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Take a Cue from the Big

Nov 12, 2008 - Times are tough but Diageo says it's prepared to battle the waning economy and changing consumer trends with a number of strategies and programs in place.

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"It's a good time to be in the alcohol business," said Ivan Menezes, president of Diageo North America at the company's Investor Conference. "Alcohol is resilient and spirits, beer and wine trends are holding steady."

He noted that since the trading environment is changing, the company has to be prepared to make quick decisions and at the same time stay focused on their long term strategy. Menezes admitted there is evidence that lower price brands are picking up and high end brands are slowing, but luckily premium growth continues.

"We believe part of the reason you're seeing some softness is because of channel switching...consumers are switching to club and supercenters which aren't tracked by IRI," said Diageo North America's senior vp of consumer planning and research, Jim Moseley. "Yes, we are seeing some trading down, but premium brands are not dead and trading up is not dead. You'll simply see it less frequently then it has been and much more selectively," he said.

Diageo's super premium brands, kin to craft beer, are growing. The company will continue investing in its brands with marketing because "evidence shows that companies that increase marketing during a downturn increase share during the downturn and for years to come," said Menezes.

Another way the company is staying current with consumer trends is offering products meant for off-premise consumption. Many consumers are opting to drink at home to save money. This may portend a slight shift from off-premise to on-premise sales


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