Diageo ‘very focused’ on invigorating Captain Morgan

5th February, 2019 by Nicola Carruthers

Diageo is “very focused on getting the energy back into Captain Morgan” after the rum brand’s half-year sales declined.

Captain Morgan “is not performing well” according to Diageo’s CEO

In the group’s H1 results, net sales of Captain Morgan fell by 4% making it the only one of Diageo’s ‘global giants’ to decline during the final six months of 2018.

More broadly, rum was Diageo’s only spirits category to decline in the period, falling by 3%. This was largely attributed to Captain Morgan’s performance in the US, which decreased 9% and “lost share in a declining category”.

Speaking at a Diageo roundtable last week, CEO Ivan Menezes said “rum has been tough for us”.

He said: “The spirits sector is so dynamic in the US. [It’s] very attractive, fast growing, premiumising nicely [with] lots of excitement in whisk(e)y and lots of excitement in Tequila.

“Even vodka brands that are on trend are doing really well. Rum is a more muted category. It’s been tougher. Captain Morgan, as a result, is not performing well. It’s not in growth.

“We’re very focused on getting the energy back into Captain Morgan so there’s a lot of work going on on that. It will take time.”

In terms of volume sales, Captain Morgan was in growth in the 2017 calendar year, hitting 11.7 million cases, up 9.3% compared to 2016 according to Brand Champions data. The brand boasted the highest rate of growth for any international rum brand.

Vodka “returned to growth”, with sales up 3% thanks to growth in all regions. This increase was partially offset by a continuing decline for Cîroc vodka, sales for which plummeted 12%.

“Captain Morgan and Cîroc are the two that are weak and declining,” said Menezes. “We’re putting our best minds and efforts against it, but it will take time for it to get back into healthy shape.”

Gin and Tequila were the star performers of the period, with both categories posting double-digit gains of 28% and 29%, respectively. Don Julio and Casamigos, the latter of which Diageo acquired in 2017, helped to boost Tequila’s growth.

Last March, the group acquired German vermouth Belsazar, which was one of the first brands to join the UK drinks group’s growth accelerator programme, Distill Ventures.

Kathryn Mikells, chief financial officer at Diageo, said the group is “making smaller acquisitions and investments through Distill Ventures all the time”.

“We look a lot but you should expect that we’re going to be pretty picky in terms of what we transact on but we continue to look.

“In this last half, we increased our investment in Sichuan Shuijingfang Company (SJF) from 40% to 60% so we continue to look for opportunities that we think are good ones for the company as we’re trying to build a portfolio that doesn’t just give us consistent results today but our seeding of the smaller brands is what we’re going to need 10 to 20 years from now.”

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