Diageo plc - Company Overview

Company Name

Diageo plc

Founded

December 17, 1997

Headquarters

London, England, United Kingdom

Industry

Beverages / Spirits and Alcoholic Beverages

Company Type

Public limited company (LSE: DGE, NYSE: DEO)

Key Products & Brand Portfolio

Diageo is the world’s largest spirits company by volume and revenue, operating an extensive portfolio of over 200 brands across spirits, beer, and ready-to-drink beverages:

Premium Spirits

• Johnnie Walker - The world’s best-selling Scotch whisky, with variants including Red Label, Black Label, Blue Label, and Double Black
• Smirnoff - World’s best-selling vodka, available in multiple flavors and variants
• Baileys - The world’s best-selling Irish cream liqueur
• Captain Morgan - Leading spiced rum brand
• Tanqueray - Premium London dry gin
• Crown Royal - Best-selling Canadian whisky
• Don Julio - Ultra-premium tequila
• Ketel One - Premium Dutch vodka
• Bulldog Gin - Contemporary London dry gin
• Cîroc - Ultra-premium vodka (in partnership with Sean Combs)

Beer & Stout

• Guinness - Iconic Irish stout, one of the world’s most recognizable beer brands

Other Notable Brands

• J&B - Scotch whisky
• Bushmills - Irish whiskey
• Seagram’s - Whisky and gin
• Casamigos - Tequila (acquired 2017)
• ** Aviation American Gin** (acquired 2020)

Non-Alcoholic Expansion

• Ritual Beverage Company - Leading non-alcoholic spirits brand in the US, acquired in 2025

Global Presence

• Operating in: 180 countries worldwide
• Manufacturing: Production facilities across 30+ countries
• Employee Base: Approximately 30,000+ employees globally

Market Position

• World’s largest producer of spirits
• Significant presence in both developed and emerging markets
• Strong portfolio spanning value to ultra-premium price points
• Strategic focus on premiumization and category expansion

Business Segments

1. Spirits - Core business, representing majority of revenue
2. Beer - Primarily Guinness and local beer brands
3. Ready-to-Drink - Pre-mixed cocktails and beverages
4. Non-Alcoholic Alternatives - Growing portfolio of alcohol-free spirits

Diageo - Origins and Early History

The Merger That Created a Giant

Diageo was formed on December 17, 1997, through the historic £23 billion merger of two British beverage giants:

Guinness plc

• Founded in 1759 by Arthur Guinness at St. James’s Gate Brewery in Dublin, Ireland
• One of the world’s most iconic and enduring beer brands
• By the 1990s, had diversified into spirits through strategic acquisitions
• Had acquired United Distillers, giving it a significant spirits portfolio including Johnnie Walker

Grand Metropolitan plc

• Traced its origins to 1934 as a hotel and catering company
• Expanded aggressively into beverages through the 1970s and 1980s
• Owned major spirits brands including Smirnoff vodka, J&B whisky, and Bailey’s Irish Cream
• Had built a strong international distribution network

The Birth of Diageo

The merger was orchestrated by: - Tony Greener - Chairman of Guinness - Sir George Bull - Chairman of Grand Metropolitan

The new company was named Diageo, a name created by brand consultancy Wolff Olins. The name combines: - Latin “dia” meaning “day” - Greek “geo” meaning “world” Together suggesting “everyday, everywhere” - reflecting the company’s ambition for global daily presence.

Early Post-Merger Years (1997-2000)

Portfolio Restructuring

Following the merger, Diageo undertook significant portfolio rationalization:

Divestitures: - Sold the Burger King fast-food chain (acquired through Grand Metropolitan) in 2002 - Divested non-core hospitality and food service businesses - Focused increasingly on premium beverage alcohol

Strategic Focus: - Consolidated spirits portfolio - Invested in emerging markets - Strengthened premium brand positioning - Built global distribution capabilities

Key Early Acquisitions

United Spirits Limited (India) - 2013

One of the most significant early acquisitions was the purchase of a controlling stake in United Spirits Limited (USL), India’s largest spirits company: - Acquisition completed in stages - Made Diageo the major shareholder in USL - Provided dominant position in one of the world’s largest spirits markets - Added iconic Indian whisky brands including McDowell’s and Royal Challenge

Acquisition Strategy

Diageo has been highly acquisitive throughout its history: - 25 acquisitions completed to date - Average acquisition value: $904 million - Focus on premium and super-premium brands - Strategic geographic expansion into emerging markets - Investment in category innovation (e.g., non-alcoholic spirits)

Historical Significance

The creation of Diageo marked a pivotal moment in the beverage industry: - First truly global spirits company of its scale - Demonstrated the value of consolidation in fragmented spirits markets - Set the template for modern beverage alcohol M&A strategy - Established London as the center of the global spirits industry

Founding Philosophy

From its inception, Diageo was built on several core principles: 1. Portfolio Premiumization - Focus on higher-margin premium brands 2. Global Scale - Leverage size for distribution and marketing efficiency 3. Brand Building - Invest heavily in marketing world’s strongest spirit brands 4. Category Leadership - Dominate key spirits categories (whisky, vodka, gin, rum)

Diageo - Major Business Developments, Expansions & Acquisitions

Major Strategic Acquisitions

Seagram Spirits and Wine (2001)

• Value: $8.15 billion (joint acquisition with Pernod Ricard)
• Significance: Acquired major brands including Captain Morgan, Crown Royal, and Seagram’s VO
• Impact: Solidified Diageo’s position as global spirits leader

Casamigos Tequila (2017)

• Value: $1 billion (initial payment, with potential earn-outs)
• Founders: George Clooney, Rande Gerber, and Mike Meldman
• Significance: Entry into ultra-premium tequila category
• Result: Rapidly became one of the fastest-growing tequila brands globally

Aviation American Gin (2020)

• Value: Up to $610 million (including earn-out provisions)
• Celebrity Partner: Ryan Reynolds
• Significance: Strengthened position in premium gin category
• Strategy: Leveraged celebrity influence for brand growth

United Spirits Limited - Completion (2013-2014)

• Investment: Over $3 billion total
• Ownership: Acquired 54.78% controlling stake
• Market Impact: Dominant position in Indian whisky market
• Brand Additions: McDowell’s No.1, Royal Challenge, Signature

Chinese White Spirit Investment - Shuijingfang (2011)

• Acquisition: 53% stake in Sichuan Swellfun (Shuijingfang)
• Significance: Entry into Chinese baijiu (white spirits) market
• Strategy: Access to world’s largest spirits market by volume

Crown Royal Expansion

Ongoing investment in Canadian whisky production: - Expanded distillery capacity - Launched flavor variants - Reinforced position as top-selling Canadian whisky

Geographic Expansion

Emerging Markets Strategy

• India: Market leadership through USL acquisition
• China: Investment in baijiu and imported spirits
• Africa: Significant presence through beer and spirits
• Latin America: Strong growth in tequila and premium spirits
• Southeast Asia: Expanding middle-class consumer base

Production Footprint

• Distilleries across Scotland (Scotch whisky)
• Facilities in Ireland (Baileys, Guinness)
• US operations (Smirnoff, Captain Morgan, Crown Royal)
• Mexico tequila production (Don Julio, Casamigos)
• Caribbean rum distilleries (Captain Morgan)

Portfolio Management

Divestitures and Rationalization

Discontinued or Sold Brands: - Seagram’s wine business (sold to various buyers) - Bushmills Irish Whiskey (sold to José Cuervo, 2014) - Several regional/local brands to focus on global priorities

Category Focus

Core Categories: 1. Scotch Whisky (Johnnie Walker portfolio) 2. Vodka (Smirnoff, Cîroc, Ketel One) 3. Liqueurs (Baileys) 4. Rum (Captain Morgan) 5. Gin (Tanqueray) 6. Tequila (Don Julio, Casamigos) 7. Canadian Whisky (Crown Royal) 8. Beer (Guinness)

Innovation and Category Expansion

Premiumization Strategy

• Focus on ultra-premium expressions (Johnnie Walker Blue Label, Don Julio 1942)
• Limited editions and collector releases
• High-end packaging and presentation

Non-Alcoholic Expansion (2025)

• Acquisition: Ritual Beverage Company
• Position: #1 non-alcoholic spirits brand in the US
• Strategic Significance: Entry into fast-growing alcohol-free category
• Market Context: Meeting consumer demand for sophisticated non-alcoholic alternatives

Digital Transformation

E-Commerce Development

• Direct-to-consumer platforms
• Partnerships with alcohol delivery services
• Investment in digital marketing capabilities

Technology Integration

• Supply chain optimization
• Data analytics for consumer insights
• Blockchain for supply chain transparency (pilot programs)

Joint Ventures and Partnerships

Distribution Partnerships

• Strategic alliances in key markets
• Joint ventures in restricted markets (e.g., India pre-USL acquisition)

Celebrity Partnerships

• Sean “Diddy” Combs (Cîroc vodka)
• George Clooney (Casamigos - former partner)
• Ryan Reynolds (Aviation Gin)

Financial Milestones

Revenue Growth Trajectory

• 1997 (formation): ~$15 billion
• 2010: ~$15.6 billion
• 2020: ~$11.8 billion (COVID-19 impact)
• 2025: $20.2 billion (strong recovery and growth)

Market Capitalization

• Consistently among UK’s largest listed companies
• FTSE 100 constituent since inception
• ADR listing on NYSE provides US investor access

Recent Strategic Initiatives (2020-2025)

Sustainability Integration

• “Society 2030: Spirit of Progress” plan
• Sustainable agriculture programs
• Water stewardship initiatives
• Packaging reduction goals

Portfolio Optimization

• Continued focus on premium brands
• Investment in ready-to-drink category
• Expansion of non-alcoholic offerings
• Digital and e-commerce acceleration

Diageo - Key Products, Innovations & Technologies

Flagship Brand Innovations

Johnnie Walker - Scotch Whisky Portfolio

Brand Evolution: - Red Label: Created in 1909, world’s best-selling Scotch whisky - Black Label: 12-year-old blend, iconic square bottle design - Blue Label: Ultra-premium blend of rarest whiskies - Double Black: Intensified version of Black Label - Green Label: Reintroduced 15-year-old blend - Gold Label Reserve: Replaced original Gold Label

Packaging Innovations: - Square bottle design (1860s) - originally to prevent breakage and allow more bottles per shipment - 24-degree tilted label - distinctive brand signature - Striding Man logo - one of world’s oldest and most recognized trademarks - Limited edition collaborations with artists and designers

Smirnoff - Vodka Innovation

Product Line Expansion: - Original No. 21: Triple-distilled, 10-times filtered - Flavor Portfolio: Over 20 flavors including Green Apple, Raspberry, Vanilla - Smirnoff Ice: Ready-to-drink malt beverage - Smirnoff Zero Sugar: Health-conscious variant - Smirnoff North: Nordic berry flavored variant

Production Innovation: - Continuous distillation process - Charcoal filtration systems - Large-scale production efficiency

Baileys - Irish Cream Liqueur

Product Development: - Original Irish Cream (1974) - first commercially successful Irish cream - Flavor Variants: Chocolate Cherry, Salted Caramel, Espresso Crème, Apple Pie - Limited Editions: Seasonal and promotional flavors - Baileys Deliciously Light: Lower calorie version

Technical Innovation: - Unique emulsion technology combining cream and whiskey - Shelf-stable cream formulation - Patented blending process

Guinness - Stout Innovation

Brewing Technology: - Nitrogenation: Pioneered use of nitrogen in beer (vs. carbon dioxide) - Widget Technology: Introduced in cans (1989) to replicate draft pour at home - Surger: Ultrasonic device for perfect head on canned Guinness

Product Extensions: - Guinness Draught - Guinness Extra Stout - Guinness Foreign Extra Stout - Guinness Blonde American Lager - Guinness Nitro Cold Brew Coffee - Guinness 0.0 (Alcohol-free variant, 2020)

Tanqueray - Premium Gin

Portfolio Expansion: - London Dry: Original recipe from 1830 - No. Ten: Ultra-premium small-batch gin - Rangpur: Distilled with Rangpur limes - Flor de Sevilla: Orange blossom infusion - Blackcurrant Royale: Berry infusion

Captain Morgan - Spiced Rum

Innovation Timeline: - Original Spiced Rum (1984) - Flavor Extensions: Coconut, Pineapple, Watermelon Smash - Private Stock: Premium spiced rum variant - LocoNut: Coconut-flavored rum

Category-First Innovations

1. Ultra-Premium Tequila

Don Julio Portfolio: - Pioneered premium tequila category - Don Julio 1942: Ultra-premium añejo - Don Julio Real: Extra añejo tequila - Don Julio 70: World’s first añejo claro (clear añejo)

2. Premium Vodka

Ketel One: - Family-produced Dutch vodka since 1691 - Copper pot distillation method - Ketel One Botanicals: Low-calorie, naturally flavored vodka

3. Canadian Whisky Excellence

Crown Royal: - Crown Royal XR: Extra rare blend - Crown Royal Reserve: Premium offering - Crown Royal Apple, Peach, Vanilla: Flavor innovations

Production Technologies

Distillation Advances

• Column Still Technology: For consistent, high-volume production
• Pot Still Preservation: Maintaining traditional methods for premium products
• Computer-Controlled Distillation: Precision in flavor consistency

Maturation Science

• Cask Selection Programs: Specific wood types and char levels
• Warehouse Climate Control: Optimizing aging conditions
• Finishing Techniques: Secondary maturation in wine, sherry, or other casks

Quality Control

• Gas chromatography for flavor analysis
• Mass spectrometry for quality assurance
• Sensory panels with trained professionals
• Blockchain traceability pilots (Haig Club)

Sustainability Innovations

Environmental Technologies

• Water Recovery Systems: Reducing water usage in production
• Renewable Energy: Solar and wind power at distilleries
• Biogas Production: Converting waste to energy
• Packaging Light-weighting: Reducing glass and plastic usage

Sustainable Sourcing

• Grain-to-Glass Programs: Sustainable agriculture for raw materials
• Cork Certification: FSC-certified cork suppliers
• Paper and Packaging: Recycled content and recyclability

Digital and Consumer Innovations

Smart Bottle Technology

• Johnnie Walker Blue Label Smart Bottle: NFC-enabled authentication
• Consumer Engagement: Digital experiences tied to physical products

Cocktail Innovation

• Thematic Collections: Curated cocktail ingredient sets
• Virtual Mixology: Online cocktail tutorials and recipes
• Flavor Science: Understanding consumer taste preferences

Non-Alcoholic Breakthrough

Ritual Zero Proof (Acquired 2025): - Spirits alternatives mimicking traditional flavor profiles - Ritual Gin Alternative: Botanical-forward - Ritual Whiskey Alternative: Oak and smoke notes - Ritual Tequila Alternative: Agave and citrus notes

Research and Development

Flavor Science Laboratory

• Understanding consumer flavor preferences
• New product development protocols
• Rapid prototyping of new concepts

Consumer Insights

• Data analytics on drinking trends
• Regional preference mapping
• Generation-specific product development

Limited Editions and Collaborations

Prestige Releases

• Johnnie Walker The John Walker: Ultra-limited edition
• Guinness The 1759: Luxury limited edition
• Collaborations: Artists, designers, and cultural figures

Seasonal Innovations

• Holiday-themed packaging
• Summer-ready variants (frozen cocktails, spritz formats)
• Cultural celebration editions

Industry Impact

Diageo’s innovations have shaped the global spirits industry: - Standardized premium vodka production - Elevated tequila from mixer to sipping spirit - Created ready-to-drink cocktail category - Pioneered alcohol-free spirits alternatives - Set sustainability benchmarks for the industry

Diageo - Financial Performance

Revenue Performance

Historical Revenue Growth

Revenue by Category (2024)

Revenue by Region (2024)

Profitability Metrics

Operating Profit

• 2024 Operating Profit: ~$6.0 billion
• Operating Margin: ~30% (industry-leading)
• Margin Trend: Improving through premiumization and cost discipline

Net Income

• 2024 Net Income: ~$4.5 billion
• Net Margin: ~22%
• Return on Equity: Strong double-digit percentages

Free Cash Flow

• Consistent strong cash generation: $3-4 billion annually
• Conversion rate: ~90% of operating profit
• Enables dividend payments and strategic investments

Stock Performance

London Stock Exchange (DGE)

• Listing: FTSE 100 constituent
• Index Weight: Significant component of UK blue-chip index
• 52-Week Range: Varies with market conditions
• Dividend Yield: ~3-3.5%

New York Stock Exchange (DEO)

• ADR Structure: American Depositary Receipts
• Ratio: 1 ADR = 2 ordinary shares
• US Investor Access: Primary method for American investment

Market Capitalization

• Current Range: $75-90 billion
• FTSE 100 Ranking: Consistently among top 10-15 companies
• Global Spirits Ranking: Largest publicly traded spirits company

Dividend History

• Dividend Policy: Progressive dividend policy
• Payment Frequency: Interim and final dividends
• Dividend Growth: Consistent annual increases (with rare exceptions)
• Yield: Approximately 3-3.5%
• Payout Ratio: ~50-55% of earnings

Acquisition Investment

Historical Acquisition Spending

• Total Acquisitions: 25 completed
• Average Deal Size: $904 million
• Largest Deal: Seagram spirits business ($8.15B, joint with Pernod)

Major Investment Timeline

Balance Sheet Strength

Key Metrics (2024)

• Total Assets: ~$45-50 billion
• Net Debt: ~$12-15 billion
• Debt-to-EBITDA: ~2.5-3.0x (conservative leverage)
• Credit Rating: Investment grade (A-/A3 range)

Capital Allocation Priorities

1. Dividends: ~50% of net income
2. Organic Investment: Marketing, innovation, supply chain
3. M&A: Bolt-on acquisitions and strategic deals
4. Share Buybacks: Periodic programs

Financial Strategy

Premiumization Focus

• Shifting portfolio toward higher-margin premium brands
• Reducing exposure to lower-margin commoditized products
• Investing in luxury and ultra-premium segments

Cost Efficiency

• Supply chain optimization
• Marketing efficiency through digital channels
• Shared services and back-office consolidation

Emerging Markets

• Higher growth rates in Asia, Africa, Latin America
• Local currency exposure management
• Market development investments

Shareholder Returns

Total Shareholder Return (TSR)

• Consistent outperformance of broader market over long term
• Dividends contribute significantly to total returns
• Capital appreciation driven by earnings growth

Earnings Per Share (EPS)

• 2024 EPS: Approximately $2.50-3.00 (varies by accounting standard)
• Growth Trend: Mid-single digit annual growth target
• Currency Impact: Significant due to global operations

Outlook and Guidance

2025 Targets

• Organic net sales growth: 5-7%
• Organic operating profit growth: 6-9%
• Continued margin expansion
• Strong free cash flow generation

Strategic Financial Priorities

• Sustainable long-term growth
• Margin expansion through premiumization
• Strong cash conversion
• Progressive dividend policy maintenance
• Disciplined capital allocation

Diageo - Leadership History & Management Philosophy

CEO History

Sir George Bull (1997)

Role: First Chairman of Diageo (from Grand Metropolitan) - Orchestrated the Guinness-Grand Metropolitan merger - Established initial corporate structure - Led initial portfolio rationalization

John McGrath (1997-2000)

Role: First Chief Executive - Focused on merger integration - Began divestiture of non-core assets (Burger King, Pillsbury) - Established spirits-focused strategy

Paul Walsh (2000-2013)

Role: Chief Executive Officer Tenure: 13 years - longest-serving CEO

Leadership Style: - Disciplined operator with focus on efficiency - Strong financial management - Pragmatic approach to emerging markets - Masters of integration following acquisitions

Key Achievements: - Successfully integrated Seagram acquisition - Expanded significantly in emerging markets - Managed through 2008 financial crisis - Maintained strong dividend growth - Sold Burger King (2002) and focused purely on beverages

Ivan Menezes (2013-2023)

Role: Chief Executive Officer Tenure: 10 years

Leadership Philosophy: - “Goal Line” management system - Strong focus on premiumization - Purpose-driven leadership - Investment in marketing capabilities

Strategic Priorities: 1. Premiumization of portfolio 2. Emerging market expansion (especially India via USL) 3. Digital transformation 4. Sustainability integration (“Society 2030”)

Major Moves: - Completed United Spirits acquisition in India - Acquired Casamigos tequila - Launched “Society 2030: Spirit of Progress” sustainability plan - Navigated COVID-19 pandemic recovery

Quote: “We are building a business that is sustainable by design.”

Debra Crew (2023-Present)

Role: Chief Executive Officer Distinction: First female CEO of Diageo

Background: - Joined Diageo Board in 2019 - Former President of North America business - Previous experience at PepsiCo, Kraft Foods, Mars - Deep consumer goods expertise

Leadership Priorities: - Continuing premiumization strategy - Accelerating tequila growth - Expanding non-alcoholic portfolio - Driving operational efficiency - Focus on US market dynamics

Management Style: - Data-driven decision making - Consumer-centric approach - Strong commercial orientation - Focus on execution excellence

Board of Directors Structure

Board Composition

• Chairman (currently Javier Ferrán)
• CEO (Debra Crew)
• Executive Directors
• Non-Executive Directors
• Independent Directors

Board Committees

• Audit Committee
• Remuneration Committee
• Nomination Committee
• Corporate Responsibility Committee

Management Philosophy

“Goal Line” Framework

Diageo’s management system introduced under Ivan Menezes:

Components: 1. Strategy: Clear priorities and resource allocation 2. Execution: Operational excellence and accountability 3. Culture: Values-driven organization 4. Talent: Developing people at all levels

Core Values

1. We are passionate about our consumers
2. We value our people
3. We give back to society
4. We work with freedom within a framework
5. We are proud of what we do

Performance Culture

• Accountability: Clear KPIs at all levels
• Transparency: Open communication
• Innovation: Encouraging new ideas
• Inclusion: Diversity as a business imperative

Key Leadership Principles

Marketing Excellence

• View marketing as an investment, not a cost
• Brand-building focus over short-term promotions
• Creative excellence in advertising
• Data-driven marketing optimization

Talent Development

• Internal promotion preference
• Global rotation programs
• Leadership development initiatives
• Diversity and inclusion programs

Stakeholder Management

• Shareholder value creation
• Employee engagement
• Community impact
• Environmental responsibility

Notable Executives

Chief Financial Officers

• Kathryn Mikells (2021-2024): Led financial strategy, joined United Airlines
• Lavanya Chandrashekar (2024-Present): Former CFO of Otis Worldwide

Regional Leaders

• North America: Largest and most profitable region
• Europe: Traditional stronghold
• Asia Pacific: High-growth focus
• Latin America: Emerging market expansion
• Africa: Beer and spirits growth

Functional Leaders

• Chief Marketing Officer: Brand stewardship
• Chief Operating Officer: Supply chain excellence
• General Counsel: Legal and regulatory affairs
• Chief Human Resources Officer: Talent and culture

Leadership Development

Internal Programs

• Executive coaching
• Mentorship programs
• Cross-functional rotations
• Global assignments

External Engagement

• Industry association leadership
• Public policy advocacy
• Sustainability coalitions
• Academic partnerships

Management Challenges

Under Debra Crew’s Leadership

1. US Market Dynamics: Navigating changing consumer preferences
2. Inventory Optimization: Reducing excess inventory buildup
3. Competition: Responding to competitor innovations
4. Regulatory Environment: Managing alcohol marketing regulations
5. Economic Conditions: Inflation and currency impacts

Governance Excellence

Corporate Governance Standards

• UK Corporate Governance Code compliance
• Strong board independence
• Regular board evaluation
• Shareholder engagement

Risk Management

• Enterprise risk management framework
• Regular risk assessments
• Crisis management protocols
• Business continuity planning

Legacy of Leadership

Diageo’s leadership history demonstrates: - Long-tenured CEOs providing stability - Consistent strategic focus on premium spirits - Strong financial discipline - Commitment to sustainability and responsibility - Evolution from merger integration to organic growth - Transition from efficiency focus to premiumization

The company’s leadership has successfully navigated: - Major mergers and acquisitions - Economic cycles and crises - Changing consumer preferences - Regulatory challenges - Global expansion complexities

Diageo - Corporate Social Responsibility & Philanthropy

Society 2030: Spirit of Progress

Launched in 2020, this is Diageo’s comprehensive sustainability and social impact plan, representing a £2 billion investment over 10 years.

Three Core Pillars

1. Promoting Positive Drinking

Objective: Reduce harmful use of alcohol and promote moderation

Key Initiatives: - DrinkIQ: Global education program about responsible drinking - Marketing Standards: Strict guidelines for alcohol advertising - Underage Drinking Prevention: Programs targeting youth education - Drink Driving Prevention: Partnerships with law enforcement - Alcohol-Free Options: Expanding non-alcoholic portfolio (Ritual acquisition, Guinness 0.0)

Programs: - SMART Drinking Goals (collaboration with industry peers) - DRINKiQ.com educational platform - Parental guidance resources - Workplace alcohol policies

2. Championing Inclusion and Diversity

Objective: Create inclusive culture and diverse workforce

Commitments: - Gender Parity: 50% women in leadership by 2030 - Ethnic Diversity: Increase representation of underrepresented groups - Pay Equity: Gender and ethnicity pay gap closure - Supplier Diversity: Increase spend with diverse suppliers

Progress Highlights: - Significant increases in female leadership representation - Employee resource groups for various communities - Inclusive hiring practices - Unconscious bias training programs

3. Pioneering Grain-to-Glass Sustainability

Objective: Environmental stewardship across value chain

Environmental Sustainability

Carbon Footprint

Net Zero Commitment: - Achieve net zero carbon across direct operations by 2030 - Achieve net zero across entire value chain by 2050 - Science-based targets approved

Renewable Energy: - 100% renewable electricity in direct operations (achieved) - Solar and wind installations at distilleries - Biogas production from waste

Water Stewardship

Water Targets: - Replenish more water than used in water-stressed areas - Improve water use efficiency by 40% by 2030 - Water recycling at production facilities

Water of Life Program: - Partnership with WaterAid since 1992 - Providing clean water access to communities - Over $15 million invested in water projects - Benefited 12+ million people globally

Sustainable Agriculture

Goals: - 100% sustainable sourcing of key raw materials by 2030 - Regenerative agriculture practices - Soil health improvement - Biodiversity protection

Programs: - Sustainable barley programs (for Guinness) - Agave sustainability (tequila production) - Sustainable sugar cane (rum production) - Grape sustainability (wine production)

Packaging and Waste

Packaging Goals: - 100% plastic packaging recyclable, reusable, or compostable - 40% recycled content in plastic packaging - Eliminate use of plastic straws and stirrers - Light-weighting glass bottles

Waste Reduction: - Zero waste to landfill at manufacturing sites - Circular packaging initiatives - Packaging innovation (paper bottles, aluminum alternatives)

Community Investment

Total Investment

• Annual Community Investment: $50+ million
• Employee Volunteering: 50,000+ hours annually
• Matching Gift Programs: Employee donation matching

Local Economic Impact

• Employment: 30,000+ direct jobs
• Supply Chain: Supporting farmers and suppliers globally
• Tax Contributions: Significant corporate tax payments
• Local Sourcing: Preference for local suppliers where possible

Crisis Response

Emergency Relief: - COVID-19 response: Hand sanitizer production, community support - Natural disaster relief funds - Emergency water and food distribution - Employee assistance programs

Global Giving Programs

Learning for Life

Focus: Skills training and employment - Training for bartenders and hospitality workers - Entrepreneurship programs - Youth employment initiatives - Over 200,000 people trained globally

Water of Life (with WaterAid)

Focus: Clean water and sanitation - Longest-running corporate partnership with WaterAid - Projects in Africa, Asia, and Latin America - Focus on water-stressed communities - Sustainable infrastructure development

Local Community Programs

Regional Initiatives: - Ireland: Guinness Storehouse community engagement - Scotland: Scotch whisky tourism and heritage - Caribbean: Rum heritage and community development - Mexico: Agave community support

Industry Leadership

Responsible Drinking Advocacy

• Member of International Alliance for Responsible Drinking (IARD)
• Signatory to various industry commitments
• Active in policy discussions
• Research funding for alcohol studies

Sustainable Development Goals

Diageo supports UN SDGs, particularly: - SDG 3: Good Health and Well-being - SDG 5: Gender Equality - SDG 6: Clean Water and Sanitation - SDG 8: Decent Work and Economic Growth - SDG 12: Responsible Consumption and Production - SDG 13: Climate Action

Partnerships and Coalitions

• One Planet Business for Biodiversity (OP2B)
• RE100 (100% renewable electricity)
• Water Resilience Coalition
• Race to Zero
• The Climate Pledge

Transparency and Reporting

ESG Reporting

• Annual ESG (Environmental, Social, Governance) reports
• Integration with financial reporting
• Third-party verification
• Transparent progress metrics

Recognition and Rankings

• Dow Jones Sustainability Index inclusion
• FTSE4Good Index inclusion
• MSCI ESG ratings
• CDP (Carbon Disclosure Project) leadership

Philanthropic Foundations

Diageo Foundation

• Structured charitable giving
• Focus on alcohol education and community development
• Employee engagement programs
• Disaster relief coordination

Brand-Specific Initiatives

• Johnnie Walker: Keep Walking Fund for social entrepreneurs
• Smirnoff: LGBTQ+ community support
• Guinness: Rugby community programs
• Baileys: Women’s empowerment initiatives

Future Commitments

2030 Goals Summary

1. Achieve net zero carbon in direct operations
2. Reach 50% women in leadership positions
3. 100% sustainable sourcing of key materials
4. Replenish more water than used in stressed areas
5. Train 1 million people through Learning for Life
6. Reach 1 billion people with alcohol moderation messaging

Challenges and Criticisms

Addressed Concerns

• Alcohol Harm: Acknowledging role in reducing harmful use
• Marketing Practices: Continuous improvement in standards
• Environmental Impact: Significant reduction commitments
• Transparency: Enhanced reporting and disclosure

Industry Context

• Operating in regulated industry with inherent challenges
• Balancing commercial objectives with social responsibility
• Working collaboratively with industry peers
• Engaging with critics and advocates

Measurement and Impact

Key Performance Indicators

• Carbon emissions (Scope 1, 2, and 3)
• Water usage and replenishment
• Diversity metrics
• Community investment value
• Employee engagement scores
• Responsible drinking reach

External Validation

• Regular audits and assessments
• Stakeholder feedback incorporation
• Continuous improvement processes
• Industry benchmarking

Diageo - Industry Impact and Historical Significance

Creation of the Modern Spirits Industry

Consolidation Pioneer

Diageo’s formation in 1997 marked a watershed moment in the beverage alcohol industry: - First truly global spirits company of its scale - Demonstrated the strategic value of consolidation in fragmented markets - Created the template for modern beverage alcohol M&A - Established premiumization as the dominant industry strategy

Industry Transformation

Before Diageo: - Fragmented regional spirits companies - Family-owned distilleries dominating - Limited global distribution networks - Commodity pricing pressure

After Diageo: - Consolidation wave across industry (Pernod Ricard, Beam Suntory following) - Global brand building at scale - Premium positioning as standard - Professional corporate management

Global Market Leadership

Category Dominance

Diageo’s brands hold commanding positions across major spirits categories:

Scotch Whisky: - Johnnie Walker: World’s #1 Scotch by significant margin - Defined premium Scotch category globally - Established luxury whisky positioning

Vodka: - Smirnoff: World’s best-selling vodka - Set standards for vodka marketing and distribution - Pioneered flavored vodka category

Liqueurs: - Baileys: Created and dominates Irish cream category - Proved viability of cream-based liqueurs at scale

Rum: - Captain Morgan: Built spiced rum from scratch - Created entirely new rum sub-category

Tequila: - Don Julio: Transformed tequila from mixer to luxury sipping spirit - Casamigos: Celebrity partnership model for spirits

Gin: - Tanqueray: Premium gin standard-bearer - Influenced global gin renaissance

Beer: - Guinness: Maintained iconic status amid industry consolidation - Proved beer brand can coexist with spirits portfolio

Business Model Innovation

Marketing Excellence

Diageo established spirits marketing standards: - Brand Building: Long-term investment over short-term promotions - Global Campaigns: Consistent messaging across markets - Cultural Integration: Embedding brands in music, film, sports - Digital Innovation: Early adoption of digital marketing

Distribution Strategy

• Route-to-Market Excellence: Optimized distribution models by region
• Trade Relationships: Strong partnerships with retailers and bars
• E-Commerce Leadership: Digital sales channel development
• Duty Free Dominance: Airport retail expertise

Portfolio Management

• Brand Architecture: Clear tiering (value, premium, super-premium, luxury)
• Innovation Process: Systematic new product development
• Rationalization: Disciplined pruning of underperforming brands

Geographic Market Development

Emerging Market Pioneering

• India: Through USL acquisition, established template for emerging market investment
• China: Early and significant investment in baijiu and imported spirits
• Africa: Beer and spirits market development
• Latin America: Tequila category building

Market Education

• Elevated consumer understanding of spirits categories
• Professional bartender training programs
• Consumer experience centers (Johnnie Walker Princes Street, Guinness Storehouse)
• Mixology culture development

Industry Standards and Best Practices

Quality Standards

• Set benchmarks for production consistency at scale
• Advanced maturation science
• Supply chain transparency initiatives
• Quality control protocols

Corporate Responsibility

• Responsible Drinking: Industry-leading programs
• Sustainability: “Society 2030” model being adopted industry-wide
• Marketing Standards: Self-regulatory frameworks
• Community Investment: Scalable CSR programs

Governance

• UK corporate governance model for global spirits
• Board diversity and inclusion practices
• Executive compensation structures
• Shareholder engagement standards

Cultural Impact

Brand Iconography

• Johnnie Walker Striding Man: One of world’s most recognized logos
• Guinness Harp: Iconic Irish symbol
• Captain Morgan: Definitive pirate imagery
• Smirnoff: Vodka’s visual identity

Entertainment and Media

• Hollywood product placement pioneer
• Music industry partnerships (Cîroc with Sean Combs)
• Film and television integration
• Sports sponsorship innovation (Guinness Six Nations, Johnnie Walker Golf)

Luxury Positioning

• Demonstrated spirits could compete with luxury goods
• Limited editions and collector culture
• Auction market development
• Ultra-premium category creation

Competitive Response

Industry Consolidation

Diageo’s success triggered: - Pernod Ricard formation and growth - Beam acquisition by Suntory - Bacardi strategic repositioning - Campari expansion - Constellation Brands diversification

Competitive Innovation

Competitors have been forced to: - Invest in premiumization - Build global distribution - Develop marketing capabilities - Pursue strategic acquisitions

Economic Impact

Shareholder Value Creation

• Consistent dividend growth over 25+ years
• FTSE 100 top performer over multiple decades
• Total shareholder returns exceeding market
• Capital allocation model widely studied

Employment

• 30,000+ direct employees
• Hundreds of thousands in supply chain
• Hospitality industry support
• Agricultural community impact

Tax Contribution

• Significant corporate tax payments globally
• Excise duty collection and remittance
• Employment tax contributions
• Local community investment

Innovation Legacy

Product Innovation

• Flavored spirits proliferation
• Ready-to-drink category development
• Non-alcoholic spirits pioneering
• Cask finishing techniques

Packaging Innovation

• Premium bottle design standards
• Sustainable packaging leadership
• Smart bottle technology
• Limited edition collectibles

Business Model Innovation

• Celebrity partnership model (Casamigos blueprint)
• Digital-first marketing
• E-commerce direct-to-consumer
• Subscription and membership models

Historical Significance

British Business History

• One of UK’s most successful multinational companies
• Maintained London as global spirits hub
• Demonstrated UK manufacturing excellence
• Post-Brexit international business model

Corporate Evolution

• Successfully navigated merger integration
• Transformed from conglomerate to focused beverage company
• Adapted to changing consumer preferences
• Managed through economic cycles and crises

Industry Benchmark

Diageo serves as the reference point for: - Spirits company valuation - Brand portfolio management - Global expansion strategy - Marketing effectiveness - Corporate responsibility

Lessons for Business

Strategic Insights

1. Focus Wins: Divesting non-core assets enabled excellence
2. Brand Power: Investing in iconic brands creates durable value
3. Global Scale: Size enables marketing and distribution advantages
4. Premiumization: Moving upmarket drives profitability
5. Emerging Markets: Early investment pays long-term dividends

Management Lessons

1. Long-Term Thinking: Patient brand building over short-term profits
2. Talent Development: Growing leaders from within
3. Culture Matters: Values-driven performance
4. Stakeholder Balance: Shareholders, employees, communities, environment
5. Adaptation: Evolving with consumer and market changes

Future Legacy

Ongoing Evolution

Diageo continues shaping the industry through: - Non-alcoholic category development - Sustainability leadership - Digital transformation - Emerging market growth - Premiumization continuation

Industry Position

As the world’s largest spirits company, Diageo’s actions influence: - Category pricing - Marketing practices - Competitive dynamics - Consumer expectations - Regulatory approaches

Conclusion

Diageo’s 25+ year history represents one of the most successful corporate transformations in modern business. From a merger of two British beverage companies, it has become the definitive global spirits company, shaping an entire industry through its strategies, innovations, and standards of excellence. Its legacy extends beyond commercial success to include cultural influence, industry best practices, and a model for responsible corporate citizenship in a sensitive industry.

The company’s ongoing evolution—from traditional spirits to non-alcoholic alternatives, from conventional marketing to digital innovation, from efficiency focus to sustainability leadership—demonstrates its continued role as an industry pioneer and benchmark for success.