Diageo takes spirited approach

27 August, 2008
Page 5 
Diageo plans to significantly increase production of its recently acquired Ketel One vodka, as part of a global push on the brand.

Diageo wants to expand Ketel One's presence outside of North America, initially in Latin America and Europe, chief executive Paul Walsh has told Drinks International.

Diageo has spent US$900 million to begin a 50 /50 joint venture on Ketel One with the Nolet family, which produces the brand in the Netherlands. The move saw Diageo pull out of the race to buy Sweden's Absolut vodka.

It is now understood the drinks giant may look to double production of Ketel One over the next few years, reflecting ongoing growth in the global premium spirits market.

Ketel One sells around 1.9 million cases per year, predominantly in North America. The brand has a 14 per cent share of the US premium vodka market, compared to 17 per cent for Stolichnaya and 39 per cent for Absolut.

Diageo's plan to ramp up production echoes a similar strategy for Bushmills Irish whiskey. Bushmills' production has tripled since Diageo bought the group in 2005.

At its recent first -half results, Diageo reaffirmed its guidance of a 9 per cent rise in operating profits for the full year.

Big brands such as Smirnoff and Johnny Walker, as well as a resurgent Guinness in the UK, lifted Diageo's net sales by 7 per cent to more than £4 billion for the six months end ing December 31 . Volumes grew less sharply at 4 per cent, reflecting Diageo's focus on higher -end drinks.

In another deal, Diageo has signed a deal to distribute and market Guatemalan rum brand Zacapa globally.

The three-year deal with Industrias Licoreras de Guatemala means the drinks giant will have control of the brand in most markets excluding Guatemala and Central America.

At the end of the deal, Diageo will have the option to buy a 50 per cent equity stake in the brand.

Randy Millian, managing director of Diageo's Latin America & Caribbean hub, said: "The Zacapa brand will widen our brand range within the second -largest and fastest -growing major spirits category in the world, and diversify our reserve brand collection."

The Zacapa rum range includes Zacapa Centenario 15, Zacapa Centenario 23 and Zacapa Centenario XO.

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