Diageo’s positive forecast for fiscal 2021 could be marred by second COVID-19 wave

Following today’s news (28 September) that spirits manufacturer Diageo’s US business has outperformed expectations at the start of its fiscal year 2021;

Carmen Bryan, Consumer Analyst at GlobalData, a leading data and analytics company, offers her view:

“Diageo is a model example of agile marketing, proven by how the company reinvented its business model to align with new consumer trends when its 2020 H2 sales plummeted. These expansions have given the company a resilient start to the new fiscal year, however, if the experiences of much of Europe are anything to go by, the new forecasts could be in jeopardy as the threat of a second wave looms over the US.

“According to GlobalData’s latest COVID-19 recovery tracker, published September 23, nearly one in four US consumers are feeling anxious or stressed. Combine this with the 63% of millennials who noted that their purchasing choices are always or often influenced by changes in the world such as social or economic movements – 21 percentile points higher than the country’s average (42%) – and you can clearly see that US consumer sentiment is sensitive to change, making for a volatile market going forwards. Foodservice premises must build trust and reassure patrons that they are maintaining safe practices, which in turn will greatly benefit spirits suppliers such as Diageo.

“While the public continues to receive mixed messages from the government and news outlets on best COVID-19 safety practices, it is critical that brands such as Diageo stay connected with consumers and monitor ongoing trends. Should pubs and bars close again, spirits manufacturers must realign with online channels, which proved a strong safeguard against falling sales in the past few months. Moreover, GlobalData’s survey found that *35% of US consumers are buying more alcoholic drinks online since the start of the outbreak. Diageo and similar brands should continue to focus their efforts in part on home consumption, offering ‘bar experiences’ such as RTD cocktails through accessible channels such as apps and delivery platforms.”

*“Slightly more”, “significantly more”, and “stockpiling” responses combined

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