Business

Diageo earns big from regional business in FY12

Sunday, August 26, 2012    

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DIAGEO'S Latin America and the Caribbean (LAC) operations, which includes its Jamaican business, is the alcoholic beverage giant's fastest growing division.

The region produced net sales and volume growth of 19 per cent and 10 per cent, respectively, for the financial year ending June 30, 2012.

"With an increase in investment behind our brands of 17 per cent, we are progressively expanding our overall market penetration, at the appropriate pace to capture the opportunities of a growing middle class consumer base," said Randy Millian, President of Diageo Latin America and the Caribbean.

"We have seen growth in all our key categories, notably in vodka, rum and scotch, and we have ensured share gains in our large scotch markets of Brazil, Venezuela, Mexico, and Colombia, where Johnnie Walker, Buchanan's and Old Parr have all performed well, with our reserve portfolio having a truly excellent year," he said.

Diageo, whose brands include Johnnie Walker, Smirnoff and Guinness, reported net profit for the year ending June 30 of £1.94 billion ($272 billion), up two per cent over a year earlier. The performance was led by strong growth in sales of spirits, which rose 12 per cent and accounted for 80 per cent of growth — overall sales rose 10 per cent to £14.6 billion.

The past financial year proved to be a good one for Diageo's Jamaican subsidiary, Red Stripe, which returned to growth through cutting operational costs and putting renewed focus on innovation.

"Some of the successes we are most proud of this year at Red Stripe are our commitment to strategic focus and vision to 2016, the graduation of 2,486 Jamaicans from our Learning for Life programme in the previous financial year, and the leveraging of some key sponsorships such as the Red Stripe Premier League," said Red Stripe's outgoing Managing Director, Renato Gonzalez.

"The last financial year also saw many innovations being launched including Tallawah, our J$100 beer, Red Stripe Light Flavours and D&G White Overproof Rum," Gonzlez added.

Red Stripe said the changes made in the past financial year have set up the business for continued growth and achieving its four-year plan in 2016. The firm enjoyed higher domestic profits against the background of greater levels of efficiencies which led to lower costs and greater diversification of its product mix, including increasing sales volumes of beverages with lower alcohol content. The brewing company introduced at least five new beverages during the year, including a trio of flavoured light beers and Tallawah, a lager packaged in a 250 ml bottle in the Jamaican colours of black, green and gold to commemorate the country's 50th year of Independence.

What's more is that the firm entered into a head-to-head battle with J Wray & Nephew in the lucrative white overproof rum market, when it introduced its own D&G White Overproof Rum to the local marketplace on July 1.

The company's net profits for the nine months to March 31, 2012 was $757 million, up 70 per cent over the same period last year.

Gonzalez is returning to his native Brazil to lead newly acquired Diageo company Ypioca. He is being replaced by Cedric Blair, a long-serving employee of Red Stripe, who has held roles mostly in engineering and operations at the company since 1995.

Blair noted that the company has a very clear strategy for continued growth of the business through to 2016.

"It is an exciting strategy that will deliver some significant strategic growth initiatives within the next twelve months, which will add value not only to the company but also for our country," he said.

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