‘We didn’t do good enough’ – Diageo CEO

Earlier today, the brand owner posted a 0.6% dip in six-month sales as the ‘Latin America & Caribbean’ reporting region came in down by 23% on the corresponding period last year. The announcement followed Diageo’s warning in November that it was battling with high inventory levels in markets including Brazil and Mexico, where macroeconomic pressures had come to bear. 

At a post-results press conference in London today, CEO Crew, who assumed the lead in June,  provided more details on the situation for Diageo in the region, where trading conditions became “quite volatile” from the beginning of last year. 

“At the end of the fiscal year [June 2023], we identified that we had extra inventory that came in [to ‘Latin America & Caribbean’] during the first half in anticipation of the summer, which we thought was going to be big,” Crew said. “And then, it wasn’t. 

“There were two things that we underestimated. One was the consumer environment, which continued to be worse than expected. The other was in between the retailers and the direct customers, where there are multiple layers that you can’t see very well. [Diageo’s team in the region] underestimated what kind of inventory was sitting there. Our corrective actions have been around getting visibility in there. It’s not just [about collecting] the total amount of data, it’s the frequency with which we collect it to help predict ordering patterns.   

“You have to remember, this was a small market for us just a few years ago,” she continued. “We know what these good processes are around the rest of the world, but we didn’t do good enough in that market.  

“We’re fixing that, adding investment into operations to help us get the standard that we would want to be at in the market, but that’s what we missed.”