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Shaping our industry's future

The following speech – Shaping Our Industry's Future: A Call To Action – was given by Diageo CEO Ivan Menezes on March 20 at the Impact Marketing Seminar in New York.

"Ours is an industry which has created jobs and wealth throughout the value chain – not just for our colleagues and investors – but for our suppliers and partners and across thousands of communities. And the long term future for our industry is bright too. The demographics in many markets are hugely favorable with hundreds of millions of people coming into the emerging middle class. The premium drinks sector is in growth and consumers are trading up. If you rank consumer goods companies by operating margin, seven of the top 10 are beverage alcohol companies. And if you look at the return on invested capital, the returns are equally strong. But our commitment to commercial success is also matched by our commitment to preventing misuse of alcohol and tackling irresponsible consumption of our products.

I’m proud of the approach we have taken as an industry – over many years – to promote responsibility and to help tackle irresponsible and under-age drinking. It’s a responsibility we take seriously. We always have and we always will.

Now, let me present a clip from Margaret Chan’s speech: “It is not just Big Tobacco anymore. Public health must also contend with Big Food, Big Soda, and Big Alcohol. All of these industries fear regulation, and protect themselves by using the same tactics. When industry is involved in policy-making, rest assured that the most effective control measures will be downplayed or left out entirely. This, too, is well documented, and dangerous.”

The words we’ve just heard were written by the Director General of the World Health Organization. They are provocative. I’m sure you agree. They were chosen very deliberately – both by her, and by me. They are a troubling perspective – at least in some quarters – about our industry.

Do I think the words and the sentiment behind them are fair? No. But that doesn’t really matter. It’s her view. I respect Margaret Chan. I respect her work. And I respect the sincerity with which she holds those convictions.
We may not agree with all of the analysis of the causes of alcohol misuse, or with all of the solutions proposed. But we all agree that some of our consumers misuse alcohol, that this is a real problem and needs to be tackled.

We are all a part of the alcohol industry – and proud to be. In fact, I would say I am passionate about this industry and excited about its prospects. We are custodians of amazing brands which are part of the fabric of many positive social occasions. But we know that we face sentiment at the WHO secretariat, among some NGOs and in some governments which is negative. So it is the right thing for us to do to more, to engage positively and constructively in the debate – to step up with more meaningful solutions.

Doing so is good for our business, good for our communities and good for our consumers. And it’s quite simply the right thing to do. Some public health groups argue that our point of view should not be heard, that we should not be allowed to market our products, that our responsible drinking programs are mere window dressing.

In short, they want to prevent us having any role in the formation of national and international public health policies. But the industry must have a seat at the table. We have valuable expertise and a legitimate point of view and need to fight for our right to participate. We are an industry which has been committed to tackling alcohol misuse for decades. Promoting responsible drinking is central to who we are. Just look at this ad. Joseph E. Seagram and Sons, one of Diageo’s predecessor companies, ran responsible drinking campaigns as early as the 1930s. This particular ad from 1938 urged fathers to set a responsible example for their sons. We should feel proud of the work we do – and have always done – to tackle alcohol harm.

Sometimes we face hostility. Just look at some of the coverage from the media over the last 6 months. We may find it unfair, but the reality is, it’s there in black and white, day in and day out. So let me be clear where I stand with everyone here today. We have a great track record driving solutions to tackling alcohol misuse, but we can DO more, THINK bigger and BE better.

I want to do more to listen to, and engage with, all those who have a genuine voice in the debate around alcohol’s role in society. Even where we don’t agree with them, in fact especially where we don’t agree with them. In the end, we all want the same outcome – to reduce alcohol misuse.

For all of us in the room, addressing misuse is central to our businesses because we understand that the consequences of the harmful use of alcohol: damage to our communities and our consumers.

We all know partnerships are crucial. One of the first things I did when I moved to the UK to take up my post as CEO of Diageo was to go on a night-time visit with the police to look at the challenges of irresponsible drinking in two different communities in London – drunken and sometimes rowdy behavior on the streets. Some of what I saw shocked me. But what I also saw was different organisations – bar owners, local government, law enforcement and volunteer groups, including a wonderful organization called the Street Pastors – coming together and having a really positive impact. It was extremely impressive and I am proud of the role that Diageo has in supporting partnerships such as this. It’s this same partnership mindset which is characterising the industry’s approach globally.

In October 2012, 13 leading global alcohol producers, Diageo included, came together to launch new commitments to reduce harmful drinking. They represent the largest ever global industry-wide initiative to address harmful drinking.

These commitments provide a coordinated industry response to support governments in reducing alcohol misuse by 10% -a goal set by all WHO member states as part of the effort to reduce non-communicable diseases 25% by 2025. And let’s remember that the WHO is made up of 193 member states and each country has a voice, so we need to be active across the world in all of our major markets.

Our future reputation hinges on delivering against these commitments with our fellow signatory companies, the broader industry and stakeholders. We need to work together all over the world to be successful; no single company or organization can do it alone.

The commitments will be implemented over five years from 2013. They cover work in five crucial areas:

• Reducing underage drinking
• Strengthening and expanding marketing codes
• Providing consumer information and responsible product innovation
• Reducing drinking and driving
• Enlisting the support of retailers to reduce harmful drinking

The first annual report on progress will be issued in the next quarter. And we are not grading our own homework, this will be a public report audited by KPMG. Agreeing them was an extremely important first step. But that’s all it was – we now need to drive their delivery and we want, and need, to do that with everyone in this industry. At Diageo we have tried to work with others to make a difference in reducing alcohol misuse.

Here in the US, I would like to give credit and thanks to the terrific work of The Century Council and DISCUS. I am also pleased with how suppliers, distributors and retailers have pulled together to support the Federal Trade Commission’s ‘We Don’t Serve Teens’ campaign.

As many of you know, Diageo spends 20% of our broadcast advertising budget on responsible drinking messages. Globally, we have invested behind our sponsorship of Vodafone McLaren Mercedes F1 team as a means of promoting responsibility. It gives us a stylish and impactful platform where we can speak credibly about the importance of staying in control while driving.  Our ‘Join the Pact’ campaign has collected nearly one million commitments from consumers around the world to never drink and drive and we want to gather one million more, which we will honour by releasing one million kilometers of rides home across the globe.

In addition to F1, we support over 300 initiatives in markets across the globe to fight alcohol misuse. These range from support of ‘Screening and Brief Intervention’ – a highly effective approach used in health care settings and universities to reduce heavy drinking – to ‘Model Cities’, a new project in Mexico where we work with local retailers, educators, police and government to blanket a city with prevention efforts.

And we are most definitely not alone in our efforts. Our colleagues in the industry are doing great work. Pernod Ricard has done a fantastic job working with students throughout Europe to address excessive
drinking with their Responsible Party toolkit. AB InBev’s ‘Family Talk About Drinking’ program encourages open, honest communication between parents and children. Heineken has just launched a great campaign that encourages young adults to make moderate drinking choices – showing that having fun and drinking in moderation are not mutually exclusive. Bacardi’s global flagship responsible drinking program, Champions Drink Responsibly is now in its fifth year. They use World tennis champion Rafa Nadal as their Global Social Responsibility Ambassador and champion. SAB Miller has established Alcohol Evidence Centres in South Africa in conjunction with local law enforcement to breath-test drivers and help increase the prosecution rates of those arrested for drinking and driving. And here in the US, Brown-Forman has lent its support to the Ad Council’s Drunk Driving Prevention Campaign to help change attitudes to drunk driving. While Beam has help fund the National Center for DWI Courts to reduce the number of repeat drunk drivers. There are many others I could mention.

All of this great work underscores what we can achieve.

In the US underage drinking is declining and teen fatalities from drunk driving as down 77%! And the significant improvements in underage drinking and alcohol-related fatalities are mirrored in other countries as well:

• Road deaths attributable to alcohol have dropped 34% in the EU since 2001
• In the UK, binge drinking among 16-24 year olds has fallen 32% since 2005
• In Ireland, indicators for youth drinking show that past 30 day drinking has fallen 19% and binge drinking 7% from 2005 to 2011
• And in Japan, the percentage of High School students who had a drinking experience in the last 30 days dropped from 50% in 1996 to 14% in 2012

But these trends are not consistent around the world. We still have work to do. We need to make sure the trajectory remains positive in these markets and improves elsewhere where we are not seeing the right trends.

We need to do this through programs that move the needle. And very importantly we need to continue to enlist partners who will help us build insights and scale.

So, I am committing Diageo to do more, and I know others want to do more too. Here is what I propose we do together:

• More listening and engagement by us with those who have a voice – from governments to NGOs. Let’s invite our critics to meet with us to find middle ground. Dialogue will help us find solutions to common concerns.
• More partnerships – with governments, the medical community, educators, parents, law enforcement and sport franchises. Every one of our programs should have a partner to widen its reach.
• More and better communications – this means telling our story, but also being transparent about the issues and our desire to be part of the solution.
• And finally, more scale and impact from our programs. I believe that in some cases we can join forces to reach more people with greater outcomes.

This industry – every tier, supplier, distributor and retailer, in every country in the world – is part of the solution. We know that we have to challenge ourselves long before we are challenged by others. We should always be our own sternest critics.

We have an amazing industry, with new innovations and iconic brands that date back hundreds of years.

We need to ensure the long-term sustainability of this industry. We are the custodians of our future; the masters of our own destiny. Stepping up our game, doing more and making a tangible difference in alcohol-related harm is not only smart business, it is the right thing to do. It will ensure our businesses and ours brands endure."

25 March 2014 - Felicity Murray The Drinks Report, editor