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Diageo to offer price benefits for retailersDiageo to offer price benefits for retailers
Andrew Pentol
2-Jul-2009
Liquor supplier gives retailers incentives for pushing promotions
Liquor supplier Diageo is to standardise its trading terms with all customers in the new financial year beginning July 1 2009 in a bid to encourage them to execute promotions. The initiative is part of its plans to double the size of the travel-retail liquor category from $6bn to $12bn over the next five years.
Speaking during a conference call this morning to mark the start of the new financial year for the company Diageo Global Travel and Middle East (GTME) managing director Phil Humphreys explained: “Retailers will have the chance to earn discounts from our single global price list based on the scale of their custom, but much more importantly the quality of their execution against the agreed sales drivers.”
The new terms will be implemented with the company’s biggest customers during this calendar year with others following soon after and will be a “win-win opportunity” for the industry as a whole. Humphreys explained: “For the first time we will be bringing our shopper insight and understanding of sales drivers into play in a much bigger way. Retailers can earn more as they can activate these proven sales drivers which can not only grow the category but increase their share of it.”
The global economic crisis may have reached its lowest point with industry observers seeing signs of a recovery, but this has not stopped Diageo from moving forward in terms of innovation, airport activation and category growth activities. “Our summer spirits promotion is prevalent in all our major airports, and brings together a wide range of our leading brands. In Dubai International airport terminal three we have been executing the promotion out of a campervan in the middle of the concourse which is something we have never done before. This shows that when you change the rules you change the game.
“We have also been doing other work with Baileys and its new gold variant which is on test at selected Gebr Heinemann duty-free outlets as well as 100th anniversary work with Black Label,” he said.
Digital and relationship marketing has also become a key focus in recent times, he said, notably digital marketing and relationship marketing with potential shoppers which he described as a step into the unknown. “We have targeted specific customer and airport databases in order to do this and a good example is our recent work with Bushmills and the British rugby fans arriving in South Africa for the British Lions rugby test series,” he added.
Humphreys revealed how a recent collaboration with Beirut Duty Free benefited both retailer and supplier. “On June 7 2009 Lebanon held its national elections which could have generated a feeling of uncertainty in terms of liquor buying. Diageo and Beirut Duty Free worked together and activated a significant category promotion mechanic. At the end of the seven days after 600,000 people had entered Lebanon, voted and departed we had more than doubled the category in that week versus the corresponding week in 2008 with Johnny Walker growing 132%.”
He concluded by urging the industry to “raise its game” in this period of adversity. “The channel must be more open and learn from the best examples in domestic retail. In liquor travel-retail we must embrace the best practices from other categories and raise the quality of our sales execution across the board to be in line with the best. I will demand this from our customers and I expect them to demand sales drivers from us in return.”
When asked about Diageo job loses and closures in Glasgow announced this month he told DFNIonline: “The announcements from Diageo relate solely to our global supply division and will have no impact on our GTME business.”
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