just On Call - Diageo Lat Am seeks spirits safety net for Scotch slip
Diageo leads the Scotch category in Latin America
Diageo's Latin America head is keen to dilute the company's dependence on Scotch whisky sales in the region to guard against potential slowdowns.
Speaking to analysts on a conference call yesterday (15 May), Alberto Gavazzi said the company's performance in Latin America is “highly dependent” on Scotch. He also said “there is not much more for (Diageo) to gain” in terms of share of Scotch in the region, because the company already accounts for up to 90% of the market in some countries.
Gavazzi, who also oversees the Caribbean for Diageo, said: “In the long term, what we need to do is diminish our dependence on Scotch, in case it ever slowed down.”
However, Gavazzi added that the catgeory will remain Diageo's “bread and butter” in Latin America. He also said there is no sign of a slowdown, with Scotch sales actually accelerating.
He said: “Right now, I happily can say that our brand equities have never been stronger. Scotch is the fastest-recruiting category in Latin America. It is the one that we can take most price on. It is the one that is most profitable per serving.”
Earlier, Gavazzi said that Diageo's strength in Scotch whisky gives it a platform from which to expand into other categories.
He said: “We are progressively taking this strategy into rums, for example with Cacique or Pampero, Captain Morgan and Zacapa, and vodkas with Smirnoff, Ketel One and Ciroc as we broaden out our portfolio leveraging the profitability of our Scotch to continue to invest.”
Gavazzi highlighted the “extremely positive” El Don in Colombia, an anisette-flavoured vodka, and Gordon’s Flavours vodka in Venezuela. He also said the company is launching pre-mix spirits in Venezuela and Mexico.
Meanwhile, Gavazzi said recent tax changes in Brazil on beer and soda, announced this month, will not affect Diageo's spirit brands. “Unfortunately, the price gap of beer and our spirits is still very, very big for this tax increase to affect the game in there,” he said.
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