francine: they are household names, some dating back c enturies. turnsear, 2018, deblasio 21. with over 200 brands i it is the bigges producer of spirits in the world. lacqua, weaders with meet the chief executive. thank you for joining us.

how has the drinks busine3sss changed? exciting timea over the last couple decades. the consumer is much more interested in premium brands, in mixology, in cocktails. the business has changed. emerging markets are coming through stronger and the developed world has good growth. but the court dynamic is great because people around the world want great experiences and those who want to drink want to drink better. that is a good thing for diageo. francine: what attracted you to the drinks business? do you remember that day you walk through the door? at home?ind yorurself ivan: i do. of my got the call, two

favorite brands were with this company, guinness and johnny walker. so, it was not a difficult decision because one of the great things about being with diageo --johnny walker is 198 years old and guinness was started in 1969. that is what attracted me to the company. francine: consumers drink more at home. he talked of the premiumization of the brands they drink. going out.me and drinks are built into the fabric of culture. key has a real

renaissance around the world. young people are interested in whiskey the renaissance behind it. that is what we love, telling those stories and getting that connection with consumers. francine: how much does it scale matter? do you need to be bigger to demand bigger premiums for your product gets placed in a bar? job: i always say my key is to keep the big company small. company, wonderful but at the same time, you need to be very entrepreneurial and very connected to where friends are going and move with speed. diageo is magic of to get the best of both. francine: what does that mean? does that mean you acquire the local brand, and you rebrand and give people stories about the more famous global brand, so they buy into it?

spreading thed grend. we have a brand called tanqueray, which is doing remarkably. company like ours, when translate that develop, you have got to use them very carefully. haved the world, we watched how culture is shifting, what happens are shifting and building our brand quickly. seems like at nightmare. how do you stay on top of the trend. i do not know how you spot that. remained very connected, our teams do, to understanding what the conversation and culture are about. we track what is happening on social media with adults and

what they are talking about. and that is what our marketing teams around the world need to be really good at. and it is actually a very exciting part of the job. two of theu own most importants fi spirit brands in the world. how do you keep those relevant? david: my job is to make sure that jobs, whic have been around forn many years, remain relevant. for the 20-year-old in brazil, johnny walker needs to remain relevant, cool, aspirational. that consumer needs to be willing to pay a premium for this wonderful whiskey. that is how i define our job. these brands have got to stay connected to culture because things change. how young people socialize is changing. and we have got to make sure our

brands fit in with the trends. and i call that the day job. ?rancine: well, what is that marketing? and does that change? do you replace billboards with celebrities? is it product placement? in brazil, we have this wonderful truck decorated like johnny walker. it moves around the country and goes to communities and we host little events. we introduce people to the whiskey and we tell them the story of all the single malts johnny walker. the youngest whiskey was distilled before the financial crisis. you tell them the story and it is amazing how much interest we get. and when you bring a consumer into a brand. a true mentoring experience, as we would call it. you get them for life. i always say, the thing about our business is what you drink

or what you serve says a lot about you. our brands need to live up to that expectation. francine: talk to me about the u.s. it is your largest market. is it expected to remain so 5-10 years from now? ivan: it is a fantastic market for us. is our biggest developing market, one third of our sales. it bodes very well for premium brands. it is also a young population. you have a growth of americans turning 21 at a faster rate than in europe. and finally, the taste profiles are changing. there's a huge interest in

teh culture. mixology is hot. francine: coming up on leaders, running a global empire. tariffs, and how to build the business in emerging markets, next. ♪

francine: as well as running the world's biggest spirits company, ivan menezes sits on the u.k.-india chief executive board. understand the eternal hunt for growth. more than 1/3 of the revenue came from north america, 20% f africa. and 13% from

are emerging markets getting a taste for spirits? ivan menezes is back with me. are the developing economies getting the same taste as a bigger ones? ivan: very much so. people's aspirations for great brands is very high growht of the emerging middle class, we see 500 million approaching drinking age. that's an exciting opportunity for us. it is not a straight line and this is the nature of emerging markets. there areca, nigeria, ups and downs. but you need to remain very consistent in building your brands and categories for the long haul. you have tough years.

we acknowledge that, but over time, the growth prospects are very exciting. we have a space that is an affordable indulegence, luxury. when people want to celebrate, our brands play a wonderful role int ahin that space. the trend for people drinking better tends to be strong. francine: but at the same time, how do you go against a local spirit, a local drink? do people drink both? ivan: the key for the brands is having them resonate at a local level. francine: the taste. ivan: in brazil, johnny walker is seen as an iconic brand, not as an international brand. that's how we build the brand.

in brazil, we have really connected with the consumer. our marketers around the world. you have got to keep the brands connecting at a local level. yes, they are global brands, but the same thing is true in india. most of it is local. but the aspiration to move into high,-whiskey is very even though the price point is very high. we are keeping scotch very relevant. francine: is that a big headache for you, getting the price right? importante is an factor in the brand value equation. and for our premium brands, it's something we watch closely. at the end of the day, our

brands are affordable. if you step up to a bar and order johnny walker blue label, you are not betting the farm. you are not purchasing a fancy watch. but it is a great occasion and we keep the specialness of our product, but it is affordable. getting that price-value equation is important. francine: i remember you coming into bloomberg and sharing with me, there are smaller sized b ottles for emerging markets. i do not know if that is how they drink, or if that goes back to affordability. ivan: it is a combination of both. there are occasions when small groups are going out, or ina beer outlet, we have a program, for example, where people in vietnam or africa are largely drinking beer. they take a small bottle of johnny walker black label and

share it with friends around the table. there is affordability, but they tie to the occasion. that's something that we manage through our understanding of the market and the consumers. >> a special distilling process. ♪ >> and 28 generations of knowledge. the best can only get better. years.to another hundred francine: talk to me about china. do you sell differently to the chinese consumer than the american consumer? david: the big thing about china, most of the value of consumption happens with meals. so, the market is enormous and a very profitable market in china. and it is so ingrained in culture and ingrained into

entertaining and how does consumed with friends or business collegues. we hav a brand -- we have a brand which is doing very well. year.roved 9% this it is highly aspirational, but is connected to the food culture. in the u.s., most of the consumption is pre-dinner, after dinner cocktails. so, the understanding of the culture is important. that is what makes the business fascinating. we do not have one way to build a brand. we get deeply immersed in local culture, and find a way to remain contemporary and aspirational within the context. francine: i don't know if it is comparable. do people drink more with their food then if they do after dinner or lunch? ivan: the main difference i ofld say is the ritual

celebration and toasting, which happens in the case of china. it's not so much drinking more, but it's a social equation, and there's more ritual about celebrating eachother, toasting eachother. the brand plays a magical role. at china,if you look india or latin america, where do you see the most potential longer-term? would say the biggest one for us, india, china, latin america has a lot of good. latin america is very important. scotch-whisky will continue to grow. the emerging markets represent a large runway for growth. early in the stage of development for our cateogory. as economic growth and gdp

growth happens there, economic profiles are in our favor. people are drinking better, choosing better brands. we are well positioned for that trend. francine: two households become better positioned? do they cut down on alcohol consumption's? -- alcohol consumption? , our brandslly perform within a special occasion space. you would see a slowdown on premium brands, where consumers might choose johnny walker red labelinstead of a black when the pocketbook is under a bit of pressure. or, they may celebrate four times a year instead of six times a year. you see those adjustments take place, but most important is when it happens, it is important to support your friends because when economic growth comes back,

you want the brand to still have that connection with consumers, so they will step up their consumption when things get better. francine: on leaders, steering a drink giant into the future. whiskey being created now. it will must be ready to drink for more than 40 years. but what will be drink industry look like then? the foresight needed for a company with a diageo.

♪ francine: ivan menezes knows his business well. over two decades he has held numerous positions, serving as diageo's coo.

over 30,000 of them are valued as much as the company customers. diageo has more women in senior roles than all 5100 firms, and wilson have gender parity on the board. ivan menezes is with me here. your when you look at how employees would describe you -- and that says a lot about how by theative is perceived people who worked under them. what would they say about you? ivan: oh my gosh. [laughter] i think i am approachable, focused on possibility, demanding, and i call it high-low. at the big picture, strategic level, but i love the execution. customers.nds, i enjoy picking up a phone to a brand manager in ethiopia

and asking how the brand is doing. i hope that's what they would say. francine: how much do you travel? enjoy traveling? is that the only way with a global business to be in touch with the local market? and how local friends are doing? ivan: totally. i really enjoy being out in the local market. it gives me the best read of our business and how it is performing, and i always go out say, barsde and i and shops do not lie. you get the true understanding of how we are performing within the market, and meeting our people. i get a lot of energy from being out. i actually do not enjoy being at headquarters. francine: do you go incognito? or do they know you are coming. [laughter] ivan: i do both. i often go out on my own and

decide which shops and bars and restaurants i will go in and take a look. so, i love to get time on my own when i'm in a market and walk the streets, and get a good feel for the culture. i enjoy that. as i said you learn a lot. francine: you also focus a lot on drinking responsibly. -- is ithat come from you pressure around you that made you do that? or, is it something that came from within? ivan: it is something that comes from the core values of diageo and is something i am proud of. we are in the category that has been around for centuries, millennia. we take the view that for people who choose to drink, we want them to drink in moderation and believe that is perfectly normal as part of a balanced lifestyle. however, we also realize alcohol

causes harm within society when it is misused. so, everyone at diageo is passionate about making a difference in reducing alcohol harm in society. be it underage drinking, underage drinking, drunk driving. we have programs to make a difference. francine: is that with government or school? ivan: we work with government, school, ngos, local communities. we are very integrated into for example, mexico city. we work with local police on a drunk driving program and have good success in reducing the level of drug driving, which in many markets, is still an issue. so, we have teams on the ground and it is a source of -- we do it with real pride and commitment. and our employees really believe passionately in the work we do in the field.

francine: talk to me about diversity. why have you achieved gender parity when most have failed? think it starts with our core values. we have always put diversity at the heart of diageo. i am proud of our track record. 40% of the executive committee, 30% of senior women -- senior leaders are women. i see that improving. it is not just gender diversity. i think diversity in nationalities, diversity n ethnicity, sexual orientation and diversity in st yle. for me, i have been in business for over 30 years. the power and having diversity within the team, including thinking styles, is huge. spades.e benefit in i am pleased with where diageo is.

francine: why do other companies fail, then? ivan: i think it is the conviction and belief. i grew up in india, in a multicultural society, actually in the minority. i come from a non-catholic background. for me, the importance of everybody coming into work and feeling valued is what you get the full potential of people. and what we put at the fabric of diageo is creating an environment where you can truly whaturself no matter your background is and where you come from. one of our core values is valuing each other and that is that the diageo of the -- and that is at the heart of the company. i am proud of the culture we have created. that is when you see good things

happen and we have seen this enormous progress in much more d iverse leadership across the company. francine: ivan menezes, thank you so much. ivan: thank you. ♪

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