Diageo Are Back in the Game!

roeWell, that is a turn up for the books as they say….I knew that Diageo were coming back into Irish whiskey, they never  left in reality. However, the news today that they are ALL IN was a bit of a surprise. They are bringing back the old George Roe (ish)  brand kind of under the new name ROE &CO. Its going to sit in the ‘luxury’ business unit that I used to work for Reserve Brands Group, so you can expect the pricing to start off in the region of Super Premium and go upwards from there. George Roe was an historic distillery with three brand attributes  that Diageo Reserve Marketeers covet:  Provenance, Heritage and Quality.  Its a bit of a masterstroke if I am honest, they already have liquid in cask and their first release will be just in time for St. Patrick’s day. They’ll funnel it nicely into their distribution network globally and it’ll be a million case brand before we can say Slainte.

In the meantime they’ll build a lovely visitor experience/distillery on a property they already own in Dublin right beside the old George Roe distillery from the 17th century and within a decade everyone will think that the George Roe distillery has been there for 300 years and will have no idea its owned by a UK multinational.

To those of you wondering why they got rid of Bushmill’s and are now back in the game, simply look at their annual shareholder reports. Diageo’s current boss Ivan Menezes is a brilliant accountant. When he signed on he promised shareholders annual operating cost savings of  £200 million per annum, which had to come from somewhere. The Diageo plants all over Ireland had become notorious for their inefficiency and were ruled by unions on every aspect, think canteens from the 1970’s huge overtime etc. etc Great for employees but awful for shareholders which is Diageo’s primary concern. I sold most of my shares to start this business so cant say I did not benefit…….. Operating costs were through the roof, so they offloaded many of the existing plants i.e. the Harp Breweries etc.

In addition they effectively swapped Bushmills for Don Julio Tequila which is an amazing brand, well if you consider a swop to include $400 million sweetener. I’ve been to the Don Julio distillery and agave fields and its absolutely fantastic. So,  lets look at the math, they got out of the untenable running costs of the existing Bushmills plant, pocketed $400 million AND a growing Super Premium/Ultra Premium Tequila brand and now are investing a paltry 25 Million Euros in a new set-up….Sounds like a deal to me.

I think this is good news for the category in many ways. Diageo are much stronger in mainland Asia and South East Asia than Pernod are. Jameson has ZERO traction out there and the Irish whiskey category is non-existant. Japan has some movement because of Beam Suntory but not enough. Diageo can plug this brand into their Reserve portfolio and network and put some force behind the category there. This is good for a small player like me. I can’t afford to build the Irish Whiskey Category anywhere. My job is to swoop in and scoop up consumers AFTER they understand the category. I need Diageo the other guys to pave the way for me.

Women in stereo glasses eating popcorn.

Me watching the Pernod/Diageo Irish Whiskey Show….

Of course in other ways it is not good. They’ll have a seat on the Irish Whiskey Association now meaning it’ll be a lot of multinationals with their agendas  and then there’ll be me and a few other small guys looking for share of voice. Plus they are highly trained and aggressive SOB’s when it comes to the sales field. I don’t have the budgets to go head to head with Pernod and I sure as hell don’t have the budget to out market Diageo either. However I am super interested to see Pernod and Diageo Duke it out now, given that they both have heritage brands based in Southern Ireland. Especially since Pernod are investing 11 Million Euros in a new Dublin visitor experience that won’t have a working distillery as a component…Whereas down the road Diageo will be able to show you their lovely copper stills etc. and simply funnel their 1 Million visitors per annum at Guinness onto the distillery. Interesting Times Folks!

 

 

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