Diageo’s 200 job cuts reflect industry struggles

By Rod Addy contact

- Last updated on GMT

Related tags: Job cuts, Johnnie walker

Diageo makes a range of beers and spirits for markets across the world
Diageo makes a range of beers and spirits for markets across the world
Diageo’s 200 job cuts reflect bigger industry issues and the maker of Guinness and Johnnie Walker whisky is not alone in feeling the pinch, according to Shore Capital analyst Phil Carroll.

The distiller and brewer made the announcement today (June 10) that it was planning to cut 200 jobs as part of measures to save £200M in business costs. Roles at its head office and all its major global regions would be affected, it said.

However, Carroll told FoodManufacture.co.uk the headcount reduction needed to be seen in the context of a company employing 28,000 people globally and reporting £11.4bn in sales in the year to June 30, 2013.  

He also stressed rivals were taking similarly tough measures in the face of difficult market issues. “They are not on their own. SAB Miller recently announced a cost saving programme, as did Heineken.”

SAB Miller

SAB Miller last month announced plans to save $500M a year by 2018. The maker of Peroni and Grolsch lager had been facing sales declines in European markets and was seeking to offset these by cost cutting and targeting developing economies including Latin America and Africa.

On March 31, Heineken announced plans to cut 97 jobs at its Ledbury plant as it shifted cider production from there to Hereford, where it would invest £58M​. The move was intended to boost production and efficiency.

Meanwhile, anti-extravagance measures by the government in greater China last year hit trade for brewers and distillers.

Need to defend profits

All these issues were exacerbating the need for drinks firms to defend their profits. “For me it’s also about a constant focus about being a streamlined organisation​,” added Carroll.

A Diageo spokeswoman said: “We announced back in January a review of the organisation to support our evolving global footprint.

“We’ve put in place a structure whereby resource and decision-making is deployed at a local level wherever possible, closer to customers and consumers and enhancing our responsiveness and agility.”

Carroll would not be drawn on whether Diageo was likely to implement further job cuts within the next year.

Related topics: Drinks

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