just-drinks.com editor's weekly highlights
In This Issue...
Some potential couplings in the drinks industry seem to surface with each coming of a new moon. How fed up do you think Tony Froggatt at Scottish & Newcastle feels, for example, each time he gets asked about S&N and Carlsberg? (For the record, Froggatt’s always handled our query on this front with great grace).
You can also be sure that both Rémy Cointreau and Diageo will begin rolling their eyes soon enough when one starts getting asked about the other day in and day out. And as for Danone and PepsiCo? Not that old chestnut.
Last week’s reports linking Anheuser-Busch with InBev may get everyone concerned not very excited, then, in this long line of ‘maybe’ deals, surely? When the two brewers announced their US bunk-up late last year, however, talk turned to just how possible a larger, global relationship could become. After all, the geographical mix has very little overlap, and regulatory issues shouldn’t be a problem either.
To temper these reports with some sense of realism, however, it needs to be borne in mind that the press speculation, from a Brazilian newspaper, suggested that Diageo and SABMiller are also looking at buying A-B. Unlikely though that most certainly is, that’s still a bun-fight I’d love to see.
Elsewhere last week, Diageo faced fresh questions over the performance of its iconic beer brand Guinness as the drinks giant published its first-half results in London.
Globally, Guinness volumes were flat for the period, as sales of the black stuff continued to fall in the UK and Ireland. Diageo CEO Paul Walsh, however, brushed off criticism of Guinness’ performance in these markets. He pointed to its strong showing internationally and insisted that “consumers still revere the product”.
Walsh is right to be upbeat about Guinness. There’s no doubt the brand’s performance in the UK and Ireland is a concern, but the company is working to correct that with innovation on both sides of the Irish Sea. And with sales up in Africa and North America, Guinness remains a key element in the Diageo portfolio.
And let’s not forget Diageo’s upcoming investment in Scotch whisky, which is perhaps the central category in its stable. A figure of GBP100m (US$195m) is not to be sniffed at and speaks volumes of Walsh’s – and the company’s – confidence in the sector. Sales of flagship brand Johnnie Walker jumped 18% in the last six months and Walsh clearly expects that growth to continue.
He was even bullish about the prospects for Scotch in India, where import taxes remain sky-high. Walsh is hopeful WTO pressure would force India to relax its tariffs. “India will be a huge Scotch market,” he said. “And Johnnie Walker will be the Scotch of choice.”
And, with Diageo fighting tooth and nail with Pernod Ricard in China, Walsh would presumably welcome a chance to steal a march on his French rivals in India.
Until next time...
Olly Wehring, Managing Editor
The announcement of major restructuring and 3,500 job losses at Coca-Cola Enterprises (CCE) says as much about The Coca-Cola Company as it does about its largest bottler. Annette Farr examines the underlying reasons behind CCE’s current malaise and suggests it is Coca-Cola’s failure to keep pace with rival PepsiCo in product innovation that has been the bottler’s prime problem.
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