Diageo boss to stick with Guinness

New chief executive Ivan Menezes doesn't rule out deals, but won't be off-loading the Irish stout. James Ashton reports
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The Independent Online

The new boss of Smirnoff-to-Baileys giant Diageo has thrown his weight behind Guinness, the famous Irish stout, which it is often said could be ejected from the world's best-stocked corporate drinks cabinet.

"That is not going to happen," said Ivan Menezes, who was announced as successor to long-serving chief executive Paul Walsh last week. "We define ourselves as a premium drinks business and Guinness is core within that."

Diageo's new Indian-born leader will concentrate on the organic growth of the £50bn business but doesn't rule out more deals. "A key requirement for me is keeping this company very agile. We have a strong balance sheet. We will look at acquisition opportunities. We look at everything."

Mr Walsh gained scale soon after he took over in 2000 by swallowing the Seagram drinks brands. More recently, he sealed deals in Turkey, India and Brazil to build momentum in emerging markets.

"There is good growth around the world," added Mr Menezes, whose favourite drink is Johnnie Walker black label with ice and soda.

"You have got 1.3 billion consumers coming in to the emerging middle classes in the next 10 years and 400 million coming into what we call luxury spending. We are setting ourselves up with good scale in these emerging markets, not just to grow the local brands but to grow the international brands."

Diageo has long been linked with a full takeover of champagne and cognac house Moët Hennessy but it must persuade French tycoon Bernard Arnault to sell his majority stake. Less likely is a revival of the deal to buy tequila brand Jose Cuevo after talks broke down last year.

"For all the deals we have done there are many more that we haven't done. There are two criteria: they need to be strategically in the sweet spot and they need to meet our economic criteria."

Mr Menezes, who was groomed for the top for several years by running the group's most profitable division in America, was instrumental in the investment in United Spirits, which gives Diageo access to India's legion of whisky drinkers.

Guinness has found the going tough in developed markets such as Britain and Ireland, but has become a top tipple in Africa. "The route to market we get with beer gives us an advantage in spirits," Mr Menezes explained. "Johnnie Walker, for example, has tripled in size in the last few years in Africa."

His ascent marks another success for the Indian Institute of Management, which has gained a reputation as a hothouse for business leaders. Ajay Banga, the chief executive of Mastercard, and PepsiCo's Indra Nooyi studied at branches of the business school.

"It was a tough school to get into – and to get out of," Mr Menezes said with a laugh.