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11 March 2013 | Anna Reynolds
Diageo is restructuring its global supply chain and procurement function as emerging markets account for a bigger percentage of its business.
By February 2016, the manufacturer of brands including Johnnie Walker whisky and Smirnoff vodka aims to source 50 per cent of its business from emerging markets. This figure currently stands at 42 per cent.
The move will reduce regional operations and make annual savings of £60 million, while enabling the company to respond to the needs of its 21 key markets.
Savings from reducing regional supply organisations will be around £60 million per year and are expected to be achieved in three years. The restructure is estimated to cost £100 million.
A spokesperson for Diageo told SM the recent acquisitions of local brands in China, along with Ypióca Group in Brazil and Turkish spirits business Mey Içki, have changed the way the business operates.
The 21 key markets are countries or clusters of countries in North America, Western Europe, Africa, Latin America, Asia Pacific, the Caribbean and Eastern Europe.
In 2011 a new model was introduced, creating local markets and regional structures. In the upcoming reorganisation, local supply chains will be transferred to the key markets, each of which will be overseen by a managing director. “This gives more control of countries’ day-to-day running, including marketing and sales, to the MD and our manufacturing is in line with that,” the spokesperson said.