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Diageo falls flat again

Diageo, the world's largest spirits company, has recorded its second year of flat sales due to issues including wholesaler destocking and discounting in vodka.

“Diageo’s weak results come from a combination of historic failings and weak global conditions,” said Jeremy Cunnington, Senior Alcoholic Drinks Analyst, Euromonitor International.

“The former caused by too much focus pre-2008 economic crisis on a few core markets in North America and Western Europe. This has meant many of its core brands such as Smirnoff, Baileys and Captain Morgan have struggled for growth as the brands mature in these markets. With weak global conditions there is little Diageo can do when core emerging markets such as Brazil and Russia are universally suffering.

“While there have undoubtedly been errors in judgement such as slowness in developing a high end bourbon, spirits is a long game and judgement should not be rushed. Short sighted solutions such as divesting its beer operations would only make the situation worse in the long-term by depriving Diageo of a major platform for long term growth in Africa, which is potentially one of the most dynamic regions for spirits in the future.”

 

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