Diageo

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Diageo plc
Type Public limited company
Traded as
Industry Beverages
Founded 1997 (London)
Headquarters Park Royal, London, England, United Kingdom
Key people Franz Humer (Chairman)
Ivan Menezes (CEO)
Products Alcoholic beverages: beer, wine and spirits
Revenue £15.487 billion (2013)[1]
Operating income £3.431 billion (2013)[1]
Net income £2.594 billion (2013)[1]
Employees 36,000 (2014)[2]
Website www.diageo.com

Diageo plc (/dˈɑːʒ/; other possibilities are /dˈʌʒ/[3] or /diˈæi/)[4] is a British multinational alcoholic beverages company headquartered in London, England. It is the world's largest producer of spirits and a major producer of beer and wine.[5][6]

Diageo's brands include Smirnoff (the world's best-selling vodka),[7] Johnnie Walker (the world's best-selling blended Scotch whisky),[8] Baileys (the world's best-selling liqueur),[9] and Guinness (the world's best-selling stout).[10][11] It also owns 34% of Moët Hennessy, which owns brands including Moët & Chandon, Veuve Clicquot and Hennessy.[12][13] It sells its products in over 180 countries and has offices in around 80 countries.[14][15]

Diageo has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £48.9 billion as of 7 May 2013, making it the 8th-largest company on the London Stock Exchange.[16] It has a secondary listing on the New York Stock Exchange.

Name[edit]

Diageo is an invented name which was created by the branding consultancy Wolff Olins in 1997.[17] The name is composed of the Latin word "dies", meaning day, and the Greek root "geo", meaning world, and is meant to reference the company giving pleasure every day, everywhere.[17][18]

History[edit]

Diageo was formed in 1997 from the merger of Guinness and Grand Metropolitan.[19] The creation was driven by the executives Anthony Greener and Philip Yea at Guinness[20] plus George Bull and John McGrath of Grand Metropolitan.[21] Shares in Diageo began trading on the London Stock Exchange on 17 December 1997.[22]

Diageo owned Pillsbury until 2000 when it was sold to General Mills.[23] In 2002, Diageo sold the Burger King fast food restaurant chain to a consortium led by US firm Texas Pacific for $1.5 billion.[24]

In February 2011 Diageo agreed to acquire the Turkish liquor company Mey Icki for US$2.1 billion.[25][26]

In May 2012, Diageo agreed to acquire Ypioca, the largest-selling brand of premium cachaça in Brazil, for £300 million.[27]

In June 2012 Diageo announced a £1 billion investment in Scotch whisky production over the following five years, with at least one new distillery to be constructed, several existing facilities to be expanded, and overall production capacity to be increased by 30 to 40 per cent.[28][29] However this did not involve retaining the original Johnnie Walker plant, in Kilmarnock, which had already closed its doors in March the same year.

In November 2012 Diageo agreed to acquire a 53.4% stake in the Indian spirits company United Spirits for £1.28 billion.[30][31]

Products[edit]

A pint of Guinness

Diageo's beverage brands include:[32]

Diageo also distributes Unicum (Hungarian liqueur), its lighter-bodied variant Zwack, and Grand Marnier which is distributed by Diageo in many markets, including exclusively in Canada, and a deal was reached in 2009 to expand significantly this partnership in Europe.

Operations[edit]

Diageo is the world's biggest whisky producer with 28 malt distilleries and two grain distilleries. The company operates the Scotch whisky distilleries of Auchroisk, Benrinnes, Blair Athol (situated at Pitlochry), Caol Ila, Cardhu, Knockando, Glen Elgin, Clynelish, Cragganmore, Dalwhinnie, Glenkinchie, Glen Ord, Lagavulin, Linkwood, Oban, Royal Lochnagar, Strathmill, Talisker, Teaninich, Mannochmore, Mortlach and Glenlossie, which are sold not only under their own name but used to make the various blended Scotch whiskies sold by the company, and owns the stock of many closed distilleries such as Port Ellen, Rosebank, Brora, Convalmore, Glen Albyn, North Brechin, Banff, and Linlithgow. The company has opened a new malt distillery adjacent to their maltings at Roseisle (1st new make spirit produced Spring 2009). This will be one of the largest malt distilleries in Scotland. The new building contains 14 traditional copper pot stills. An expansion programme is also underway at its Cameron Bridge Grain Distillery in Fife that will make it the largest grain distillery in Scotland. Diageo previously owned the Port Dundas Grain Distillery in Glasgow prior to its closure and demolition in 2010, and jointly operates the North British Grain Distillery in Gorgie, Edinburgh, with The Edrington Group.

Furthermore, Diageo owns the Gleneagles Hotel and a 34% stake in the Moet Hennessy drinks division of French luxury goods company LVMH.[34]

Head office[edit]

Diageo's head office is in Park Royal, London Borough of Brent,[35][36] on a former Guinness brewery property.[37] The brewery was closed in 2004; it had produced beer since 1936.[38]

In 1996, Diageo moved to a head office facility in Henrietta Place, Westminster, City of Westminster.[37][39] In 2009, Diageo announced that it was closing the Henrietta Place facility as part of a cost reduction programme. Diageo moved its employees to the Park Royal site. During that year, about 1,000 employees were located at the Henrietta Place and Park Royal offices. The lease in the Henrietta facility was scheduled to expire in 2010.[37]

Controversies[edit]

In December 2003, Diageo provoked controversy over its decision to change its Cardhu brand Scotch whisky from a single malt to a vatted (blended) malt whilst retaining the original name and bottle style. Diageo took this action because it did not have sufficient reserves to meet demand in the Spanish market, where Cardhu had been successful. After a meeting of producers, Diageo agreed to make changes.[40] On February 4, 2004, Diageo restated last fiscal year's earnings under U.S. accounting rules, reducing net income by 53 million pounds, or $97 million.[41] In 2006, the Cardhu brand quietly changed back to being a single malt.[42]

In July 2009, Diageo announced that, after nearly 200 years of association with the town of Kilmarnock, Scotland they would be closing the Johnnie Walker blending and bottling plant[43] as part of restructuring to the business. This would make 700 workers unemployed and caused outrage from press, local people and politicians. A campaign against this decision was launched by the local SNP MSP Willie Coffey and Labour MP Des Browne. A petition was drawn up against the Diageo plans, which also involves the closure of the historic Port Dundas Grain Distillery in Glasgow.[44] Part of the Johnnie Walker operation will be moved to a Diageo site at Leven, Fife, with the creation of 400 jobs there.[45] As part of this expansion in Leven, Diageo culled a herd of roe deer living on the site to make way for new buildings.[46]

In February 2009, it was reported in The Guardian that the company had restructured itself so as to avoid paying tax in the UK.[47]

The National Puerto Rican Coalition plans to run a series of ads in New York City and Puerto Rico urging a boycott of Diageo-owned alcoholic drinks to protest the corporation’s production move of its Captain Morgan rum from Puerto Rico to the U.S. Virgin Islands,[48] which will provide it with $2.7 billion in tax benefits over 30 years.[49]

On 9 May 2012 Scottish Craft Brewery BrewDog revealed that Diageo had threatened to withdraw funding from BII Scotland's annual awards if BrewDog was to be named winner of the Best Bar Operator award. Diageo was forced to issue an apology.[50][51][52]

In December 2013, Diageo brand "Captain Morgan Spiced Rum" began advertising on the Rush Limbaugh Show, provoking a backlash against the brand.

References[edit]

  1. ^ a b c "Preliminary Results 2013" (PDF). Retrieved 9 March 2014. 
  2. ^ "Our people". Diageo. Retrieved 2014-05-18. 
  3. ^ "you tube". you tube. 2010-08-26. Retrieved 2014-05-18. 
  4. ^ The only pronunciation in the Longman Pronunciation Dictionary
  5. ^ Thompson, James (27 August 2010). "Johnnie Walker popularity helps Diageo to toast profits". The Independent (UK). Retrieved 29 August 2010. 
  6. ^ "Categories". Diageo plc. Retrieved 29 August 2010. 
  7. ^ "Diageo says would look at Absolut if up for sale". Reuters. 14 March 2007. Retrieved 23 October 2011. 
  8. ^ "Diageo and the brands that make the global drinks giant". London: The Telegraph. 7 June 2011. Retrieved 23 October 2011. 
  9. ^ "Diageo's heady cocktail is best left on the shelf". London: The Independent. 10 July 2003. Retrieved 23 October 2011. 
  10. ^ "A round of applause". The Jakarta Post. 12 September 2009. Retrieved 23 October 2011. 
  11. ^ "Our Brands". Diageo plc. Retrieved 21 June 2011. 
  12. ^ "Wines". Diageo plc. Retrieved 29 August 2010. 
  13. ^ Boyle, Catherine; Walsh, Dominic (22 April 2009). "LVMH denies talk of Diageo bid for Moët Hennessy". The Times (UK). Retrieved 29 August 2010. 
  14. ^ "About Us". Diageo plc. Retrieved 29 August 2010. 
  15. ^ "Famous Brewer Expands with National Launch of Guinness Black Lager". PR Newswire. 24 August 2011. Retrieved 24 March 2012. 
  16. ^ "FTSE All-Share Index Ranking". stockchallenge.co.uk. Retrieved 7 May 2013. 
  17. ^ a b "Diageo Case Study". Wolff Olins. Retrieved 6 June 2012. 
  18. ^ Yates, Andrew (27 November 1997). "Guinness' new name gets shareholder thumbs down". The Independent. Retrieved 6 June 2012. 
  19. ^ "Spirits soar at Diageo". Findarticles.com. 2005. Retrieved 18 April 2011. 
  20. ^ "Board Announcements at Diageo". 4 May 1999. Retrieved 24 March 2012. 
  21. ^ Griffiths, Ian (18 May 1997). "Profile: John McGrath – The man who'll mix the drinks". The Independent. Retrieved 24 March 2012. 
  22. ^ Yates, Andrew (18 December 1997). "Market bids farewell to an old name as Diageo makes debut". The Independent. Retrieved 6 June 2012. 
  23. ^ "Diageo sells Pillsbury to General Mills". Findarticles.com. 23 December 2002. Retrieved 18 April 2011. 
  24. ^ "Diageo sells Burger King". Findarticles.com. 23 December 2002. Retrieved 18 April 2011. 
  25. ^ "Diageo in $2.1 Billion Deal for Turkish Liquor Maker". The New York Times. 21 February 2011. Retrieved 6 June 2012. 
  26. ^ "Diageo's Turkish delight at raki swoop". The Scotsman. 19 February 2011. Retrieved 6 June 2012. 
  27. ^ Chesters, Laura (29 May 2012). "Diageo gets the taste for a cocktail with Brazilian spirit". The Independent. Retrieved 31 May 2012. 
  28. ^ Thomas, Nathalie (6 June 2012). "Diageo to invest £1bn in Scotch whisky". The Telegraph. Retrieved 6 June 2012. 
  29. ^ "Scotch whisky firm, Diageo, to invest £1bn". BBC News. 6 June 2012. Retrieved 6 June 2012. 
  30. ^ "Diageo buys majority stake in India's United Spirits". BBC News. 9 November 2012. Retrieved 10 November 2012. 
  31. ^ "Diageo does $2.1 billion deal for India's United Spirits". Reuters. 9 November 2012. Retrieved 10 November 2012. 
  32. ^ "our brands". Diageo. Retrieved 18 April 2011. 
  33. ^ Hansell, John (29 January 2014). "Diageo’s Orphan Barrel Whiskey Project". Whiskey Advocate. Retrieved 25 June 2014. 
  34. ^ Walsh, Dominic; Boyle, Catherine (23 April 2009). "LVMH denies being in Mot sale talks with Diageo". The Times (London). 
  35. ^ "Diageo Contacts." Diageo. Retrieved 1 September 2011. "Diageo plc Lakeside Drive Park Royal London NW107HQ"
  36. ^ "Brent Boundary (approximate)." London Borough of Brent. Retrieved 1 September 2011.
  37. ^ a b c Dunkley, Jamie. "Drinks maker Diageo to close London office." The Daily Telegraph. 20 March 2009. Retrieved 1 September 2011.
  38. ^ Innes, John. "Guinness closes UK brewery." The Scotsman. 16 April 2004. Retrieved 1 September 2011.
  39. ^ "Contact us." Diageo. Retrieved 15 December 2009. "main content Diageo plc 8 Henrietta Place LONDON W1G ONB"
  40. ^ "Whiskey packaging whips up controversy". Beverage Daily.
  41. ^ "Diageo earnings reduced by $97 million". 
  42. ^ "Scottish Whisky: Cardhu". Scotchwhisky.net. 25 June 2007. Retrieved 18 April 2011. 
  43. ^ "Diageo Bottling Plant Refurbishment". Packaging-gateway.com. Retrieved 18 April 2011. 
  44. ^ "Kilmarnock Town fights to protect their heritage". Savejohnniewalker.org. Retrieved 18 April 2011. 
  45. ^ "Diageo reject bid to save Johnnie Walker jobs". Thescottishsun.co.uk. 10 September 2009. Retrieved 18 April 2011. 
  46. ^ Philp, Myra (27 March 2010). "Deer oh deer Diageo Drambis doomed". The Sun (UK). Retrieved 18 April 2011. 
  47. ^ Tax gap reporting team (2 February 2009). "Going Dutch". Guardian (UK). Retrieved 18 April 2011. 
  48. ^ Unlimited Studios (27 November 2009). "P.R. Coalition urges boycott of Diageo". Prdailysun.com. Retrieved 18 April 2011. 
  49. ^ Donmoyer, Ryan J. (26 June 2009). "Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit". Bloomberg. Retrieved 5 April 2011. 
  50. ^ "Diageo Screw BrewDog". BrewDog. 9 May 2012. Retrieved 9 May 2012. 
  51. ^ "Statement regarding the 2012 BII Scotland Annual Awards". Diageo. 9 May 2012. Retrieved 9 May 2012. 
  52. ^ Thomas, Nathalie (9 May 2012). "Scottish beer company BrewDog forces Diageo to apologise over 'dirty tricks' at awards". The Telegraph. Retrieved 10 May 2012. 

External links[edit]