PAUL WALSH TALKS ACQUISITIONS, SCOTCH AND RTDs
During yesterday’s financial results conference, Paul Walsh gave listeners insight into Diageo’s acquisition strategy, price pressures in the US and several other key issues. Let’s take a look.
When asked about future acquisitions, Paul was guarded in his answer. With so much Absolut rumors swirling in the air we don’t necessarily blame him.
“Our first priority is to grow the business that we currently have, so organic growth is a priority...secondarily, if we see opportunities for growth in acquisitions we will certainly seize those opportunities. In fact, I think we have a reasonable track record with that one.”
“We will continue to be alert to opportunities and it would probably be unwise to say more than that.”
We were a little disappointed though. With Fortune so open about its interests in the Swedish company, we hoped he’d address Absolut more. However, the company is most likely concerned about anti-trust issues, and as a result is staying tight lipped.
Paul acknowledged recent pressures in the US as a result of dropping prices, but claimed Diageo refused to get involved. Therefore, he said, prices pressure haven’t effected the business much or at all.
“Trend to premiumization will continue which is where our brands play...we are proud of the prudencey of which we’ve managed our affairs...regarding this debt crunch...we are very cash generative.”
Meanwhile, renewed interest in Scotch has helped drive growth for Johnny Walker, particularly Johnny Walker Black, and Diageo’s other Scotch brands.
“Scotch generally is seeing somewhat as a renaissance particularly as we gain access to more and more of the emerging markets. I think as a category it offers authenticity, quality and its rich in heritage.”
“Clearly in the Scotch category, Johnny Walker is by far the leader...our Scotch portfolio is more than Johnnie Walker. Johnnie Walker makes up about half of our total Scotch sales, which make up a total of about 13% of sales.”
And in the opposite side of the spectrum, it doesn’t look like Diageo is pulling out of the RTD segment anytime soon. You’ll recall that 29 AGs wrote a letter asking the TTB to rethink the definition of RTDs and alcoholic energy drinks last week, but the letter only specifically cited beer companies (Miller and A-B, mainly). Here’s what Ivan Menezes had to say on the malted matter:
“RTD is about under 2% of the alcohol servings in the US across beer, spirits and wine. We see it as a sustainable category. We have over 50% share, nearly 60% share in it. It’s a category that requires news and innovation and constant renovations but we see it as very profitable. And even though it’s less than 10% of our business there, it’s an important segment to the marketplace.”
“Our emphasis is on beer, spirits and wine. With that said, we believe we can growth RTD in certain markets around the world. It tends to be a market driven strategy,” reiterated Paul.
To take a peak at yesterday’s coverage of the results, click here.
When asked about future acquisitions, Paul was guarded in his answer. With so much Absolut rumors swirling in the air we don’t necessarily blame him.
“Our first priority is to grow the business that we currently have, so organic growth is a priority...secondarily, if we see opportunities for growth in acquisitions we will certainly seize those opportunities. In fact, I think we have a reasonable track record with that one.”
“We will continue to be alert to opportunities and it would probably be unwise to say more than that.”
We were a little disappointed though. With Fortune so open about its interests in the Swedish company, we hoped he’d address Absolut more. However, the company is most likely concerned about anti-trust issues, and as a result is staying tight lipped.
Paul acknowledged recent pressures in the US as a result of dropping prices, but claimed Diageo refused to get involved. Therefore, he said, prices pressure haven’t effected the business much or at all.
“Trend to premiumization will continue which is where our brands play...we are proud of the prudencey of which we’ve managed our affairs...regarding this debt crunch...we are very cash generative.”
Meanwhile, renewed interest in Scotch has helped drive growth for Johnny Walker, particularly Johnny Walker Black, and Diageo’s other Scotch brands.
“Scotch generally is seeing somewhat as a renaissance particularly as we gain access to more and more of the emerging markets. I think as a category it offers authenticity, quality and its rich in heritage.”
“Clearly in the Scotch category, Johnny Walker is by far the leader...our Scotch portfolio is more than Johnnie Walker. Johnnie Walker makes up about half of our total Scotch sales, which make up a total of about 13% of sales.”
And in the opposite side of the spectrum, it doesn’t look like Diageo is pulling out of the RTD segment anytime soon. You’ll recall that 29 AGs wrote a letter asking the TTB to rethink the definition of RTDs and alcoholic energy drinks last week, but the letter only specifically cited beer companies (Miller and A-B, mainly). Here’s what Ivan Menezes had to say on the malted matter:
“RTD is about under 2% of the alcohol servings in the US across beer, spirits and wine. We see it as a sustainable category. We have over 50% share, nearly 60% share in it. It’s a category that requires news and innovation and constant renovations but we see it as very profitable. And even though it’s less than 10% of our business there, it’s an important segment to the marketplace.”
“Our emphasis is on beer, spirits and wine. With that said, we believe we can growth RTD in certain markets around the world. It tends to be a market driven strategy,” reiterated Paul.
To take a peak at yesterday’s coverage of the results, click here.
posted at 12:06 PM
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