Diageo targets £60m savings in supply chain

DIAGEO, the world’s biggest spirits group, said yesterday it was targeting annual cost savings of £60m through a review of its global supply operations.

The firm said responsibility for local operations will be transferred to 21 key markets and regional structures will be reduced.

It said the savings are expected to be achieved in three years at an overall cost of about £100m.

The FTSE-100 listed firm already makes 43 per cent of its sales in emerging markets, and said in January it will hit its target of 50 per cent during 2013 – two years earlier than initially planned.

The maker of Smirnoff vodka is currently shifting its reporting structure to group high-growth areas, such as Africa, eastern Europe and Turkey together.

Western Europe, which has been harder hit by economic woes in countries including Spain, Portugal and Italy, will be reported separately, it said.

Diageo said the planned changes reflected its “increasing presence in new faster growth markets”.

The firm has been on an acquisition spree across emerging markets in recent years, snapping up Turkey’s Mey Içki in February 2011, and in June upped its stake in both China’s Quanxing brewery, which makes the country’s popular ShuiJingFang spirit, and in Guatemala’s upmarket rum producer Zacapa.

It is currently awaiting final approval from regulators on a £1.3bn deal with India’s United Spirits, to take a majority holding in the owner of Glasgow distiller Whyte & Mackay.