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Diageo probed by SEC for US shipments
Diageo has come under the scrutiny of the US Securities and Exchange Commission with regards to the accuracy of its distribution figures in the country.
Diageo has confirmed it is under scrutiny by the US Securities and Exchange Commission (SEC)
The Wall Street Journal broke the news yesterday that the SEC has launched an inquiry into whether the Smirnoff vodka and Johnnie Walker Scotch whisky producer had shipped excess inventory to distributors in order to artificially elevate figures.
The group has confirmed the inquiry in a comment, but would not disclose any background information.
“Diageo has received an inquiry from the US Securities and Exchange Commission regarding its distribution in the United States. Diageo is working to respond fully to the SEC’s requests for information in this matter,” a comment from the firm read.
Diageo has struggled in its priority US market over recent months due to “weaker pricing” and increased competition, particularly with regards to its Smirnoff vodka brand, which saw volumes decline 2% in 2014 (Brand Champions).
CEO Ivan Menezes admitted the group had priced its mid-range brands in North America “a little high”, resulting in declines for both Smirnoff and Captain Morgan rum. He added that Diageo now intends to “moderate” prices to return the brands to growth.
Reporting its half year financial results in January, the group said Scotch shipments to North America were also down 9%, with Johnnie Walker plummeting case sales by 17%.
It was revealed last month that Larry Schwartz, president of Diageo North America, would retire at the end of the calendar year and will be succeeded by Diageo’s current chief financial officer Deirdre Mahlan.
A few weeks later, Peter McDonough, Diageo’s chief marketing and innovation officer for North America, announced his intention to leave the company. He will be replaced by James Thompson, currently managing director of Global Reserve for Diageo.
The group is set to announce its full-year financial results for 2014/15 next week.