Diageo to cut jobs
The Irish are feeling bitter. Only hours after U.S. president Barak Obama did a publicity stunt for Guinness when he ordered a pint of the black stuff in a Moneygall pub on 23 May 2011, the drinks group was telling 400 of its 1,700 Irish staff to brace themselves for job losses. The Irish are not alone. The brunt of the job cuts is expected to be borne by workers in countries that have underperformed in recent years, including Spain.
The world’s biggest drinks firm employs 20,000 people world-wide, 5,000 of whom are in the UK. Following the February 2011 release of Diageo’s half-year results (six months to 31 December 2010), which saw sales in Europe down 3 percent but up 17 percent and 10 percent in Latin America and Africa respectively, employees had been aware that changes were imminent.
The group needs to divert more resources into growth markets while slashing costs in stagnant developed countries. This year emerging markets will be about 35 percent of Diageo’s total business while in the next three years they could easily climb to 50 percent according to CEO Paul Walsh.
Still, Irish media thought the timing of the announcement of the radical restructuring plans most unfortunate. The shake-up is the most dramatic since Diageo cut headcount as part of a GBP 120 million cost-cutting drive in 2009.
Diageo’s harsh jobs announcement brings the immediate economic realities facing Ireland firmly into focus.
Ireland is important for Diageo but the market is declining. The Guinness business in Ireland suffered an 8 percent fall in sales in the six months to December 2010.
By initiating a consultation process with staff now, Diageo hopes to be in a position to finalise the redundancies within a few months.
To recognise the importance of Latin America and Africa, which were previously lumped together as part of Diageo’s international region, Diageo’s CEO Paul Walsh said he was breaking them down into two distinct regions.
The two new regions Latin America & Caribbean and Africa will continue to be run by their existing presidents Randy Millian and Nick Blazquez, while the president of the international region Stuart Fletcher, who has been with Diageo for 25 years, will leave the company, it was reported.
