Blog: In Dubai with Diageo
Chris Mercer | 15 December 2010
I've just returned from a whistle-stop trip to Dubai to see what Diageo is doing in the Middle East and in the region's travel retail arena.
"This is Kizad, the industrial zone of tomorrow," reads an enormous red billboard on the long, straight road between Dubai and Abu Dhabi. Behind the sign sits an expanse of shrub-covered desert and a collection of buildings of varying shapes and sizes not more than three stories high.
The scene says a lot about the ambition of Dubai and Abu Dhabi, which are blessed with enough of the world's oil reserves to make money no object. No surprise, then, that companies like Diageo are seeking to expand their presence in this corner of the United Arab Emirates.
Selling alcohol here is not an easy task, given that companies are forbidden to advertise anywhere except where their product is sold. There are a few retail outlets, operated by, among others, Foster's Group's African & Eastern, but these remain few and far between. Personal consumption is also regulated by alcohol licences, which indvidual consumers must obtain from the local police and carry a limit on the amount one can spend on booze per month.
However, despite the tough conditions, Diageo reported sales in the Middle East and North Africa up by 16% in its last fiscal year. Travel retail, in particular, is forecast to expand strongly as Dubai and Abu Dhabi seek to transform their airports into international travel hubs. On the domestic front, a relatively high-earning expat community and a layer of wealthy local business people have led to the creation of swanky hotel bars and the Guinness mecca that is Dubai's "Irish Village".
At the same time, Dubai has an army of migrant labour, many of whom are young men from India who like to drink whisk(e)y when not staffing one of hundreds of local hotels.
Much hinges on the sustainability of Dubai's and Abu Dhabi's economies. Things were looking bleak this time last year after investors withdrew billions of dollars in finance, but there is a sense that the worst is now over. Dubai's GDP is forecast to rise by 4% in 2011.
Opulence, privilege and status sit alongside ambition as the cornerstones of this experiment in modern city-building. Whether you think the result to be a soulless society or a vision of the future, the progress will be interesting to watch.
Whisk(e)y companies spend a lot of money and effort ageing their products for that premium taste....
PepsiCo created a stir last week with the news it is testing a product called Caleb's Kola, with some in the media claiming it was the beginning of a new “craft soda” category....
SABMiller's bid to widen the appeal of beer is very much in evidence at its latest 'House of Peroni' - with beer cocktails and a bigger bottle for the Italian lager brand on offer. ...
Here's a round-up of the big stories on just-drinks last week, featuring PepsiCo, SABMiller, the Scotch whisky category and the US wine market....
- Diageo's future brighter than present suggests
- Diageo's Q1 Results by Region
- SABMiller's troubles fuel M&A rumours
- Analysis - Remy's Cognac "dead-cat bounce"
- Focus - Remy Cointreau's H1 Performance by Brand
- Moët Hennessy unveils first Travel Retail outlet
- Diageo puts Beckham centre stage in Haig Club ad
- United Spirits sees Q1 net loss
- Diageo Q1 sales dip "in line with expectations"
- Moet Hennessy sales falter in YTD