Diageo plc is a British multinational firm that owns some of the most popular alcoholic drinks in the world. The firm boosts a reputation of not only being the largest spirits producer in the world, but also being the world's leading premium drinks company. The company has an extensive portfolio and their most popular drinks include Smirnoff vodka, Baileys, Pimms, Blossom Hill and Guinness. The company owns 312,120 Breweries, 312,130 Wineries and 312,140 Distilleries in the world and trade in near 180 markets, and employs more than 200,000 people in about 80 countries; of which include Great Britain, Canada, United States, Ireland, Spain, Italy, Africa, Latin America, Australia, India and the Caribbean. The company is listed on both the New York Stock Exchange (DEO) and the London stock Exchange (DGE). (Diageo, n.d)
I firstly gathered information about Diageo Plc through the use of secondary data from the internet, e journals and newspaper articles. I used the search engine Google to find trusted websites that contained information About Diageo Plc and shifting through this information to find parts which were relevant to my report and then referred to them.
For this report a SWOT (Strength, Weaknesses, Opportunities and Threats) analysis framework seemed most appropriate in aiding me to firstly analyse and evaluate the company’s position in the market place and secondly how successful the strategies they have adopted have been. Last but not least a SWOT analysis is useful in drawing out recommendations that could not only help Diageo build on its success but also aide it in developing the company further.
Although most consumers are unfamiliar with the company itself, some of the brands owned by Diageo plc are hugely popular in many countries and in most cases are leaders in their respective markets. The company alone owns 79% of the stout sector in Europe (Corporatewatch, 2005). Figures by the Herald Scotland show that prior to the recession Diageo was selling on average 1.5 billion bottles of Smirnoff Ice annually; even though the company claimed it had only dipped its toes in the global market for ready-to-drink vodka. Sales have slowed down due to the downturn but the company is still making respectable amounts of profits, and for the fiscal year ending in June 2010. Compared to one of their main competitors in the alcoholic beverage market; Pernord Ricard who produce popular brands such as absolute vodka, Jacobs creek wines, Beefeater gin, Diageo’s Sales were at $14,735.5M whilst Pernord’s sales stood at $8,643.1M (although it must be said that the company did experience a higher level of growth than Diageo, with Diageo experiencing a 4.2% growth this year compared to Pernord’s 14.6%) (Answers, 2010). The company’s strategy of investing greatly in marketing; with approximately £1.04 billion spent on marketing of premium drinks brands in June 2004 alone, has paid off as brand awareness, especially in their eastern markets, is very high. By operating in locations all over the world; including Africa and devising an effective marketing campaign tailored to specific markets the company has definitely made its mark in the alcoholic beverages market and pushed competitors far behind it. In Africa for example their advertisements have at times featured local celebrities (in Africa singer 2face Idibia endorsed Guinness extra smooth) High quality TV advertisements and catchy slogans such as “Guinness isn't good for you, Guinness is Good for You and There`s vodka and then there`s Smirnoff” to their products, which are now forever associated with the product and more importantly the brand (Textart, n.d).
Even with the profits that the company made at the end of the June fiscal year, Diageo’s full year operating profits grew by just 2%. The western markets have been less successful...