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CMD 2021

Nov 16, 2021

Cristina Diezhandino
CMO, Diageo

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 has touched on brand building as 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 re-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. Today, I'll 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 precision. This precision 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 omni-channel 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 marketer 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 this 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 shifts in socialization which impact 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 augment it 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 2017. The insights generated from these tools enable us to lead rather than follow trends. I want to share two great examples with you, of where we have done this. The first is luxury, the second is tequila, both important growth areas 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 premiumisation.

We have the privilege of working with some of the finest luxury spirits brands in the world. They are valued by consumers and valuable to our business. We have built our portfolio and crafted our marketing to leverage this breadth and diversity. We used 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 contact with the right influencers. We know that they are heavy consumers of digital content, so we use brand stories to engage with them online in one-to-one relationships, and we link this to personalized brand experiences, both online and offline. We know they expect access to highly curated and exclusive experiences. Our brand homes such as Brora, Talisker, and now Johnnie Walker Princes Street provide us with the ability to deliver them. We recognize 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's Sam Fischer to share how our approach to one-to-one consumer engagement is coming to life in Asia.

Sam Fischer
President, Asia Pacific and Global Travel, Diageo

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 offline. One of our initiatives in response to this has been to extend our existing Rare & Exceptional platform to be online. Diageo Rare & 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 diageorareandexceptional.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 & Exceptional private client business, and many digital-first customers have also applied for offline 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 whisky 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 Twelve, which is held on December 12th, another important online shopping day in China preceding Chinese New Year.

Cristina Diezhandino
CMO, Diageo

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, craftsmanship, and rarity still exists. 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.

Speaker 5

Luxury isn't what it used to be. The modern luxury consumer is infusing the category with a new spirit that places cultural values above price points. This shift can be distilled down to three truths. Luxury buyers are becoming younger. 55% of luxury spend will come from Millennials and Gen Z by 2025. As they become the wealthiest age group in modern history, diversity defines these generations. Nearly 60% of buyers purchasing luxury products are multicultural, who have more buying power and influence than ever before. Not all luxury buyers are wealthy. 33% of consumers consider themselves luxury buyers. Aspirational luxury consumers will save up, trade up, and splurge for quality. When it comes to brands, the drivers of choice are rooted in self-definition. The spirit lover seeks quality liquids that speak to their status as a connoisseur.

They look for craftsmanship, history, age statements, and rarity when making selections. The luxury lover is motivated by status. Brands they love are meant to be displayed, often sitting on the high end of price and desired by this consumer based on covetability and association alone. The liberation lover is fueling redefinition. Driven by purpose and immersed in culture, their reverence pulls them towards brands who have an energy of collaboration, design prowess, and a willingness to push boundaries at their core. These consumers are increasingly looking for seamless online shopping experiences to make their luxury purchases across categories. Within spirits, the number of brands they have to select from continues to grow.

Cristina Diezhandino
CMO, Diageo

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 consumer to ensure we connect with them. I'm excited by how we are marketing to luxury consumers in Asia, both online and offline. In the U.S., our brands are well-positioned to capitalize on the evolving shape of luxury. Let's move on to 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.

Debra Crew
President, North America and Global Supply, Diageo

Thanks, Cristina. I wanna 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 2021. 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 2026, we expect the tequila category to be number two 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 that 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, one in five Americans are forecast 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 day parts. 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. drinkers say they choose authentic items, and one in five 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 2015, we took control of the remaining 50% of Don Julio, gaining full global ownership and management control of the brand and its supply assets.

At the end of FY 2017, we acquired Casamigos, the fastest-growing super premium tequila brand in the U.S., partnering with two of the founders, George Clooney and Rande Gerber. We also have exciting opportunities to scale DeLeón 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 Rande 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 two 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 consumer insights. Primavera is perfect for the informal and mid-tempo occasions. Ultima Reserva delivers an authentic, incredible brand experience.

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 2021, 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.

Cristina Diezhandino
CMO, Diageo

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 creative 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.

Speaker 5

Baileys is a great example of precision marketing and a digital transformation where the approach is already growing 8% CAGR from FY 2018- FY 2021. It begins with our focus on establishing Baileys within the contemporary culture of treating and indulgence, a category forecast to grow by a third to GBP 302 billion by FY 2025. Consumers all around the world have changed how they feel about treating, embracing it as part of a balanced lifestyle. People are jogging and eating ice cream. The Baileys brand insight taps into these themes, acknowledging that in a difficult and disorientating world, we all need these moments of spontaneity and joy. By creating delicious content, Baileys has successfully established itself as a tasty treat, winning high reach and high relevance in the category.

While there are over 1 million tagged posts on Instagram including Baileys, there are less than 15,000 tagging cream liqueur. Repositioning as a real adult treat has helped the brand drive relevance at huge scale, with consumers adding Baileys to millions of posts within the indulgence space. Not to mention the 4.5 billion searches a year there are for treats that Baileys can now show up in. Creating lick the screen delicious content alongside a strong and consistent brand world, consumers are inspired to get creative with Baileys all year round, helping deliver some of Diageo's strongest tracked ROIs. At the heart of the approach is social listening and search data analysis, which helped identify what people cared about most in treating and when they cared about it. This allowed Baileys to recruit new consumers with mouth-watering content relevant to the billions of triggers all year round.

This precision approach allows the brand's work to extend across four key areas. This highly data-driven approach has resulted in ROIs 1.5x the U.S. Diageo social average and delivered Baileys's highest social ROIs ever. Beyond social media, a similar strategy was taken to refine the performance of the wider media investment. Through localized testing coupled with Catalyst measurement, they saw early promise in scaling TV investment for Baileys beyond the holidays. This gave them the confidence to invest more broadly this year, resulting in some of their strongest ROIs on TV and expanded seasonality for Baileys. Additionally, through ongoing cohort testing in streaming platforms, they've been able to drive a 40% higher ROI versus non-targeted media. This approach can be adapted for individual markets, bringing locally relevant treats to life.

In the U.S., Baileys Deliciously Light was able to lean into the trend of better-for-you options and daytime occasions through unique content and tasty serves that spoke to informed indulgence. Following indulgence online, the brand extended the treating strategy by launching brand stores on Amazon under their virtual Treat Bar platform. Consumers would discover delicious Baileys serves created by local influencers and could seamlessly click through to shop the recipes. In Germany, 97% of consumers viewing this Amazon content were new to the brand. In Spain, in August, the Treat Bar activity contributed to a pretty sweet 24% uplift in Baileys Original sales.

With live social commerce forecast to drive over $131 billion in sales in China, the brand has put treating at the heart of retailtainment, partnering with top seller Viya, who brought the Baileys brand, flavors, and recipes to life in her own signature way for her live audience. A collaboration delivering sales of 20,000 units of Baileys Strawberries & Cream in just two minutes. That's a lot of Baileys to a lot of people in no time at all. Anchoring this entire digital ecosystem is baileys.com, a platform that reaches over 3.3 million people looking for treatspiration. Through the addition of reactive recipe content, on-site search, and search engine optimization enhancements, baileys.com is now more discoverable than ever before, with 66% increase in Google first page visibility, driving consideration amongst new audiences by ranking for more than 100 new non-branded keywords.

Over the last six years, Baileys has implemented a digital transformation that has set it up to deliver effective, efficient growth drivers across platforms. Leveraging our learning, we have all the right ingredients in place to build on our results and deliver a show-stopping performance in the years to come.

Cristina Diezhandino
CMO, Diageo

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're 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.

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 offline to the consumer, there's 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 used 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 much broader range of touchpoints. Our brands need to do more than just engage with consumers when they are physically at a bar, at an event, or in 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 touchpoints, 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 breadth 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 engagement 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 2021, 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 the video to show how the brand is exciting new consumers across many channels. We will hear from Alvaro about how Johnnie Walker is being brought to life in Brazil.

Speaker 5

Take a walk on the wild side. Walk, walk, all over. Walk all over you. She told me to. Walk this way. She told me to. These boots are made for walking, and that's just what they'll do. One of these days these boots are gonna walk all over you. Walk, walk this way. Black kids. Come on.

Alvaro Cardenas
President, Latin America and Caribbean, Diageo

Thanks, Cristina. I wanna 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. 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 a strong double-digit growth in Brazil in fiscal year 2021, 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.

Cristina Diezhandino
CMO, Diageo

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 the 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 sq ft celebration of the Johnnie Walker brand and its amazing story, which started in a 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.

Speaker 5

Hello, folks. I'm Edith Bowman. Very excited because I've been invited to have a sneak peek around the brand-new Johnnie Walker Princes Street, and I thought you might wanna come with me. Shall we go and have a look? Come on ♪

We have you booked for the Journey of Flavor, which is a fantastic, fully sensory, immersive tour.

Slàinte Mhath.

Slàinte.

That just blew my mind. Okay, here we go then. We ready for this? Whoa. This is the most breathtaking view I've ever seen.

Cristina Diezhandino
CMO, Diageo

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 the flavor profiles, and chatting with our global brand ambassadors. They even received their own highball kit to provide this 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 exciting experiences, 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're using our digital platforms to drive engagement with our Scotch portfolio. We're 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, 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. 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.

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 email about the launch of the Lagavulin Offerman Edition to the highest propensity consumers, and it sold out in just six 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 two 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 innovation to continue to recruit and re-engage 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. 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 this, we are guided not just by insight, but by three 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. Re-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 whiskey. What's Your Whiskey is a great answer to that.

It uses artificial intelligence to help people find their perfect whiskey 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 whiskey category share growing almost seven 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 draft 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. Draft 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.

Guinness MicroDraught, which is essentially a keg so small it fits in a can, uses cutting-edge technology to bring beautiful, fresh Guinness Draught 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?

Sam Fischer
President, Asia Pacific and Global Travel, Diageo

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 five 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- one and tier- two 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 whiskey expertise to China and another example of our investment to develop the whiskey 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 whiskey, 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 whiskey that will delight premium whiskey 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.

Cristina Diezhandino
CMO, Diageo

That's how we bring it all together. The consumer insights, the creativity with precision, the understanding of the consumer's journey in an omnichannel world, and the constant focus on reinvention and innovation. 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.

Debra Crew
President, North America and Global Supply, Diageo

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 ROI well over $2 for every $1 spent. We also used 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's 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 2021, 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.

Cristina Diezhandino
CMO, Diageo

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 2022, it will be fully deployed across our global markets. What we have built is an industry-leading execution ecosystem, which we call EDGE, Everyday 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 half a million more outlets than you would have done just three years ago. 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.

Speaker 5

We have a customer-focused, digitally enabled organization. Utilizing consumer data and outlet-specific data, our customers will have insights and recommendations tailored to their outlets at the touch of a button. EDGE 365 is our game-changing sales force automation tool, enabling our sales reps to see each customer's biggest opportunities and what value they will add to their business. Diageo One is our highly bespoke, always-on experience for the customer that they can access where they want and when they want. We have created the opportunity to order glassware, promotional materials, and more from Diageo or a wholesaler. Customers can access customized brand assets, contracts, and invoices, use training materials at Diageo Bar Academy, participate in a global customer community based on customer-tailored insights and recommendations. We don't stop here.

EDGE will enable us to adapt to change as rapidly as it occurs, creating ongoing value for Diageo and our customers and strengthening our customer partnerships.

Debra Crew
President, North America and Global Supply, Diageo

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 three times more sales than a non-recommended product. Alvaro is now going to share more about how EDGE is rolling out in Latin America.

Alvaro Cardenas
President, Latin America and Caribbean, Diageo

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. We know this because we have consistently heard it from our sales teams, retailers, and customers. I am going to share some of their feedback with you now.

Speaker 5

Colombia is our first adopter in LAC, and we have heard loud and clear positive feedback from our sales reps.

With our app-enabled sales force automation solution, our team has achieved a successful transformation from a cumbersome and semi-manual process to a digital smart process, helping our sales reps be better business partners to their customers by delivering a targeted portfolio and activation solutions that grow sales and profit while making the entire selling experience more efficient. This great feedback was echoed by retailers.

Finally, our customers are equally delighted.

The power is in our hands. EDGE 365.

Alvaro Cardenas
President, Latin America and Caribbean, Diageo

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. We have expanded the reach of outlets by over 40% in fiscal year 2021. 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.

Cristina Diezhandino
CMO, Diageo

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 advanced digital capabilities to connect with consumers at the right time, in the right place, with the right message. Connecting with consumers across multiple touchpoints. Delivering cutting-edge innovation against consumer insights and opportunities. 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. 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.

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