1. How would you explain the Guinness pricing strategy and the underlying assumptions about consumer behaviour when Diageo reports for 2005 that in the UK and Ireland the Guinness sales volume fell by 3 per cent, but a value growth of 4 per cent was achieved in both markets, mainly due to price increases?

2. Motivated by the success of this pricing strategy should Diageo continue to increase the price of Guinness?

3. In Choueke (2006) an anonymous beer retail buyer comments on Guinness’ decreasing sales volume:

4. What elements of the Guinness international marketing strategy would you focus on in order to increase both global sales volume, value and profits.

5. What do you think about the ‘1759’ marketing idea? Should Guinness introduce more special edition beer brands with a limited lifetime for special occasions or as a gift product?

The UK-based company Diageo was formed through the merger of Guinness and Grand Met in 1997. Since July 2000, the company has increasingly concentrated its focus on its premium drinks business, spinning off food operations such as Pillsbury Co., which was sold to General Mills in 2001, and Burger King, which was sold in 2002. In addition, Diageo bolstered its
position in the alcoholic drinks market when it acquired some of Seagram’s wine and spirits brands through a joint venture with Pernod Ricard in 2001.

Diageo is a global company, trading in over 180 markets, and owns a broad range of alcoholic beverage brands across spirits, wine and beer, including Smirnoff vodka and Smirnoff FABs, Johnnie Walker, Guinness, Baileys, J&B, Captain Morgan, Cuervo Tequila, Tanqueray and Gordon’s gins and Beaulieu Vineyard and Sterling Vineyards wines.
The company has one major beer brand: Guinness, which is the world’s leading stout brand. As a result of this status, Diageo Plc’s beer performance is heavily reliant on the fortunes of the Guinness brand.
The main question in the Guinness case is: should Diageo continue the ‘milking strategy’ by withdrawing marketing resources (lowering costs) and increasing revenues (by increasing the end-consumer prices)?