Innovation continued to play a critical role in Europe's performance agenda

While Europe as a whole still faced external trends that continued to impact sales, the region’s growth strategy, based on polarisation of investment choices, began to pay off.

In the trends there were challenges and exciting opportunities. These included increased regulation, an ageing consumer base, beverage alcohol being consumed more frequently with food and premiumisation, especially in spirits.

Against this backdrop Diageo evolved its organisation structure in Europe, optimising it for business success. At the beginning of the year a Continental European business was created. This new hub allowed for consistency in operations and marketing and had a strong year. Going forward, growth of Diageo’s premium brands collection including Johnnie Walker Blue Label, Smirnoff Black and Classic Malt whiskies will be key to the success of this business.

In Iberia a reorganisation streamlined the operational model and focused investment on the best performing and most important brands. As a result Diageo is positioned for long term sustainable growth in the market.

In both Ireland and Great Britain challenges in changing consumer trends continued, specifically with the move from on trade consumption to off trade.

In Ireland investment through innovation provided consumers with more exciting on trade offerings such as Guinness Mid-Strength, which is currently on trial in Limerick and Dublin. Investment was also made in the off trade with new offerings and innovations in displaying Diageo’s brands.

In Great Britain during the run-up to Christmas Diageo moderated its promotions on a festive favourite, Baileys. While this resulted in volume loss for the brand this year, it increased net sales per case and it is believed that this will help protect the brand equity for a continued healthy future.

The launch of a new 75% owned company in Russia, Diageo Distribution, was a highlight this year. Diageo’s business in Russia, formed for the distribution, sales and marketing of spirits brands, is focused on high margin imported spirits such as Johnnie Walker, Baileys and Captain Morgan and the domestic vodka market, which holds great opportunity for Smirnov. In the year the Russian business grew organic net sales 63%, offering a strong position to capitalise on continued market growth.

Focused investment
Innovation continued to play a critical role in Europe’s performance agenda. The pan-European launch of Baileys flavours was a tremendous success and further launches are happening in markets across Europe and indeed the world into the new financial year. Smirnoff Black continued to perform well with exciting consumer programmes to drive premiumisation of this small batch vodka crafted in the traditional Russian method.

Diageo established category partnerships with retailers in Ireland, Greece, Spain and Great Britain. This was accomplished by strengthening relationships with multinational customers, improving senior level communications and implementing the first pan- European campaigns for Baileys and Johnnie Walker. Diageo also trained over 5,000 bar staff throughout Europe and set up its first concept store in the developing market of Poland. This work has resulted in a collection of customer recognition awards.

Attitudes to alcohol
Diageo led the European drinks industry in pioneering consumer responsible drinking programmes. These included collaborations within the drinks industry such as the DrinkAware Trust in Great Britain and MEAS in Ireland.

The business initiated responsible drinking programmes in all EU member states and will focus on the accession states in the coming year. Diageo also became a founding member of the EU Alcohol and Health Forum, the world’s first multi-stakeholder forum to tackle alcohol related harm and sponsored the European Transport Safety Council, dedicated to reducing drink driving throughout Europe.

As a consumer goods company Diageo believes that the key to influencing consumer attitude lies in media communications that are directly generated by consumer insight. This is just as true in the field of responsible drinking. In Great Britain this year a consumer education programme was created with Tesco available at point of purchase in stores and on their website.

In Ireland Diageo led discussions to create and activate a €20 million responsible drinking fund, which delivered new consumer campaigns to promote responsible drinking. This groundbreaking initiative is completely industry funded and included education, research and server training initiatives to promote better attitudes to alcohol in Ireland.

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1. 12% Johnnie Walker organic net sales growth as a result of price increases, additional investment and a focus on premiumisation
2. Guinness Premiership marked a second successful year of rugby sponsorship
3. Baileys introduced two new flavours for consumers to enjoy, mint chocolate and caramel
4. Diageo hosted a multi-market employee community initiative
5. Former British Prime Minister Tony Blair enjoyed a taste of Johnnie Walker while on a tour of a packaging plant in Kilmarnock, Scotland
6. Smirnoff emphasised its purity through the ‘Clearly Smirnoff’ campaign
7. Johnnie Walker’s ‘Keep Walking’ global campaign continued with a new ad called ‘Android’