INGLESE: The company history and modern times

INGLESE:  The company history and modern times

Arthur Guinness, born in 1725 in Co. Kildare, was the son of Richard Guinness, among whose duties was to supervise the brewing of beer for the workers on the estate. As Arthur grew up, he helped his father with his work.

When, in 1752, Arthur was left an inheritance of £100, he used the money to start his own brewery in Leixlip with his brother Richard. Just three years later, he handed the business over to Richard and went to Dublin with a view to starting a brewery of his own.

On December 31^st 1759, Arthur Guinness signed a lease on the St. James's Gate Brewery for 9,000 years at £45 per annum. The brewery he bought was small, disused and ill-equipped. So began the Guinness brewing legend. Ever since, the St. James's Gate Brewery has been at the heart of the success of Guinness.

Growth and expansion

By the 1770s the now famous Guinness porter was being brewed. In 1799 the decision was made to concentrate solely on brewing extra stout porter instead of the weaker ale that was then being produced.

The late eighteenth century marked a period of rapid growth, with the first major expansion of the brewery taking place. In 1803 Arthur Guinness died, and his son Arthur Guinness II took over.

By 1833 St. James's Gate Brewery had become the largest brewery in Ireland and in 1862 the Guinness trademark label was introduced.

Under Edward Cecil Guinness, in 1873, the size of the brewery doubled and spread north to bound the river Liffey.

Largest brewery in the world

By 1886, Guinness had become the largest brewery in the world, with an annual production of 1.2 million barrels. An illustration of the global profile that Guinness now had was the appointment of Overseas Travellers in the 1890s.

These were international quality controllers. They travelled abroad to ensure that the Guinness sold outside of Ireland was of the same high quality as that found at home.

This commitment to quality has been a cornerstone of the brewing process up to the present day.

Expansion

The beginning of the 20th century saw further expansion and at its peak more than 4,000 people were directly employed at St. James's Gate. By 1914, output had reached almost three million barrels annually.

Guinness also grew stronger as a truly global brand. Foreign Extra Stout, a variant of the original Guinness stout, fortified specifically for export, was shipped - and later brewed - in countries across the world. Foreign Extra Stout now accounts for over 40% of the Guinness sold worldwide.

With the launch of draught Guinness as it is now known, in the 1950s, Guinness further increased in popularity and its distribution widened.

Modern times

Five are now Guinness's most important markets:

Great Britain

Nigeria

Ireland

United States

Cameroon

Guinness is the world's leading stout, sold in more than 150 countries worldwide. Despite being a hugely successful brand, in Britain and Ireland, Guinness sales are falling, mainly because wine has become so popular. In 2006 Guinness sales in Ireland were down 7%. In Ireland, with 40% of the population under 25, Guinness also has an image problem as a bit of a grandfather's drink, much heavier than easy-drinking fizzy lagers. Nevertheless, Guinness is successfully opening up new markets. Guinness's top market is still Britain, but in second place is no longer Ireland, but Nigeria - where barley is replaced by maize and sorghum. In fact, Lagos, and not Dublin, is home to the world's largest Guinness brewery.

The start of Diageo

In May 1997 Guinness and Grand Metropolitan merged to form a new company, tentatively called GMG Brands. Seven months later the £12 billion ($19 billion) merger, the largest in U.K. history to that point, had been finalized, but not before a five-month battle with LVMH had ended peacefully. LVMH agreed to drop its opposition to the merger in return for receipt of £250 million upon the merger's consummation; the merged entity would retain Guinness's 34 percent stake in LVMH's Moët Hennessy chamne and cognac division, while LVMH would hold about 11 percent of the new company. Guinness and GrandMet also had to agree to divest the Dewar's Scotch whiskey and Bombay gin brands in order to gain approval from U.S. and European regulators. In late March 1998, the merged company, now named Diageo plc, announced an agreement to sell these brands to Bermuda-based Bacardi Ltd. for £1.15 billion ($1.94 billion) in cash. The name 'Diageo' had been derived from the Latin 'dia' (day) and the Greek 'geo' (world). The company explained that the name was supposed to convey that 'every day, all around the world, millions of people enjoy our brands.'

Diageo was centred on brands. At its founding, the company had four main businesses: United Distillers & Vintners (UDV), Pillsbury, Guinness, and Burger King. UDV (which generated about 45 percent of overall revenue) was a combination of the numerous leading liquor brands of Guinness's United Distillers unit and GrandMet's International Distillers & Vintners unit; UDV became the world's number one distiller upon its formation. Pillsbury (29 percent) retained GrandMet's four packaged-food megabrands: Pillsbury, Green Giant, Häagen-Dazs, and Old El Paso. Guinness (18 percent) included such stellar brewing brands as Guinness, Harp, Kilkenny, Cruzcampo of Spain, Red Stripe, and Kaliber. Burger King (8 percent) trailed only McDonald's among the world's hamburger chains. Bull and Greener were named co-chairmen of Diageo, while McGrath became Diageo's first chief executive.

Refocusing on Premium Drinks

By 2000 Diageo had endured three years of criticism from analysts unimpressed by the outcome of the Grand Met-Guinness merger. The company's sales were sluggish and its share price was sinking. A new management team took over that year, led by Lord Blyth, chairman of the Boots Company PLC, who was named non-executive chairman, and Paul Walsh, the new chief executive, who had previously headed Pillsbury. Walsh immediately began shaking up the firm. UDV and Guinness were combined into a single beverage division, Guinness UDV. More dramatically, Walsh narrowed the company to a single focus: premium drinks. In mid-2000 Diageo announced s to divest both Pillsbury and Burger King. Pillsbury was ultimately sold to General Mills, Inc. in October 2001 for about $6 billion in stock and the assumption of $5.1 billion in debt. Diageo emerged with a 33 percent stake in General Mills, but by late 2005 Diageo had completely divested this holding. In December 2002, meantime, Diageo completed its exit from the food industry with the sale of Burger King to a consortium led by Texas Pacific Group Inc. in a £940 million ($1.5 billion) deal. Also divested during this period was the Guinness World Records business, which was sold in July 2001 to Gullane Entertainment for £45.5 million ($64.5 million).

Diageo shuttered its Park Royal brewery in London in June 2005, transferring its production of Guinness for the U.K. market to its St. James's Gate brewery in Dublin.

Principal Subsidiaries:

Diageo Ireland; Diageo Great Britain Limited; Diageo Scotland Limited; Diageo Brands BV (Netherlands); Diageo North America, Inc. (U.S.A.); Diageo Capital plc; Diageo Finance plc; Diageo Capital BV (Netherlands); Diageo Finance BV (Netherlands); Diageo Investment Corporation (U.S.A.).

Principal Divisions:

Diageo Europe; Diageo International; Diageo North America.

Principal Competitors:

Pernod Ricard SA; Bacardi & Company Limited; Brown-Forman Corporation; Fortune Brands, Inc.; Heineken N.V.; SABMiller plc; Molson Coors Brewing Company; Carlsberg A/S.

• Public Company
• Incorporated:
• Employees:
• Sales: £9.04 billion ($16.18 billion) (2005)
• Stock Exchanges: London New York
• Ticker Symbols: DGE (London); DEO (New York)
• NAIC: 312120 Breweries; 312130 Wineries; 312140 Distilleries

Key ures 2007:

- Marketing spend increased by a further 8%

- Operating profit includes a gain of £40 million in respect

of exceptional items

- Return on invested capital increased 70 basis points to 14.4%

- Strong free cash flow of £1,365 million

- £2.3 billion returned to shareholders: £858 million

in dividends and £1,400 million of share buybacks

Avendo parlato della nascita e dell'evoluzione dell'impresa, analizziamo ora nel dettaglio un fenomeno molto importante che la Guinness ha vissuto più volte durante questo percorso