Diageo focused on ‘next generation’ of global brands

Acquisitive activity is not off the cards for global drinks giant Diageo, which is “restless as hell” when it comes to developing “the next generation” of leading brands, CEO Ivan Menezes has said.

Acquisitive activity is not off the cards for global drinks giant Diageo

Speaking at a media briefing yesterday [28 July] after the release of Diageo’s full-year results, which saw organic net sales grow by 4% to reach £12.1 billion (US$15.8bn), Menezes said there are “a lot of opportunities” that the group “will continue to strive for and build a business from”.

“We feel very good about the business momentum, and the underlying changes we’ve made around putting the consumer at the heart of the business and driving every day efficiency is really what you’ll see coming through in the consistency of the results,” he said.

“Now, the world is still challenging, we’ve got lots of things that are not working to their full potential so we’re restless as hell – we’re not sitting here thinking we’ve got it all figured out.

“While we build today’s big, important brands, we’re also really focused on the next generation. When we talk about our restlessness, we’ve got to create the next Bulleit’s, the next Don Julio’s as well.”

After recently acquiring George Clooney’s Casamigos Tequila brand for US$1 billion, the firm’s chief financial officer Kathryn Mikells said the group is “clearly going to continue to be inquisitive in terms of looking for things that can be added to Diageo’s portfolio”.

The group will “look at potential full-time acquisitions”, she said, but stressed that the group “has a big portfolio to work with”.

“From that perspective we’re always looking first to what the consumer trend is and how we can play with what we already have in our portfolio,” she added.

The acquisition of Casamigos increased the spirits giant’s presence in the fast-growing super-premium Tequila category – but Mikells says there is no concern of ‘cannibalisation’ as the brand sits in “a very different space” to Don Julio.

“We did a whole lot of due diligence to understand that and to work on a state-by-state basis in terms of what their growth trajectory was. They really appeal to different occasions,” she explained.

“We did a lot of research on this and we are still small in what we think could be a very fast-growing profit pool so we see plenty of growth from both,” added Menezes. “To safeguard it, we are keeping Casamigos in its existing system… We’re not folding it into our business, so we’ll have two separate sales commercial teams for the next few years.”