would say we expect share growth everywhere in the U.S. and Latin America, Africa. We actually see Diageo -- and this comes back to Diageo's strength. The portfolio of categories, brands and geographies we have and the actions we've taken over the last few years really positions us, so we feel very confident about growing share. Certainly, our ambition is to grow share everywhere. Debra, the U.S.

Sure. I mean I think, look, when you think about the fact of U.S. Spirits and the strong growth that we're seeing based on premiumization and sourcing volume from beer and wine, that should continue. When you think about our advantaged portfolio, largest whiskey company, fastest-growing tequila company, the investment that we're making in A&P in the U.S., once again following Ivan, I would say the same thing. We don't have this mapped out quite the way this says here. But I do think you can expect sort of some reasonable share growth in that sort of 30 basis points. That's about what we're doing right now. And so I do see continued share growth in the U.S.

Thanks, Debra. Next question.

When you compare the makeup of your prior group growth framework of 4% to 6% versus new framework, 5% to 7%, which are the key moving parts by region? Just the U.S. or are other regions also expected to grow faster?

Lavanya?

Yes, sure. So the way I'd answer the question is what are the key drivers of us believing that we can actually grow a point faster than our previous guidance. I think it's really 3 things. The first one is spirits is growing faster and taking share away from beer and wine even faster than it did previously. And we see that in North America, we see that in Europe. In a previous question, John O'Keeffe talked about what we're seeing happen with consumers getting more interested in spirits in regions such as Africa. So I think the phenomena of spirits growing faster is really across the board. The second thing that gives us the confidence is that we have a more advantaged portfolio than we've had in the past. And you saw from my presentation, we have a leadership position in 4 out of the 5 fastest-growing categories within spirits. And in the fastest-growing category within spirits and tequila, we have the fastest-growing brands, and we're gaining share of total spirits. So that's definitely an advantaged position. Over half of our business now is in premium-plus price segments. And those are the fastest -- that is the fastest-growing part of the category as well. 25% of our business is in super-premium plus, which is growing even faster than premium. And so that gives us confidence that we will grow faster. And the third thing that I would say is we've built the capabilities to execute better. We have more deep consumer understanding. Our marketing is better. Our customer execution is better. We have the digital tools and the capabilities to be able to do this with precision. We are better at driving productivity, and that is what enables us to be able to fuel the business. And most importantly, we have an organization that is really motivated and charged up and the passion of our people, I think, really is showing up in the results that we have achieved here in fiscal '21 when we gained share in 85% of our measured markets in the off-trade.

Thanks, Lavanya. Next question.

You have increased marketing spend from 15.5% in 2017 to 17% in 2021. Does your guidance assume a natural cap to this level?

No, it doesn't. We don't set targets for A&P percentage. I hope what you've got out of today is you can see the rigor and the analytics that go behind our marketing investment decisions. So when we see good high-return opportunities where spending is right and will deliver us quality sustainable growth, we're going to do it. Our algorithm is very dynamic. And so we will determine, say, as we go into fiscal '23, if the Presidents want to spend more and have confidence in the growth and the returns they'll get. So we don't operate to a percentage target. And I think you've seen over the past few years, we have taken up our reinvestment. But the quality of top line sustainable growth has come along with it, so we feel good about the returns that go with that A&P analytical understanding we now have. Next question?

Our next question is, can you break down your assumptions on margin progression in more detail? How much is coming from cost saving? What's the impact of marketing? And what is the expected contribution of operational leverage? And is there anything else we should be aware of? Is there any reason why you can't exceed historical EBIT margins of 32%?

Lavanya?

Sure. So when you look at our margin progression, I think I'd start by saying that historically, we've been able to grow this business with both volume growth and value growth. And on a business of our scale with some of our big global giant brands, when you grow volume, you obviously generate operating leverage. The other thing that has helped us with margin expansion has been premiumization. The category has premiumized, and our portfolio has premiumized over the years, and that has definitely allowed us to grow margins. The third driver of margin improvement is revenue growth management. and I spoke a bit to it in my presentation, but it really helps us to be able to take headline pricing to be able to manage our mix of trade spend across packs, across SKUs, across different markets and to do so in a really intelligent way using data. That allows us to do what I call walk and chew gum. That means grow volume and grow price at the same time, thereby growing share. So that definitely helps us drive margins as well. Productivity, you've seen that we've delivered productivity extremely consistently over the years, GBP 400 million on an average of GBP 400 million even after the years that we got out of our productivity program because that's really embedded within our culture. And then the last piece that I would talk about is that we're growing share and investing behind our brands with superior investments going behind our brands, really helps us to be able to create that virtuous cycle of growth that then drives leverage and margins even further. So is there any reason why we can't exceed historical EBIT margin levels? I'm not going to answer that question directly, but I do think there is a significant opportunity for us to be able to grow our operating profit in line with our guidance, which is 6% to 9%.

Thanks, Lavanya.

What has driven the raised sales guidance? Is it better volume, mix or price? And is it primarily led by the U.S.?

Yes, I can take that. It's not the U.S. that's driving it. We are seeing improved performance everywhere. So we're looking at all our regions and this is the result of, I'd say, the actions and the investment decisions and the execution capability. Everything we've talked about today that gives us the confidence that our outperformance, which you've seen in our recent market share performance, can continue. We do believe the executional improvements right across the business are contributing to the outperformance. And as it relates to volume price and mix, it's -- we want all 3. The beauty of this business is it's got volume growth. The beauty of our consumer is they want to drink better. And the beauty of our analytics is we know how to get the right level of price to enable us to get the flywheel algorithm that we want, to drive efficiency, invest in the business and grow margins.

The next question is for Debra. Does Debra believe that the midterm SNSV growth rate of the U.S. spirit category will now exceed the long-term pre-COVID trend of circa 4%?

Yes, I do think we can do slightly better. And as I mentioned -- as I just mentioned in the prior question, it comes down to the strength that we have in tequila growth, our strength in our whiskey portfolio, the strength that we have with the consumer and, I think, the strength of the spirits industry overall. It certainly feels like we could do slightly better than that 4% that we were doing pre-COVID.

Now a question for Alvaro. In your experience, how do you see the demand for scotch evolving in Latin America in the context of weak local currencies and the need for you to increase prices on these imported products?

Yes. So scotch right now is quite a vibrant category in Latin America, which is outperforming not only spirits, it's also outperforming TBA. And we've got quite a solid portfolio of brands like Johnnie Walker, Buchanan's, Old Parr. Then now, especially this after COVID, are really getting to gain share of serves of at-home consumer occasion that before were predominantly of beer and wine and locally produced spirits. So I think there is a high level of confidence around keep doing that. And also, we need to remember that we operate in a region that has been dealing with inflationary environment and currency devaluation and fluctuations for a long time. So I think there is a high level of confidence around keep managing both the pressures that we are having, plus the opportunity that we have with the scotch.

Thank you. Could you please discuss your outlook for the vodka and rum categories and your opportunities here? By your own admission, these are not priority categories. But clearly, they remain large portions of your sales mix.

Yes, I'm happy to take that. Firstly, I'm not sure whether I said these are not priority categories. Here's how we think about the total portfolio of Diageo and take a really long view because product categories do go through cycles, right? We've seen it on whiskey 20, 30 years ago, which was being called as the end of whiskey. It came back. You saw the resurgence of gin that's happened in the last 8, 9 years, which has been extraordinary. And so we take the view that we've got to keep these brands vibrant and relevant. And actually, I feel good about our vodka portfolio and what CÎROC and Ketel One and Smirnoff and the future that we see for them, feel very good about our rum portfolio as well. But we don't shape category dynamics. Right now, obviously, tequila and whiskey and gin have more momentum. But we're very committed to ensuring that these brands continue to build their equity in these categories and that we ensure we're positioned for when long-dated long-term trends begin to shift. Smirnoff and Captain Morgan in a lot of the world still have a lot of runway for growth. It's a little more challenging in the U.S. But even there, it's now in a modest growth. And within the categories, it's doing better within vodka and within rum. So I view this as -- at any point in time, you are going to have parts of the portfolio growing faster, parts growing slower, you'll have markets growing faster, markets growing slower. Diageo's strength is our ability to manage across the diversity of this portfolio and deliver consistent, sustainable growth.

Thank you. Our next question is how integrated are your tools with distributors in the U.S.? And the convenience channel is becoming increasingly important for spirits with growth of prepared cocktails. How can you win in this channel where beer distribution has always had the edge?

Debra?

Sure. So we actually have really good -- we have 2 networks. We've got the spirit distributor network, and we've got the beer distributor network, and we feel great about both. And really, when we're looking at the convenience portfolio, we are looking across both spirit cocktails in a can that goes through our spirits distributors as well as we've got still -- Smirnoff Ice turns 21 this year. So we've got a strong FMB portfolio still as well that goes through our beer network. And so we're quite integrated, particularly with some of our distributors, and we use a lot of their information as well as our own as we're using tools like EDGE. And so that absolutely helps us be able to take these products to the right places to the right consumer at the right time.

Our next question is, Cristina highlighted Diageo's cutting-edge innovation capabilities. Given your best-in-class consumer insight tools and generally strong #1 and #2 positions in most product categories, why have you chosen to acquire brands in areas like premium gin or premixed cocktails in recent years rather to create them in-house using these capabilities?

Yes, I'm happy to take that. I'd say we want both, and we're very disciplined about when we acquire and what we expect. So we're very selective in the acquisitions. And clearly, using our innovation engine to build new brands and new products as well. In these 2 cases, I mean, Aviation Gin, we've identified as a brand that has over several years built a very nice traction in the marketplace. We think it's -- with the trend of premiumization in gin ready to take off in the U.S., we believe that's well positioned to capitalize on those trends. And some of the cocktails, the Loyal 9 Cocktails, again, very distinctive proposition, early stage, not a lot of capital, and it helps speed the process. A spirit brand takes a long time to build from scratch, typically. And so when we spot things early, a bit like we did with Casamigos and why we went after Don Julio when it was much smaller, so we will always use both.

Thank you. The next question is, are you expecting acquisitions to be a material contributor to your ambition to increase TBA share from 4% to 6%? What is the next big growth opportunity that you're investing in today for the decade ahead?

Sure. I can take that, Ivan. So we do expect to have some regular investment in M&A. It has been a huge driver of value for us over the last several years. You would have seen that 460 basis points of growth for our U.S. Spirits business came from the acquisition that we made in Casamigos. Equally importantly, divestitures have played an important role as well in accelerating growth as well as generating funds for our shareholders and creating more focus on the organization on what we go after. We are very picky about the brands that we buy. They've got to be built the right way. We need to have confidence that they're going to deliver -- we are going to be able to deliver strong shareholder value by making the acquisitions. We're extremely disciplined in how we go through the entire M&A process. And so -- but I do expect that it will be a key contributor to our ambition to grow. In terms of what are we investing in today for the decade ahead, a lot of things that we've talked about today. I mean you look at the $500 million investment that we have announced on expanding capacity in tequila, the single malt distillery that we announced that we've just started construction in China, the Guinness storehouse in Chicago. These are all things that will help us to be able to grow this business for years to come as well as our investment in digital capabilities. We've -- Cristina shared, and Debra and Alvaro shared a number of the tools that we are using in this space. And this will continue to fuel incredible growth for us in the decades to come.

Thank you. Next question?

Is low and no alcohol a significant part of the new growth algorithm? How should we think about it going forward, focus on organic or M&A?

Yes, I can take that. I mean we do see the space of low and no alcohol as attractive and strategic going forward. We do intend to participate in it. And our goal really is to lead the shaping of it, particularly around in spirits. We're going to go about it with innovation internally and M&A, as you've seen, a brand like Seedlip, which came in through Distill Ventures. And organically, where we've had great success here on Tanqueray 0.0%, Gordon's 0.0%, Guinness 0.0% is off to a very good start. We've not set a quantified goal here because our goal is really to help lead and shape the market. That's how we're looking at it. And we think it's a really attractive on-consumer trend opportunity which we want to lead the development of.

Our next question, can you provide more color around the phasing of the GBP 1.2 billion cost savings over the next 3 years?

Sure, I can take that. So in the guidance that we've put out for the medium term, that's fiscal '23 to fiscal '25. We have -- we do believe we will be able to deliver GBP 1.2 billion of -- GBP 1.2 billion of cost savings in the 3-year time period. We are not providing explicit guidance on exactly what the number will be year-on-year. But let me tell you a little bit about why I have such confidence in our ability to be able to deliver the continued productivity. First and foremost, this is embedded in our culture and our people. And what do I mean by that? What I mean by that is that our people wake up every day, go to work every day believing that this is something that they need to do. And why would somebody want to do that? They want to do that because they know that each dollar saved goes -- gets reinvested in growing our business. And in a company that loves our brands as much as we do, this is why this entire machine works. We do believe that we will get a fair chunk of those savings from COGS. We believe that marketing effect efficiencies will be another driver of the savings. And we do believe we will get some savings out of the overheads area as well. And so I do have strong confidence in our ability to be able to deliver productivity savings over the 3-year time horizon.

Thank you. I think we have time for 1 more question. Last question?

Yes. The last question today is, why raise the low end of the guidance from 4% to 5%? Historically, the spirits industry has been quite cyclical. Have your views on the cyclical component changed?

Yes, I can take that. And maybe I'll use it to wrap up what today was about. Firstly, specifically, TBA is not that cyclical, right? In terms of the underlying consumer demand and the drivers of premiumization that are at work. So we feel very confident about that. I hope you took away from today this -- raising the lower part of our guidance from 4% to 5% really reflects our confidence in the business and our ability to deliver sustainable quality growth. It stems from the participation we now have in the portfolio, the product categories, the brands, the price points, the geographic footprint, right, U.S. and China and Europe, strong. You see tequila, whiskey, gin, strong. Reserve brands are growing at a very fast pace, and we have the leadership position there. So the reshaping of the portfolio that's happened in the last 5 years positions us for better growth. Then you look at our investment behind this, and we're doing it much more smartly. We are -- our marketing and commercial execution, as I hope you've seen today, is leading edge. We've invested behind it and the quality of what both creative data and analytics and route-to-consumer execution is now at a whole different stage. Efficiency and productivity is built in, and that gives us the oxygen to reinvest. As Lavanya talked about, it's very much in our culture. Our commitment to sustainability and ESG, I hope you would agree, we are genuine in our desire to lead here. And if you look at our track record over the last decade, we've had impressive gains there. And then finally, I would say to Lavanya's point earlier, our people and our culture is a real competitive advantage. And as we put this all together, and look forward, this is what gives us the confidence in the medium-term guidance that we've laid out. It is a competitive world out there. And we -- but we still have a lot of opportunities to improve in our execution in parts of the portfolio that are not working. And so I know I speak on behalf of the executive committee team here in front of you that this is an ambition we are both excited and determined to deliver. So thank you, everyone, for your time today. I hope you found the Capital Markets Day informative and useful and we all appreciate hugely your interest, support and investment in the company. Thank you.