Diageo CEO: Overall Market For Spirits, Beer And Wine Is Healthy Around The World

The biggest distilled spirits maker in the world Diageo plc (ADR) DEO came with weaker than expected numbers for the first half of the year ending December 31 on back of declining North American sales. Ivan Menezes, Diageo CEO, was on CNBC Thursday to discuss the current liquor consumption pattern in US and the reason for falling sales of Vodka.  

“The overall market for spirits, beer and wine is healthy around the world,” Menezes said. “So, the underlying consumption patterns are good, people are drinking better. Now, if I just break it into the various regions, in North America the spirit industry is still very healthy, we are seeing a good trading up, whisky is hot, bourbon in particular, we have a very hot brand in Bullet Bourbon.”

He continued, “In Vodka, the mid-market of Vodka is very competitive, but the premium-end is strong, we grew 27p in Ciroc for example and Americans are drinking more premium spirits are drinking more cocktails and that’s a secular trend. It’s underpinned by demographics and tastes and as the US consumer recovery happens, I would expect that to further help the sector.”

What’s The Problem Vodka Is Facing?

“The middle market of Vodka has gotten extremely competitive,” Menezes said. “We have been taking price increases and Smirnoff as a result has lost a bit of share. It’s coming back, there’s lots of new entries. Flavored vodka, which was a big growth engine for a long time has slowed down and Smirnoff is the market leader in flavored vodka, but pure vodka is strong.

“Premium vodka is doing well, but whisky is doing even better…but vodka is still the biggest part of the US market and will continue to remain a very important piece of the market.”