Financial Data and Key Metrics Changes - Diageo has increased its cost-saving targets from $500 million to $625 million, indicating a focus on supply chain efficiency and operational excellence [6][11][12] - The company aims to deliver $3 billion in net cash flow, which includes the exceptional costs associated with the new savings target [11][12] Business Line Data and Key Metrics Changes - The company is focusing on optimizing trade investment and advertising and promotion (A&P) spending, which has grown at a higher rate than net sales value (NSV) growth [10][12] - Diageo is looking to improve the effectiveness of its marketing spend, with approximately 40% of A&P dollars currently spent on media scale and reach [10][12] Market Data and Key Metrics Changes - The U.S. market has shown growth primarily through a few successful brands, such as Don Julio Reposado and Crown Royal Blackberry, while other brands in the portfolio are struggling [34][36] - The company has not observed signs of improvement in U.S. consumer sentiment, maintaining a cautious outlook for fiscal 2026 [40][41] Company Strategy and Development Direction - Diageo is shifting its focus from margin percentage to dollar margin, aiming to capture profit pools that may have been overlooked due to an obsession with premiumization [19][23] - The company is evaluating its portfolio for potential disposals of non-core businesses to focus on growth areas within the spirits segment [25][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing debate about structural versus cyclical changes in the industry, suggesting that moderation trends may be exacerbated by macroeconomic pressures [28][30] - The company believes that the spirits category remains robust and attractive, despite current uncertainties [43][44] Other Important Information - Diageo is exploring opportunities in lower alcohol by volume (ABV) products and ready-to-drink (RTD) formats to cater to changing consumer preferences [32][33] - The company is committed to rebuilding its commercial execution capabilities to enhance relationships with customers and drive growth [14][36] Q&A Session Summary Question: How is Diageo finding cost savings? - Diageo is focusing on supply chain efficiency and operational excellence, with a shift in perspective on cost savings to ensure they contribute to the bottom line rather than just cost avoidance [7][8] Question: How will Diageo maintain relationships while cutting costs? - Management plans to reinvest approximately half of the savings into commercial excellence and execution to maintain important relationships in the industry [13][14] Question: What is the strategy regarding marketing spend? - Diageo is looking at marketing spend holistically, focusing on effectiveness rather than just increasing budgets, and is committed to reducing wasted commercial A&P [16][17] Question: How is Diageo evaluating potential disposals? - The company is assessing whether certain businesses offer synergies or growth opportunities, with a focus on maximizing value for shareholders [25][43] Question: What is the outlook for the U.S. consumer? - Management does not see signs of improvement in U.S. consumer sentiment and is planning cautiously for fiscal 2026 [40][41]