Exclusive - CAGE 2013 - Diageo set fair in China, despite tighter gifting controls
Diageo operates in both domestic and international spirits in China
Diageo's sales in China have stayed firm despite stricter controls covering inter-governmental gifting and banqueting, according to the firm's chief operating officer.
The country's authorities enforced a ban late last year on high-level luxury banquets and forbade high-ranking military officials from “indulging in alcohol” on official visits. The move hit the share prices of many local spirits companies, including baijiu producer Kweichow Moutai.
But speaking at day one of the Consumer Analyst Group of Europe in London yesterday (18 March), chief operating officer Ivan Menezes said that both Diageo's international spirits brands and its domestic ShuiJingFang spirits division, had not been troubled by the bans.
“Our business in China is not that dependent on the classic institutional sales and classic gifting, which is where the downturn is happening right now," he told delegates. “We've got a Scotch whisky business where the key growth is coming from super-deluxe: Johnnie Walker Odyssey costs around US$1,000 a bottle. A lot of it is consumed in the on-premise, it's not the institutional government-to-government gifting. Scotch doesn't play there.
“While our ShuiJingFang baijiu business is an ultra-premium business,” Menezes continued, “it's less dependent on institutional sales than the big Chinese players. So, we've taken less of an impact there.”
Menezes also highlighted “very fast” growth for the Baileys Original Irish Cream liqueur brand in the country.
“We were not that heavily reliant (on gifting) to begin with, and we're just at the starting stages of building the business in China,” he added.
In the Q&A session, when asked about the prospect of consolidation within the US spirits industry, Menezes said that, in the long-term, M&A could play a part in the country.
“The development of craft distilling in the US is positive for spirits,” he said. “It brings more interest into the category and is recruiting new young LDA adults into spirits directly. I view all this as positive.
“In terms of the long-term industry structure," he continued, "the sheer economic forces will lead to more consolidation in the US. The pace and shape of it is a little uncertain, but we clearly study it.”
Menezes was appointed COO last year, and is widely-tipped to replace CEO Paul Walsh in 2014.
Since the great recession of 2008/2009 Diageo has transformed itself, primarily through acquisition, from being overly focused on mature markets to a more balanced geographic split and if, as seems li...
Marketing a beer brand successfully has traditionally involved partnering with a big event and parting with big bags of cash. But, Larry Nelson has been introduced to a smaller, smarter way to push a ...
Diageo and Pernod Ricard have teamed up with other Scotch whisky makers to start twice-weekly shipments from Speyside by train....
- Why Chinese beverages won't conquer the world
- Is “Craft” the Next Big Thing for Soft Drinks?
- Petropolis Finally Moving into SABMiller's View?
- Can Coca-Cola fuel SABMiller's soft drinks story?
- Gin: Plymouth's from Plymouth, London's from...?
- Diageo confirms Australia RTD abv drops
- Pernod launches online Ballantine's "experiment"
- Global vodka sales slip in 2013 - research
- SABMiller returns to Brazil with Petropolis tie-up
- Pernod takes Absolut Warhol push to Travel Retail
- Early Signals: future scenarios that will drive consumption and product innovation over the next five years
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global vodka insights - market forecasts, product innovation and consumer trends research
- The IWSR Forecast Report - 2014-2019 Global Review
- The IWSR Global Trends Report 2014