OUR BUSINESS OUR BRANDS SOCIETY 2030 NEWS AND MEDIA INVESTORS CAREERS Annual Report 2021 Snapshot Chief Executive’s and Chairman’s statements Performance highlights Connecting purpose to performance Our brands Investment proposition Market dynamics Business model Stakeholder engagement Strategic priorities ‘Society 2030: Spirit of Progress’ Performing against our 2030 targets Our ESG reporting approach Responding to climate risk Case studies Downloads Annual Report 2021 Diageo is a global leader in beverage alcohol with an outstanding collection of brands across spirits and beer. Annual Report 2021 Download PDF (13MB) ESG Reporting Index Download PDF (3MB) View all downloassssds CHIEF EXECUTIVE’S AND CHAIRMAN’S STATEMENTS Creating a positive impact and emerging stronger “I am very proud of how Diageo’s 27,650 employees have supported each other, our customers and the communities in which we live and work throughout this terrible pandemic. Our company is emerging stronger, and I would like to thank all my colleagues for their dedication and resilience. I would also like to express my deepest condolences to the families of employees who lost their lives and to all who have lost loved ones this year due to the pandemic.” Ivan Menezes Chief Executive “Again this year, Diageo has displayed its culture of agility, moving at pace to adapt ways of working, capturing emerging opportunities with our consumers and trade partners, delivering further efficiencies and continuing to invest in the foundations of our long-term success.” Javier Ferrán Chairman CHIEF EXECUTIVE’S AND CHAIRMAN’S STATEMENTS (PDF 505KB) PERFORMANCE HIGHLIGHTS FINANCIAL PERFORMANCE NON-FINANCIAL PERFORMANCE Volume Equivalent Units (EU) Created with Highcharts 4.2.5 2021 2020 EU238.4m EU217.0m Reported movement 9.9% Organic movement 11.2% Net sales1 Created with Highcharts 4.2.5 2021 2020 £12,733m £11,752m Reported movement 8.3% Organic movement 16.0% Operating profit Created with Highcharts 4.2.5 2021 2020 £3,731m £2,137m Reported movement 74.6% Organic movement 17.7% Net cash from operating activities Created with Highcharts 4.2.5 2021 2020 £3,654m £2,320m 2021 increase of £1,334m 2021 free cash flow2 £3,037m Earnings per share (eps) Created with Highcharts 4.2.5 2021 2020 113.8p 60.1p Reported movement 89.4% eps before exceptional items movement2 7.4% Total recommended dividend per share3 Created with Highcharts 4.2.5 2021 2020 72.55p 69.88p 4% 1 Net sales are sales less excise duties 2 See definitions and reconciliation of non-GAAP measures to GAAP measures on pages 74-83 of the Annual Report 3 Includes recommended final dividend of 44.59p Unless otherwise stated in this document, percentage movements refer to organic movements which are non-GAAP measures. For a definition of organic movement and reconciliation of non-GAAP measures to GAAP measures, see pages 74-83 of the Annual Report. Share refers to value share. Percentage figures presented are reflective of a year-on-year comparison, namely 2020-2021, unless otherwise specified. PERFORMANCE HIGHLIGHTS (PDF 155KB) CONNECTING PURPOSE TO PERFORMANCE Building a company that will prosper over the long term We are a global company built on and sustained through innovation, creating new products, categories and experiences for consumers. We are the stewards of iconic, purpose-led brands created by entrepreneurs like John and Alexander Walker, Elizabeth Cumming, Charles Tanqueray, Arthur Guinness and many more that have followed in their footsteps. Today, we stand on their shoulders and act with the same entrepreneurial spirit and determination. CONNECTING PURPOSE TO PERFORMANCE (PDF 419KB) OUR BRANDS With over 200 brands sold in more than 180 countries, our portfolio offers something for every taste and celebration We own Johnnie Walker and Smirnoff, two of the world’s four largest international spirits brands by retail sales value¹ 1 IWSR, 2020 People and brands are at the very heart of Diageo. To develop, launch and grow a brand requires creativity, determination and belief. Arthur Guinness had belief – signing a 9,000-year lease on the St. James’s Gate Brewery in Dublin. Alexander Walker, John’s son, was determined that their whiskies would be carried by every ship’s captain, ‘from the four corners of Scotland to the four corners of the world’. Today, our people share these attributes, combining their entrepreneurial flair and award-winning creativity, with deep understanding of consumer insights and the latest data to nurture and build our brands. Discover our portfolio OUR BRANDS (PDF 3.0MB) INVESTMENT PROPOSITION Positioned to win Diageo is a global leader in the premium and above spirits segment – which is growing globally and gaining share.1 And with Guinness at the heart of our portfolio, the majority of our beer business is positioned in the premium, flavourful beer segments, which are growing fastest.2 OPEN ALL In an attractive industry With a leading footprint and brand portfolio An effective route to consumer Financial strength and a culture of efficiency Highly engaged people And a commitment to shaping a more sustainable future 1 IWSR, 2020 – retail sales value (RSV) CAGR 2010-2020 2 Global Data, 2019 3, 4 IWSR, 2020 5 85% of our global employees completed the survey INVESTMENT PROPOSITION (PDF 196KB) MARKET DYNAMICS An attractive industry with a runway for growth Drinking occasions and practices vary depending on local culture and traditions. We believe that drinking in a responsible way can be part of a balanced lifestyle in many societies around the world. Our markets are shaped by long-term consumer, economic, cultural and social trends, and the regulatory environment. Premium total beverage alcohol has remained resilient during Covid-19 and the long-term trends for our industry remain attractive. Consumers want to ‘drink better’ Consumers are increasingly choosing spirits An emerging middle class who can afford international-style spirits Consumers are changing how they socialise Consumers are changing how they buy A complex regulatory environment Consumers expect businesses to act responsibly Retail sales value of global alcohol market¹ £728 billion Equivalent units of alcohol sold² 5 billion New legal purchase age consumers expected to enter the market by 2031³ 600 million 1,2 IWSR, 2020 3 World Bank, 2021 Find more out about our e-commerce strategy and our super premium and luxury portfolio in China. You can read more about our market dynamics in the PDF download below. MARKET DYNAMICS (PDF 196KB) BUSINESS MODEL Creating a truly sustainable business for the long term We deliver our strategic priorities through a business model that leverages global and local expertise, has the consumer at its heart and puts our responsibilities to our stakeholders front and centre. Through our ‘Society 2030: Spirit of Progress’ 10-year action plan, we want to help create a more inclusive and sustainable world, creating a positive impact in our company, with our communities and for our society. Our business activities Consumer insights We continually evolve our data tools to understand consumers’ attitudes and motivations. We convert this information into insights which enable us to respond with agility to our consumers’ interests and preferences. Sourcing From smallholder farmers in Africa to multinational companies, we work with our suppliers to procure high-quality raw materials and services. Where it is practicable, we source locally. Marketing We invest in world-class marketing to responsibly build vibrant brands that resonate with our consumers. We have a rigorous global Marketing Code and belong to the Global Alliance for Responsible Media, working with peers to push for further consumer and brand safeguards. Innovation Using our deep understanding of trends and consumer socialising occasions, we focus on driving sustainable innovation that provides new products and experiences for consumers, whether they choose to drink alcohol or not. Distilling and brewing We distil, brew, bottle and distribute our spirits and beer brands through a globally co-ordinated supply operation, working to the highest quality and manufacturing standards. Where it makes sense, we produce locally. Selling We grow by working closely with our customers. Our global and local sales teams use our data, digital tools and insights to extend our sales reach, improve our execution and help generate value for us and for our customers. When our customers grow, we grow too. Find out more about our business model and the value we create for our stakeholders in the PDF download below. 27,650 people 200+ brands 180+ countries 138 sites BUSINESS MODEL (PDF 586KB) STAKEHOLDER ENGAGEMENT Ensuring a continuous dialogue We aim to maintain open and positive dialogue with all our stakeholders, considering their key interests and communicating with them on a regular basis. This dialogue helps us build trust and respect and make choices as a business that help shape the role we play in society. The strength of our stakeholder relationships has never been more important than during Covid-19. We continue to be committed to actively supporting our people, our industry and our communities. Learn more about how we engage with our stakeholders in the PDF downloads below. STAKEHOLDER ENGAGEMENT (PDF 312KB) CORPORATE GOVERNANCE - STAKEHOLDERS (PDF 325KB) STRATEGIC PRIORITIES Delivering our Performance Ambition Our strategic priorities support the achievement of our ambition to be one of the best performing, most trusted and respected consumer products companies in the world. Through them, we deliver the strategic outcomes against which we measure our performance. STRATEGIC PRIORITIES (PDF 974KB) Our six inter-related and mutually reinforcing priorities drive our company forward. Read more below and in our Case Studies. OPEN ALL Sustain quality growth Embed everyday efficiency Invest smartly Promote positive drinking Champion inclusion and diversity Pioneer-grain-to-glass-sustainability ‘SOCIETY 2030: SPIRIT OF PROGRESS’ We are committed to building a more sustainable, responsible, and inclusive business and society To lead our business through the next decade, we have set 25 ambitious goals which are aligned to the United Nations’ Sustainable Development Goals. The issues facing society are complex and connected and we are focussed on the impact we can have throughout our value chain across communities, suppliers, our partners, customers and consumers. From our people to our brands and the way we promote our category, we will leverage the full breadth and reach of our business to shape market-leading policies and practices. Read more about our ‘Society 2030: Spirit of Progress’ plan below, as well as how we are putting it into action in our Case Studies. We want to change the way the world drinks for the better. We will do this by celebrating moderation and continuing to address the harmful use of alcohol, expanding our programmes that tackle underage drinking, drink driving and binge drinking. We believe the most inclusive and diverse culture makes for a better business and a better world. We will champion inclusion and diversity across our business, with our partners and communities, to celebrate diversity and help shape a tolerant society. We are committed to preserving the natural resources on which we all depend. We will work in partnership to tackle climate change, water stress and biodiversity loss, and help create a more sustainable world. Water is the basis of life and our most precious resource. By 2030, every drink we make will use 30% less water than today and by 2026 we will replenish more water than we use in all our water-stressed areas. We all have a responsibility to restore the natural world on which life depends. We will do our bit by eliminating waste from our value chain, collaborating with farmers to regenerate landscapes, and creating innovative solutions to grow sustainably. The planet needs significant science-based action to create a sustainable low-carbon future. We will decarbonise our own operations by 2030 and work with our suppliers to halve theirs, too. We believe doing business the right way contributes to a fair and just society. We will create an environment where all our people feel they are treated fairly and with respect. We will act with integrity, to ensure we are doing business in the right way, meeting external expectations and our own standards. Learn more about our ‘Society 2030: Spirit of Progress’ plan and targets. Doing the right thing, in the right way, is the foundation of our business. Learn more about our human rights approach and health and safety strategy in the PDF download below. DOING BUSINESS THE RIGHT WAY (PDF 91KB) PERFORMING AGAINST OUR 2030 TARGETS Our targets underpin our ‘Society 2030: Spirit of Progress’ action plan Our action plan to help create a more inclusive and sustainable world is supported by a comprehensive set of goals that help us drive, measure and report transparently on our progress. In 2015, we set a range of environmental and social goals for 2020 and in November 2020 we set additional goals in areas including renewable electricity and plastic packaging. PERFORMING AGAINST OUR 2030 TARGETS (PDF 354KB) OUR ESG REPORTING APPROACH The non-financial reporting space is evolving quickly We are committed to continual evaluation and improvement of our approach and to actively tracking emerging ESG frameworks and good practice. Our ESG reporting suite aims to provide comprehensive and comparable disclosures for a broad range of stakeholders. As well as publishing our integrated Annual Report and ESG Reporting Index at the year-end, we also submit non-financial information to benchmarking and index organisations throughout the year. In our ESG Reporting Index we give additional disclosures in line with the GRI Standards index and the UNGC advanced reporting criteria index, plus our response to the Sustainability Accounting Standards Board (SASB). Relevant policies and standards Focus area Read more Promote positive drinking Marketing and Digital Marketing Policy Employee Alcohol Global Policy Position papers Champion inclusion and diversity Our people Code of Business Conduct 2020 Gender Pay Report Human Rights Global Policy Pioneer grain-to-glass sustainability Environmental Global Policy Sustainable Agriculture Guidelines Sustainable Packaging Commitments Partnering with Suppliers Standard Human rights Human Rights Global Policy Modern Slavery Statement Global Brand Promoter Standard Health and safety Health, Safety and Wellbeing Global Policy Anti-bribery and corruption Code of Business Conduct OUR ESG REPORTING APPROACH (PDF 110KB) RESPONDING TO CLIMATE RISK Committed to combatting climate change We have a longstanding commitment to combatting climate change and the related issue of water stress. Since 2008, we have been working to decarbonise our value chain, implementing adaptation measures and acting as champions for water stewardship around the world. This focus forms a key part of our strategic priorities, which support the achievement of our ambition to be one of the best performing, most trusted and respected consumer products companies in the world. We welcome the Task Force on Climate-related Financial Disclosures (TCFD) as an important step in increasing stakeholders’ and companies’ focus on climate change. We have incorporated the TCFD framework into our reporting and are accelerating efforts to mitigate climate change risks and identify opportunities for transitioning quickly to a low carbon future. RESPONDING TO CLIMATE RISK (PDF 1.1MB) CASE STUDIES The year in action Guinness: making connections, rooted in culture Scotch in China: positioned for premiumisation Online, on-demand, on track: accelerating Diageo’s e-commerce strategy Don Julio and Casamigos: how quality drives our growth Transforming our execution: every customer, every day, everywhere Building our portfolio for the long term: strategic acquisitions SMASHED Online: changing attitudes, reducing underage drinking Raising the Bar: our $100 million commitment to helping hospitality recover DOWNLOADS ANNUAL REPORT HISTORICAL REPORTS Annual Report 2021 Download (PDF 13Mb) ESG Reporting Index Download (PDF 3.0Mb) REPORT Annual Report 2021 Download (PDF 13MB) REPORT Annual Report Strategic Report 2021 Download (PDF 6MB) REPORT Directors' Remuneration Report 2021 Download (PDF 1MB) REPORT Corporate Governance Report 2021 Download (PDF 1MB) REPORT Audit Committee Report 2021 Download (PDF 69KB) REPORT ESG Reporting Index 2021 Download (PDF 3MB) REPORT NYSE Statement of Difference 2021 Download (PDF 208KB) REPORT Corporate Citizenship assurance statement Download (PDF 54KB) REPORT 20-F filing 2021 Download (PDF 2MB) Conditions of UsePrivacy and Cookie NoticeUGC PolicyAccessibilityPrivacy SettingsDrink responsiblyDrinkIQtheBar.comModern Slavery StatementSite MapSuppliersContact Us© Diageo 2021 Our Use of Cookies Our website uses cookies from Diageo and our partners to enhance your user experience, personalise content and show you more relevant adverts about our great products. 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