Diageo: consumers ‘not rejecting big brands’By Amy Hopkins
Amid claims large spirits brands are at risk of losing market share to craft distillers, Diageo’s top executives have expressed confidence that consumers are “not rejecting big”.
Speaking to journalists following the announcement of Diageo’s full year 2014/15 financial results, Ivan Menezes, CEO of the UK drinks giant, said most consumers are not aware of the specific origins of the spirits they buy.
“For the most part consumers do not know who owns Bulleit or Talisker, and we do not market our products in this way [as craft],” he said.
This thought was reiterated by John Kennedy, president of Diageo Europe, Russia and Turkey, who said the group’s brands mirror many of the traits found in so-called “craft” spirits.
“Many of our brands have great craftsmanship,” he said. “There are trends that people are looking for in craft that they will find in our brands too.”
Diageo faced criticism in 2013 when it claimed to have the potential to become the “number one craft distiller in North American whiskey in the US” with the launch of its Orphan Barrel Whiskey Distilling Company.
The programme, which bottles “forgotten whiskies” and markets the product under a new identity, has seen the launch of Barterhouse, Old Blowhard, Rhetoric and Lost Prophet.
Ewan Morgan, master of whiskey for Orphan Barrel, told The Spirits Business that “not all small distilleries are craft, and not all craft distilleries are small”.
“As for what is or isn’t a ‘craft spirit’, that’s up for debate and can vary across categories such as single malts and Bourbons,” he said. “Everyone has their own opinion and should have the right to voice it, just like all those in the business have the right to be creative and innovative with the products they sell.”
A recent report by the IWSR claimed that established spirits brands are “struggling to compete” with craft players, which have grown in popularity in line with the spirits industry’s premiumisation.
However, also speaking with journalists last month, Deirdre Mahlan, CFO of Diageo and incoming president of its North America business, stressed that large spirits brands face little competition from “artisan” distillers.
“I don’t think Millennials are that bothered [about craft labels], but they do want authenticity. I do not see people rejecting big.”