RTD decline fails to deter Diageo

by John Harrington Volume sales of Diageo's RTDs (ready to drink) fell 12% in the second half of 2003, while the Treasury is taking more from the brand than ever before. Smirnoff Ice, one of Diageo's principal RTDs, suffered a net sales drop of 20% after deducting excise duties. Diageo managing director Don Goulding blamed high duty imposed in the 2002 budget and limited innovation for the slowdown in RTD sales, which explains the poor performance of Smirnoff Ice. But Goulding said he still had faith in the RTD category. "The RTD category is large and valuable, now worth £1.2bn in Great Britain, and well-established within consumers drinks repertoires," he said. "We believe there is still a significant opportunity and over the next few months we will be working hard to create new news for the trade consumers." Meanwhile, on-trade sales of Guinness also fell, with more people choosing the take-home market. Overall volume was down 3%. The drinks giant is planning a new campaign for February to reverse this trend. Overall, Diageo said its growth was driven by sales of its premium spirit brands, with volume sales increasing 6%. The best performer was Pimm's, with volume up 34%. Diageo attributed this to the brand being marketed as a summer drink for any weather. Diageo attributed a 9% increase in volume for Smirnoff to the initiatives introduced to improve the standard of service in pubs. Gordon's Gin and Baileys both saw volume growth of 7%, but Baileys grew slower than in previous years. Archers, meanwhile, saw volume decrease 12%.