London-based Diageo, the giant international company that produces and sells spirits, beer and wine in 180 countries, is scarcely 18 years old.
Diageo was established at the end of 1997 when Guinness plc and Grand Metropolitan plc merged. But its history goes back to the founding of Justerini & Brooks in 1749, London wine merchants and blenders of J&B whiskey. A decade later, Arthur Guinness signed a 9,000-year lease on the St. James’s Gate brewery in Dublin and created a global brand.
Today the conglomerate makes products at more than 200 locations in over 30 countries, and sells famous brands such as Johnnie Walker, Smirnoff (the world’s best-selling vodka), Guinness, Captain Morgan, Baileys, Tanqueray, Crown Royal, J&B, Buchanan’s, Grand Old Parr, Bell’s and Cîroc. Its products hold leading positions in many international markets.
The name Diageo was created from the Latin word “dies” — meaning day — and “geo” — a Greek root for the world. The combination was meant to convey the idea that Diageo is providing enjoyment or pleasure (presumably liquid) every day around the world.
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Miami is an important center for Diageo’s worldwide business.
The company moved its Latin America and Caribbean regional headquarters from the Blue Lagoon area to Coral Gables in 2012, and now has about 200 employees here, out of approximately 3,000 throughout the LAC area. Diageo’s predecessor, Grand Metropolitan, had an office in Miami during the 1980s.
“This is the hub for all our Latin America and Caribbean operations,” said Alberto Gavazzi, Diageo’s Miami-based president for Latin America and the Caribbean since early 2013. Miami also is the base for other business units that handle relations with Diageo distributors in the Southeast U.S. and for travel retail, which covers sales to airport and cruise ship passengers for North America.
“Miami is an excellent location for us,” Gavazzi said. “It makes travel easier, it has great weather, good schools and professional talent, as well as a multicultural lifestyle. And young professionals like to come here to work.”
Miami also provides a “halo effect,” Gavazzi said. Latins like to travel to Miami, visit local bars, restaurants and clubs to see what’s happening and learn about new cocktails and beverages served here. They often take their impressions back and ask for similar products in their home countries.
Gavazzi, a Brazilian, has worked for Diageo since 1993, after stints with Unilever and Colgate-Palmolive. An executive with extensive international experience in brand management, marketing and sales, Gavazzi speaks English, Portuguese, Italian and Spanish.
The LAC region generates a significant share of Diageo’s global revenue. Net sales in the region in recent years accounted for about 9 percent to 10 percent of the company’s overall net sales, which were approximately $16.9 billion in the fiscal year 2015, which ended June 30.
Scotch is one of Diageo’s leading products, and it has a long history in Latin America.
“Johnnie Walker was in 120 markets before Coke left the U.S.,” Gavazzi said. “Scotch in Latin America accounts for about 24 percent of Diageo’s Scotch business today, and it has been exported to Latin America and other parts of the world for over 100 years. In this region, we sell about eight out of every 10 bottles.”
In addition to Scotch, big sellers in the region in terms of volume are Smirnoff and its ready-to-drink products, rum and tequila.
In LAC, Diageo imports some of its products, distills others at its own regional plants and buys other products from partners who produce distilled spirits to meet Diageo’s strict international standards. All the Scotch Diageo sells in LAC is imported.
While Smirnoff, rum, tequila and different varieties of Scotch are generally popular across the region, demand for Diageo products varies from country to country. For example, cachaça, a distilled spirit made from sugarcane juice in Brazil, is a favorite in that country. But its popularity has spread rapidly across international markets. Diageo now owns Ypióca, the country’s leading premium brand of cachaça. Moreover, consumers in different markets prefer different brands of Scotch, and Diageo offers a wide variety of brands.
Diageo faces strong competition globally. In spirits, they fight for market share with Pernod Ricard, Beam Suntory, Bacardi and Brown-Forman. In beer, there are AB InBev, Heineken, SAB Miller, Molson Coors and Carlsberg. In wine, the world market is fragmented among a host of producers. And in all these segments, there are many local and regional competitors in different countries.
An important part of Gavazzi’s job is to expand Diageo’s reach in all markets, introducing new products (for example, moving its premium gin into a market where it is not widely consumed) and encouraging buyers to move up the quality chain. “The trend here and in other parts of the world is ‘premiumization,’” Gavazzi said. “Most of the spirits consumed in the region are low-end spirits, but people aspire to drink international brands. In Brazil, they might want to move up from a low-end cachaça to Black & White.”
Diageo also offers “how to” online videos to potential customers. In the Miami headquarters, there is a bar fully stocked with Diageo spirits. Expert bartenders and mixologists prepare new and different cocktails using company products. These videos are sent to clients so they can test them with customers.
Gavazzi also stressed that wherever Diageo operates, it employs sustainable supply chain and production activities, and participates actively in government, community and NGO programs to educate people on how alcohol abuse can be damaging.
An important part of Diageo’s presence in the region is its Learning for Life program, a global training initiative that helps disadvantaged youth learn useful skills in hospitality, retail, entrepreneurship and bartending.
So far, the program has trained more than 100,000 people in 35 countries since 2008.
Diageo recently opened a Learning for Life school in Catia, Venezuela, a large low-income community that forms part of Caracas. In coming years, the company is planning to steadily expand these schools throughout Latin America and the Caribbean.
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Business: Diageo is a global leader in alcoholic beverages, including spirits, beer and wine sold in 180 countries. The company makes its products at more than 200 locations in over 30 countries. Among its many brands are Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray, Guinness, Crown Royal, J&B, Buchanan’s, Grand Old Parr, Bell’s, Cîroc, Cacique, Zacapa and Don Julio. Diageo’s Latin America and Caribbean headquarters in Miami oversees a region that recently accounted for 9 percent to 10 percent of the company’s multibillion-dollar net sales worldwide.
Founded: Diageo was established in 1997 when Guinness plc and Grand Metropolitan plc merged. The company’s roots go back to the founding of Justerini & Brooks in 1749, London wine merchants and blenders of J&B whiskey. A decade later, Arthur Guinness signed a 9,000-year lease on the St. James’s Gate brewery in Dublin and created a global brand.
Corporate headquarters: London, England.
Latin America and Caribbean headquarters: 396 Alhambra Cir., Coral Gables. This office also manages relations with Diageo distributors in the Southeast United States and travel retail, which are products sold at airports and to cruise line passengers.
Diageo CEO: Ivan Menezes.
Diageo president for Latin America and the Caribbean: Alberto Gavazzi.
Employees: About 200 in the Miami regional headquarters, approximately 3,000 in Latin America and the Caribbean and 33,000 worldwide.
Revenues: Net sales were approximately $16.9 billion for the fiscal year ending June 30.
Competitors: In spirits, Pernod Ricard, Beam Suntory, Bacardi and Brown-Forman. In beer, AB InBev, Heineken, SAB Miller, Molson Coors and Carlsberg. In wine, the world market is fragmented. In all these segments, there are many local and regional competitors in different countries.
Ownership: Traded on the London Stock Exchange (symbol: DGE) and on the NYSE (DEO).