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Diageo

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Diageo plc
Company typePublic limited company
IndustryBeverages
Predecessor
Founded1997; 27 years ago (1997)
HeadquartersPark Royal
London
NW10 7HQ
Key people
ProductsAlcoholic beverages: spirits, beer and wine
Revenue£12.867 billion (2019)[1]
£4.042 billion (2019)[1]
£3.337 billion (2019)[1]
Number of employees
28,420 (2019)[1]
Websitewww.diageo.com

Diageo plc (/diˈædʒioʊ/) is a British multinational beverage alcohol company, with its headquarters in London, United Kingdom. They operate in more than 180 countries and produce in more than 140 sites around the world.[2] It was the world's largest distiller until being overtaken by China's Kweichow Moutai on 9 April 2017.[3] It is also a major producer of beer.

Diageo has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It has a secondary listing on the New York Stock Exchange.

Name

Diageo is an invented name that was created by the branding consultancy Wolff Olins in 1997.[4] The name is composed of the Latin word diēs, meaning "day", and the Greek root geo-, meaning "world"; and is meant to reference the company slogan "Celebrating Life, Every Day, Everywhere".[5] [6]

History

Diageo was formed in 1997 from the merger of Guinness Brewery and Grand Metropolitan. Its creation was driven by the executives Anthony Greener and Philip Yea at Guinness,[7] along with George Bull and John McGrath of Grand Metropolitan.[8] Anthony Greener was the first executive chairman.[9] Shares in Diageo began trading on the London Stock Exchange on 17 December 1997.[10]

Diageo owned Pillsbury until 2000 when it was sold to General Mills.[11] In 2002, Diageo sold the Burger King fast food restaurant chain to a consortium led by US firm Texas Pacific for $1.5 billion.[12]

In 2001, Diageo acquired the Seagram’s spirits and wine businesses.[13]

In 2003, Diageo signed a joint venture with tequila brand Jose Cuervo to buy Don Julio Tequila, selling Jose Cuervo a 50 per cent stake for $100m.[14]

In February 2011, Diageo agreed to acquire the Turkish liquor company Mey Icki for US$2.1 billion.[15][16]

In May 2012, Diageo agreed to acquire Ypióca, the largest-selling brand of premium cachaça in Brazil, for £300 million.[17]

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.[18][19] This did not, however, involve retaining the original Johnnie Walker plant, in Kilmarnock, which had already closed its doors in March of the same year.[20]

In November 2012, Diageo agreed to acquire a 53.4 per cent stake in the Indian spirits company United Spirits for £1.28 billion.[21][22]

Since 2011, Diageo has had a controlling stake in the parent company Sichan Chengdu Shuijingfang Group Company, which it bought outright in 2013.[23]

In November 2014, Diageo agreed to sell Bushmills Irish whiskey to Jose Cuervo in exchange for $408 million and full ownership of tequila brand Don Julio.[24]

In April 2015, Diageo acquired a 100 per cent share in South African beer producer United National Breweries (UNB),[25] but it was announced in December 2018 that Diageo had entered into an agreement for the sale of UNB, expected to close in the second half of 2019.[26]

In October 2015, Diageo announced the sale of most of its wine business to Treasury Wine Estates.[27] Other brands, such as Navarro Correas and Chalone Vineyard, were sold separately.[28]

In December 2015, Diageo announced a $10 million investment in Danish whisky brand Stauning, to facilitate expansion of production.[29]

In March 2016, the company sold Grand Marnier, a cognac and bitter orange-based liqueur, to the Italian beverage company Campari Group.[30]

In February 2017, Diageo announced plans to open a Guinness brewery and tourist attraction in Baltimore County, Maryland.[31] The brewery could potentially create 70 new jobs and host as many as 300,000 visitors per year.[32]

In June 2017, the Casamigos tequila brand – a super-premium US-based tequila, launched in 2013 – became the latest addition to Diageo[33].

In February 2018, Diageo announced plans for limited edition bottles of its 12-year-old Black Label blended whisky named Jane Walker, as opposed to Johnnie Walker, to be sold. The label featured a striding woman on the label, rather than the top-hatted man normally associated with the brand.[34]

In November 2018, Diageo agreed to sell Seagram's VO, Seagram's 83, Myers's Rum, Popov vodka, Booth's Gin, Goldschläger, Yukon Jack, Sambuca, and 11 other brands to the Sazerac Company for $550 million.[35][36]

In February 2019, Diageo increased its stake in Chinese baijiu company Sichuan Shuijingfang Company Limited (SJF) to almost 70% through a partial-tender offer.[37]

In August 2019, Diageo bought the majority stake in Seedlip, a non-alcoholic spirits brand.[38]

In January 2020, Diageo agreed to pay $5 million to settle charges brought by the Securities and Exchange Commission that alleged the company had pressured distributors to buy products in excess of demand in order to hit performance goals.[39][40]

Brands

Diageo's beverage brands include: [41]

Scotch whisky: Johnnie Walker, Buchanan's, Cardhu, Justerini & Brooks, Bell's, Black & White, White Horse, Logan, Caol Ila, Vat 69, Oban, Talisker, Lagavulin, Glenkinchie, Dalwhinnie, Cragganmore, Clynelish, Singleton including Glen Ord, Dimple, Royal Lochnagar, Glen Elgin, Knockando, Windsor, Grand Old Parr, Auchroisk, Benrinnes, Blair Athol, Dailuaine, Glenlossie, Glen Spey, Inchgower, Linkwood, Mannochmore, Mortlach, Strathmill, Teaninich.

Irish whiskey: Roe & Co

American and Canadian whiskey: Bulleit, Seagram's Seven Crown, Crown Royal

Vodka: Smirnoff, Cîroc, Ketel One

Rum: Captain Morgan, Bundaberg, Pampero, Cacique, Myers's, Zacapa

Mixed drinks: Smirnoff Cocktails

Liqueur: Baileys, Sheridan's

Tequila: Don Julio, DeLeón, Casamigos

Gin: Gordon's, Tanqueray, Gilbey’s

Various: McDowell’s

Baijiu: Shui Jing Fang,

Rakı: Yeni Rakı

Cachaça: Ypioca

Beer: Guinness, Tusker, Harp Lager, Kilkenny, Senator, Meta Abo

Worldwide

Diageo operates in 180 countries across five regions: North America, Europe, Asia Pacific, Africa, and Latin America and the Caribbean.[42]

Awards and rankings

In 2016, Diageo was ranked 11th out of 4,255 companies worldwide for diversity and inclusiveness in the Thomson Reuters Diversity and Inclusion (D&I) Index.[43]

Operations

Diageo also owns a 34% stake in the Moet Hennessy drinks division of French luxury goods company LVMH.[44]

In 2017, the company was awarded top place in the Institute of Directors' and Chartered Quality Institute's Good Governance Index.[45]

  • Diageo's Gimli Plant in Gimli, Manitoba, Canada, the global supply plant for Crown Royal (the top selling Canadian whisky in United States[46])
    Diageo's Gimli Plant in Gimli, Manitoba, Canada, the global supply plant for Crown Royal (the top selling Canadian whisky in United States[46])
  • Caol Ila distillery on the Isle of Islay, Scotland
    Caol Ila distillery on the Isle of Islay, Scotland
  • Sterling Vineyards in Napa Valley, California
    Sterling Vineyards in Napa Valley, California
  • Gleneagles Hotel in Auchterarder, Scotland
    Gleneagles Hotel in Auchterarder, Scotland
  • St James Gate Guinness Brewery in Dublin, Ireland
    St James Gate Guinness Brewery in Dublin, Ireland
  • Diageo world headquarters in Park Royal, London
    Diageo world headquarters in Park Royal, London

Head office

Diageo's head office is in Park Royal, London Borough of Brent,[47] on the site of a former Guinness brewery[48] which had closed in 2004 after producing beer since 1936.[49] Diageo’s previous head office facility had been located in Henrietta Place, in the Marylebone district of the City of Westminster in London, since 1996. In 2009, Diageo announced that it was closing the Henrietta Place facility as part of a cost reduction programme and moved its employees to the Park Royal site.[50]

Controversies

Diageo received major backlash from the public and the Scottish Government following the decision to close Johnnie Walker production in Kilmarnock, Scotland, the birthplace of the brand's founder and production hub since 1820

In December 2003, Diageo provoked controversy over its decision to change its Cardhu brand Scotch whisky from a single malt to a 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.[51] In 2006, the Cardhu brand changed back to being a single malt.[52]

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[53] 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 plans, which also involved the closure of the historic Port Dundas grain distillery in Glasgow.[54]

In February 2009, it was reported in The Guardian that the company had restructured itself so as to avoid paying tax in the UK.[55]

The National Puerto Rican Coalition planned 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,[56] which will provide it with $2.7 billion in tax benefits over 30 years.[57]

In 2011, Diageo agreed to pay more than $16 million to settle U.S. civil regulatory charges that it made improper payments to foreign officials. Regulators accused the British company of violating the U.S. Foreign Corrupt Practices Act through its subsidiaries to obtain lucrative sales and tax benefits for its Johnnie Walker and Windsor Scotch whiskies and other brands.[58]

On 9 May 2012 Scottish Craft brewery BrewDog revealed that Diageo had threatened to withdraw funding from the British Institute of Innkeeping Scotland's annual awards if BrewDog was to be named winner of the Best Bar Operator award. Diageo was forced to issue an apology.[59] [60] [61]

In 2015, Diageo released an advertising campaign showing a young girl crying with her makeup smeared as her sister looks at her from the doorway, and the caption, "Who's following in your footsteps? Out of control drinking has consequences". The director of Rape Crisis Network Ireland said Diageo "blames victims of sexual violence for the crimes that have been committed against them. This is a harmful, regressive and hurtful message which targets the vulnerable."[62]

In November 2016, Diageo announced its intention of selling at auction Sir Edwin Landseer's iconic 1851 painting The Monarch of the Glen – which the company owns, but which has been on loan to the National Museum of Scotland in Edinburgh since 1999 – as it has "no direct link to our business or brands". [63] Ian Jack, writing in The Guardian, stated that "any business with a sense of history would give the picture to a public gallery in Scotland, the place without which both the business and the picture would be nothing. It would be the decent thing.[64]

In July 2017, Diageo was accused of using its huge influence over Irish publicans to pressure some based in Cork city into swapping out craft beer taps offering Irish-produced craft beer for Diageo beer brands, after several such pubs all did so over the course of one weekend. Diageo denied the accusation.[65]

References

  1. ^ a b c d "Annual Report 2019" (PDF). Retrieved 27 February 2020.
  2. ^ "Where we operate". Diageo Plc. Retrieved 2 January 2020.
  3. ^ "China's Moutai Tops Diageo as Most-Valuable Liquor Maker: Chart"". Bloomberg.com. 9 April 2017. Retrieved 12 April 2017."Categories". Diageo plc. Retrieved 29 August 2010.
  4. ^ "Diageo Case Study". Wolff Olins. Archived from the original on 15 July 2013. Retrieved 6 June 2012.
  5. ^ "History of Diageo". Drinks.ng. Retrieved 18 December 2019.
  6. ^ "Guinness' new name gets shareholder thumbs". The Independent. Retrieved 6 June 2012.
  7. ^ "Diageo". Grace’s Guide. Retrieved 11 December 2019.
  8. ^ "Profile: John McGrath – The Man Who'll Mix The Drinks". The Independent. Retrieved 11 December 2019.
  9. ^ "A liquid lunch". Forbes.com. Retrieved 11 December 2019.
  10. ^ "Diageo's drinks are best left on the shelf". The Independent. Retrieved 10 December 2019.
  11. ^ "Diageo to Confirm Pillsbury Deal". The Guardian. Retrieved 11 December 2019.
  12. ^ "Diageo sells Burger King". The Irish Times. Retrieved 11 December 2019.
  13. ^ "Diageo in 2001 – Seagram's Acquisition sees Crown royal and Captain Morgan join Diageo's brands". Diageo plc. Retrieved 11 December 2019.
  14. ^ "Diageo Turns to Tequila For Its Next Buy". City A.M. Retrieved 11 December 2019.
  15. ^ "Diageo in $2.1 Billion Deal for Turkish Liquor Maker". The New York Times. Retrieved 11 December 2019.
  16. ^ "Diageo's Turkish delight at raki swoop". The Scotsman. Retrieved 6 June 2012.
  17. ^ "Diageo gets the taste for a cocktail with Brazilian". The Independent. Retrieved 31 May 2012.
  18. ^ "Diageo's £1bn Shot into Malt Whisky". The Telegraph. Retrieved 11 December 2019.
  19. ^ "Scotch whisky firm, Diageo, to invest £1bn". BBC. Retrieved 6 June 2012.
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  21. ^ "Diageo buys majority stake in India's United Spirits". BBC News. Retrieved 10 November 2012.
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  23. ^ "Close of partial tender offer for shares in Sichuan Shuijingfang Company Limited". Diageo Plc. Retrieved 11 December 2019.
  24. ^ "Diageo Gets Full Control of Don Julio in Swap for Bushmills". Bloomberg L.P. Retrieved 23 December 2014.
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  28. ^ "Foley Family Wines Buys Chalone Vineyards". WineSpectator.com. Retrieved 11 December 2019.
  29. ^ "Diageo invests £10m in Stauning Danish whisky". Retrieved 20 February 2019.
  30. ^ "Gruppo Campari to buy brandy brand Grand Marnier". FT.com. 15 March 2016. Retrieved 6 July 2016.
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  35. ^ "Diageo sells portfolio of brands to Sazerac". Diageo Plc. Retrieved 12 December 2019.
  36. ^ "Diageo Sells Seagram's VO to Sazerac in $550 Million Deal". Bloomberg. Retrieved 12 November 2018.
  37. ^ "Diageo proposes upping stake in Shui Jing Fang Baijui Company"". The Drinks Business. Retrieved 12 December 2019.
  38. ^ "Diageo's Stake in Seedlip Proves Booze-Free Spirits Are Big Business". Fortune. Retrieved 10 September 2019.
  39. ^ Sebastian, Dave (19 February 2020). "Diageo Reaches $5 Million Settlement With SEC on Sales-Boosting Charges". The Wall Street Journal. Retrieved 21 February 2020.
  40. ^ "Makers of Guinness fined $5m over US disclosure failures | Accountancy Daily". www.accountancydaily.co. Retrieved 3 March 2020.
  41. ^ "Our Brands". Diageo Plc. Retrieved 24 January 2019.
  42. ^ Davies, Adrian (2006). Best Practice in Corporate Governance: Building Reputation and Sustainable Success. Routledge. p. 74. ISBN 978-0566086441.
  43. ^ "Diversity and Inclusion Index". Thomson Reuters. Retrieved 6 July 2018.
  44. ^ Walsh, Dominic; Boyle, Catherine (23 April 2009). "LVMH denies being in Moet sale talks with Diageo". The Times. London.
  45. ^ "Diageo listed top of CQIs 2017 Good Governance Report".
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  50. ^ "Contact us". Diageo Plc. Retrieved 15 December 2009.
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  54. ^ "Kilmarnock Town fights to protect their heritage". Savejohnniewalker.org. Archived from the original on 29 January 2011. Retrieved 18 April 2011.
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  57. ^ Donmoyer, Ryan J. ""Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit". Bloomberg. Retrieved 5 April 2011.
  58. ^ "Diageo settles U.S. civil bribery charges". Web Archive. TrustLaw. Retrieved 6 October 2014.
  59. ^ Thomas, Natalie. "Scottish beer company BrewDog forces Diageo to apologise over 'dirty tricks' at awards". The Telegraph. Retrieved 10 May 2012.
  60. ^ "Statement regarding the 2012 BII Scotland Annual Awards". Diageo Plc. Retrieved 9 May 2012.
  61. ^ "Diageo Screw BrewDog". BrewDog. Retrieved 9 May 2012.
  62. ^ "Rape Crisis Network slams 'rape victim blaming' ads". Irish Examiner. Retrieved 12 March 2015.
  63. ^ "Iconic Scottish painting The Monarch of the Glen to be sold". BBC. 2 November 2016. Retrieved 15 November 2016.
  64. ^ "Scottish heritage helped build the whisky business. Now it's payback time". The Guardian. Retrieved 5 March 2020.
  65. ^ Leogue, Joe (25 July 2017). "Argument brewing over Cork beer taps". Irish Examiner. Retrieved 26 July 2017.
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