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Diageo, Coca-Cola distribution tie-up in Chile producing "positive" results

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Diageo has praised its new distribution agreement with the Coca-Cola system in Chile, while flagging that the tie-up is still in its "early days".

Diageo switched its distribution in Chile from Concha y Toro to two Coca-Cola bottlers last year

Diageo switched its distribution in Chile from Concha y Toro to two Coca-Cola bottlers last year

During the second quarter of last year, Diageo called time on its distribution arrangement in the country with Concha y Toro. Subsequently, the Chile-based wine company, which began handling Diageo's portfolio in the country in 2009, saw the move drag on its domestic performance in 2018.

On a call with investment analysts late last week, Latin America & Caribbean president Alberto Gavazzi provided an update on the new arrangement in the country, which sees Coca-Cola Andina and Coca-Cola Embonor handle Diageo's distribution.

"It's a test that we're doing really in Chile with Coke," Gavazzi said. "It's the first time we've done something like this. Early results are really positive for us, and for them. If this test is positive, eventually we can look into new places.

"Right now, what we want to do is learn through this process, learn what a wider distribution system like Coke can do for spirits, and how can we still concentrate in making spirits growth in the channels that are more relevant for us, for instance, versus soft drinks."

Gavazzi added that Diageo and the two Coca-Cola bottlers are "satisfied" with results so far, "but, again, very early days for us".

Also on the call, Gavazzi highlighted a strong performance in gin across Latin America. "The gin phenomenon is catching on … as the category continues to gain relevance," he said. "Gin taps into every early-evening occasion as well as into food occasions."

In the first six months of the group's current fiscal year, Diageo's gin sales in LatAm & the Caribbean leapt by "over" 75%, according to Gavazzi.

Click here to view the slides from last week's conference call with Alberto Gavazzi.

Diageo's Latin America & Caribbean president Alberto Gavazzi on primary Scotch, Cachaça's comeback and cocktail culture - Click here for a just-drinks focus


Sectors: Spirits

Companies: Coke, Concha y Toro, Diageo

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