Diageo

Diageo (pronounced Diagio) is a British company, the largest global producer of premium alcoholic beverages.

Aktivs

By 2018, Diageo owns the following well-known alcohol brands:

• Johnnie Walker
• J&B
• White Horse
• Crown Royal
• Smirnoff
• Baileys
• Captain Morgan
• Gordon's
• Guinness.

History

2023: The company's 43 businesses are located in water-scarce areas

Diageo Plc, the world's largest liquor company, is worried in June 2023 that climate change will lead to a shortage of one ingredient that is needed to produce all its alcoholic beverages - water.

According to Michael Alexander, Head of Global Water, Environment and Agriculture at Diageo, there were 43 businesses in the world in 2022 located in water-scarce areas, the most significant risk posed by climate change for gin producer Tanqueray, Guinness beer and Baileys Irish Cream.

2022: Business closure in Russia and loss of $172 million

On June 28, 2022, Diageo officially announced its withdrawal from the Russian market. The British manufacturer of alcoholic beverages made this statement a few months after it suspended shipments to the Russian Federation against the backdrop of a Russian special operation in Ukraine.

At the end of July 2022, it was announced that the losses of Diageo, which owns the alcoholic brands Johnnie Walker, Guinness, Baileys and Captain Morgan, from leaving Russia amounted to $172 million.

After the termination of exports and sale of finished products to our customers in Russia in March, we made a difficult decision on the forced gradual reduction of commercial activities in the country, a Diageo representative told Interfax.

Alcohol producer Diageo curtails business in Russia

According to him, the process of curtailing the business will take about six months, which means that Diageo will finally leave the Russian market by the end of 2022 - the beginning of 2023. Until that time, the company will support employees, including providing them with an expanded package of compensation payments in full compliance with Russian legislation, Diageo added.

According to Diageo's official website, the company employs more than 300 people. Most will be reduced by the end of July 2022.

Diageo was engaged in the production and supply to Russia of Scotch whisky Johnnie Walker, The Singleton, Talisker, Mortlach, Bulleit bourbon, Captain Morgan rum and Baileys liqueur. The company in March 2022 noted that logistics problems do not allow uninterrupted business in the country.

The well-being of employees, customers and consumers are our top priorities. We continue to strive to keep our business running smoothly. Taking into account the state of global supply chains, we decided to temporarily suspend the shipment of finished products to our customers in Russia and focus on supporting our employees, Diageo said at the time.[1]

2017: Using SAP Software Without Purchasing Licenses

In February 2017, a point was put in the proceedings between Diageo and SAP. The German company accused the world's largest producer of expensive alcohol of using the software without acquiring licenses.

In 2004, Diageo introduced the SAP Business Suite enterprise resource planning system, which is used to manage production, product inventory and supply chains, as well as to form financial statements and control employees.

SAP sues Diageo, accusing alcohol maker of using software for free

Each year, Diageo paid for licenses and support services based on the number of named users registered with the system.

In 2011-2012, the British company launched Salesforce.com the Connect applications on the platform (allows customers to order online instead of calling the call center) and Gen2 (provides sales managers with access to client data using the iPad). Both solutions are connected to and DBMS Oracle also used data from the ERP SAP system through the component. SAP Process Integration

SAP sued Diageo in October 2015, alleging dissatisfaction with such free integration and the need to purchase licenses for each registered Diageo user (about 5,800 customers).

In February 2017, a British court sided with SAP, issuing a verdict according to which Diageo should use named licenses for customers and staff to access the SAP system, even if they do not use this software directly, but through Salesforce programs. You must pay extra for SAP Process Integration.

I deny Diageo's claim that SAP Process Integration is an intermediary license to access a suite of SAP applications and databases. There is a separate pricing scheme for SAP Process Integration elements, which applies even where there are named licenses for SAP ERP. In this regard, it is clear that this is an add-on, not an alternative to authorization under a named user license, "said Judge Justice O'Farrell.

According to her, the use of Gen2 by sales representatives is not allowed, and SAP is entitled to receive additional payments for licenses and support services.

How much Diageo was supposed to pay SAP, the judge did not disclose. The German company estimated the damage at 54.5 million pounds sterling (about $76 million at the exchange rate at the time of filing the claim), and also demanded 4 million pounds sterling in interest, legal costs and compensation for the support services provided. This is a large amount, given that between May 2004 and November 2015, Diageo paid SAP a total of £50m to £61m, court documents said.

Experts warn that this court decision could set a precedent for future similar cases. Companies that have integrated their customer systems with SAP databases may be required to make royalties for each customer using their online store.

If some SAP systems are indirectly involved, even by chance, from anywhere in the world, then in this case all sorts of hidden costs are assumed, "said Robin Fry, director of the consulting company Cerno Professional Services, specializing in licensing issues.

SAP was quick to reassure customers about the additional licence fees. In May 2017, at Sapphire's annual conference, the company stated that indirect static access to SAP data is read-only, not modified, and is not related to real-time queries and does not require processing in the SAP system. This static data access was included in the license price.^[2]

2012

£1.2bn purchase of Indian whisky maker United Spirits

In November 2012, Diageo announced the purchase of Indian whiskey maker United Spirits for £1.285 billion. Thus, Diageo intends to break into the Indian market, where the number of middle-class consumers is growing^[3] the^[3].

Diageo will first acquire a 27.4 per cent stake in United Spirits for £660 million and then make a new offer to buy a further 26 per cent. As a result, the British company will receive a controlling stake. The purchase will be made at the expense of Diageo's own funds, as well as borrowing.

Despite the takeover, the current head of United Spirits, Vijay Mallia, will remain in his position as CEO.

According to Diageo CEO Paul Walsh, the combination of United Spirits' successful business and Diageo's capabilities as the world's leading producer of expensive drinks will allow the company to maintain its best position in the Indian alcohol industry.

Kashasa Ypioca Moves to Diageo Portfolio

In May 2012, Diageo acquired the rights to the Ypioca kashasa.

2011: Purchase of Turkish liqueur maker Mey Icki

In February 2011, Diageo acquired Turkish liquor manufacturer Mey Icki.

1997: Grand Metropolitan merge with Guinness to form Diageo

In 1997, Grand Metropolitan merged with Guinness to create Diageo.

1987: Heublein sold to Grand Metropolitan

In 1987, Heublein and all its alcoholic brands were purchased by Grand Metropolitan.

1968

Actor Buster Keaton in an advertisement for Smirnoff vodka. UNITED STATES. 1960s.

1966

Smirnoff vodka. An advertisement in Playboy magazine in 1966.

1938: Heublein buys rights to Smirnoff vodka in North America

In 1933, Vladimir Smirnov licensed Rudolf Kunnet (as well as he emigrated from Russia) to produce Smirnoff vodka in North America. However, business in America was not as successful as Kunnet hoped. In 1938, Kunnet could not afford to pay for the necessary commercial licenses and contacted John Martin, president of Heublein, who agreed to buy the rights to Smirnoff.

Notes