Deirdre Mahlan is president of Diageos North America unit

Deirdre Mahlan is president of Diageo's North America unit

Late last week, Diageo's North America president, Deirdre Mahlan, hosted a conference call with analysts. Having spent just over a year in the role, Mahlan offered some insight into the company's largest and most profitable region. Here, just-drinks picks out some key points from the call.

  • On President-Elect Donald Trump

Late last month, the CEO of Remy Cointreau said president-elect Trump's plans to lower corporation tax in the US could benefit luxury goods brands in the country. However, Diageo's Mahlan was more circumspect on the subject. "There's been a lot of discussion about president-elect Trump and the potential policies on tax, in particular. corporate tax, imports and a whole host of other things," she said. "It is very early days. We have a long history of working with government as these policies are developed, and I think it is very early to say the impact of any given policy or even what those policies may be as he gets his plan in place."

Mahlan noted, however, that Diageo expects the spirits category in the US to continue to grow strongly, thanks to the continued development of the country's economy. "Our place in it, [the US] in particular at the premium end, will continue to be strong," she added.

  • On Millennial consumers

Within Diageo's North American unit, the age bracket used as a definer for Millennial consumers is from 21 to 34 years old. Mahlan said the group is the biggest age cohort in the US and represents 34% of the country's spirits consumption. She told analysts that Millennials expect more from brands - and prefer to do business with brands that share their beliefs. 

"They choose their brands for quality and taste and for talkability," said Mahlan. "They value experiences and are willing to spend on them. They interchange between brands depending on their mood, on the occasion, and the company they are in. Gone are the days of consumers who are either single-category or brand drinkers."

Mahlan also highlighted the importance of technology among Millennials. "They spend almost as much time on their mobile device as they do watching TV and, as you know, they often multi screen," she said.

At the company's Capital Markets Day in New York last year, Diageo set out plans to target Millennials with its Smirnoff brand. The measure appears to have been successful, with Mahlan saying last week that 2016 had seen the vodka brand "stabilise". However, Millennials are not the only consumers on Diageo's radar and she said plans will now move beyond the 21-to-34 age range. "In evaluating the results from this work," she said, "we recognise there's more to do in recruiting and re-recruiting multicultural consumers as well as Generation X and Baby Boomers, who remain core to the consumer base."

Next year will see a focus on core Smirnoff flavours as well as "limited-time offers" to test new ideas. Marketing activities include highlighting Smirnoff's historical role in the creation of the Moscow Mule, as well as multicultural and LGBT consumer activations.

"In hindsight," Mahlan noted, "we did make progress on Millennials and, if you look at the penetration of Smirnoff with Millennials, it's improved. However, the core of Smirnoff today is really above 30 years old and that would be where the bulk of the volume is. I think we under-indexed on communicating with those consumers."

  • On Bourbon

Mahlan said Diageo's ambition for its Bulleit brand is to make it "the number one super-premium Bourbon" in the US. "We're scaling up in fiscal-2017, but with the Bulleit touch in a way that's very consistent with the brand's heritage, using the proven growth drivers," she said. The North America president also linked Scotch's future performance to Bourbon. "As the whiskey renaissance continues, we expect it to benefit the Scotch category," she said. "Last time North American whiskey was hot, Scotch followed. Scotch also has a multicultural consumer tailwind since the growth Hispanic and Asian population has a strong existing affinity for Scotch. Within our Scotch portfolio Johnnie Walker, Buchanan's, and single malts will remain a priority. " 

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