Wednesday, July 25, 2007

A shot of vodka and a packet of capital gains, please

It's been a while since we did any Guinness/Diageo posts so the Financial Times brings news that Diageo has again squelched rumours that it would sell the Irish brand, referring instead to a goal of increasing sales in Africa (where they offer a higher alcohol version) to compensate for declining sales in Ireland --

Mr [Paul] Walsh [CEO] said a continuing fall in Guinness sales in Ireland had "nothing to do" with Diageo’s marketing of the brand, and was instead due to "structural" changes in consumption as people spent less time in pubs.

Guinness accounts for about 13 per cent of Diageo’s total sales revenues, which were £7.26bn (€10.8bn) in the 2006 financial year. Guinness sales fell 1 per cent globally and were down 4 per cent in Europe in the six months to December.

"We have to continue to grow the brand outside its home market," Mr Walsh said, adding that sales of Guinness outside Ireland had risen 4-5 per cent.


Despite marketing abominations like Surger and Ice, he's probably right that changes in Irish drinking culture have more to do with the decline in sales. Incidentally, the article also says that Diageo is interested in buying the Swedish government-owned Absolut operation. Now, Diageo could do like everyone else and borrow the money to finance that purchase. But one option not explicitly ruled out by the claim that they won't sell Guinness is selling the St James' Gate Brewery.