#AceFinanceNews – Featured Report: July.30: Guinness has a plan to take on craft beer — and it’s working
Diageo, the alcohol giant behind the likes of Smirnoff, Johnnie Walker, and Captain Morgan, just put out its full-year results and one of the few bright spots is Guinness.
The iconic Irish stout has an association with history and heritage, but Diageo is trying to reinvent it as “innovative” — and the plan is working.
Innovation remained a key performance driver with net sales up 30% [in this category], driven by successes such as ‘The Brewers Project’ which helped put Guinness back in growth in both Great Britain and Ireland.
“The Brewers Project at St James’s Gate” is a branding and marketing campaign tied to the launch of new Guinness beers, all trying to make the Dublin brewery look like a “craft” beer maker of the type springing up across Britain right now.
Last year Guinness brought out its first new drinks in years in the UK, launching two porters and, most incredibly, a golden ale. Their success helped Diageo’s beer sales rise 2% in Britain.
In North America too Guinness sales were up thanks to the launch of a Guinness branded Blonde American Lager.
All of this is in response to the rising tide of “craft” beer that’s gaining in popularity across North America and the UK. Consumers are willing to spend more on more adventurous and complex styles of beer, but are less interested in “traditional” drinks.
While Diageo will be pleased with Guinness’s performance in the west, sales declines in Africa and Asia mean globally sales fell by 2%.
That pretty much sums up performance across the whole company. Sales of most spirits are falling, with tequila and North American whiskey the only big bright spots, as the table below shows:
Diageo reported a 5% rise in sales to £10.8 billion ($16.85 billion), while profit rose 3% to £2.8 billion ($2.37 billion). Shares are down 0.18% 20 minutes after trade started in London.
CEO Ivan Menezes says in Thursday’s results statement that the performance “reflects the challenges we have seen on top line growth” but says he’s optimistic about the year ahead.
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