Diageo slows innovation, increases marketing spend, sales boom

Industry Contributor 8 Jul 2019 - 2 min read

Diageo slows innovation, increases marketing spend, sales boom

By Paul McIntyre - Executive Editor

Market Voice 3 min read

How to use generative AI beyond efficiency: Just talk to it for half an hour every week – OK Tomorrow founder Nilesh Ashra

By Nine | Partner Content

OK Tomorrow founder Nilesh Ashra is convinced AI can unlock the creative floodgates, and has some cracking examples covering customer, product and HR. But media and marketing appear to be running headlong for efficiency.

Market Voice 3 min read

Advanced Audiences: Nielsen makes synthetic, first-party data play as CMOs prioritise customer lifetime value, optimise marketing technology investments, and navigate changes in privacy laws

By Nielsen | Partner Content

Audience measurement company, Nielsen, is becoming a first-party marketing company, working directly with brands to build privacy-compliant customer segments – panel data that is synthetically overlaid with brands’ customer data platform (CDP) data.

Tags: diageo, marketing, advertising

Diageo says it has hit “peak innovation” and is slowing down its rate of new product launches. Instead it's backing existing brands with higher marketing spend to drive growth (Marketing Week).

Slowing innovation “allows us to be more ‘choiceful’” – global head of innovation Michael Ward
“You have fewer [launches] but you want to have a bigger difference,” - Ward
Marketing needs to be at the heart of all innovation, adds Ward

Diageo has increased marketing spend three years running - and it's paying off, big time. The drinks giant upped marketing spend to £1.9bn (A$3.4bn) in 2018, up 5% on 2017 and 20% higher than 2016. Its latest interim results suggest marketing spend will be north of £2bn in 2019 (up 9% to £1.1bn in the first half). So far, the strategy appears to be working: H1 net sales were up 7%, operating profit up 12%.

Ahead of the company’s full year results on July 25th, Diageo’s shares last week hit an all time high, with Deutsche Bank upping its share price target. Its analysts expect Diageo to post full year organic sales growth of 6.5% and an increase in underlying earnings of 9.5%. Trebles all round.