Diageo is set to release its H1 and Q2 results on Thursday (9 February). Below, we take a look at the highs and lows for the company in the three months to the end of December.
- At the start of the quarter, Diageo announced that it would move Red Stripe production for the US market to the US mainland, from Jamaica. Red Stripe bound for Brazil, Canada and Europe, meanwhile, will continue to be brewed by Desnoes & Geddes (D&G) in Jamaica.
- In mid-October, Diageo and Pernod Ricard shared the dominated the higher places in a joint-IWSR/just-drinks report on the world’s top performing brands. Using a ranking based on volume, retail value and five-year growth, as well as reader feedback, Diageo’s Johnnie Walker topped the list.
- The company also renewed its distribution deal with Southern Wine & Spirits of America in the US, and negotiated what it described as being stronger support for its brands in key markets. The deal covers California, Florida, Hawaii, Kentucky, Indiana and Alaska, as well as wine in Oregon.
- In the second half of October, just-drinks published a two-part interview with Diageo’s president for Asia-Pacific, Gilbert Ghostine. Part one covered India and China, while part two covered Vietnam, the Cognac question and locals’ perception of Diageo as a company. “I can see us more than doubling our business in Asia Pacific between now and 2015, when I can see the region representing 20% of Diageo,” Ghostine said.
- As part of its Asia growth plan, Diageo confirmed that it has formed an independent advisory panel to help the group’s regional and global management make the most of the growing alcohol market in India.
- At the end of October, Diageo was forced to face down shareholder unrest at its annual general meeting. Around one fifth of those who voted at the meeting rejected the group’s remuneration report for senior executives, on the basis that the bonus-linked targets were too soft.
- In a call with analysts, Diageo’s president for Europe, Andrew Morgan, said that the group has “turned a corner” in the region. It will improve its sales performance in Europe this fiscal year, Morgan said, by shifting more resources to fast-growth eastern markets and selling more super-premium spirits in western countries.
- At a round-table discussion with journalists in mid-November, Diageo’s CEO, Paul Walsh, said that the company is keen to take a stake in Jose Cuervo, which it currently distributes worldwide. Regarding any renewal of the distribution deal, which expires in 2013, Walsh said that he would “much prefer to have more of an equity participation than being a pure distributor for Cuervo”.
- At the same session, Diageo’s president for North America, Ivan Menezes, said that the firm has cut its focus on its lower priced vodka brands in the US, as it ramps up attention for the higher end vodkas in its portfolio. “Our premium-and-above vodkas – Smirnoff, Ketel One, Ciroc – are growing share,” he said.
- The group also announced that it was working on extensions to the Captain Morgan brand.
- In late November, Diageo opened a GBP10m cooperage in Scotland. Replacing the firm’s cooperages in Dundashill and Carsebridge, the facility highlighted a new level of mechanised manufacture in barrel production.
- Only a day later, Johnnie Walker was confirmed as one of the official sponsors of the 2014 Ryder Cup, to be held at Scotland’s Gleneagles resort, which the drinks company owns.
- In Africa, Diageo’s Serengeti Breweries opened a new brewery in Tanzania. The move increases the pressure on SABMiller’s Tanzania Breweries, which leads the national market by volume. Serengeti is the number two.
- In early December, the company announced that its CEO, Paul Walsh, would step down as chair of the Scotch Whisky Association, to be replaced by The Edrington Group’s CEO, Ian Curle.
- The worsening eurozone fiscal crisis forced several big drinks companies, including Diageo, to begin thinking about ways to prepare for a break-up of the euro currency. “With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive,” the group’s Europe president, Andrew Morgan, told the Financial Times.
- In mid-December, Diageo updated the packaging for its Talisker single malt Scotch whisky brand. The company, which launched the first global advertising campaign for Talisker last year, said the update would amplify the Skye-based whisky’s maritime connections.
- The drinks group also launched a pan-Africa advertising campaign for Guinness. Its ad campaign, named ‘The Ticket’, has aired on television, broadcast on radio on printed on billboards in Nigeria, Cameroon, Kenya, Uganda and Ghana, as well as parts of West Africa.
- Late in the quarter, Diageo’s East African Breweries Ltd closed the public sale of its shares in SABMiller-controlled Tanzania Breweries. In 2010, East African Breweries (EABL) agreed to dispose of the 20% stake in order to gain regulatory clearance to buy 51% of Serengeti Breweries.
- In Ireland, a spokesperson for the firm told just-drinks that it was in the process of submitting a planning application to Dublin Council that would allow it to build a new brewhouse on the north side of the St James’s Gate site. The project would likely cost around EUR100m (US$131m), she said. Full details were later announced in early 2012.
- At the end of the quarter, just-drinks reflected on the ten year anniversary of the Seagram deal. At a time when emerging markets across Asia, Africa and Latin America are increasingly driving growth, we found that some of the old Seagram brands were right in the thick of it.
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