Diageo, at first glance, is an international drinks producer and distributor operating across developed and emerging markets. But, if you look deeper at the company you quickly discover that it represents a portfolio of iconic beverage brands including Johnnie Walker Scottish whisky, Smirnoff vodka, Baileys Irish cream liqueur and Guinness Irish stout. This broad brand portfolio allows it to offer a diverse drinks range to consumers meaning as drinking trends ebb and flow, Diageo can benefit from changing consumer tastes by leaning in to trends through one or a few of their respective brands.
A key trend that Diageo has bene ted from has been ‘Premiumisation’. As consumers place greater emphasis on their health, and their incomes grow, alcohol volume consumption is declining but more favour is now being placed on more premium drinking experiences. Consumers seem to be trading up brands and favouring a pricier tipple, with food, versus just drinks.
Nevertheless, risks remain. Alcohol consumption remains a public health concern and high import tariffs for international companies could mean competing against local market players becomes more challenging. And, if we see harder times ahead, to what extent will the Premiumisation trend remain intact if consumer incomes are squeezed?