Diageo seeks Middle East boom

Diageo is looking to double its sales in the Middle East and North Africa (MENA) over the next five years as part of a focus on new emerging markets.

The world’s biggest drinks group said liquor sales in the MENA region grew 16% this year, with Gulf Arab countries contributing 44% of the sales.

"We strongly believe that the combination of global travel (retail sales) and Middle East and North Africa is set for growth," said Jane Ewing, managing director for global travel and the Middle East at Diageo.

"Key elements of the business can double over the next five years."

Diageo, whose brands include Guinness, Smirnoff vodka, Captain Morgan rum and Gordon’s gin, is eyeing new core markets like Abu Dhabi where newly opened hotels and resorts have been boosting sales, with year-on-year sales growth of 28%, according to the company.

Hugo Mills, general manager for the Gulf region said Abu Dhabi "will be a core market for us within the next 8-10 years".

Ewing also pointed to Qatar’s successful bid to host the soccer World Cup in 2022 as an opportunity to boost liquor sales in the region, where alcohol sales are usually restricted to ex-pat communities.

Diageo’s business in Dubai, one of its key markets, was hit by the debt crisis, with sales there falling about 30% in its 2009 financial year. The company said the tourism boom seen in Dubai between 2006 and 2008 was not expected to return soon and focus has shifted to other markets.

"Every room was full…every hotel wanted to have events, parties. You could not get tables in restaurants," said Ewing. "Earlier it was all about Dubai but now it will be more spread."

Net sales in MENA grew 22% in 2008 compared to just 6% percent in 2009.

The company does, however, see signs of recovery in the US market.

While admitting the consumer environment in the country remains unsettled, Ivan Menezes, president of North America and chairman of the Asia-Pacific region at Diageo, said: “There are emerging, positive signs of life in Fall retail sales.”

Menezes also confirmed the company is keeping up-to-speed with developments at Beam Global, which last week decided to split into three separate businesses, including its wine and spirits unit which comprises brands such as Courvoisier, Maker’s Mark and Jim Beam.

“We are looking at the developments as the industry consolidates,” said Menezes.

Alan Lodge, 15.12.2010