Blog: Diageo - huge, but still growing
Olly Wehring | 4 July 2006
Resilience, reliability, durability - not characteristics guaranteed to set the heart racing, are they? But these were exactly the credentials on display at Diageo last week as the UK drinks giant issued a buoyant trading update ahead of its full-year results next month.
Some analysts, however, were unconvinced. They were disappointed that, after hefty marketing investment, Diageo would only say that growth in operating profit was in line with its previous forecast. However, earnings growth of 7% and sales growth of 6% are figures not to be sniffed at for a consumer goods juggernaut like Diageo.
Premium spirits sales in North America and growth from emerging markets, particularly in Latin America, have been behind the strong performance. The company also seems to have breathed new life into key brands, notably Guinness, which has seen sales in the UK rise on the back of a popular campaign that showed man’s evolution leading to a pint of the black stuff.
Sure, Diageo still has work to do. It needs to up its presence in other emerging markets particularly in India and China, where global rival Pernod Ricard was faster to recognise the potential of the market and has carved a very strong position in the premium spirits category. Diageo has also warned that European markets remain “subdued” but CEO Paul Walsh said the company would continue to invest more in marketing in an attempt to drive sales.
In the US, where the thirst for premium spirits shows no sign of abating, the drinks giant holds a strong position. Add to this a growing focus on emerging markets and a willingness to flex its marketing muscle to revitalise sales in a stagnant Europe, and Diageo seems set to post similar numbers in the months and, maybe, years ahead.
What’s more, Diageo is less exposed than some of its rivals to the grape glut in Australia and the resultant debilitating effects of price wars in major wine markets. Excess wine and falling prices weighed on profits at Constellation Brands last week, while Foster’s also announced that it was set to offload three wineries as it looks to trim back its business post-Southcorp.
Heineken is known for its flashy adverts. Now the brewer has given the star treatment to a new recruitment drive with a glamorous and highly-persuasive ad that, quite frankly, had the staff here at...
Move over iPhone 7 headphones-gate, there is a new Apple product causing a stir. Or a shake. Or just a shot....
I was full of questions yesterday when reading our news story about Bacardi's Martini Smart Cube. An ice cube-shaped device that can provide real-time information about its consumer? How? What? Why? H...
News reaches us today of what has been heralded as the "world's most daring whisky challenge". The Ultimate Ardbeg ARDventurer has been launched this week with an inaugural three-day camping trip....
- Why sports drinks fail to ride the Olympic wave
- Experienced hands hold firm at CCEP - Analysis
- What do US wholesalers think of spirits trends?
- It isn't just men who like beer - Comment
- How the craft economy is loosening alcohol laws
- Luxury and e-commerce a "natural fit" - Diageo
- Diageo Australia's commercial head to step down
- "We're not complacent about Brexit" - Diageo
- Diageo merges US, Canada spirits units
- William Grant upgrades Glenfiddich Cask Collection
- Global gin insights - market forecasts, product innovation and consumer trends
- The Next Seven Big Beverage Markets
- Global rum insights - market forecasts, product innovation and consumer trends
- Global RTD insights - market forecasts, product innovation and consumer trends
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends