Diageo is pinning its hopes on a boom in sales of its non-alcoholic Guinness Zero to revive investor confidence. The drinks giant plans to roll out the alcohol-free variant in every pub in the UK that has the black stuff on draught.
The FTSE 100 firm will this week update investors after the dramatic exit of its boss Debra Crew in July and as it battles to reverse a slump in demand as more drinkers opt to cut down or abandon alcohol.
Diageo, which also owns Johnnie Walker whisky and Smirnoff vodka, has pledged to drive sales through the growing trend for no and low alcohol drinks. Interim boss Nik Jhangiani insists the company can cash in on drinking in ‘moderation’ even though Diageo’s shares have slumped by nearly a third this year.
Guinness Zero is key to the revival as, after a debut in pubs in 2022, it has become the UK’s best-selling alcohol-free beer. It comes as the Irish brewing dynasty finds itself in the spotlight after Netflix released drama House Of Guinness, starring Louis Partridge, a month ago.
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The drink now accounts for 14 per cent of all the beer brewed at the brand’s historic St James’s Gate Brewery in Dublin. It is so popular Diageo is preparing to move some of its non-beer brands out of the brewery to free up space.
Britain is to become the first market outside Ireland where the booze-free drink can be poured on draught after a trial in a few London pubs. In most it is only available in cans.
Diageo said the rollout would begin on approval from the UK’s Food Standards Agency.
Barry O’Sullivan, managing director for Great Britain, told The Mail on Sunday: ‘It will be a question of if, not when, we get that green light.’
He said it would boost pubs as more drinkers adopt habits such as ‘zebra striping’ – alternating between alcoholic and non-alcoholic drinks.
Having the alcohol-free variant on tap also makes non-drinkers less self-conscious when ordering, said O’Sullivan, adding: ‘You don’t have to explain what you’re doing.’
Diageo sells £50 million of Guinness Zero in shops and online supermarkets a year – a fifth of its total sales outside pubs and bars, according to researcher NIQ. The alcoholic version accounts for one of every nine pints sold in Britain.
But Steve Clayton, at broker Hargreaves Lansdown, said there was still ‘understandable nervousness’ ahead of the update on Thursday with investors still waiting to see ‘green shoots’. He expected trading ‘to be tough’ especially in China and the US amid economic gloom there.
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