The story: After a series of mergers, demergers and acquisitions, the management of Diageo, the conglomerate formed by the 1997 merger of Guinness and Grand Met, made a strategic decision to focus on premium alcohol drinks. Diageo was in charge of an expanding and wide-ranging collection of brands, some of which had broad appeal across many countries while others had more regional appeal, sometimes limited to just a few markets.
The challenge: After both organic growth and acquisitions, three key dilemmas emerged by 2002. First, how to manage brands with significantly different appeal, such as Guinness, a brand with strong Irish roots but huge global appeal, or Buchanan’s, the leading Scotch whisky in Latin America. Second, how to rejuvenate tired brands and third, how to improve the market share of the most successful brands, such as Captain Morgan, J & B, Smirnoff and Johnnie Walker.
The initial strategy: To help managers maintain focus and allocate resources, Diageo developed three brand classifications: global priority, local priority and category.