Diageo introduces new trade terms
Diageo has established a new set of trade terms for licensees, claiming the new deals are part of its drive to make the spirits category more profitable for pubs.
According to the drinks giant, the shift will provide incentives for pubs to sell spirits in a way that will ultimately grow the spirits category.
The terms and pricing of Diageo's brands used to be determined on an account-by-account basis, but has now been consolidated into one agreement based on three principals. The first, scale discounts, will offer promotions based on purchasing throughout the year. The second, efficiency discounts, will give licensees incentives to order and pay for Diageo products in a certain way. In the third, sales driver investments, in return for discounts, licensees must commit to a number of initiatives including perfect serves and merchandising products in a set way defined by Diageo's consumer profiling work.
The new terms will be applied across all Diageo customers - wholesalers, as well as licensees and pub groups.
Diageo sales director David Smith said: "As a company, we are increasingly focused on how we can better deliver growth within the total category, versus solely concentrating on promoting our individual brands. We're applying this across all aspects of our business: category development, marketing and of course the significant area of trade investment.
"The focus is very much to maximise the value and effectiveness of our trade investment, which in turn will promote category growth and provide mutual benefit to both our customers and Diageo.
"We believe there is a potential £500million of incremental value for the industry by concentrating on key development areas. These include encouraging consumers to buy more premium brands, using seasonal peaks to attract consumer interest, providing fantastic finished drinks for core brands and mixers through bespoke menus and promoting spirits as relevant for everyday occasions."
