SWOT Analysis With Example: Diageo PLC

The following is a S.W.O.T Analysis of the Diageo beverage company. Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis gives a comprehensive look at the company which highlights their advantages and disadvantages as a business as well as figuring out where the company is currently positioned in terms of market share, target market etc.

Strengths:

• Recognised worldwide brand.

• Large marketing budget and resource allocation.

• Substantial product portfolio.

• High quality products.

• Great public relations image.

• Established dominant market share (especially in Ireland and Nigeria with Guinness)

• Strong share and distribution network.

Weaknesses:

• Prioritises its better known products at the expense of Diageo’s lesser known products.

• Stiff competition globally hence Diageo has a limited market share.

• Diageo has not fully tapped into emerging markets.

• Large gap in sales with its wine business in comparison to its spirit business.

• The company’s portfolio is incomplete with having no market share in some markets such as the Australian wine market.

Opportunities:

• The UK wine market is proving to be more resilient against private label wines. There is potential for Diageo to expand into this market.

• Growing demand for red wine products. Red wine sales are likely to continue to benefit from medical and scientific research findings indicating that it offers health benefits to regular, moderate drinkers.

• Growth in the European market. There is considerable growth potential in Norway and Ireland. Although sales in these countries are growing, they are not yet at the same level as other Western countries.

Threats:

• Continued fears about the social impact of alcohol abuse may lead to the reduction of Diageo’s market as consumers are encouraged to turn away from alcohol.

• Some European countries, such as France, have brought in new legislation banning alcohol sponsorship of sporting events.

• New proposed Government legislation towards minimum alcohol pricing and packaging (similar to the anti-smoking campaign packaging).

• Any changes in excise tax levels in any of its markets could have a negative impact on the company’s margins.

• As a British company, with significant overseas sales, the company is at the mercy of fluctuating exchange rates. Brexit may lead to unforeseen drop in sales.

• There is increasing competition from small niche market beer and wine distributors.

• Greater emphasis is being placed on anti-drink/driving campaigns in some traditional wine-drinking countries, such as Spain, which is a key market for Diageo.