In yet another setback for the RTD category, Allied Domecq and SABMiller are scaling back their joint operations in the category and reducing inventories of Stolichnaya Citrona and Sauza Diablo, because of weak consumer demand.
“The brands have not met our expectations,” SABMiller spokeswoman Molly Reilly said on Tuesday.
The cost of the decision will be in the region of US$10m to US$12m, Reilly said, although it is unclear how this will be split between the two companies.
Money will be used to buy back unsold cases of Citrona and Diablo from Miller’s wholesale distributors. Some of the product will be dumped.
The move however does not mark the end of the brands, which will continue to be sold by SABMiller. However, the focus will now be placed on regions where Citrona and Diablo have had the most success.
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By GlobalDataAnd the decision to scale back on the two Allied products will not affect SABmiller’s other RTD ventures, Skyy Blue and Jack Daniel’s Original Hard Cola.
The industry has been awaiting such an announcement since SABMiller revealed a weak US performance in November.
In the nine months to September 30, 2002, its US market share fell to 19.2%, down 0.5% on the prior year period. And there was talk that Stoli Citrona and Sauza Diablo could be withdrawn altogether, after claims that the launch of these RTDs caused the group to take its eye off its core beer market – at a time when RTD growth was faltering – allowing rival Anheuser-Busch to steal a march in the beer sector, with a major push behind its core beer brands.
