Money Tracker: Diageo Profit Growth Slows

http://www.youtube.com/watch?v=4XLTm9aYNYo

This is a video on Bloomberg Money Tracker with an interview with Paul Walsh, Diageo's CEO, in regards to spirits prices going up 3-4%. Diageo has a portfolio of some of the world's leading premium spirits brands such as Johnnie Walker, Ciroc, and Tanqueray 10. Paul Walsh discusses how Diageo is present in 118 countries where he is seeing a specific trend in many of them. This trend is that people are trading up to premium beverages and that is how he can justify charging more for those brands. People are not necessarily drinking more today. He also states that the brewers are seeing more pressure in these economic times than the spirits are. Another very interesting point that he makes is that people are not trading down on the quality of their alcoholic beverage of choice but are changing from being in the on premise to the off premise. What this means is that instead of drinking spirits while going out to dinner, bars, or nightclubs, consumers are opting to go to the liquor store instead and entertain at home. Paul Walsh also talks about an even larger trend which is that consumers are nowing choosing Ultra Premium brands like Johnnie Walker Blue and Ciroc. The sales of brands such as these have gone up 27% in the last year.