Diageo in the News

If you’ve been a Booze Business follower, you know that I like to keep close tabs on Diageo and follow the good, the bad and the “close but no cigars” assessment of their actions.

This past week or so provided lots of press worth commenting upon.

India

As part of their global strategy, Diageo seems to be concentrating on gaining a presence in emerging markets. To do that, they have developed relationships in various countries, focusing on local spirits, at least initially. They have ventures or are selling such locally made products as Raki in Turkey, Baiju in China and local vodka in Vietnam.

This week brought the news that they are launching a local Indian whisky aimed at the country’s middle-income drinkers. Considering the fact that the spirits market in India is 234 million 9-liter cases (2nd only to china and Russia in volume) and growing at a compounded rate of 20% the last five years – I’d say it’s a good move.

But it won’t be easy, given the tough advertising rules for liquor. According to my friend and publisher Bishan Kumar (I write a monthly column for his magazine in India called Spiritz), the pathway to promotion of liquor is centered on point of sale and event sponsorship.

Diageo will also have to confront other past issues. It had a local product (Gilbey’s Green Label) but sold it in 2002 to concentrate on global brands. Now it wants to go back to concentrating on local brands. I suppose time and management changes allow for course adjustments.

Also, in July the US SEC charged the company with violating the Corrupt Practices Act in part for illicit payments made to Indian officials between 2003 and 2009. I read that Diageo agreed to pay more than $16 million to settle the charges. I guess they figured point of sale and event promotions are more effective brand building tools.

ESPN

In another recent move, Diageo signed a deal to become “presenting sponsor” on two shows and – get this – on both the English and Spanish versions of the broadcasts. It’s a smart move to reach different types of audiences with a consistent message.

On the other hand, their initial choice of brands includes Captain Morgan. That made me smile. Some time ago in doing some research on brand potential among Latino consumers, a focus group moderator asked a group of consumers with a Caribbean background how they felt about the brand. One respondent said something like, “Captain Morgan… wasn’t he the dude that sailed all over the Caribbean burning and pillaging? You want me to buy his rum? For all I know he destroyed my great-great-great grandfather’s village.”

Talk about dumb

Diageo announced last week that they are moving production of the US supply of Red Stripe beer from Jamaica to the US.

One of my readers sent me an email on the subject that just about sums it up. “They’ve got to be kidding! They’re not just moving bottling, but production itself. Do they think that consumers are stupid?”

I wrote back and told him not to get too excited. They thought it would be okay since the new facility will also be in Jamaica… Queens.

Besides, if you’re going to take a chance on moving the production of Captain Morgan from one place to another when the brand faces stiff competition, changing Red Stripe production is a trifling matter.

I have a new slogan for them – At Diageo, Our Accountants Rule.

My favorite event of the week

I don’t know how much Diageo’s deal with P Diddy is worth – some give the number in 8 digits or even 9 digit millions – but he sure has done good things for the brand.

Last week, however, he lost it in a club in Atlanta and had to spend much of his time apologizing for what some have referred to as a “foul-mouthed vodka rant.”

Apparently he saw some guy drinking Grey Goose rather than Ciroc and decided to defend his brand by 1) throwing ice at him 2) calling him the “N” word and 3) maligning the guy’s sexual persuasion.

An online blog called Hollywood Gossip quoted him as tweeting, “I’m sorry for the ignorant way I represented myself … I have backslid and regressed. Forgive me for my ignorance. Pray for me pls.”

Don’t apologize Mr. Diddy, Diageo could care less. Your contract is safe. As for me, I just want you to know that you’re my kind of brand ambassador.

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