The head of Diageo has warned shortages of materials such as glass bottles are putting extra pressure on business but that rising costs will not hamper the post-coronavirus recovery.
Speaking to Just Drinks today, CEO Ivan Menezes admitted the group is facing sourcing constraints on some types of bottles. He said his team is working “very hard” with Diageo’s suppliers to manage the situation.
“Clearly, inflationary pressure is higher, so we are looking at how we manage that,” he continued. “We believe we can take inflation and handle it in a way where we can continue to build and grow the brands.”
The CEO, who was speaking at the launch of the new Johnnie Walker visitor centre in Edinburgh, added that Diageo “will take some price” on the flagship blended Scotch, but that whisky has “natural” hedges that protect costs.
“A bottle of Johnnie Walker Black Label whiskey was laid down 12 years ago,” Menezes said. “We don’t get the same immediacy of cost impact as something that’s just manufactured entirely today.”
Other spirits CEOs have highlighted shortages, and issues with sourcing items such as glass bottles and labels. Meanwhile, a lack of haulage drivers has caused some transportation challenges. Speaking to Just Drinks this week, Anora Group CEO Pekka Tennilä said shortages are a “critical situation for sure”.