Diageo(US:DEO)2025-09-04 19:17Financial Data and Key Metrics Changes - The company has increased its cost-saving targets from €500 million to €625 million, indicating a focus on improving operational efficiency [6][11][12] - The management emphasizes a shift from focusing solely on gross margin percentage to prioritizing operating profit dollars, which is expected to drive better growth decisions [20][23] Business Line Data and Key Metrics Changes - The company is looking to optimize its trade investment and advertising and promotion (A&P) spending, which has been growing at a higher rate than net sales value (NSV) growth [10][12] - There is a focus on maintaining commercial excellence and execution while ensuring that cost savings do not compromise essential relationships in the industry [13][14] Market Data and Key Metrics Changes - The management acknowledges that the U.S. market has shown growth primarily through a few successful brands, while many others in the portfolio are struggling [33][34] - The company is tracking consumer sentiment and spending power, indicating that there is still uncertainty in the U.S. consumer environment [39][40] Company Strategy and Development Direction - The company is evaluating its portfolio for potential disposals of non-core businesses to focus on growth areas, particularly in the spirits segment [26][30] - There is a strategic shift towards understanding consumer occasions and experiences to better align the product portfolio with market demands [34][36] Management's Comments on Operating Environment and Future Outlook - The management believes that moderation in alcohol consumption is a continuation of long-term trends rather than a sudden shift, influenced by macroeconomic pressures [29][30] - The company is not planning for significant improvements in the consumer environment for the upcoming fiscal year but is focused on what can be managed and controlled [39][40] Other Important Information - The management 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 leveraging digital media for better marketing returns and efficiency in spending [10][12] Q&A Session Summary Question: How is the company finding new cost savings? - The company is focusing on supply chain efficiencies and reallocating resources to drive operational savings while ensuring that these do not negatively impact commercial execution [7][8][10] Question: How will the company maintain relationships while cutting costs? - The management acknowledges the importance of relationships in the industry and plans to reinvest a portion of the savings into commercial excellence and execution [13][14] Question: What is the company's approach to marketing spend? - The company is looking at marketing spend holistically, focusing on effectiveness rather than just increasing budgets, and is committed to reducing wasted spending [16][17] Question: How does the company view the structural versus cyclical changes in the market? - The management believes that while there are cyclical elements, many changes in consumer behavior are structural and need to be understood in the context of long-term trends [28][29] Question: What is the outlook for the U.S. consumer market? - The management does not see immediate signs of improvement in the U.S. consumer market and is cautious in its planning for the upcoming fiscal year [39][40]