1997 saw the US$19 billion merger of Guinness and Grand Met to form Diageo, the world’s largest drinks company. Guinness was the group’s top- selling beverage after Smirnoff vodka, and the group’s third most profitable brand, with an estimated global value of US$ 1.2 billion. More than 10 million glasses of the world’s most popular stout were sold every day, predominantly in Guinness’ top markets: respectively, the UK, Ireland, Nigeria, the USA and Cameroon.
However, the famous dark stout with the white, creamy head was causing some strategic concerns for
Diageo. In 1999, for the first time in the 241-year history of Guinness, sales fell. In early 2002 Diageo
CEO Paul Walsh announced to the group’s concerned shareholders that global volume growth of Guinness was down 4 per cent in the last six month of 2001 and, more alarmingly, sales were also down 4 per cent in its home markets, Ireland. How should Diageo address falling sales in the centuries- old brand shrouded in Irish mystique and tradition?
The changing face of the Irish beer market
The Irish were very fond of beer and even fonder of Guinness. With close to 200 liters per capita drunk each year- the equivalent of one pint per person per day- Ireland ranked top in worldwide per capita beer consumption, ahead of the Czech Republic and Germany.
Beer accounted for two-thirds of all alcohol bought in Ireland in 2001. Stout led the way in volume sales and accounted for 40 per cent of all beer value sales. Guinness, first brewed in 1759 in Dublin by Arthur
Guinness, enjoyed legendary Status in Ireland, a national symbol as respected as the green, white and gold flag. It was by far the most popular alcoholic drink in the Ireland, accounting for nearly one of every two points of beer sold. Its nearest competitors were Budweiser and Heineken, which held 13 per cent and
12 per cent of the market