Diageo announces reorganisation and shake up

Diageo, the largest drinks company in the world, has announced a major organisational shake up which results in two senior executives leaving and power being devolved to regions.

Diageo CEO, Paul Walsh, said: “The regional variation in the pace of economic growth has created significant change and new opportunities for Diageo as a global business. In order to capture these opportunities Diageo has begun a review of our operating model across the business to ensure that all our resources are deployed closer to the market and in those areas where the potential for growth is greatest.”

From July 1, the company is changing its international division, creating two autonomous regions; Diageo Latin America and Caribbean and Diageo Africa. As a result International president, Stuart Fletcher, is leaving.

Walsh said that he has also decided to put Diageo’s sales and commercial organisations within its market companies. As a result, chief customer officer, Ron Anderson, is also leaving.

The transition is scheduled to be in place by the middle of Diageo’s 2012 financial year.

Walsh has already announced an employee consultation process on significant changes which are proposed to Diageo’s European organisation.

The changes are seen as a move by the drinks giant to decentralise and devolve as its near rival, Pernod Ricard, has achieved. It is also a shift away from traditional, mature markets such as Europe where future growth is, at best, limited. Walsh wants to maximise and concentrate resources in new emerging markets such as in Asia, central and South America.

Walsh once questioned: what was the point of selling scotch whisky such as Bell’s cheaply at Christmas in UK supermarkets when they could get premium prices for brands such as Old Parr and Buchanan’s in South America.