Diageo embarks on US Tanqueray push
Diageo is increasing its focus on Tanqueray gin in the US market, where the “gin renaissance” has not yet taken root, the group’s CEO Ivan Menezes has claimed.
Speaking in London yesterday following the publication of Diageo’s H1 2017 financial results, Menezes said he hopes to increase the firm’s position in the US gin market.
“The gin renaissance hasn’t happened yet in the US, but it will come and we are very well positioned with Tanqueray, and we are increasing our position even more,” he said.
“You will see us supporting Tanqueray more in the US, but we are going to build it in the right way – slowly.”
In the six months to 31 December 2016, Tanqueray’s organic sales grew 9% thanks to a positive performance in Europe, Latin America and the Caribbean. The brand sells just over one million cases in the US – its biggest market.
Menezes also said that while Smirnoff was Diageo’s only ‘Global Giant’ brand to decline in H1 – impacted by price hikes in the US – he expects the vodka to return to growth “over the next few quarters”.
The CEO added that Diageo’s positive performance in the North America – which increased reported net sales by 16% in H1 – was “not all economically dependent” and was due to “consistent trends” such as spirits taking share from beer and millennials drinking more spirits.
On Don Julio – which in 2015 received a US$400 million investment pledge from Diageo – Kathryn Mikells, the group’s chief financial officer, said expansion work is progressing.
“We are on the path to expanding our manufacturing capacity down in Mexico and this work is underway as we speak,” she said. “It’s a multi-year plan to expand the distillery, but we have made the commitment and are moving forward.”
The US$400m investment will be phased until 2020 and will be used to expand distillation, bottling and water treatment facilities in Jalisco, as well as increase Diageo’s agave farming capabilities.