Brewer makes billions despite ‘challenging year’

Posted on 27 Aug 2009 by The Manufacturer

Diageo – the global producer of alcohol drinks – has announced full year net profits of £1.62bn while it continues plans to close sites and make employees redundant in an effort to cut costs.

The net profit figure constitutes a rise of seven per cent on last year’s figures but all the same chief executive Paul Walsh said it has been “a very challenging year” for Diageo. Operating profit was up 10 per cent to £2.44bn

The firm, leading brands of which include Smirnoff, Guinness and Gordon’s, has come in for major criticism in Scotland for plans to close a Johnnie Walker bottling plant in Kilmarnock in a move which will see 700 jobs lost. A further 200 employees are set to be made redundant from sites in and around Glasgow.

These, along with other cuts across its global operations, is estimated to save the company £120 per year.

“We took action quickly to manage these difficult times, reducing our cost base and refocusing marketing spend as consumer trends changed,” said Walsh

Diageo has seen growth this year in vodka, rum, tequila and beer sales. Gin and wine markets are weaker though, and retailers have engaged in fine whiskey de-stocking initiatives.

An outraged Len McCluskey, assistant general secretary of Unite, said the figures prove Diageo’s cost cutting exercise in Scotland amounts to penny pinching.

“Even in a global recession, Diageo can pull in billions of pounds in pure profit,” he said. “Surely now Diageo’s claims that it must cut Scottish jobs to reduce costs can be seen once and for all for what they are – about short-term greed, not long-term need.

“For 185 years, generations of Scotland’s workers have delivered for this company. Their hard work has made this company extraordinarily wealthy and its products loved around the world.

“They deserve better than to be thrown on the scrapheap to slate Diageo’s thirst for yet ever more profits.

“CEO Paul Walsh may claim to be ‘comfortable’ with his plans to cut jobs but there is a way forward, where efficiencies can be delivered for the company but without devastating Scottish communities by putting people out of work, and we urge Diageo to work with us now on this more socially responsible approach.”

Unite has organised protest marches in Scotland and has appealed for MPs to boycott hospitality at the Johnnie Walker golf championship, starting at Gleneagles today. It has received 450,000 emails in support of its campaign against the cuts from the British public.

In other alcohol producer news, Magners cider brewer C&C
has bought Tennents lager in an £180m deal.