Diageo assures prices won’t rise post Brexit

John Kennedy, president of Europe for drinks giant Diageo, has assured that the retail prices of its brands won’t be hiked up in the wake of Brexit.

John Kennedy in Italy with male model David Gandy

Speaking during a round table in London following the release of the company’s positive half-year results, Kennedy said: “If we based our prices on changes in currency we’d be changing them all the time.

“We manage our prices on a global basis, and while there will inevitably be some inflation pressure in the UK, there will not be significant price hikes to our brands.”

Kennedy also spoke of the trend of drinking better in the UK, with Diageo-owned, grape-based vodka brand Cîroc now the number one luxury vodka in Britain.

Diageo Reserve brands like Tanqueray Ten, Zacapa, Ketel One and Cîroc are now on sale in 5,000 key hotels, restaurants, resorts and bars in key cities around the world.

The Reserve portfolio is enjoying “very strong growth” and now accounts for 20% of the company’s turnover with “significant room for future growth,” Kennedy said.

In response to demand, Diageo plans to double the production capacity of Tequila brand Don Julio in the coming years. Diageo’s chief executive, Ivan Menezes also spies an opportunity to ride the wave of a growing thirst for gin in the US.

“The gin explosion hasn’t happened in the US yet but we’re very well positioned with Tanqueray and Tanqueray Ten and will be building both brands in America more, where we expect them to do very well,” he said.

“Together they sell one million cases in the US, which is by far our biggest market for them. We don’t have a strategy to exploit the gin boom – we’re going to build the brands in the right way and don’t expect sales to take off at an exponential rate,” he added.

Despite beer sales being flat, Menezes insisted that the category remains “integral” to the company’s portfolio.

He also revealed that Diageo is becoming more “micro” in its approach to targeting specific demographics and audiences, with millennials remaining a key priority going forward, and thus digital being a key focus for 2017.

However, Menezes stressed “Your marketing works best when it talks to everyone”.

With Smirnoff putting in a less than glittering performance last year, Menezes revealed he expects to see the brand back in growth in the UK in “the next few quarters”.