Diageo CEO Ivan Menezes insists the spirits giant must ‘innovate at scale’ to ensure a larger share of its growth stems from fewer launches along the lines of Haig Club whisky and Captain Morgan White Rum.
Speaking at the Deutsche Bank conference in Paris this Wednesday, Menezes tipped these two Diageo brands for great things, saying: “I think could be significant players in the next five years”.
Menezes said he was excited by Diageo’s release of ‘grain whisky’ Haig Club, which is “targeted as an introduction to scotch and for consumers of lighter whiskies”.
“It has the substance and quality of Scotch but with a fresh new look,” he added.
David Beckham’s ‘extraordinary name recognition’
Haig Club is a brand Menezes believes can unlock the ‘with meal’ occasion in China and open it up to international spirits, with the People’s Republic one of the initial launch markets.
“The blend was created to match with food and seafood in China and our choice of David Beckham as the face of Haig Club was down to the extraordinary name recognition he has in China and across the world,” he said.
“Our plan is to launch in October in Asia, GB and in around 60 airport outlets, but if you’re in London this summer, you’ll see Haig Club in trend-leading accounts,” he added.
Earlier in his address, Menezes said Diageo’s Johnnie Walker houses were leading its efforts in premium core and reserve brands, which are central to the company’s current and future growth and profit, especially in emerging regions like Asia Pacific, which now accounts for 13% of the company’s net sales.
Diageo’s premium core brands are Guinness, Baileys, Smirnoff, Johnnie Walker Red and Black Labels, Captain Morgan, Windsor, Buchanan’s, Crown Royal, Tanqueray and J&B.
Menezes was at pains to stress that the percentage of world consumers in the $5,000-20,000/year income bracket is creeping up – it was 36% in 2012 but is set to hit 43% by 2020.
“The number of consumers with incomes of at least $5,000/year is being transformed and this is the watershed at which international consumer goods become affordable,” he said.
Captain Morgan steals No.1 white rum spot in US
In China, for instance, Diageo sees an opportunity for premium core given that the population earning $5,000-20,000 is forecast to rise from 522m to 627m from 2012-2020, the same figures are 191m and 371m in India; and in reserve spirits they are 88/288m and 24/67m in the two countries respectively.
Captain Morgan White Rum was launched in the States this year – Diageo calls North America its ‘powerhouse’ with around a third of net sales delivering circa. 40% of group operating profits – and Menezes said he believes Diageo can harness the consumer affinity with the spiced, dark rum brand.
“Many of those consumers love white rum as well, with as much as 20% of their consumption coming from that segment,” he said.
Diageo opened a rum distillery on St.Croix in 2010 and Menezes said this gave it the ability to distil a white rum of “great quality and versatility” to expand usage occasions for Captain Morgan.
Despite only launching in February, Diageo’s CEO said the initial sales data was “very encouraging, with Captain Morgan White the No.1 new item in dollar sales with almost three times the sales of the No.2 product in Nielsen over the last two months”.