Diageo confirms ABV tweaks

24 November, 2014 by

By James Atkinson

Diageo Australia has confirmed it has reduced the ABV on Captain Morgan, Smirnoff flavours and Ruski RTDs over the past few months.

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Independent retailers say there has been no mention of margin improvement for them under the new regime, which delivers obvious excise benefits to Diageo. 

However a Diageo spokesperson told TheShout the reduction of Captain Morgan Original Spiced Gold ABV from 37.5 per cent to 35 per cent in August was to “bring it in line with the rest of the world”. 

“This has enabled us to significantly increase production for the Australian market to keep pace with the considerable growth we have seen in Captain Morgan Original Spiced Gold over the last 12 months (55.4 per cent MAT – Aztec, October 2014),” she said.

Ruski meanwhile dropped from 4.5 per cent to 4 per cent ABV, the spokesperson said, “while at the same time absorbing the latest CPI increase so we could maintain competitive consumer pricing”.

And the recent relaunch of the Smirnoff flavour range brought with it a “new, more accessible flavour profile” based on a reduced ABV of 30 per cent, down from 37.5 per cent, she added.

“We have also reduced the price of Smirnoff flavours to $32.99 (on promo) to make them more competitive with other lower strength, flavoured vodkas on the market,” the spokesperson said.

She would not comment on Diageo’s margin gain, which independents argue should be fairly shared with all customers, even if they don’t wield the bargaining power of Coles and Woolworths.

“With respect to margins, margins are negotiated with customers on an individual basis and are commercial in confidence,” the spokesperson said.