Diageos president for Europe, Andrew Morgan, described minimum pricing as a “very bad way to target the problem”

Diageo's president for Europe, Andrew Morgan, described minimum pricing as a “very bad way to target the problem”

This story originally appeared on just-drinks yesterday (2 April), but is being published again today due to a technical error.

The head of Diageo Europe has branded UK minimum pricing a “very bad way to target the problem”, but has shrugged off the proposed law change as being a “long way off”.

In an investor conference call earlier today (2 April), Diageo's president for Europe, Andrew Morgan, said that last month's proposal by the UK government was “misguided”. 

“It's a very, very long way off, even if it moves ahead,” he said. “The earliest it will be is close to the next (UK) election. If then, the EU decides it's illegal, then you can expect a legal battle that will take it further than that.” 

He also suggested that, with further duty hikes expected in the meantime, many of Diageo's brands would be above the proposed minimum unit price of GBP0.40 (US$0.64) by the time the measure took effect.

Morgan was also asked in the call about the company's rumoured bid for Jose Cuervo Tequilia, which hotted up over the weekend with reports that it is using Goldman Sachs to seal the deal. “Were we to become the owner, that brand could be a much bigger priority in the business and hence do rather better,” he added. 

Turning to his region, Morgan told investors that Diageo was still finding it “challenging” in Western Europe, but emerging markets in the region, such as Turkey, Eastern Europe and Russia, are continuing to perform well. He called the performance of the two markets “massively differentiated”. 

Spain, in particular, he said has “disappointed over the last few months”, but Germany was showing “very significant growth”. 

On Diageo's strategy in the UK of “going after value” by taking products out of promotions, Morgan said: “We've had a lot of success with that.” He added: “We are managing to do pretty well on market share. One of the brands we've focussed on and drawn a line in the sand on is Smirnoff.” 

Morgan said he did not see “any downside with being out-of-line with the competition”.

Meanwhile, Morgan pointed to the continued growth of some of its premium reserve brands of around 20%, as evidence that consumers are continuing to treat themselves in these “tough times”. “It's a very clear trend in the business,” he said.