This document provides an overview of Diageo plc, a global spirits and beer company. It discusses Diageo's business operations in over 180 markets, internal strengths such as its strong portfolio of brands, and weaknesses like its comparatively weak wine brands. The document also analyzes the spirits industry and Diageo's marketing strategies. It outlines Diageo's global strategy and reviews trends in the industry, concluding with strategic recommendations for Diageo's future outlook.
2. Company Information
Context of the industry
Internal Analysis
Marketing mix strategies
The firm’s core strategy
The future outlook of industry
Strategic recommendations
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4. 180 markets
Over 20,000 employees
Offices in 80 countries
Manufacturing globally:
› Great Britain; Ireland; United States; Canada; Spain; Italy
› Africa; Latin America; Australia; India; The Caribbean
Company values
› ‘Passionate about customers and consumers’
› ‘Freedom to succeed’
› ‘Proud of what we do’
› ‘Be the best’
› ‘Value each other’
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5. 1/31/2015Diageo
1759
•Arthur Guiness
1934
•MRMA ltd:
public company
1961-1962
•Grand Metropolitan
Hotels ltd
1971-1973
•Entering brewing industry
•Acqusition Watney Mann ltd
1986
•Guiness & Distillers
Company Acqusition
1987
•Foundation of
United Distillers(UD)
1997
•DIAGEO created
•Guiness & Grand
Metropolitan merge
2000
•DIAGEO Sells
Burger King &
Pillsbury
2001
•Acqusition of part of Seagram
6. 1/31/2015
Diageo
6
Beverages industry analysis:
› Beer, Wine and Spirits
Global beverages market: US$182.9 billion liters
Market growth: 1-2% annual increase over 1999-
2004 period. 1
Spirits market shares:
› There is a consolidated very profitable market.2
› Diageo 28%
› Pernod Ricard 19%
› Bacardi 10%
› Brown Forman 6%
› Fortune Brands 5%
› Other Brands 32%
1 Source: Impact Databank top 100 Premium Spirits. February 2009
2 www.diageo.com
8. Herfindahl-Hirschman Index - SPIRITS INDUSTRY HHI=
282+192+102+62+52+322 = 2330
This means that according to the US Department of Justice, the
spirits industry is Highly Concentrated, as the result is above 1800
Strategy implications
› Tough for new entrants, need to innovate constantly
› Predictable market
› Social Responsibility is important
Environmental factor
› Life cycle analysis: Mature stage
› The key factors for success are product innovation, distribution
and product branding
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10. High volume and low sales growth. Major
challenge: the drinking habits change quickly
Beer and wine threaten spirits ´share of market
around the world
The recession has had a negative impact on the
on-trade and spirits sales in bars, clubs and pubs.
Consumers are more interested in the entire
process and in the differences between products
than ever before.
Specific marketing towards younger consumers in
the wine industry.
11. Internal Factors Analysis Summary - Strengths
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Factors
Weight
(a)
Rating
(b)
Weighted
Score (a*b)
Comments
Strong Brands in a
diversified portfolio
0.22 5 1.1
The company has 8 from the
world top 20 premium spirits
brands*
Global reach 0.15 4 0.6
Protects the company from
economic uncertainty in any one
particular region
Fast response to
customer and
consumer trends
0.07 3 0.21
In-depth customer
and consumer understanding.
Constant innovation
Effective
marketing
capabilities
0.10 2 0.20
Diageo spent $358.2 million
advertising worldwide making it
the 94th global advertiser **
Good financial
performance
0.09 4 0.36
£1,204m Strong free cash flow;
15% increase in net sales***
*Impact Database
** AdvertisingAge
*** Diageo
13. Internal Factors Analysis Summary - Weaknesses
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Factors
Weight
(a)
Rating
(b)
Weighted
Score (a*b)
Comments
Comparatively
weak wine brands
0.15 2 0.30
Diageo does not put enough
resources in their wine division
and looses share to Period
Ricard
Not a leader in
emerging markets
0.13 4 0.52
Global trends show that Europe
and NA are not growing and
the only possibilities are in EM
Overdependence
of net sales on
global brands
0.06 3 0.18
In 2009, GPB accounted for
58% of total volume and
contributed net sales of £5,131
million.
No bitter spirit in
portfolio
0.03 2 0.06
Bitters are becoming the new
trendy drink in developed
markets such as NA and
Europe
Total 1 3.53
14. 4 Ps for Global Priority Brands
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Premium
15. Corporate Strategy
› Long-term sustainability
› Corporate Social Responsibility
› Cooperation with NGOs
› Cooperation with communities
› Cooperation with competitors
› Creating shareholder value
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17. Companies are looking into Latin America, Asia,
and the Middle East in search for new consumers,
as growth opportunities are hard to find in Europe
and North America.
Source: www.beveragedaily.com
They have to monitor consumer habits, financial
data and invest in NPD, marketing and sales in
order to success.
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18. 1/31/2015Diageo 18
US will have the most successful spirits market with
U$48,147mn forecasted by 2012 following a growth
of 8.1% from 2008.
In Europe and the US most of the spirits categories
are predicted to experience higher value than
volume growth.
Beer will continue to overshadow spirits industry in
Europe, Japan and the US.
European market is expected to increase 1.5%
each year between 2008 and 2012
In Japan, whiskey is set for huge growth after
2011/12
Source: Innovations in Spirits: Key product trends, growth strategies and forecasts to 2012. 1 April 2010. www.officialwire.com
19. For the North American market:
› Industry resilience
› Economic recovery
› Attractive demographics
For the European market:
› Russia opening for imported spirits – Scotch whiskey
› Focus on at-home drinks
For International:
› Grab the growing middle class population
› Main opportunities in LATAM (6-7% growth) and Africa
For Asia Pacific:
› Make partnerships with local players
› Take on technological and consumer trends for marketing
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With innovative developments. Now they have to handle issues such as responsible drinking, demand for high quality at a lower price and ricing costs of raw materials.
Retail sales and brand strategies were affected by the recession.
5- consumers are increasingly rarely drinking wine at lunch, so the consumption per capita of wine has fallen.
About consumers, they are also changing the way the drink. Instead of ‘out of home’, they prefer to drink at home, as they are not looking anymore for heritage or authenticity, but for an ostetatious ‘bling’, what has led companies to create new flavours from trusted brands and
