Perspective Key Key Target Summary Action Plan

Success Performan Performance

Factor ce Level
Indicator
Organic Net Total Revenue Increase by 5% by Drive sales in LAC and NAM
Sales Growth 2nd quarter of FY through market share growth
2025 and targeted consumer
marketing.
Financial Increase Return on Increase to 17% Focus on the Premiumisation
Profitability Capital (from 15.33%) by of spirits with high-volume
Employed FY 2025 sales such as Scotch, Tequila
and Vodka to increase profits.

Expansion Market Share Increase Total Utilise data on local markets to

Growth Beverage Alcohol identify best areas with growth
(TBA) share to 6% opportunities for top products
(from 4%) by FY of the company.
2030
Internal Efficiency and Successful Percentage Optimise the performance of
Business Sustainability execution of increase across workforce through
Process the Inclusivity, Diversity representation among
company's and Low carbon leadership across gender
ESG action world targets identities and ethnicities and
plan implement use of renewable
energy along 100% recycled
materials for packaging.

Employee Employee Increase to 85% Up skill the workforce by

Development engagement (from 81%) by FY setting up a training centre to
score 2025 recognise and nurture talent
within the workforce.
Learning And
Innovation Digitisation Online Increase the Utilise the company’s app to
engagement company's digital collect and analyse data in
reach to 20 order to market products
countries (from 13) effectively.
by FY 2025
Customer Tracking Optimum costumer Promote sales of low and non-
Satisfaction Market reach within alcoholic spirits and beers to
Performance dynamic consumer cater to changing consumer
environment. environment.
Customer Premiumisatio Organic net Increase Premium Introduce Premium high-
n sales growth net sales to 2% performing spirits into high-
in Premium (from 0.7%) by FY potential markets through
Tier 2025 local distributors to optimise
reach.
Individual Reflection:
The report provides a detailed analysis of the workings within Diageo PLC, by diving
into the financial indicators through Trend and Ratio analysis. The report then moves
on to analyse the company’s performance via non-financial indicators by providing
the Balance Scorecard and the Strategy Map. Finally, the report evaluates the
economic landscape of the company and concludes by providing some
recommendations for future operations.
While researching content for the report, I had a chance to go over all the materials
that were taught in lectures and also browse through the learning resources provided
online. This helped me gain an even better understanding of the module and feel
confident in analysing different aspects of a financial report. While working on the
report I was also able to understand the workings of Diageo in detail and gain insight
into different initiatives taken by the company and understand various frameworks
adapted for better future operations. Working on this made me understand the
design of the Balance Scorecard in depth and equipped me with knowledge to
design a BSC and Strategy Map for any given company.
Working on the report in a group has helped me with better time management as
well as communicating with my colleagues outside of the scheduled University
hours. The report has been an equal effort and hard work by all the group members
and all the members have been helpful to others through our individual research
methods.
In conclusion, this financial report on Diageo PLC has enabled us to understand the
course material in depth and equipped us with skills to not only understand various
workings within a company but also design a report using the available data.
References:
 Diageo. (2024a). Annual Report 2024.

https://www.diageo.com/~/media/Files/D/Diageo-V2/Diageo-Corp/investors/results-

reports-and-events/annual-reports/diageo-annual-report-2024.pdf

 Diageo. (2024b). Digital acceleration. Www.diageo.com.

https://www.diageo.com/en/careers/why-diageo/digital-acceleration

 Diageo. (2024c). Our Spirit of Progress targets. Www.diageo.com.

https://www.diageo.com/en/esg/spirit-of-progress-targets

 Diageo. (2024d). Preliminary results, year ended 30 June 2024.

https://www.diageo.com/~/media/Files/D/Diageo-V2/Diageo-Corp/press-release/

2024/f24-prelims-results-press-release.pdf

 IWSR. (2024, July 11). Consumers show preference for downtrading in beverage

alcohol, but sentiment is improving in some markets. IWSR.

https://www.theiwsr.com/consumers-show-preference-for-downtrading-in-beverage-

alcohol-but-sentiment-is-improving-in-some-markets/
Kaplan and Norton (1992), believed that managers needed to focus on
operational measures along with financial ones to better map out the
company’s current and future strategy for development. In order to achieve a
perfect balance between financial and operational measures, Kaplan and
Norton designed the Balance Score Card that would effectively measure a
company’s development and future strategy through four main viewpoints or
Perspectives- Financial, Internal Business Process, Learning and Innovation and
Customer perspective.
Below is Diageo PLC’s Balance Score Card based off their performance up until
the second quarter of FY 2024 and targets from FY 2025 to FY 2030.

Financial Perspective:
In the financial year 2024, Diageo PLC’s organic net sales declined by 0.6%,
which was primarily affected by poor performance in the Latin America and
Caribbean (LAC) region, which contributes 8% to Diageo’s organic net sales.
This was mainly due to low demand in the previous fiscal year which lead to
elevated levels of the inventory in LAC, eventually adding up to inventory
normalisation in FY 2024 within a challenging consumer atmosphere (Diageo,
2024).
According to Diageo’s Preliminary Results report, the organic sales in North
America (NAM) also declined in FY 2024. This was a result of consumer making
conscious choices with concerns related to health, personal finances along
with the recent moderation trend (IWSR, 2024).
To tackle this, Diageo’s focus in both the regions is increase their market share
through targeted marketing techniques and also design the delivery of
products and services into these market according to the current consumer
environment (Diageo, 2024).
IWSR (2024), also reported that the consumer focus was now shifting towards
premium spirits, which was confirmed by Diageo’s preliminary data (2024) on
the sales of their premium spirits. The same data is being utilised to drive
Diageo’s profits for FY 2025 by focusing on the premiumisation of their best-
selling spirits (Diageo, 2024).
Internal Business Process:
Diageo also aims to grow its market share by utilising its regional outlets and
data available on local, small-scale markets to detect the areas most suitable
for growth of their top-performing brands and spirits. It remains one of the
company’s top-most targets to grow its TBA share to 6% in FY 2025.
Similar to many leading global companies, Diageo sports an impressive ESG
strategy, which aims to incorporate 100% renewable energy throughout its
operation with a focus on preserving water. The company also demonstrates
the importance of inclusivity and diversity, by recognising the positive impact
of the same on the productivity within the workforce. Diageo aims to recruit
50% of women into key roles by 2030, and focus on representation from
ethnically diverse backgrounds into 45% of managerial roles (Diageo, 2020).

Learning and Innovation:

Diageo prioritises employee development to constantly motivate their
workforce. The company boasts an impressive employee engagement score of
81% and aims to up skill not just their workforce, but also their distributors
into experts in the industry through the setup of their upcoming ‘Academy of
Beverage Leadership’ (Diageo, 2024).
As the world moves towards progressively more digitisation, the company’s
‘Diageo One’ platform serves as tool for the consumers. The platform not only
operates e-commerce, but also engages with the consumers and help with
better understanding of the products that they are considering to purchase.
‘Diageo One’ currently operates in 13 countries with a reach of almost 200,000
customers. It remains one of Diageo’s targets to increase its reach to the global
audience via the ‘Diageo One’ platform (Diageo, 2024).
Customer:
Diageo remains a company that owns brands loved by consumers for decades.
The company aims to maintain that position by targeting maximum customer
satisfaction. This can be achieved through investing in the marketing of low
and non-alcoholic spirits and beers, which are at the centre of the new
consumer environment, with the customers’ in 2024 leaning more toward non-
alcoholic beverages (IWSR, 2024).
Diageo also focuses on the premiumisation of its key products, following the
0.7% growth in its premium tier of spirits. Premiumisation proves to be a vital
factor for the Spirits category, with consumers leaning more towards premium
spirits, as the customers start to feel more secure in their financial status with
the increasing spending capacity and growing incomes (IWSR, 2024).

Financial perspective:
 Drive sales in LAC (which contributes to 8% of Diageo’s organic sales)
and NAM (affected by inventory normalisation and conscious consumer
environment) through targeted marketing techniques (Diageo, 2024d).
 Focus on increasing profitability through premiumisation of best-selling
(high potential) brands following the recent data highlighting the
growing trend around premium spirits and Diageo’s growing premium
tier (IWSR, 2024; Diageo, 2024d).

Internal Business Process:

 Grow TBA share to 6% by 2025 through top-performing brands, utilising
regional outlets and data on local markets (Diageo, 2024d).
 Promote inclusivity and diversity with recruiting 50% women and 45%
employees from ethnic backgrounds into leadership roles. Following the
ESG strategy, incorporate use of renewable energy and aim for zero-
carbon world (Diageo, 2024c).
Learning and innovation:
 Up skill the workforce and distributors into industry experts through the
setup of ‘Academy of Beverage Leadership’ (Diageo, 2024d) and increase
the employee engagement score to 85% from previous 81% (Diageo,
2024a).
 Increase online customer engagement through ‘Diageo One’ platform by
providing product-related assistance (Diageo, 2024b) and increase the
reach of the platform in 20 countries.

Customer:
 Invest in the marketing towards low and non-alcoholic spirits catering to
the recent consumer trends to maximise customer satisfaction (IWSR,
2024).
 The 0.7% growth in the premium tier of spirits led to Diageo focusing on
the premiumisation of products (Diageo, 2024d), which also falls in line
with recent data suggesting increased spending capacity of consumers
(IWSR, 2024).
Internal factors
 Inflation, supply chain problem, changing customer demographics and
unstable market conditions

External factors:

Inflation  Inflation leads to higher cost of raw materials

 Inflation affects consumer’s purchasing
behaviour.
Supply chain  Fluctuation in agricultural yields can lead to
problems shortages or increased cost.
 Diageo operates in various markets, making it
vulnerable to local disruptions.
Changing  Age groups play a crucial role in changing
customer customer preferences. Some customers prefer
demographics prices and others seek quality.
 With growing interest in health and wellness,
demand for low and non-alcoholic is
increasing
Unstable  Increased competition from peers create
market challenging environment, requiring constant
conditions adaptation and innovation.
 Events such as the COVID-19 pandemic
disrupt supply chain, making it difficult to
source and deliver products.
Focus on premiumisation to take advantage of high-margin markets and expand its
operations into NAM, Europe and Asia.
Gain stability by boosting brand loyalty and attracting wealthier consumer base.
Maintain transparency and build consumer trust along with brand appeal through
following CSR and working towards the company’s ESG goals through their ‘Spirit of
Progress plan’.
By keeping an eye on economic indicators like interest rate, purchasing power of
consumers and fluctuation in currency exchange rate, Diageo can improve on its
competitiveness in the industry. This would enable prompt price adjustments
especially during inflation. Adopting such methods helps businesses foresee
economic obstacles.