Diageo Is The Worlds Leading Alcoholic Drinks Commerce Essay

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Diageo is the worlds leading alcoholic drinks businesses with an exceptional assortment of beverage alcohol brands across spirits, beer and wine. Brands included in this collection include very common names such as Crown Royal, Captin Morgan, Tanqeray, Smirnoff, Bailey's, Buchanans and Bushmills whiskies, J&B, Jose Cuervo, Ciroc and Guinness. Diageo is a British international alcohol company, and one of the leading alcohol corporations worldwide. The company represents itself in a clean, pleasant and moral-oriented corporation with an obligation to 'corporate social responsibility' (CSR).

Many Diageo beverage brands have been around for generations and still are on the market today accompanied by new established products that meet new customer tastes and experiences. Leading the global market in flavored alcoholic beverages such as Smirnoff Ice and Ciroc has given Diageo the opportunity to allow people to celebrate with their products at every occasion no matter where they are in the world. This is how Diageo meets their motto which is "celebrating life every day, everywhere" is at the core of what they do.

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Diageo trades in nearly 180 markets and employ over 25,000 people around the world. This company manufactures facilities across the globe with offices in 80 countries which includes, Ireland, Canada, Spain, Italy, United States, Africa, Latin America, India, Great Britain, Australia and the Caribbean employing all together over 25,000 people around the world. The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO).

Strengths

Strengths include Diageo's broad global coverage for generations. This acts as a moderate against financial uncertainty in any one particular region.

Over the years Diageo has progressively earned a reputation and has been recognized globally for providing positive work environments for employees by providing High levels of employee loyalty will help the company through difficult periods.

Diageo has a lot of sales potential because the company itself knows the significance of building worldwide brands.

Along with a wide collection of international brands Diageo is the world's leading premium drinks business. Diageo, one of the largest publicly quoted companies in the UK, is the leading premium spirits business in the. Smirnoff vodka, the company's liquor label, was identified as the world's leading drinks brand, followed by Johnnie Walker Scotch whisky, another brand of Diageo.

Of the company's 14 strategic brands, Johnnie Walker (number one Scotch whisky in the world in

2011), Crown Royal (number one Canadian whisky in the world), Smirnoff (number one premium spirit by volume in the world), Baileys (number one liqueur in the world), Jose Cuervo (number one tequila in the world), and Guinness (number one stout in the world) are leading brands in the world in their respective categories. Over the years, the company has built significant brand strength in premium spirits helping it to achieve leading market position. The brand strength provides revenue sustenance to the company on account of repetitive customer purchases of its brands.

Diageo owns 106 production facilities located across various regions like the UK, Ireland, Italy, the US, Canada, Jamaica, Australia, and Philippines. The company's production facilities contain distilleries, malting, vineyards, packaging plants, cooperages, breweries, wineries and distribution warehouses. About 85% of total production is undertaken by Global Supply organized into four production centers: Europe Supply with services in the Italy, Ireland and UK, America Supply (the US and Canada), Global Beer Supply (Ireland (Guinness) and Jamaica) and Asia Supply (Australia and Philippines). All other production activities are integrated with the distribution organization, principally in Africa within International. With production capacities across geographies, the company is well equipped to serve its markets faster and in a more efficient manner.

Weaknesses

Diageo is involved in numerous lawsuits, claims, and legal proceedings, arising out of the demeanor of the company's business. Some of these legal cases and claims seek damages, fines, or penalties.

Insufficient marketing resources are being put towards the company's wine brands in comparison to its spirits business.

The lack of any major wine strategy reflects a lack of commitment to Diageo's wine collection.

The company has not established itself fully in the UK premium wine market. The lack of a major global brand is a distinct disadvantage in an industry which is becoming increasingly focused on branding.

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Attainments to improve the company's geographical reach and product offerings

The company has made numerous achievements to further strengthen its market base. In the last five years, Diageo invested more than $1,590.5 million in escalating its footprint in Africa. In January 2012, Diageo acquired the Meta Abo Brewery Share Company, a beer company in Ethiopia, for $225 million. Being the second largest beer company in Ethiopia Meta Brewery with a volume share of approximately 15%. The acquisition not only gives Diageo the opportunity for direct access to the growing Ethiopian beer market, but also accompaniments its existing business in the country. Ethiopia's beer market is expected to continue to grow at more than 10% per annum to 2015, primarily due to strong GDP growth and increased disposable incomes of consumers.

Threats

Alcohol corporations have been critiqued for careless representation of alcoholic drinks in advertisements. Particularly in Europe and many other countries, advertising regulators are coming down severely on alcohol advertising, demanding that such advertisements encourage splurge drinking. There are a diversity of national limitations, controls and mixtures of the constitutional and the self-regulatory bodies. One of these legislations that have taken affect is the Television without Frontiers Directive which has been incorporated into nationwide regulations. The code reinforces the Advertising Standards Authority/Committee on Advertising Practice, Independent Television Commission and Radio Authority advertising codes. All advertisements and sales promotions are required to comply fully with these codes. Most countries enforce a legal ban on advertising of spirits using media linking alcohol with minors, operating vehicles, athletics, or promoting alcohol abuse, and on sponsorship of TV and radio program by companies which primarily produce alcohol. Such severe regulations on advertisements could set limits on the brands' future promotional campaigns and their awareness among the consumers.

Beer has always been related with negative health qualities. There is a general negative awareness about beer's effect on the body fat and cholesterol. On the other hand, wine is perceived as healthier alternative to additional drinks. There is a overall change in consumer liking to healthier substitutes in matured markets like Western Europe and North America, beer is losing its regard in the replace of wine. What also is affecting the beer sales is the easy access to a broad selection of wine and alcohol products. If the beer market continues to lose its share in the beverage category, Diageo will have to compete with other major competitors for dwindling market share. The company's efforts to enter these lucrative and matured markets can be hampered if this trend continues.