Guinness owner speaks of challenging environment for drinks industry

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Diageo owns well-known drinks brands such as Guinness, Johnnie Walker, Baileys, Smirnoff and Captain Morgan. Credit: Diageo

Diageo chief executive Debra Crew has commented on the ‘challenging’ trading conditions throughout the drinks sector ahead of the firm’s AGM.

The beverage manufacturer reported a $304m decline organic operating profit during its preliminary results for the 2024 fiscal year, published in July, and Crew has now said that its expectations remain unchanged.

Diageo owns several leading alcoholic drinks brands including Guinness, Johnnie Walker, Baileys, Smirnoff and Captain Morgan.

“The global environment remains challenging for both our industry and Diageo,” she said.

“While consumers continue to be cautious in this environment, we are focused on strengthening the resilience of our business through operational excellence, productivity and strategic investments to win quality market share.

“We have made good progress on our strategic initiatives, including our US route-to-market enhancements, and in Nigeria we are progressing well towards completion of the agreement to restructure our business model there.”

However, Crew predicted that more favourable conditions will return in time: “I believe that the fundamentals for global TBA, and particularly the spirits industry, remain strong and am confident that when the consumer environment improves, growth will return and the actions we are taking will position us well to outperform the market.”

Investment and innovation

Elsewhere, Diageo announced the acquisition of Chicago-based non-alcoholic spirits brand Ritual Zero Proof on 25 September.

The group has owned a stake in Ritual Zero Proof since 2020, with North America CEO Sally Grimes describing it as the “number one brand in the fastest growing adult beverage category”.

Diageo is also trialling 90% paper-based bottles of Johnnie Walker Black Label exclusively at Johnnie Walker Princes Street's 1820 bar, in Edinburgh.

The trial, now underway, will assess how bartenders feel about bottle and how it bottle fares in a bar environment. A total of 250 paper-based bottles will be used with the trial expected to run until mid-October.

Jennifer English, Johnnie Walker global brand director, called the trial a “significant step forward” in the brand’s journey.

“This test allows us to explore new packaging in the high intensity environment of the on-trade,” English added.

In other news, Co-op has recalled several batches of pate because packs may have been contaminated with Salmonella and Listeria monocytogenes.