Marketing investment is a differentiator for Diageo

“Sustained and upweighted marketing investment” has been a key differentiator in Diageo’s financial performance when compared to its peers, according to the CFO of the drinks giant. 

“A&P is crucial to strengthening our brand equity and building resilience of our business for the long term,” Lavanya Chandrashekar told a Capital Markets Event. 

By the numbers 

• At $3.7bn, marketing expenditure in fiscal year ‘23 was up 60% on the 2017 figure. 
• Diageo’s share of the total beverage alcohol market has increased over that period: from 6.4% to 7.5% in North America; from 2.5% to 4.3% in Europe; and from 1.4% to 1.6% in Asia Pacific. 
• The global A&P reinvestment rate has climbed from 15.0% to 17.8% over that period. 
• The increase in the reinvestment rate is most pronounced in North America (20.0%, up from 15.4%); smaller increases took place in Europe (18.1%, up from 15.7%) and Asia Pacific (17.3%, up from 14.5%).

Delivering ROI

• Diageo reports spending its A&P budget more efficiently and increasing ROI.
• It has done that through the use of continually enhanced analytical tools such as Marketing Catalyst, the development of marketing effectiveness capabilities, and focusing more of A&P on media.
• Diageo intends to continue to upweight A&P investment with a focus on brands, categories and geographies where it expects to see the best ROI, including with Guinness, Baileys, Scotch, and tequila, as well as in India.

Key quote 

“We have gained considerable market share in all the regions where we upweighted A&P investment,” said CFO Lavanya Chandrashekar. “One key insight we have is that this A&P investment needs to be sustained over several years on a consistent basis to deliver the right outcomes.”

Sourced from Diageo