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DIAGEO PREPARES CHRISTMAS ONSLAUGHT

London-based drinks giant Diageo fired a few early shots in the Christmas drinks battle last week, announcing a massive increase in pre-Christmas marketing spend and predicting a strong performance from the off-trade, with less discounting in the multiples and more consumers entertaining at home. Diageo's off-trade managing director, Steve Gannon, unveiled increased marketing spend on almost all of the company's leading brands this week - including new TV advertising campaigns for Baileys, Gordon's gin, Smirnoff vodka, Smirnoff Ice and Guinness - and said that weakening consumer confidence would probably speed up the trend of the on-trade losing sales to the off-trade rather than hit total market sales. Baileys is the big winner, with marketing spend on the brand, at 5 million, almost doubled compared to last year during the key Nov/Dec bi-month. In the 2003 Christmas period the brand - which is the number-one spirits brand during the Christmas period - registered a 3% drop in sales by value due to hyper-discounting in the multiples by up to 6 off per litre bottle. In such a competitive market place in retailing there will always be pressure to discount,' said Gannon. But from a retailer's perspective you have to ask if the cost of last year's discounts to the retailer were justified by the increase in sales.' Diageo is clearly hoping that the extent of its investment in Baileys, which also includes extensive POS material and numerous gift packs (each exclusive to different multiples), will convince retailers that this year Baileys is a brand to use to drive profits rather than footfall. Gannon also said that he expects a White Christmas' this year, with the two major white spirits, gin and vodka, continuing their recent market gains. Diageo's two market leaders in their respective categories, Smirnoff and Gordon's, will get a similar treatment to Baileys in an attempt to push their excellent full-year performance (with both registering low double-digit off-trade sales) right into the Christmas period. I would be disappointed if we don't see double-digit increases in sales for both brands compared to Christmas last year,' said Gannon. Cannon also expects the trend for Christmas to come later' (with consumers making their Christmas drinks purchases later in the period) to continue. Out-of-stock problems have been vastly reduced in recent years, and consumers now expect to see their favourite brands on shelf right up to the last day,' he said. With a full five shopping days in the week running up to Christmas, which falls on a Saturday this year, Cannon predicted we would see one of the biggest shopping weeks for years in 2004.

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