Diageo Plc Wine Composition

DIAGEO PLC

Introduction, Business Profile and Current Approach

Diageo is one of the world's most significant alcoholic beverages companies, leading the global marketplace in flavoured alcoholic beverages (such as Smirnoff Ice), and spirits. On this factor it is nonetheless very similar to a number of its main rival firms, including Germane Domecq, Pernod Ricard or CCU, all who have various alcoholic beverages portfolios. In which Diageo provides differed from its rivals recently, however , is a way in which their wine business has been relatively overlooked in comparison to the development of the global priority brands, that have mainly been centred about spirits, as well as its flavoured alcoholic beverages. The strategic assessment undertaken in case study gets the potential to alter this state of affairs, and the organization may wish to check out possibly increasing its existence in the premium New World wines segment, dealing with its opponents head on.

Diageo's decision will more than likely depend upon a number of factors, with the key factor, likely to support expansion in wine beverage, being the expansion potential of premium wine, particularly in the light of recent overall health claims made about the advantages of drinking red wine and perils of spirits consumption. In addition , the business has endured a decrease in its flavoured alcoholic beverage business, again like its opponents which have seen this particular sector begin to lose its fashionable appeal. However , through stretching its wine offering, Diageo will intensify the competition among itself and companies including Pernod Ricard or Allied Domecq, as well as more wine-centred companies which includes Kendall-Jackson or perhaps Constellation Brands. All four of those companies have got portfolios which are similarly prioritised around Californian premium wine drinks.

A combination, or obtain, may be the simplest way to achieve a strong presence in the wine sector, as debt consolidation continues to be solid amongst wine beverage firms. A global wine industry has yet to settle straight down from the amount of intense merger and acquisition activity experienced over the last couple of years. The purchase of BRL Hardy by Multitude Brands in 2003 was the first main salvo, creating an environment of consolidation which will remained at the begining of 2005, with E& T Gallo purchasing Barefoot Cellars and the integration of Robert Mondavi in to Constellation Brands's fine wine division, as well as Diageo's own acquisition of Chalone. (Diageo Plc, 2005)

External Environment Options and Issues

An examination of the external environmental chances and problems facing Diageo's wine organization, in some of its key markets, is based primarily on the truth that the company's portfolio is definitely firmly seated in the still light grape wine sector. It does have got a few rosГ© and glowing wines, notably extensions towards the UK-focused Bloom Hill, but these are unlikely to have a significant impact on the company's sales in the years ahead despite the forecasted growth of around 27% in britain still rosГ© sector and 6% in UK gleaming wine. Within just its other key market segments, Spain and Ireland, Diageo's wine profile is likely to discover mixed outcomes. Whilst in Ireland, that has come past due to wine-drinking, the potential of an immature marketplace is apparent. Elevated interest in wine beverage as customers develop more sophisticated tastes is usually expected to bring about growth of about 92% in red wine and 80% in white wines, offering Diageo great potential once its distribution programs have been increased.

In contrast, the Spanish wines market is much slower, struggling with maturity plus the same change in family patterns that has got such an adverse impact on the French wine industry. As a result, stationary growth costs are expected, although it is likely that with Spanish consumers exchanging quantity intended for quality, the opportunity of Diageo's high quality wine portfolio remains. In the usa, where wine drinking is a relatively new activity, the growth potential for the company's wide premium wine portfolio excellent. Red wine growth of...

References: Diageo Plc. (2005) www.diageo.com. Reached 26th December 2005.

Global Market Info Database (Mar 2005) Diageo Plc. Euromonitor International.

Global Market Information Database (Sep 2005) The earth Market intended for Wine. Euromonitor International



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