Diageo is reassessing the resource allocation process across its portfolio, according to interim CEO Nik Jhangiani.
Speaking at Barclays’ Global Consumer Staples Conference in Boston yesterday (4 September), Jhangiani (below) said the group will look to reduce its historical over-reliance on a handful of brands and cut back on ineffective spending. Diageo had focused too narrowly on premiumisation, he added, overlooking opportunities in mainstream and “premium-plus” segments.
“I’ve got a great set of brands that have a role to play for a broad consumer base I might not be addressing,” he explained. “Why do I have 100 children, where only two are doing well and the other 98 are duds? That’s not great.”
While Don Julio, Crown Royal and Guinness have been strong performers, Jhangiani noted that Ketel One and Bulleit have not yet reached their potential. “The team is doing really well with Don Julio, Crown [Royal] and Guinness, but I’ve got these other brands that are really, really good quality that we’re just not doing enough with,” he said.
“I think… premiumisation was one vector, and that’s great. But I’ve also got a great set of other brands in the ‘premium-plus’ and the mainstream core that have a role to play for what is actually a great consumer base that I might not be addressing,” he said.
“I think we just need to look at it differently. I think there’s an opportunity, as we look forward, but that doesn’t mean I do everything everywhere. So, I’ve got to be more choiceful.”
Jhangiani also emphasised the need for greater accountability in marketing. “Brand love is great,” he said, “but if it’s not translating into purchase, how good is brand love?” Diageo intends to cut back on “wasteful commercial spend” and redirect resources into scalable growth and stronger consumer activation, according to the CEO, who is holding the position on an interim basis following July’s departure of Debra Crew after two years.
Last month, Diageo increased the target of its current cost-saving initiative by a further 25%, to US$625m, but stopped short of detailing how many jobs will be cut.
