Crown Royal Aids Diageo, Battle with Johnnie Walker
How can a company have a successful product and a struggling flagship at the same time? This is the situation facing Diageo in their 2025 preliminary results. While one of their whiskies is doing well, their main category, Scotch, is declining.
The performance of Diageo's whisky portfolio shows a mixed picture:
- Scotch (22% of portfolio): Volume down 2%, Sales down 4%
- US Whiskey (2% of portfolio): Volume down 8%, Sales down 9%
- Canadian Whisky (7% of portfolio): Volume up 5%, Sales up 3%
- International Whisky (4% of portfolio): Volume up 7%, Sales up 10%
The success story for Diageo in 2025 has been Crown Royal, a Canadian whisky brand. Crown Royal Blackberry has been particularly successful, attracting new whisky drinkers and contributing to the brand's growth.
In contrast, Johnnie Walker, another major player for Diageo, has focused on premium offerings targeted at existing whisky drinkers. The comparison between Crown Royal and Johnnie Walker highlights the importance of making the switch to whisky easy for consumers, especially in a challenging economic environment.
Nik Jhangiani, Interim Chief Executive of Diageo, acknowledged areas of progress and success, particularly mentioning brands like Don Julio, Guinness, and Crown Royal Blackberry. However, there is recognition of the need for improvement across the broader portfolio.
The challenges faced by Diageo are not unique, as the spirits and luxury markets have been experiencing declines due to changing consumer behavior influenced by inflation and economic instability. The guidance for 2026 suggests that similar trends are expected to continue.
Looking ahead, the key issue for the scotch industry may lie in adapting to changing consumer preferences and market dynamics. The time required to produce whisky presents a challenge in responding quickly to evolving consumer demands.
Mark Littler, an independent whisky consultant, emphasizes the importance of understanding market trends and adapting strategies accordingly. With his expertise and experience, he provides valuable insights and guidance to clients navigating the whisky market landscape.