James Wilmore

just On Call - Diageo ups on-trade focus after taking "foot off the pedal"

By | 18 September 2013

Diageo is increasing its focus on the on-trade

Diageo is increasing its focus on the on-trade

Diageo has been too heavily focussed on off-trade distribution in global markets in recent years and took its “foot off the pedal” in the on-trade, a senior company executive has admitted. 

In an analysts' Q&A yesterday (17 September), Diageo's global sales director Mark Barnard said that, during the economic slowdown, fewer consumers visited the on-trade. But now, he said: “Those people are all back again.” 

During the call, following a webcast entitled 'Transforming Diageo's Route to Consumer', Barnard said: “We’re emphasising the on-premise. My personal view is we took our foot off the pedal a little bit in the on-premise over the last few years ... we swung the business too heavily towards the off-trade from a capability build and activation point of view.”

However, he said that there are "lots of opportunities still in the off-trade".

Earlier, on Diageo taking control of United Spirits, Barnard said that Smirnoff will “benefit tremendously” from the way the Indian business can penetrate the country's market. “They (United Spirits) call on 68,000 outlets which is quite a lot more than the ones that the Diageo business was calling on,” he said.

Barnard also suggested that Diageo's IMFL (Indian-Made Foreign Liquor) whiskey brand Rowson’s Reserve will get wider distribution in India. But, he warned: “It’s not a question of just distribution for distribution sake, because that doesn’t serve anybody well.” 

He added: “I wouldn’t want Johnnie Walker Black in every single outlet in India because I don’t think that’s the right thing for us to be doing.” 

On China, Barnard acknowledged that the company is still operating three seperate distribution structures - with Moet Hennessy, ShuiJing Fang and DCL - as its products are sold in different styles of outlets. “We keep looking at efficiencies...but we’re not looking at putting all three of those together at the moment,” he said.

Expert analysis

Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review

Diageo plc (Diageo) is one of the world's leading companies in the beverage alcohol industry. The company carries out the production and distribution of spirits, beer and wine. The key brands of the company include Johnnie Walker, Smirnoff, Captain Morgan, Baileys Original Irish Cream, J&B, Tanqueray, Guinness, Crown Royal Canadian, Beaulieu Vineyard and Sterling Vineyards, and Bushmills Irish. Diageo also has distribution rights for the Jose Cuervo tequila brands in North America and various other markets.

Sectors: Beer & cider, Emerging markets – BRIC, Spirits, The off-trade, The on-trade

Companies: Diageo, Smirnoff, Johnnie Walker, United Spirits

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