UK: New Diageo Blend Redefines The Market
By integrating Guinness with its spirits brands, Diageo has suggested that Guinness can be perceived as a "Ready to Drink" (RTD) alcoholic beverage, rather than merely as a beer brand. Diageo already has an impressive portfolio of RTD alcoholic drinks, including Malibu, Pimms, Smirnoff Moscow Mule, Smirnoff Ice and Tony's Freezer Cocktails.
"This move indicates that Diageo is ahead of the game in the realisation that drinkers are discarding old product boundaries" says Kevin Baker, Director of Canadean's Beer Service. "Consumers are increasingly selecting a drink from a much wider repertoire of alcoholic beverages for any given drinking occasion. Consumer choice is no longer simply between a Budweiser or a Holsten Pils" says Baker. "These brands compete not only with each other, but also with Martini Metz, Hoopers Hooch, Bacardi Breezer, or Red Bull and Vodka. These drinks all compete for the same drinkers and the same drinking occasion" continues Baker. According to Canadean's latest report on the UK Beer Market, the previously buoyant Premium Packaged Lager (PPL) market has suffered from competition from spirit based drinks, like Metz.
Pat Brazzier, Head of Canadean's Spirits and Wine Service, confirmed that the Ready To Drink market, encompassing Pre-Mixes, Alcoholic Carbonates and Cocktails, shows strong growth. "In recent years global sales of these drinks have increased markedly compared to a lacklustre performance for the Spirits sector overall" says Brazzier.
According to Canadean's latest Company Watch Report on Diageo, concentration on the consumer is fundamental to Diageo's strategy, and the company constantly tracks and researches consumers in order to understand, anticipate and meet their diverse and rapidly changing needs. This focus on consumers and their changing consumption habits was one of the key drivers behind the decision to merge Guinness with UDV. Canadean believes that Diageo may seek further acquisitions in the beer sector, with premium and speciality brands providing the most attractive targets.
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