Diago Company Profile

by Corporate Watch / Companies, Food & Agriculture / 13 Jun 2005

Diageo is one of the biggest alcohol companies in the world, selling some of the most famous booze brands. It projects an image of itself as a clean, friendly and ethically-oriented company, glossing over a number of issues for which it has received criticism, such as undermining small-scale alcohol production, environmental damage, irresponsible marketing and political lobbying.

You can find our 2005 Company Profile of Diageo below.

Click here for details of Diageo’s latest profits and other financial results from the Bloomberg website.

There is also lots of useful information on Diageo’s website:

Click here for Diageo’s head office and other basic information.
Click here to find out which brands of spirits, beers and wine the company is selling.
Click here to find out who’s on Diageo’s board of directors.
Click here to download Diageo’s latest annual report and accounts.

For a more critical perspective on Diageo’s work try Powerbase’s company profile and the Alcohol Justice website.

If you want to do some digging into Diageo yourself, have a look at our Investigating Companies: A Do-It-Yourself Handbook.

If you would like your website added to this list, or have any other links or suggestions for this page, please get in touch.

DIAGEO PLC

A Corporate Profile

By Corporate Watch UK
Completed May 2005

1.The Company

‘Great people, great brands, holistic performance. That is Diageo.’

Name: Diageo plc www.diageo.com
Industry Areas: Alcoholic drinks

1.1 Summary

‘Every day, everywhere, people enjoy our brands. Together we celebrate life responsibly.’2

Diageo is a British multinational alcohol company, and one of the biggest alcohol companies in the world. It projects an image of itself as a clean, friendly and ethically-oriented company with a commitment to ‘corporate social responsibility’ (CSR).3 This includes both a professed concern with the harm alcohol can cause, and statements about what a great service the company is providing by producing such well-loved brands As a result, the company manages to gloss over a number of issues for which it has received criticism, such as:

undermining small-scale and independent alcohol production, both in the UK and in East Africa (see Corporate Crimes section of this profile);

assisting a shift towards casualisation of employment terms (see Corporate Crimes section of this profile);

Specific instances of environmental damage and irresponsible marketing (see Corporate Crimes section of this profile);

Diageo’s ‘ethical’ image has also allowed it a significant and increasing role in formulating government policy, both individually and through various alcohol industry bodies. Diageo’s networks of links with policy-makers should be especially highlighted (see Influence section of this profile).

Diageo promotes the idea that the major problem of alcohol harm is anti-social behaviour caused by binge-drinking. Many health experts dispute the industry assumption about alcohol harm, suggesting that liver failure caused by sustained drinking, account for the majority of people treated in Accident and Emergency for problems caused by alcohol (see Influence section of this profile).4

Diageo is to play a prominent role in the 2005 G8 Gleneagles Summit. Not only does it own the Gleneagles Hotel where the Summit will take place, it has made its presence felt in determining the policies of the G8. As one of Africa’s largest corporations, the company was part of the Business Contact Group of the Commission for Africa, which has essentially recommended a further opening up of markets in Africa to foreign investment (See Corporate Watch report, ‘Bringing the G8 Home: Corporate Involvement in and around the G8 in Scotland 2005).

1.2 Market share, importance

Diageo PLC is a British multinational alcohol company, selling alcohol in 180 countries, with a substantial presence in 30 countries.5 The company was created in 1997 by the merger of Guinness PLC with Grand Metropolitan PLC (GrandMet). At that stage it was a large multinational with interests in food as well as drink. Today, the company has shed most of its food interests to concentrate on alcohol, acquiring new spirit brands.

In September 2004, Diageo was the 11th largest publicly quoted company in the UK in terms of market capitalisation.6 The company’s turnover was £8.89 bn in 2004, with a total profit of £1.87 bn after exceptional items and tax.7 It is the largest spirits company in the world, with many of the leading spirits brands (see section on Products and Projects in this profile). As well as spirits, it is the manufacturer of Guinness, and has a 79% share of the stout sector in Europe.

Number of employees
Various figures are available as to the number of Diageo’s employees. These all suggest a reduction in number in the early 2000s, in part due to the company selling many of its non-alcohol divisions. YahooBiz suggests 38,955 employees in June 2003 (down from 62,124 in June 2002).8 Diageo’s own website suggests 32,392 for 2004,9 while elsewhere its ‘Corporate Responsibility Report’ suggests 23,720 in 2004 (as opposed to 24,561 in 2003).10 Whichever figure is accurate, they are employed in numerous small operations across the 180 countries Diageo works in.

1.3 History

Diageo PLC was formed with the merger of Guinness PLC, its primary parent company, with Grand Metropolitan PLC (GrandMet), a hotel chain with brewing interests, in 1997. Guinness had already absorbed a number of other companies, including Distillers PLC.

The history of the Guinness family company is celebrated as an important part in the history of Dublin. Arthur Guinness began brewing beer in 1759. He and his family had a reputation for philanthropic activities, which included providing parks and housing for Dublin’s poor in the 19th century, when governments relied on private beneficence to enable public services to exist. Diageo’s website celebrates this element of the history of Guinness and links it with its own current policy of social responsibility.11

Diageo’s parent companies were involved in a number of controversial and high-profile scandals in the second half of the twentieth century, tarnishing their reputations and perhaps providing an impetus to the re-naming and re-imaging the company underwent when the merger took place. In 1958 Distillers PLC marketed and distributed the drug thalidomide as a treatment for morning sickness, which was found to produce severe deformities in babies.12 In the 1986 ‘Guinness Affair,’ four people including Guinness’ former Chief Executive Ernest Saunders were convicted for illegally boosting share prices in a takeover bid (See the Corporate Crimes section of this profile for a more detailed account of these incidents).13

1.4 Current Strategy

Perhaps as a result of these incidents, the merger of 1997 brought about a re-branding and re-imaging of the company. The neutral-sounding and fairly meaningless name ‘Diageo PLC’ was chosen. Diageo explains this name as follows: ‘the name “Diageo” combines the Latin word for “day” and the Greek word for “earth”. Together, the two words mean celebrating life every day, everywhere.’14 This is captured in another of its catchphrases, ‘every day, everywhere, people are enjoying our brands.’15

The company indeed has had much to celebrate in recent years:

It has become a world leader in spirits production;

It has transformed its image through a huge PR campaign since 1997 and today is viewed as a clean and ethical company, and an enthusiastic proponent of corporate social responsibility (CSR) (see Influence section for more on this);

Quite possibly assisted by this PR programme, Diageo has also been successful in building a good relationship with the British government. An ethos of corporate responsibility and self-regulation, and a professed commitment to fighting the harm caused by alcohol, has allowed them, together with other companies and industry-wide organisations, to evade regulation and to be involved in government policy, which has in turn been shaped around the alcohol industry’s perception of alcohol and alcohol harm (alcohol as something that helps ‘celebrating life every day, everywhere.’16)

Diageo’s close ties with government, and strong interests in lobbying it, help make sense of its involvement in the G8 summit of July 2005, which will take place at Gleneagles, a hotel in Perthshire in Scotland owned by Diageo.

References:

1 Paul Walsh, Diageo CEO, The London Business School Summit on Global Leadership, 28.06.04

www.diageo.com/download%5C3000—R495.pdf – viewed 18.01.05

2 Diageo website: www.diageo.com/pageengine.asp?site_id=0&section_id=0&page_id=1015 – viewed 24.01.05

3 Diageo website, www.diageo.com
4 Jo Revill, ‘Mid-life drinkers who booze at home risk disease,’ The Observer, 23.01.05; http://observer.guardian.co.uk/politics/story/0,,1396586,00.html – viewed 07.02.05

5 Julia Finch, ‘Brewing a set of Standards,’ The Guardian 17.11.03, http://society.guardian.co.uk/givinglist/story/0,10994,1087122,00.html – viewed 25.01.05

6 Diageo Annual Report 2004, www.diageo.com/download%5C3000—R531.pdf p. 12 – viewed 24.01.05

7 Diageo Annual Report 2004, www.diageo.com/download%5C3000—R531.pdf – p.26 – viewed 24.01.05

8 http://uk.biz.yhoo.com/p/d/dge.1.html – viewed 02.01.05

9 http://finance.yahoo.com/q/pr?s=DEO – viewed 02.01.05

10 Diageo website www.diageo.com/download%5C3000—R532.pdf p.16 – viewed 02.01.2005

11 Diageo website

www.diageo.com/pageengine.asp?status_id=3000&page_id=22&site_id=3&section_id=24. – viewed 24.01.05

12 Diageo website www.diageo.com/pageengine.asp?menu_id=4&section_id=; Thalidomide UK, www.thalidomideuk.com/ – viewed 04.02.05

13 Mike Verdin, ‘Guinness Four fail in fight for acquittal,’ BBC News Online 21.12.01 http://news.bbc.co.uk/2/hi/business/1723136.stm – viewed 26.11.04

14 Diageo Careers, www.diageo-careers.com/WhoWeAre-DidYouKnow.asp+distiller+diageo&hl=en – viewed 26.11.04

15 Paul Walsh, Diageo CEO, The London Business School Summit on Global Leadership, 28.06.04

www.diageo.com/download%5C3000—R495.pdf – viewed 18.01.05

16 Diageo Careers, www.diageo-careers.com/WhoWeAre-DidYouKnow.asp+distiller+diageo&hl=en – viewed 26.11.04

Diageo: Who, where, how much?

Diageo is a UK-based multinational. Its principal brewing locations are in Ireland, the UK, Nigeria, Kenya, Jamaica, Malaysia and Cameroon, though it has bases and markets in 180 countries.

3.1 Diageo’s sites

Diageo’s Head Office: 8 Henrietta Place

London

W1G 0NB

Web: www.diageo.com Email: Company secretary; Investor Relations

Park Royal Site: Cumberland Avenue

Park Royal, London NW10 7RR

020 8965 7700

A major site for Diageo is its ‘prestige office development’ in Park Royal, West London, which is the head office for Diageo Great Britain, and until recently the site of brewing of Guinness for the UK, which is currently being moved to Ireland.1

Diageo Ireland: St James’s Gate, Dublin 8, Republic of Ireland

Tel: 01 643 5438/5683

Fax: 01 408 4814

Email: irish.register@diageo.com

Diageo Scotland ltd: Edinburgh Park

5 Lochside Way

Edinburgh

Lothian EH12 9DT

0131 519 2000

Diageo Great Britain: Lakeside Drive

London NW10 7HQ

For a full list of Diageo’s sites around the world, see the company’s website: www.diageo.com/careers/index.html

3.2 Company structure/ownership

Diageo Plc is incorporated as a public limited company in England and Wales. It is listed on the London Stock Exchange, as DGE, and on the New York Stock Exchange, as DEO.

Share value

For information about Diageo’s share value see the company’s Annual Review.2

According to its Annual Review, Diageo has a total shareholder return (the change in capital value over a period of time of a listed company) of 39%, which makes it rank 6th amongst its competitors.3

Shareholders

Capital Group Companies, Inc. are the only major shareholders, with 123 million ordinary shares (4.01% of the issued ordinary share capital) and no different voting rights. No other major shareholders are listed in Diageo’s Annual Report.

Annual turnover

Turnover in 2004 was £8.89 bn, with total profit £1.87 bn after exceptional items and tax.5

Operating profit before exceptional items and was £1.91 bn in 2004, down from £1.96 bn in 2003. 6

3.3 Company officers7

Executive Committee

Paul Walsh
Nicholas Rose
Stuart Fletcher
Jim Grover
Rob Malcolm
Ivan Menezes
Andrew Morgan
Tim Proctor
Gareth Williams

Board of Directors

Executive Committee

Paul Walsh Chief Executive Director Diageo’s CEO, Paul Walsh was listed by the Guardian as ranking 16th in the top twenty earners in Britain in 2003, with a salary of £3,457,909.8 He joined GrandMet in 1982 going on to become CEO of the Pillsbury Company in 1992. He was appointed to the Diageo Board in 1997 and became its CEO in 2000. His other appointments include Director of the Scotch Whisky Association, Non-Executive Director of Federal Express Corporation9, Non-Executive Director of Centrica PLC (amongst whose brands are British Gas and a number of other suppliers of gas, electricity and telecommunications)10, and Governor of Henley Management Centre.11

Paul Walsh on business in the UK: ‘The UK’s enterprise culture needs strengthening. We need those who seek to legislate, regulate, or otherwise influence opinion to see business as an inherently good thing, creating prosperity and the foundation on which the institutions of civil society can flourish. We need to change the culture of this country so that enterprise is celebrated.’12

Nicholas Rose Chief Financial Officer Nick Rose was Finance Director of UDV from 1997 and was appointed to the Diageo board in 1999. His other appointments include Non-Executive Director of Scottish Power13 and Non-Executive Director of Moet Hennessey SNC in France, which has joint ventures with Diageo.14

Other members of the Executive Committee are:

Stuart Fletcher – President of Diageo International;

Jim Grover – Global Business Support Director;

Rob Malcolm – President of Global Marketing Sales and Innovation (who has previously held positions at Proctor and Gamble);

Ivan Menezes – President of Diageo North America;

Andrew Morgan – President of Diageo Europe;

Tim Proctor – General Counsel (who has previously held positions with GlaxoWellcome);

Gareth Williams – Human Resources Director.

Board of Directors

Lord Blyth of Rowington Chair James Blyth was appointed as a Non-Executive Director in 1999 and chair in 2000. Lord Blyth’s other interests include arms sales: he ran the Defence Export Services Organisation (DESO), the UK Ministry of Defence’s arms export promotion department, from 1981 to 1985, to which he was seconded from Lucas Aerospace ltd, an arms manufacturer.15 DESO’s aims are to encourage arms sales by UK companies. It is a forum for arms industry executives to enter the heart of government, through secondments, in order to help the industry sell arms with direct government support.16 In addition Lord Blyth was Non-Executive Director of British Aerospace from 1990 to 1994.17 He has also been Chief Executive of the Plessey Company, and Chair of Boots Company PLC, which he left in 2000 having been Chief Executive since 1987. He is also currently Non-Executive Director of Anixter inc.18 and Vice-Chair of Greenhill inc., a global investment banking firm. Sir Anthony Greener, Chair of Diageo until 2000, announced Lord Blyth’s appointment congratulating ‘his experience with government,’ an ‘excellent qualification for the next chair of Diageo,’ pointing to the value to the company of a director with experience of working with government,19 given its priorities at that time.

Lord Hollick of Notting Hill Senior Non-Exeutive Director As well as being Senior Non-Executive Director of Diageo Clive Hollick has numerous interests. An active Labour Party member, he was a founding trustee of the Institute for Public Policy Research, a ‘centre-left’ think-tank that has been very influential on New Labour’s policies.20 His work at the IPPR included establishing and being a member of the IPPR’s Commission on Public Policy and British Business, which reported in 1997 and ‘was subsequently influential in setting Labour’s business policy for its first term.’21 The IPPR also organised a forum on responsible drinking in May 2004 which was hosted by Diageo and included speakers from Diageo as well as from government ministries, including Tony Blair.22 Lord Hollick was also a member of the House of Lords Committee on Science and Technology 1995-6, a special advisor to the President of the Board of Trade and the Secretary of State for Trade and Industry 1997-8, and an advisor to successive leaders of the Labour party since 1987, including Margaret Becket and Peter Mandelson. In 2000 he established a cross-party and business group ‘Britain in Europe’ campaigning for UK’s adoption of the Euro.

Lord Hollick is Chief Executive of United Business Media PLC, an international business information group with publishing, broadcasting and market research businesses. He was Managing Director of MAI PLC, a major international media and financial services group which merged with United News and Media PLC in 1996. He is chair of London’s South Bank Centre.23 From 1995-7 he was a non-executive Director of Channel 5 Television Group Ltd.24 He is a Governor of the London School of Economics.25

In 1998 Lord Hollick was placed as ranking 32nd in a ‘power list’ put together by Fulcrum TV, and voted by a panel, of ‘Britain’s most powerful people’.26

Rodney Chase

Rodney Chase retired as Senior Non-Executive Director at the 2004 AGM. He has also been Non-Executive Director of Tesco PLC and Deputy Group Chief Executive of BP PLC.

Maria Lilja Non-Executive Director of Diageo Maria Lilja is a Non-Executive Director of Diageo. She was head of American Express Europe 1996-2000. She is also Non-Executive Chair of Mandator AB and Non-Executive Director of Bilia AB, Intrum Justitia AB, Observer AB and Poolia AB, all in Sweden.

Keith Oates

A Non-Executive Director before retiring at the 2004 AGM, who was also Senior Advisor to Coutts Bank, Monaco, Deputy chair of Marks and Spencers PLC before 1999, a BBC Governor, and Non-Executive Director of BT PLC;

Jonathan Symonds Non-Executive Director Jonathan Symonds, Non-Executive Director, is also a member of the Accounting Standards Board, joint Chair of the Business Tax Forum, and Chair of the 100 group of Finance Directors. He is also Chief Financial Officer of AstraZeneca PLC,27 which he joined in 1997. Before that he was a partner at KPMG.

William Shanahan Non-Executive Director A Non-Executive Director, William Shanahan has also been President of the Colgate-Palmolive company since 1992.28 He was appointed Non-Executive Director of Diageo in 1999.

Todd Stitzer Non-Executive Director Todd Stitzer, a Non-Executive Director appointed in 2004, is also Chief Executive of Cadbury Schweppes PLC, a role he was appointed to in 2003.29

Paul Walker Non-Executive Director Paul Walker, a non-executive director, is chief executive of the Sage Group PLC,30 which he joined in 1984, and a non-executive director of MyTravel Group PLC.31

3.4 Subsidiaries

Diageo has 296 listed subsidiaries, many of which have ‘Diageo’ in their name, including,

Gleneagles Hotels Ltd32 33

Gleneagles Hotel

Auchterarder

Perthshire, PH3 1NF

The Gleneagles hotel will be the venue for the G8 summit hosted by Diageo in July 2005. 34

Brighton Grand Hotel Company Ltd

Haagendazs UK35

6 The Market

The Piazza

London WC2E 8RA

Haagendazs is a large American company producing ice cream. Some of their products have been investigated for GM products (see ‘Corporate Crimes’ section).36

3.5 Auditors

Diageo’s auditors are KPMG Audit Plc 37

References 1 ‘Diageo announces plan to move Guinness® brewing from GB to Ireland’ 15.04.2004 www.diageo.com/pageengine.asp?menu_id=0&site_id=1&section_id=2&page_id=1129 last viewed 05.05.05

2 Diageo Annual Review 2004, www.diageo.com/download%5C3000—R530.pdf – p.84-162 – viewed 24.01.05

3 Diageo Annual Review 2004, www.diageo.com/download%5C3000—R530.pdf – p.5 – viewed 24.01.05

5 Diageo Annual Report 2004, www.diageo.com/download%5C3000—R531.pdf – p.26 – viewed 24.01.05

6 Diageo Annual Report 2004, www.diageo.com/download%5C3000—R531.pdf – viewed 24.01.05

7 Information about the officers can be found at Diageo’s website www.diageo.com/pageengine.asp?menu_id=0&site_id=2&section_id=8&page_id=58; and in Who’s Who 2004

8 Guardian press release, 26.08.04, http://www.guardian.co.uk/pressoffice/pressrelease/story/0,,1294243,00.html viewed 24.01.05

9 Federal Express: 942 South Shady Grove Road, Memphis, Tennessee 38120, 901-369-3600; www.fedex.com; 14, Place Sainte Gudule, B-1000 Brussel, ++32 (0)2 515 88 00; UK contacts: www.fedex.com/gb/contact/ 10 Centrica www.centrica.co.uk; Millstream, Maidenhead Rd, Windsor, SL4 5GD; Tel: 01753 494 000; Fax: 01753 494 001

11 Henley Management Centre, www.henleymc.ac.uk; Greenlands, Henley-on-Thames, Oxfordshire, RG9 3AU 01491 571454; Fax: 0 1491 571635; email: enquiries@henleymc.ac.uk 12 Paul Walsh, Diageo CEO, The London Business School Summit on Global Leadership, 28.06.04 www.diageo.com/download%5C3000—R495.pdf – viewed 18.01.05

13 Scottish Power; 1 Atlantic Quay, Glasgow, G2 8SP; www.scottishpower.com 14 Moet Hennessey Louis Vuitton, 65 Avenue Edouard Vaillant, 92100, Boulogne-Billancourt, France www.lvmh.com 15 www.hemscott.co.uk/guru_online_test_drive/ind_dir_biog.htm – viewed 18.01.05; Campaign Against the Arms Trade, www.caat.org.uk/information/publications/other/political-influence-0403.pdf – viewed 18.01.05

16 To view the DESO website: www.deso.mod.uk/policy.htm – viewed 18.01.05 For more on DESO: Campaign Against the Arms Trade, www.caat.org.uk/information/publications/other/political-influence-0403.pdf – viewed 18.01.05

17 Campaign Against the Arms Trade, www.caat.org.uk/information/magazine/0204/brothers-in-arms.php++lord+blyth+mod&hl=en – viewed 29.11.04

18 Anixter European HQ 1 York Rd, Uxbridge UB9 1RN, 01895 818181, europe@anixter.com, UK HQ 1st Floor, Wellington House, 4-10 Cowley Rd Uxbridge UB8 2XW 01895 276800, infomktg@anixter.com 19 Diageo News Release, 7 October 1999, ‘Board Appointments at Diageo’ www.diageo.com/pageengine.asp?menu_id=0&site_id=2&section_id=9&page_id=382 20 Institute for Public Policy Research,

www.ippr.org.uk/about/index.php?current=trustees – viewed 08.02.05

21 Institute for Public Policy Research, www.ippr.org.uk/research/index.php?current=28&detail=history – viewed 29.11.04

22 Julia Finch, ‘Drink Firm’s Shock for Bingers,’ The Guardian, 09.10.04, http://www.guardian.co.uk/business/story/0,,1323368,00.html – viewed 10.02.05

23www.culture.gov.uk/global/press_notices/archive_2002/dcms23_2002.htm?month=February&properties=archive_2002%2C%2Fglobal%2Fpress_notices%2Farchive_2002%2F%2C – viewed 29.11.04

24 Channel 5, 22 Long Acre, London WC2E 9LY www.channel5.co.uk 25 www.mynottinghill.co.uk/nottinghilltv/celebs&gossip-lord-hollick.htm- -viewed 18.01.05

26 The Power List, Fulcrum TV, www.fulcrumtv.com/power.htm -viewed 05.05.2005

27 AstraZeneca PLC, 15 Stanhope Gate, London W1K 1LN, 020 7304 5000, www.astrazeneca.co.uk 28 Colgate-Palmolive www.colgate.com 29 Cadbury Schweppes PLC, 25 Berkeley Sq., London W1J 6HB, 0800 279 9640, www.cadburyschweppes.com www.cadburyschweppes.com/EN/feedback/feedback.aspx?dept=Todd%20Stitzer – viewed 08.02.05

30 The Sage Group PLC, North Park, Newcastle upon Tyne, NE13 9AA, 0191 294 3000, www.sage.co.uk/home.asp 31 MyTravel Group, Parkway Business Centre, 300 Princes Rd., Manchester M14 7QU, 0161 232 0066 www.mytravelgroup.com,

32 http://fame.bvdep.com/cgi/template.dll?context=33Y78C&tpl=reportframe&bitnr=14627&pushlink=0 – viewed 01.12.05

33 Gleneagles website, www.gleneagles.com – viewed 24.01.05

34 Grampian TV, 10.06.04, http://northtonight.grampiantv.co.uk/content/default.asp?page=s1_1_1&newsid=4038 – viewed 24.01.05

35 http://fame.bvdep.com/cgi/template.dll?context=33Y78C&tpl=reportframe&bitnr=513278&pushlink=0 – viewed 01.12.05

36 www.btinternet.com/-clairejr/foodcomp/foodcomp.html – viewed 10.10.04

37 KPMG website, www.kpmg.com/ – viewed 08.02.05

Diageo: Products and Projects

Diageo manages 17 of the world’s top 100 premium spirits brands. Recently it has dropped non-alcohol products, selling Pillsbury, a large US firm producing baked foods and snacks, to General Mills in 2001, and selling Burger King, the fast food giant, in 2002, which has allowed the company to escape the current outcry against fast food. Diageo has bought much of the spirits division of Seagram, previously a major spirits company, and other alcohol brands, entrenching its position as a leader in spirits. This reflects a shift to consolidation evident in the spirits sector in general.1

Diageo’s key brands include:

Whisky: Bell’s (UK market leader)

Johnnie Walker (global market leader in Scotch whiskey), Johnnie Walker Pure Malt

J&B (European market leader in Scotch whiskey), J&B Rare

Black and White, Haig, Spey Royal, White Horse, VAT 69, Buchanan’s, Dimple, Old Parr, Windsor Premier, Seagram’s 7 Crown, Seagram’s VO, Crown Royal Canadian Whiskey;

Single Malt Scoth Whiskys: Cragganmore, Glenkinchie, Oban, Distillery Malts, Hidden Malts, Cardhu.

Vodka: Smirnoff (40% of global market share), Ciroc, Tanqueray Sterling Vodka.

Gin: Gordon’s (around 50% of UK market share), Tanqueray (US market leader in imported gin), Gilbey’s Gin.

Rum: Captain Morgan (UK market leader in dark rum), Cacique, Brandenburg, Pampero, Myer’s Rum.

Brandy: Bertrams VO Brandy.

Liquers: Bailey’s (UK market leader in liquer), Romana Sambuca, Safari.

Schnapps: Archers, Rumple Minze, Goldschlager, Black Haus.

Tequila: Jose Cuervo (global market leader in Tequila), Don Julio.

Pimms

Ready-to-Drinks (alcopops): Smirnoff Ice (UK alcopop market leader, sharing 50% of market together with Bacardi Breezer), Smirnoff Black Ice, Archer’s Aqua, Bailey’s Glide, Ruski, UDL

Beer: Guinness (global stout market leader), Harp, Kilkenny, Tusker, Smithwicks, Red Stripe

Wine: Sterling Vineyards, Piat d’Or, Periquita Wines, Justerini & Brooks Wines, Casillero Wines, Blossom Hill Wines, José de Sousa Wines , Baron Philippe Wines, Barton & Guestier Wines, Beaulieu vineyards

Champagne: Dom Perignon

Aperitif: Picon

Diageo also has two joint ventures with Moet-Hennessey, Hennessey Cognac and Moet Chandon.

Diageo’s major competitors include Allied Domecq, Pernod Ricard, and Bacardi.

References 1 Keynote reports; Diageo annual review 2004, www.diageo.com/download%5C3000—R531.pdf – p.5 – viewed 20.01.05

Diageo: Corporate Crimes

The ethical status of a giant alcohol corporation is inevitably questionable, simply because of the dangers of the drug. The World Health Organisation (WHO) states that alcohol causes 3.2% of deaths worldwide (and is responsible for between 8% and 18% of the disease burden amongst males in Europe and the Americas) and is estimated to cause 20-30% of oesophogal cancer, liver cancer, cirrhosis of the liver, homicide, epilepsy, and motor vehicle accidents.1 This makes it the leading risk factor for disease in low mortality developing countries, and the third highest in the developed world.2 It costs Europe between 2-5% of GDP,3 and the extensive cost it brings the NHS has been acknowledged.4 The most important issue raised by the WHO is that, in direct contradiction to the claims of the industry, the greatest burden on society comes not from isolated individuals, but from the collective impacts of light to moderate drinkers.5

For an analysis of how Diageo’s commitment to solving these problems matches up to its practices, please see the www.corporatewatch.org/?lid=1708“>Influence section of this profile. This section will look at a number of other areas in which the image established in Diageo’s CSR may not hold out to scrutiny, including its role in the increasing global trend towards the dis-enfranchisement of the workforce through a steady rate of staff cut-backs and the casualisation of labour.

5.1. Non-traditional innovations in alcohol production

Recent years have seen changes in the way alcohol is being produced and drunk in Britain and elsewhere, with Diageo, among other companies, but always at the forefront of changes in the industry.

5.1.1. Wine and Beer – Structural Changes

The drinks sector is polarised between a small number of huge multinational companies, and small local producers, particularly for wine and beer. In the case of wine, Diageo and Allied Domecq in particular have accelerated the big multinationals’ programme of investment in vineyards and branded wines, collecting wine brands and in doing so changing the wine industry from being very fragmented to being highly concentrated.6

www.camra.org.uk/SHWebClass.ASP?WCI=ShowCat&CatID=1“>The Campaign For Real Ale (CAMRA), a British beer consumer group, campaigns in favour of independent breweries not owned by one of the major multinational brewing companies. Beer is one of the products still regularly produced at a small local scale,7 and according to CAMRA this is under threat from the growing role of multinationals (particularly since the Beer Orders of 1989 eroded the brewery-tie system in which most pubs were owned by brewers) who neglect real ales thereby undermining the diversity of British beer. CAMRA also say that the major multinationals undermine local tastes, which it sees as an important part of local communities, as well as the ability of small-scale local producers to function.8 Diageo, as producer of Guinness (whose popularity is at the expense of other stouts) and premium lagers like Red Stripe, has a significant role to play in this process.

5.1.3. Alcopops

Diageo has been heavily involved in the manufacture of alcopops, a new innovation in the drinks industry in the mid-1990s as it responded to changing consumer lifestyles and forms of entertainment in British society (as elsewhere).9 These forms of drinks have been linked to the problems associated with binge-drinking, as they are designed to be easy and quick to drink, and, as will be examined below in the ‘marketing’ section, they have been linked to under-age drinking.

5.2. Marketing

5.2.1. Diageo’s Code of Marketing

5.2.2. Marketing of responsible drinking messages

5.2.3 Marketing alcopops

5.2.4 instances of investigation into Diageo’s marketing

Diageo invests heavily in marketing, with £1.04 billion spent on marketing of premium drinks brands in the year ended June 2004.10 In 2001 Diageo became the first company in 50 years to advertise spirits on American TV, with an advert for Smirnoff Vodka on NBC.11 More worryingly, despite Diageo’s policy of responsible marketing,12 there have been claims that its marketing has been aimed at groups at risk, such as young people.

(For more on marketing, see ‘Self-regulation’ under the www.corporatewatch.org/?lid=1708“>Influence section of this profile, and the ‘Diageo in Africa’ section below.)

5.2.1. Diageo’s Code of Marketing

Diageo does have a www.diageobrands.com/assets/marketing-code.pdf“>Code of Marketing. But the code, as distinguished from regulations imposed in legislation, presents the need to limit the scope of advertising in a way which ensures that these limitations will not damage sales. A central point in this code is that alcohol will not be presented in a manner associating it with destructive and anti-social forms of behaviour, which Diageo is keen to discourage. Advertising that associates alcohol with positive, non-bingeing forms of behaviour will, the code states, benefit British society as well as the company’s sales:

We believe that brand advertising that depicts responsible drinking as a relaxed, sociable and enjoyable part of life, has a role to play in promoting a responsible approach to alcohol consumption… We will not depict people drinking heavily or very rapidly, or imply that such behaviour is attractive or appropriate… We will ensure that our marketing communications do not suggest any associations with violent or with anti-social behaviour.13

The result is a ‘responsible’ marketing campaign for alcohol which refrains from depicting irresponsible or unattractive behaviour, encouraging a message which presents drinking as a desirable activity which can be part of a desirable lifestyle. For example, the code of marketing practices suggests that ‘our brand advertising… frequently depicts responsible drinking as a relaxed and enjoyable way to socialise with friends.’14 Though presented as a policy of social responsibility, this can actually be seen more as an effective way of marketing products, and thus increasing sales. Taken together with campaigns against binge-drinking, this very successfully plays a dual role of presenting the company as one that disassociates itself from undesirable behaviour, so can be viewed as ‘responsible,’ and of selling the product (including, potentially, to under-age drinkers), as something desirable. Indeed, the issue of presenting alcohol as something that can increase sexual ability is a slightly more sensitive issue: Alcohol Concern have suggested that drinks companies are using ‘creative advertising’ to bypass regulations forbidding advertising that links alcohol to sexual success.15

5.2.2. ‘Don’t be the drunken monkey’: Marketing of ‘responsible drinking’ messages

It isn’t just the selling of alcohol over which Diageo formulates marketing: the company, and SAOs it is involved in, have shared a role with government departments in investing in the promotion of what they define as responsible drinking.

In May 2004, the Portman group released an advertising campaign entitled ‘Don’t be the drunken Monkey,’ presenting binge-drinking as undesirable and anti-social.16 The adverts showed an irresponsible young drinker as a chimpanzee. The idea behind this was to disassociate the correct use of alcohol from violent and anti-social behaviour, so as to discourage such behaviour – but this also served to protect the product itself from an association with such behaviour. The message of the anti-binge drinking campaign portrays a platform that is not harmful to the company’s aim of selling drinks, and is perhaps even beneficial to it. This platform is that excessive amounts and irresponsible use of alcohol, rather than the substance itself, are damaging to health and society. This message correlates well with the idea behind Diageo’s Code of Marketing. Alcohol campaigning groups question the role played by industry groups, rather than disinterested health experts, in putting together this campaign:

It shouldn’t be left to drinks manufacturers to decide what messages are conveyed about the dangers of alcohol, because their priority will always be to sell alcoholic drinks to the public. – Lee Lixenburg, Alcohol Concern 17

There was also criticism of this advertising campaign from another perspective: the Captive Animals Protection Society (CAPS) called for the campaign to be withdrawn on the grounds that the advert’s portrayal of an irresponsible young drinker as a chimpanzee was degrading to chimpanzees and damaging to their welfare.18

In August 2003, Diageo was criticised by the Australian Drug Foundation and National Council on Drugs at the launch of a social responsibility marketing campaign for advertising its product in a campaign to discourage drink-driving. In the words of Paul Dillon of the National Alcohol and Drug Research Centre Diageo were ‘still pumping out the product and still pumping out the problems.’19

And despite the messages being those chosen by the industry, Diageo still expects government funding to be available to finance these campaigns. In October 2004 they called on the British government to fund a campaign against binge drinking, holding a series of meetings with ministers.20

5.2.3. Marketing alcopops

Alcopops provide the clearest indication that drinks may be being marketed to young people. Called FABs (flavoured alcoholic beverages) or RTDs (‘ready-to-drinks’) by the industry, these drinks specifically target young and inexperienced drinkers and are prominent amongst under-age and young people. Their penetration by age group in Britain across the industry is 42% amongst 25-34 year-olds, 60% amongst 20-24 year-olds, and 64% amongst 15-19 year-olds.21 They were innovated and rapidly expanded in the mid-1990s, designed not to taste very alcoholic so as to appeal to those not used to drinking and to those seeking to consume a large amount of alcohol in a short amount of time. As such they have been linked to binge-drinking.22 The recent resurgence of spirits is due in part to the interest in cocktails and alcopops, both of which constitute a youth market for spirits such as vodka. The percentage change of FABs has been a rise of 51.1% 1999-2003 compared to 35.7% for wine, 13.9% for spirits and 4.8% for beer. The percentage change in market value of FABs 1999-2003 was 227%.23 Marketing spent on FABS is extensive, with £32.9 million spent 2002-3. The top brand is Diageo’s Smirnoff Ice, which together with Bacardi Breezer constitutes over 50% of the market, and Smirnoff Ice was also the brand with the highest amount spent on marketing in 2002-3, a sum of £8 million.

5.2.4. Instances of investigation into Diageo’s marketing

In several other instances, Diageo’s marketing of products has been criticised or investigated, in some cases for breaching its own or regulatory codes of marketing practice.

Legal action in the US In 2004 a series of putative class actions were filed against Diageo in US federal district courts (in Ohio, North Carolina and the district of Columbia), and one in Colorado state court. These actions filed for recovery of profits made through allegedly advertising and marketing products to underage drinkers.24 Diageo pledged to defend itself against these allegations.25

Guinness adverts in the US In March 2004, the Marin Institute in the US claimed that Guinness adverts for St. Patrick’s Day violated Diageo’s own Code of Marketing, by depicting St. Patrick’s Day as ‘Christmas morning with a keg,’ which ‘apparently starts with binge drinking in the morning’ and ‘unambiguously evokes a child’s delight.’26

Cardhu Affair In March 2004 Diageo were forced to withdraw their brand ‘Cardhu pure malt,’ which was marketed under the name of the Cardhu distillery despite the fact that it was being made from a number of distilleries. Traditionalists in the Scotch Whisky Association claimed that this undermined the top end malt of whiskeys which ought to be single malt, and constituted false marketing.27

Sports events In 1998 the Amsterdam Group (an SAO in which Diageo plays a leading role) asked the EC to let it take court action against France’s regulations banning screening of sports featuring alcohol advertising.28 The World Health Organisation has judged that sporting events featuring alcohol advertising and sports promotion and sponsorship by alcohol companies are a major forum in which the alcohol industry are targeting marketing towards young people.29

Causing offence: Taiwan In January 2003, the Taiwanese government voted to criticise Diageo and considered a ban on its brands, for an advert for Smirnoff disseminated on the London Underground which they deemed to be offensive to Taiwan. The poster campaign depicted a Christmas present saying on the label: ‘Warning. This gift will break down on Christmas morning. Replacement parts available from Taiwan. Allow three hundred and sixty-five days for delivery.’30

Norway In July 2002, Diageo’s license to sell alcohol in Norway was revoked for six months for its marketing of an alcopop in breach of Norwegian law. ‘Smirnoff Black Ice’ was promoted to trade officials but members of the public entered the event and got hold of free promotion material, making Diageo in contravention of Norwegian law. Diageo continue to trade its products in Norway through third parties.31

5.3 Unions and labour – the shift to casualisationr

Between 2003 and 2004, Diageo cut nearly 1000 jobs worldwide,32 and between 1998 and 2000 axed the same number of people in the UK alone,33 part of an on-going trend towards contraction of employment that mirrors the concentration of ownership into the hands of fewer and fewer companies. It is hardly surprising then that there is considerable pressure on Diageo’s relationships with suppliers and workforce, but it is interesting to note how, especially with regards to relationships with trade unions, the company’s strategies seem very much in line with the way they assume ‘responsibility’ for alcohol problems. Rather than an outright oppositional strategy to other interest groups, they seek ‘working partnerships’, which give the impression that they are engaged with other interest groups, but can have the effect of reducing the power an independent negotiating body might have over them. In labour law, just as in health regulation, we can see Diageo pursuing voluntary codes which seem evasive to more binding legislation. It is quite telling that a National University of Ireland report refers to the trade union role in Guinness as constructively ‘managing change’34 – the emphasis on communication with unions masks the extent to which ‘involvement’ is a substitution for influence.

5.3.1. Diageo Europe Forum (DEF)

One recent innovation has been the new Diageo Europe Forum (DEF) agreement which was unveiled in 2002. The DEF is an annual meeting involving at least two core senior managers, and just 35 employees, only some of whom are union representatives, drawn from the whole of Europe. It is supposed to be a means by which management and staff work in partnership, and was hailed as innovative because it included an unusually extensive definition of ‘consultation’ with employees over the issues that affect their interests. This was called ‘extensive’ because it stipulated that this must involve communication before, rather than after, decisions are made,35 but the key point is that there is no obligation on managers to respond to objections. The function of the DEF is said to be an ‘information and consultation’ forum, but whatever that may mean, it is stated not to involve ‘collective bargaining’.36

In addition, we must look at what precipitated Diageo towards such an ‘extensive’ definition of its worker’s rights. Firstly, the forum has to be seen as a response to the1994 European Directive on European Works Councils (EWCs). This aimed to improve workers rights to information and consultation, and stipulated that all companies of a certain size must establish EWCs,37 such as Diageo’s annual forum. Under this Directive, companies which had established a voluntary agreement on the consultation of the workforce before a certain deadline were exempt from many of its provisions, and because of the time delay in implementation of the Directive, the agreement can be counted as just such a voluntary code.38

What’s more, the agreement over the definition of ‘consultation’ also came after unions threatened to take Diageo to the European Court of Justice over the issue. The company had announced it was planning to cut 300 out of 360 jobs at Dundalk in Ireland, and insisted that ‘consultation’ had taken place, because they had mentioned ‘overcapacity’ at the plant at the DEF meeting a month before. 39

5.3.2. Corporate Social Partnerships

Another strategy recently favoured by businesses is the development of corporate social partnerships with employees. These set up structures between staff and top level management, which allow for communication and ‘joint problem-solving’, and often involve some degree of employment security. While these do not replace unions, they can in effect means that they are co-opted, and ‘involvement’ in decisions replaces independent bargaining power.40 It is telling that both the UK Department of Trade and Industry (DTI) and the Involvement and Partnership Association (IPA) refer to these partnerships as a means of increasing ‘competitiveness’,41 and the ability to ‘manage change effectively’, change being a sure euphemism for insecurity and instability.42

The DTI features Diageo Global Supply in Scotland as a shining example in their brochure on best practice in employee partnerships, though it also states that this partnership was revised after 7 months attempting to negotiate pay in 2000.43 It is also the case that only 55% of the Diageo work force in Scotland is unionised, and 17% are employed on temporary contracts.44 In July 2004, when Diageo announced it was cutting 60 jobs in Glasgow and Edinburgh, a spokesperson for the company said that they hadn’t consulted over the move because they ‘operated in a non-unionised environment’.45

United Distillers, now owned by Diageo, provides a prime example of how these partnerships can serve corporate rather than employee interests. After considerable job losses had already taken place, the unions (GMB, AEEU, TGWU and MSF) signed up in 1994 to a ‘Positive partnership’, a three-year deal which promised no more compulsory redundancies, provided that staff agreed to retraining and ‘redeployment’, and didn’t attempt to oppose voluntary redundancy. The move was rejected in a ballot, but, to quote the IPAs own website, for ‘mysterious reasons … the agreement still went through …’.46

5.3.3. Casualisation of labour and redundancies in Nigeria

However partial Diageo’s extension of labour rights to European employees, there is no suggestion that they are to be extended beyond the zone of EU legislation. In 2004 Diageo Africa was awarded first prize as the ‘Employer of the Year’, for its ‘clearly articulated policies’ to ‘ensure that employees have a positive experience.’47 This recognition came from Africa Investor Magazine, the quarterly publication of ‘Business for Africa’,48 and Diageo’s website described the award as recognition of its ‘investment’ within the continent,49 rather than its labour standards. It seems unlikely that unions would be offering the same accolade. Guinness Nigeria sacked 500 workers in February 2005, and unions claimed that the company’s objective was to replace permanent contracts with casual ones, and claimed that major redundancies in 1992, 1995 and 1997 had all been followed by employment of casual workers with no conditions of service, and created space for more expatriates in higher level management.50 Guinness had already been picketed in 2002 as part of the Nigerian Labour Congress (NLC) anti-casualisation campaign,51 which revealed that a majority of workers in Nigerian industry were employed on a casual basis,52 and claimed that the biggest companies had the worst labour practices.53

5.4 Relations with Suppliers

The phrase ‘eliminate waste’ occurs twice in three short paragraphs in Diageo Scotland’s Corporate Citizen Report.54 In 2000 they switched to an e-procurement system with the company www.ariba.com/“>Ariba, which among other things allowed them to negotiate in consortiums.55 E-procurement is said to place suppliers in an increasingly cut-throat environment, where any possible considerations for quality, labour rights or the environment are squeezed out in favour of competition based simply upon who can offer the lowest price.56 It also places another intermediary in the sale process, which puts further costs on the suppliers, who have to pay a transaction fee for every sale made.57

5.4.1. NFU protest In October 2002 the National Farmer’s Union of Scotland chose to target Diageo in a protest against the price paid for malted barley, claiming that the price paid to farmers accounted for only 7.5p in a bottle of whisky, and that an increase of one penny per bottle would produce a further £20 per tonne,58 while in 2003 the money farmers were receiving was still lower than the cost of production.59 Peter Smith of Diageo described himself as ‘mystified’ by the accusations, while Scotch Whisky Producers Association spokesperson Campbell Evans protested that the NFU was responding to a ‘wider problem within agriculture,’ and protested that the whisky industry could not ‘control the weather and world prices;’60 in other words, while marketing ‘Scotch’ whisky, the only factor in selecting suppliers could be cost.

5.4.2. International Supply Chain labour standards Diageo has produced a ‘Statement of Intent’ on its ethical standards in international deals with suppliers, which promises to take its responsibilities ‘very seriously’,61 but a recent independent report into supply chain labour standards produced a different picture.62 Although Diageo came out as a leader against other companies in the beverage industry, this sector had one of the lowest scores overall,63 and a vast majority of the companies surveyed were found to be inadequate, even though the only data used was their own publicly-available reported information.64 Although Diageo has a code in place with regards to labour standards, this was described as weak, not referencing all the core conventions of the International Labour Organisation (ILO).65 It scored 0 in the ‘Management’ and ‘Stakeholder Engagement’ sections of the survey. In other words, it doesn’t privilege ethical standards at a high enough level of the organisation, or offer training on this issue to buyers and sellers, and nor does it give unions adequate scope for involvement in decisions over issues such as working conditions.66 Perhaps more worrying, Diageo’s score is very low in the auditing and reporting section, so that there is no guarantee that the code responds to anything in reality.

5.5 Diageo in Africa

Diageo enjoys huge economic clout in many areas of Africa. Not only does the continent provide 10% of their annual profit, and an area of ‘phenomenal growth’,67 but the concentration of wealth is such that their subsidiaries are frequently among the very top companies listed on local stock markets. In Kenya for instance, over 50% of the national market is controlled by just five companies, all of which are owned by multinationals, including Diageo.68 Since national industries were privatised and opened up to foreign capital, the market in branded alcohol has been more or less carved up between Guinness, Heineken and South African Breweries. In Nigeria around three quarters of the regional and state owned breweries foundered in the 1980s, leaving Guinness, and the Heineken-controlled Nigeria Breweries competing for top position.69 As well as their ability to buy out competition in the form of smaller national companies, this stranglehold may also in part have been achieved by a marketing strategy which seems to pervade all areas of public life and to seek to demonise non-branded alcohol as illicit and dangerous. With such financial power, Diageo seems in a position to exercise huge influence on public policy, with regards to alcohol, environmental and labour regulation, and more over-riding economic issues.

In addition to the disproportionate influence Diageo wields by virtue of its sheer size, it has a more direct impact on public policy. In 2003 it was one of the prime sponsors of, and provided speakers for a meeting of the Commonwealth Business Council (CBC) in Abuja.70 This forum was held directly before the meeting of the commonwealth heads of government, and the CBC made its intentions quite explicit, referring to it as a ‘unique opportunity’ for delegates to ‘network’, contribute to policy recommendations, and influence ‘the debate on important trade and investment issues.’71 The agenda of the CBC is equally clear and predictable: it’s pre-Abuja recommendations for instance, called consistently for public services to be ‘liberalised’ while ‘burdensome environmental, health and safety regulations’ were to be avoided.72

Diageo was also a member of the Business Contact Group set up to give business input into Tony Blair’s Commission for Africa in 2004-2005. The outcome of the Commission for Africa were predictable, calling for Africa to embrace liberalisation and for the continent to make itself more attractive to foreign investment through developing its infrastructure.(See Corporate Watch report, ‘Bringing the G8 Home: Corporate Involvement in and around the G8 in Scotland 2005).

5.5.1. Philanthropic projects

As well as bragging about its business successes, Diageo’s literature tends to use Africa as proof of its philanthropic credentials. Diageo’s Corporate Citizen Report 2004 ‘Focus on Africa’ talks very little about breweries, and a lot about hospitals, literacy programmes, water projects, and of course HIV.73 It seems almost churlish to be critical of anyone addressing such basic needs, and yet with a healthy dose of scepticism we see a different picture. For a start, according to an admittedly very rough estimate, Diageo donates only 0.078% of annual turnover to worthy causes,74 and for a second, it can seem that the initiatives are chosen to maximise publicity and minimise investment. In Kenya and Nigeria for instance Diageo subsidiaries provide scholarships for small numbers of individuals to attend university, especially to study business, and in South Africa Guinness UDV presents a yearly award to the best literacy centres.75 Such schemes are an excellent way of increasing the prominence of Diageo’s brand, inducing brand loyalty, and providing future recruits, but sponsorship for individuals doesn’t increase the total number of places available, and pouring more funds on successful institutions doesn’t help those which are under-resourced and struggling. Diageo is often cited as a leading socially responsible corporate citizen because it provides free drugs to HIV-positive members of staff. However this seems rather an inadequate counterbalance to the well-documented role alcohol has to play in the spread of HIV.76 In addition, the epidemic has reached such devastating proportions that is in business’ direct economic interests to address it.77

Far more damningly however, an article in The Guardian in November 2003 suggested that, at that stage at least, Guinness Nigeria had not actually implemented the drinking water projects which were boasted of on the website, and by Gabriel Nkanang, then the external relations manager. The company’s water engineers when questioned said that they had not heard of any boreholes being drilled, and when questioned, Nkanang replied evasively that 7 of the 10 projects were in fact ‘at the planning stage’. Similarly, after weeks of media coverage senior spokespeople for Guinness Nigeria seemed to know nothing of the provision of anti-retrovirals for HIV positive staff, and claimed that none of the then 3000-strong workforce were infected, and that therefore the issue was irrelevant.78 It is interesting that nearly two yeas later the web-based project description for the Water of Life programme in Nigeria doesn’t seem to have been updated, the wording is exactly as it was when Rory Carrol quoted it, referring to the project as having been ‘launched’, and talking of how Guinness ‘will’ work with local organisations.79 Searching the local press on the internet has revealed a number of contradictory stories as to the locations of future boreholes, but nothing to suggest that any had been completed since the one in Benin, which had already been operating by 2003.80 While there is no evidence that Diageo does not intend to ever put its promises into practices, such delay seems rather contradictory to the ‘integrity’ which the company lays claim to.81

5.5.2 Marketing

The marketing of alcohol is of course the familiar area in which Diageo poses as the solution to a problem of which it is such an obvious part. There is nothing unique to Africa about Diageo’s paternalism here: as in the UK, they have been training bartenders in ‘responsible serving’, publicly sponsoring campaigns against drink driving, and supporting ‘programmes to educate consumers’.82 What is extraordinary however is the ‘creativeness’ with which the company has sought new territory for advertising. In part this is about targeted sponsorship. Guinness Nigeria backs events aimed at the young and wealthy, such as beauty contests on university campuses, essay writing competitions for schools, and radio shows devoted to questions and answers on particular brands. This reaches its climax in the superhero Michael Power, whose image has spilled over from billboards to mini adventure series on radio and television, which do not need to market products as such, but simply focuses on his personal qualities of strength, virility and moral responsibility.83 The 2003 film ‘Critical Assignment’ was celebrated in reviews as ‘Africa’s very own James Bond’84 and a testimony to the ‘maturity of African films’85, but it is in fact tantamount to a feature long advert for Guinness, produced by the company and starring Power as its hero.

The competition which Diageo is fighting against is often not rival corporations: a majority of alcohol consumed comes from the so-called ‘illicit’ sector. Across Africa, beer is traditionally brewed from millet, maize or cassava as a small scale commercial enterprise, often by women. The company’s agenda comes through very clearly from the 2004 Corporate Citizenship Report for East Africa which has a virulent attack on unbranded alcohol, which, they claim, can pose severe ‘health and social risks.’.86 Interestingly enough, even a report commissioned by ICAP, an organisation itself sponsored by Diageo, reported that so-called ‘illicit’ brew is generally safe and of good quality,87 as well as providing an important boost to the household and local economy.

For further information about Diageo’s practices in Africa see the separate ‘Environmental damage’ and ‘Unions and labour’ sections.

5.6 Environmental damage

In 2004, Diageo missed its targets for reduction of energy use, greenhouse gas emissions, and liquid effluent. It set 2007 targets for energy use at the same level as the missed 2004 target ,and set a more conservative target for 2007 than the missed 2004 target for greenhouse gas emissions. Diageo achieved its 2004 targets for water used and solid waste landfilled, though these still constituted an increase both in total supply and in relative level (refer to Diageo’s Corporate Citizenship Report for details of these figures).88 According to Ethical Consumer magazine, in 2000 Diageo failed to meet its targets for reduction of raw materials and emissions, and set conservative targets for the future, which it succeeded in meeting most likely due to output reduction, with emissions relative to output making little progress.89

Why water?

It is interesting that water is Diageo’s prime chosen area for charity given that, yet again, the company is a far bigger part of the problem than it is of the solution: breweries are frequently listed among the worst pollutants and biggest consumers of water, especially in Africa. Until new treatment plants were installed, Uganda Breweries was taking water from the national supply, and then discharging effluent and broken glass into Lake Victoria at levels which exceeded the recommended limits often by ten times or more.90 This is no isolated incident. In 2003 the executive director of the United Nations Human Settlement programme complained that Kenya Breweries was consuming nearly 6% of the total water supply for Nairobi City.91 A report into water pollution in East Africa held Tanzania Breweries, (partly owned by Diageo,) largely responsible for the fact that the Msimbazi River was so polluted as to be ‘practically devoid of life.’92 The irony is complete when we learn that in Malaysia, Diageo have been sponsoring educational handbooks on integrated river mouth management,93 a gesture which, interestingly enough, came after the company had been fined for discharging effluent into inland water in the area.94

5.7 Genetically Modified products

The chocolate in Haagendazs Ice Cream (Haagendazs UK is one of Diageo’s subsidiaries) contains GM soya lecithin; in addition, some varieties contain corn syrup which may contain GM.95 In 1999 Diageo was one of a number of companies targeted in a shareholder anti-GM campaign.96

5.8 MAI – Promoting Unjust Trade Rules

In 1998 Diageo was involved in the negotiation of the Multilateral Agreement on Investment (MAI). The MAI was an agreement multi-national companies tried to get passed through the Organisation for Economic Co-operation and Development. The agreement was defeated by a world-wide coalition of groups opposed to the serious social and environmental consequences it was expected to have. It would have increased investment rights and the opening up of free trade in an unprecedented manner, resulting in a real transfer of power to unaccountable private corporations.97

5.9 Colombia

On 8 November 2004 Diageo together with Pernod Ricard were forced to defend themselves against a suit made by the Columbian government that the companies had bypassed the heavily-taxed official state alcohol distribution networks, instead importing alcohol through drug traffickers, and companies laundering drug money and supporting terrorist groups. According to the allegations, Diageo and the other companies had competed illegally with government-owned businesses and received bribes from companies dealing with laundered funds. Diageo determined to defend itself vigorously against these allegations.98

5.10 Human rights

As Diageo has operations in 180 countries, it has difficulty in putting its commitment to condemning human rights violations into practice, as many of these countries are ones in which serious human rights abuses take place. In 1999 Amnesty International pointed out that Diageo had operations, and investments into establishing markets, in countries with oppressive regimes including Tanzania, Turkey, Russia, the Philippines, Mexico, Indonesia, Colombia, and Nigeria (the world’s 3rd market for Guinness).99 In 2003 the IBLF drew attention to this, suggesting that the discrepancy between the company’s policy on human rights and its operations in these countries might damage the company’s reputation. To guard against this, Diageo drew up a policy on human rights in collaboration with Amnesty International. Geoffrey Bush, director of corporate citizenship, suggested that there was little Diageo could do about human rights abuses in countries it operates in, beyond assisting the local economy: ‘from our point of view the best thing we can do is build a brewery.‘100

5.11 Squeezing out small businesses

In 2002, Diageo sponsored a bill in the California Assembly which would have had the effect of limiting imports of wine to a small monopoly of registered companies. This provoked a major campaign and the bill was finally blocked, but according to Michael Opdahl, managing partner of Joshua Tree Imports in Pasadena, it represented ‘perhaps the greatest threat’ smaller importers had ever faced, and could have been the end for local business.101

5.12 The Thalidomide Scandal and its aftermath

Thalidomide was a drug produced in 1954, and prescribed to pregnant women for morning sickness in the late 1950s. It was found to produce severe deformities in babies including internal deformities and missing limbs. Distillers, which was bought by Guinness in 1985, was the company which manufactured and marketed the drug in 1958. In 1973 Distillers failed to accept liability when offering compensation to victims of thalidomide, and the original settlement made by Distillers is described by the group Thalidomide UK as ‘the lowest medical claim ever awarded in the UK.’102 in 2000 this group called for a boycott of all brands owned by Diageo with the aim of obtaining full compensation for the surviving 456 British victims of the drug, who saw the no-blame compensation fund of 1973 as inadequate. In June 2000 Diageo extended the company’s payments to the Thalidomide Trust.103

5.13 The Guinness Affair

In 1990 the ‘Guinness Four’ were convicted of trying to manipulate the price of shares in Guinness, by artificially organising widespread buying of shares to boost the share price in order to succeed in its takeover bid of Distillers in 1986. This was judged illegal by the DTI in their investigation of December 1986. Ernest Saunders, former Guinness Chief Executive, was imprisoned for 5 years, which was halved on appeal, for false accounting, conspiracy and theft. Also imprisoned were trader Anthony Parnes and businessman Gerald Ronson, and consultant Jack Lyons was fined.104 In 1991 Saunders was released from his term on the grounds that he was suffering from Alzheimer’s disease, though he subsequently recovered from his symptoms (Alzheimer’s is incurable).105

References 1 The World Health Organisation, World Health Report 2002, www.who.int/whr/2002/chapter4/en/index6.html – viewed 10.02.05

2 World Health Organisation Global Status Report on Alcohol Policy, 2004 p. 9 www.who.int/substance_abuse/publications/en/Alcohol%20Policy%20Report.pdf – viewed 10.02.05

3 Derek Rutherford, ‘Social Aspects Organisations: A health warning’, The Globe www.ias.org.uk/publications/theglobe/02issue3/globe02issue3.pdf – viewed 10.02.05

4 BBC News ‘Alcohol puts huge pressure on the NHS’, 06.03.04, http://news.bbc.co.uk/1/hi/health/3537257.stm 5 World Health Organisation Global Status Report on Alcohol Policy, 2004 p. 9 www.who.int/substance_abuse/publications/en/Alcohol%20Policy%20Report.pdf – viewed 10.02.05

6 Oligopoly Watch, www.oligopolywatch.com/2003/05/27.html – viewed 25.01.05; Keynote reports, beverages 2003

7 Keynote Reports, ‘Beverages,’ 2003

8 CAMRA ‘Save Britain’s Independent Brewers’ campaign, www.camra.org.uk/SHWebClass.asp?WCI=ShowCat&CatId=221 – viewed 10.02.05

9 Jay Rayner, ‘On the Streets of Binge Britain,’ The Observer, 05.09.2004, http://observer.guardian.co.uk/review/story/0,,1297347,00.html – viewed 25.01.05

10 Diageo Annual Report 2004, www.diageo.com/download%5C3000—R531.pdf p.15 – viewed 10.02.05

11 NBC in pact with Diageo to run liquor ads , USA Today, 14.12 01 www.usatoday.com/money/advertising/2001-12-14-liquor.htm – viewed 24.01.05

12 Diageo Code of Marketing Practices for Alcoholic Beverages, www.diageo.com/download%5C3000—R401.pdf – viewed 10.02.05

13 Diageo Code of Marketing Practices for Alcoholic Beverages, p.2/p.4 www.diageo.com/download%5C3000—R401.pdf – viewed 10.02.05

14 Diageo Code of Marketing Practices for Alcoholic Beverages, p.2/p.4 www.diageo.com/download%5C3000—R401.pdf – viewed 10.02.05

15 ‘Creative adverts selling drink,’ BBC News, 15.03.04 http://news.bbc.co.uk/1/hi/uk/3513042.stm – viewed 10.02.05

16 The Portman Group, ‘Don’t be the Drunken Monkey,’ www.portman-group.org.uk/campaigns/263.asp – viewed 10.02.05

17 Annie kelly, ‘New Ads warn of Binge Drinking Danger,’ The Guardian, 28.05.04 http://society.guardian.co.uk/drugsandalcohol/story/0,,1227048,00.html – viewed 25.01.05

18 www.captiveanimals.org/news/2004/chimps.htm viewed 30.11.04

19 Peter Gotting, ‘Diageo Puts Up but is told to shut up,’ Sunday Morning Herald, 20.08.03 www.smh.com.au/articles/2003/08/20/1061368349838.html?from=storyrhs&oneclick=true – viewed 02.02.05

20 Julia Finch, ‘Drink Firm’s Shock for Bingers,’ The Guardian, 09.10.04, www.guardian.co.uk/business/story/0,,1323368,00.html – viewed 10.02.05

21 Keynote Reports, ‘Beverages,’ 2003

22 Jay Rayner, ‘On the Streets of Binge Britain,’ The Observer 05.09.2004, http://observer.guardian.co.uk/review/story/0,,1297347,00.html – viewed 25.01.05

23 Keynote Reports, ‘Beverages,’ 2003

24 http://bankrupt.com/CAR_Public/031128.mbx 25 Diageo Annual Report 2004 www.diageo.com/download%5C3000—R531.pdf p.22 – viewed 15.02.05

26 Join Together, ‘Diageo Violates Marketing Code with Guinness Ads,’ 16.03.2004, www.jointogether.org/sa/news/alerts/reader/0,1854,569898,00.html – viewed 07.06.2005 (the website has since been taken down but the page can be found at www.drugfree.org/join-together).

27 BBC News, ‘Diageo admits Cardhu malt defeat’ http://news.bbc.co.uk/1/hi/scotland/3546321.stm viewed 15.02.05

28 Ethical Consumer Magazine, Issue 75 February-March 2002, Research Supplement, Beer Lager and Cider, p. 4 – 5. ECRA Publishing Limited;

Hillary Abramson, ‘Big Alcohol puts on a Front’, Multinational Monitor, December 1998, http://multinationalmonitor.org/mm1998/98dec/front1.html, viewed 15.02.05

29 WHO World Declaration on Young People and Alcohol, 2001, www.euro.who.int/AboutWHO/Policy/20030204_1 30 Online Advertising and Marketing Law Report, www.adlawbyrequest.com/international/Diageo012203.shtml+smirnoff+taiwan&hl=en viewed 30.11.04;

BBC News, ‘Taiwan mulls Diageo ban’, http://news.bbc.co.uk/1/hi/business/2652705.stm viewed 30.11.04

31 BBC News, ‘Norway Bans Diageo over Vodka Promotions’, http://news.bbc.co.uk/2/hi/business/2187118.stm viewed 30.11.04

32 Diageo Corporate citizenship report, 2004 www.diageo.com/download%5C3000—R532.pdf, viewed 04.12.04

33 John Kelly, ‘The limits and contradictions of social partnership,’ www.communist-party.org.uk/articles/2003/february/the%20limits%20and%20contradictions%20of%20social%20partnership.shtml, viewed 02.12.04

34 ‘Organisational change and employee information and consultation’, TonyDundon, Dierdre Curran, Maureen Maloney, Paul Ryan, National University of Ireland, Galway, www.ibec.ie/ibec/ibecdoclib3.nsf/cb0e6ff75bb9789880256f24004e9735/ef9088f1c506a29080256f50005984c6/$FILE/NUIG_research.pdf, viewed 05.12.04

35 ‘Diageo concludes innovative EWC agreement,’ www.eiro.eurofound.eu.int/2002/11/feature/ie0211204f.html, viewed 02.12.04

36 ibid.

37 ‘The impact of European Works Councils’ www.eiro.eurofound.eu.int/1998/07/study/tn9807201s.html, viewed 05.12.04

38 ‘Diageo concludes innovative EWC agreement,’ www.eiro.eurofound.eu.int/2002/11/feature/ie0211204f.html, viewed 02.12.04

39 ‘Guinness unions seek to define EWC consultation after job cuts announced’ www.eiro.eurofound.eu.int/2000/10/inbrief/ie0010212n.html viewed 05.12.04

40 ‘Union revitalzation in the United Kingdom’ International Labour Organisation Discussion Paper, ed. Heery, John Kelly, Jeremy Waddington www.ilo.org/public/english/bureau/inst/download/dp13302.pdf, viewed 06.12.04

41 ‘Achieving best practice in your business,’ ‘Partnerships in practice’, DTI, www.dti.gov.uk/bestpractice/assets/employee.pdf, viewed 05.12.04

43 ‘Achieving best practice in your business,’ ‘Partnerships in practice’, DTI, www.dti.gov.uk/bestpractice/assets/employee.pdf, viewed 05.12.04

44 Diageo Scotland, Corporate Citizenship Report, 2003 www.diageo.com/html/diageocorprep03/files/scotland.pdf, viewed 05.12.04

45 BBC News, Diageo attacked over whisky cuts http://news.bbc.co.uk/1/hi/scotland/3920837.stm, viewed 05.12.04

46 www.partnership-at-work.com/index.php?scmd=ViewCaseStudy&id=3567&sid=45, vieweed 05.12.04

47 ‘Africa Investment Awards 2004’ Information on winners, www.idcs.co.za/winners.pdf, last viewed 02.03.05

48 Africa Investor’ www.africaplc.com/about.php, last viewed 02.03.05

49 ‘What’s new? Diageo www.diageo.com/pageengine.asp?page_id=948&site_id=4&section_id=21, last viewed 02.03.05

50 John Kolawole, Nigeria Trade Union Congress Secretary General, quoted by Chris Nwachuku, ‘Workers Reject Sack of 500 in Guinness’, This Day (Lagos), 25.02.05, http://allafrica.com/stories/200502250176.html, last viewed 20.03.05

51 Ifeanyi Onyeonoru (Ph.d), ‘Trade unions and neo-liberal reforms: globalized trends and emergent patterns of contestation’, Department of Sociology, University of Ibadan, June 2003, www.interaction.nu.ac.za/sasa2003/Onyeonoru.htm, last viewed 20.03.05

52 Rita Onoshevwe, ‘NLC and the war against casualisation’, Daily Independent Online, 18.06.03, http://news.biafranigeriaworld.com/archive/2003/jun/18/0091.html, last viewed 20.03.05

53 Prisca Egede, ‘Labour vows to step up anti-casualisation campaign’, The Guardian Nigeria, 03.10.2002, http://news.biafranigeriaworld.com/archive/ngguardian/2002/oct/03/article08.html, last viewed 20.03.05

54 Diageo Scotland , Corporate Citizenship Report, 2003 www.diageo.com/html/diageocorprep03/files/scotland.pdf, viewed 05.12.04

55 ‘Ariba puts Diageo’s supply chain online’ http://software.silicon.com/os/0,39024651,11015310,00.htm – viewed 09.12.04

56 ‘Sourcing strategy and supplier relationships, Strategic Relationship vs. e-procurement’ The practice of supply chain management. http://mba.tuck.dartmouth.edu/digital/digital-03/Research/ManagementArticles/Alliances-vs-eProcurement.pdf, viewed 12.12.04

57 ‘Canadian Institute of Public and Pricvate Real Estate companies’ www.cipprec.ca/research_education/technology%20-%20e-procurement.htm#Supplier%20Fears, viewed 12.12.04

58 Jim Walker, president of the National Farmer’s Union of Scotland, quoted www.lifestyle.scotsman.com/yourhealth/health_headlines_specific.cfm?articleid=6834, 29.10.02

59 www.bottlesuppliers.net/news/02january.php, 0.11.03, original article in the Scotsman –

60 BBC News, ‘Whiskey Prices Anger Scots Farmers,’ 28.10.02, http://news.bbc.co.uk/1/hi/scotland/2369567.stm viewed 15.02.05

61 Diageo website, ‘Partnering with suppliers’, www.diageo.com/download%5C3000—R139.pdf, last viewed 31.03.05

62 Insight Investment, Halifax Bank of Scotland, ‘Gradient – Promoting best practice management of supply chain labour standards’, www.gradient-index.net/GradientReport.pdf, last viewed 31.03.05.

63 ibid. p.4

64 ibid. p.5

65 ibid. p.27

66 ibid.

67 Diageo Africa, company profile, www.careersinafrica.com/CareersinAfrica2005Diageo.asp, last viewed 22.02.05

68 ‘Corporate Governance in Africa, A Study of Publicly Listed Companies’ London Business School, UK, www.africaplc.com/typetool/uploads/main_news/docs/CGiA%20Final%20Report.pdf, last viewed 22.02.05

69 Selling booze: alcohol marketing in Nigeria. A Paper for World Health Organisation Valencia conference, 2002. Obot, Isidore S, Ibanga, Akan J. www.ias.org.uk/publications/theglobe/02issue2/globe02issue2.pdf. Last viewed 01.03.05

70 The Corporate Socal Responsibility Newswire Service, ‘Momentum Builds for the Commonwealth Business Forum’, 11.25.03, www.csrwire.com/article.cgi/2288.html, last viewed 25.03.05

71 Quoted by Sean Healy, ‘Next on the M1 Hitlist: The Comonwealth Business Forum’, The Green Left Weekly, www.greenleft.org.au/back/2001/450/450p9.htm, last viewed 25.03.05

72 ‘The Commonwealth, the WTO and the Doha Round: a compass for trade policy reform, growth and development.Recommendations of the Commonwealth Business Council (CBC)’, July 2003, http://64.233.183.104/search?q=cache:RMHx4N9EHtUJ:www.lse.ac.uk/ collections/internatio

Diageo: Influence

Summary

A big part of Diageo’s recent activity has been influencing the UK Government’s policies on alcohol. Diageo has developed close ties with government policy makers in an effort to limit the statutory regulation of alcohol, and to steer government policy into protecting its own interests. It has achieved this through a huge investment in public relations and in its promotion of ‘corporate social responsibility’ (CSR) as a business strategy as favoured by New Labour, and through publicly speaking out against alcohol harm. In practice, this has resulted in policies which target individual misuse of alcohol rather than corporate liability or regulation.

Diageo promotes the idea that the major problem with alcohol is the anti-social behaviour caused by binge-drinking. Many health experts dispute this industry assumption, suggesting that long term health problems caused by sustained drinking are more serious – liver failure caused by sustained drinking accounts for the majority of people treated in Accident and Emergency for alcohol-related problems.1 The UK government’s policy has followed the industry line, to the criticism of many health experts and groups (please see the ‘Impact on policy’ section for further details).

This section will explore Diageo’s CSR projects, PR campaigns, lobbying and the ‘social aspect organisations’ which it is involved in. It will also explore what Diageo hopes to achieve through self-regulation and investment into education initiatives. It will also investigate the forums through which the company influences policy and the ways in which Blair’s government’s policy reflects industry interests.

4.1 PR and CSR

4.1.1. Corporate Social Responsibility

Diageo has been involved in and sponsored a number of projects in areas unconnected to alcohol, in order to improve its reputation and push an image of itself as an ethically responsible company. The investment in CSR, while making a positive impact in a number of projects, is clearly oriented towards business needs:

‘We know our actions as a corporate citizen can differentiate us from our competitors in the hearts and minds of all our stakeholders’2

This section will look at some of the projects which Diageo has developed:

www.iblf.org/“>International Business Leaders Forum (IBLF) This is an international not-for-profit organisation promoting responsible business practice. Its line is that in developing or unstable countries, where trust in governments may be low, corporations could take on some social roles typically carried out by the state. In doing so it can ‘reduce the social risks of operating in developing and transition economies, confer competitive advantage, win support of employees and customers, and contribute to vital societal infrastructure.’3 Diageo is a founding member of the IBLF, and Diageo’s CEO Paul Walsh is a deputy Chair. The IBLF’s website, which is sponsored by Diageo, suggests that ‘the organisation has become recognised as an authority on global corporate social responsibility and on facilitating partnership projects between businesses, NGOs and government agencies, and more recently with business schools’. 4 Other principle members of the IBLF include Coca Cola, Nestle, GlaxoSmithKline, BP, and Shell.5

Diageo sponsored the IBLF’s ‘Millennium Campaign on Human Capitalism’ which ‘aimed to establish responsible business practice as a mainstream strategic issue on the corporate agenda,’6 and make it look like corporations can ‘respond to the perceived downsides of development and globalisation.’ It would also allow them a greater public involvement, so that they could play ‘an increasingly pivotal role in shaping not only economic development, but also social and environmental progress.’7 The campaign ran from 1999 to February 2001.

www.tomorrows-people.co.uk/company.htm“>Tomorrow’s People Tomorrow’s People8 is a charity set up by Diageo’s parent company Grand Metropolitan PLC in the 1980s, with the professed aim of helping unemployed people into work by being an ‘expert intermediary between government, businesses and job-seekers.’ The idea behind the charity is that ‘it makes good business sense to reduce unemployment.’9 In that sense, the charity clearly illustrates that CSR serves business needs: boosting social and economic conditions will benefit revenues. Such projects also benefit the company’s reputation and its links with government agencies. The charity has been praised from some quarters for its work.10

The charity is ‘independent,’ but funded by Diageo. Its Board of Trustees include Diageo staff (including Geoffrey Bush, Diageo’s director of Corporate Citizenship), and other business representatives.11 Because of this, priorities in dealing with employment issues will be those of the private sector, though it can apply for government funding to carry out its projects:

‘Tomorrow’s People would urge the Government to engage the private sector in interventions that are business-led, community focused and individually tailored.’12

In the mid-1990s Tomorrow’s People were involved in Project Work, a pre-Blair precursor to the New Deal, which had little credibility with trade unions and local authorities, many of which boycotted it. In January 1997 20 people occupied the offices of Grand Met in London over its involvement in Tomorrow’s People. Tomorrow’s People withdrew their involvement in Project Work in March 1997.

Once again, we see business attempting to blur the line into what should be public policy. Serious questions should be asked as to why business, which is totally unaccountable and un-democratic, believes it has a right to operate in this sphere.

www.diageo.com/pageengine.asp?menu_id=0&site_id=4&section_id=21&page_id=966“>The Diageo Foundation The bulk of the company’s investment in community projects (a commitment of 1% of pre-tax profits, currently about £19 million) is orchestrated through the Diageo Foundation,13 a charity set up by the company ‘to offer ‘kick-start’ funding and expertise for projects within priority themes around the world’.14 (See the ‘Africa’ section under ‘Corporate Crimes’ for more details on the philanthropic projects Diageo supports).

4.1.2. Public Relations

Diageo has consulted a number of PR firms in recent years. The remit of the firms Diageo has consulted, corresponds well with the company’s aim of avoiding criticism and regulation.

www.edelman.com/“>Edelman, the largest independently owned PR company, is a US firm which specialises in advising its clients on how to liaise with NGOs in order to avoid opening themselves to criticism from those NGOs.15
www.experti.com/“>Circulation Experti is a US PR, advertising and marketing consultancy firm dedicated to developing links between companies and ethnic minority communities in the US.16
www.cohnwolfe.com/default.aspx“>Cohn and Wolfe, a large US PR firm,17 was hired in 2003 to steer Diageo’s CSR programme along with Reputation Inc. Cohn and Wolf was given the remit of promoting CSR initiatives to consumers.

In particular, Diageo has invested in PR to boost its relationships with governments, and gain from promoting its CSR work to those who might create legislation regulating alcohol sales and marketing. Firms specialising in this include:

www.quinngillespie.com/“> Quinn, Gillespie and Associates (QGA), a ‘bipartisan public affairs firm that provides strategic advice, public relations services, and government representation to corporations, trade associations and issue-based coalitions.’18 19
www.reputation.com/“>Reputation Inc, which was charged with representing the company on issues of alcohol reform such as licensing laws and taxation, and with communicating the CSR message to governments and NGOs.20

The alcohol industry has taken a dramatically different stance to that of a comparable industry, the tobacco industry, which was heavily regulated by governments around the world once the associated health risks were revealed. In avoiding such a situation, investment in CSR and PR by companies like Diageo and industry bodies, has played a significant role.

4.2.1.PR and the G8

Diageo shares PR company, Abbott Mead Vickers, with the Make Poverty History coalition. It also shares Lexis PR, with the Foreign and Commonwealth Office who have employed Lexis to organise corporate sponsorship for the G8.

4.2 Lobbying

4.2.1. Lobbying Groups

Diageo is involved in a number of lobbying groups in the US and UK devoted to presenting the interests of the alcohol industry to governments. The role played by lobbying groups supplements the role played by PR in establishing networks of relationships between government and industry. In 2003, Diageo spent over £1.3 million on lobbying in the US Senate alone.21

www.parliament.the-stationery-office.co.uk/pa/cm/cmparty/memi140.htm“>All Party Parliamentary Beer Group, UK Diageo is one of the companies funding the British parliamentary group, giving it an annual sum of £4100. The aim of the group is to promote the role of beer and the pub in British society.22 The group, as it turns out, is the biggest industry group in the House of Commons, with 275 member MPs.23
www.wig.co.uk/“>Whitehall and Industry Group, UK Diageo is a member of this group that aims to bring together private and public sector interests in the UK, to ‘improve understanding and co-operation between the public and private sectors.’24

www.alec.org/“>American Legislative Exchange Council, US A membership organisation of state legislators drafting model legislation that often becomes law in the US,25 with a leaning towards big business interests and against environmental regulations. It was condemned by the Defender of Wildlife and the Natural Resources Defence Council in 2002 as constituting a way for corporations to influence state legislative activities. Members of the Private Enterprise Board include Kenneth Lane of Diageo.
www.radanovich.house.gov/wine/“>Congressional Wine Caucus, US The Congressional Wine Caucus includes 250 members of Congress from all 50 US states.26 It holds meetings which host ‘tastings’ funded by the alcohol industry,27 and holds high profile fund-raising events for ‘good causes’ unrelated to alcohol, such as The Children’s National Medical Centre.28 Parallel to this, the function of this caucus is to ‘lobby colleagues on wine-related issues,’29 which, for example, in 2000 meant pressing governments to allow wine bottles to print labels showing the health benefits of alcohol, and to permit alcohol companies to employ ‘temporary immigrant agriculture workers’,30 who, we can assume, would work at lower rates of pay and with less job security. (See the www.corporatewatch.org/?lid=1709“>Corporate Crimes section, ‘Squeezing out Small Businesses’ for more information on Diageo’s activity in California).

4.2.2. ‘Social Aspect Organisations’ (SAOs)

‘The influence of the alcohol industry is exercised through social aspect organisations’ -Global Alcohol Policies Alliance 31

Diageo plays a prominent role in various industry groups that have the professed aim of promoting responsible drinking, but are tied to industry interests and disseminate research on alcohol that promotes an industry agenda. In effect, they occupy an ambiguous space with a role not totally separate from that of the lobbying groups.

These SAOs share Diageo’s stance that moderate consumption of alcohol is beneficial, and that only irresponsible drinking patterns make alcohol dangerous. They also advocate industry partnership in shaping alcohol policy.32 Alcohol campaigning groups have raised concerns over the use of research funded by the industry. A 1996 report by Alcohol Policies Project provided evidence that there is a clear difference in attitudes between those organisations which do or don’t accept funding from the alcohol industry. It concludes that there are ‘serious ethical and political issues concerning the funding of community-based alcohol prevention organizations by entities related to the alcoholic-beverage industry.’33 The Global Alcohol Policies Alliance sees SAOs as ‘created by the beverage industry to promote its interests’ though ‘presented to the public as impartial and objective bodies.’ 34

Unlike many NGO’s, SAOs are extremely well funded, drawing on substantive industry contributions.

www.portman-group.org.uk/“>The Portman Group

‘The Drinks industry has a legitimate and important role to play in combating alcohol misuse’ -The Portman Group 35

A British body of alcohol industry representatives that promote responsible drinking, focusing on education to target the minority of those who misuse alcohol.36 Central to the activities of the Portman Group are the beliefs that ‘the consumption of alcohol in moderation… is compatible with a healthy lifestyle.’ The group suggests that ‘targeted measures are more effective than blanket controls in a society where alcohol misuse is a minority problem.’37 Research supported by the Portman Group in November 2004, suggested that alcohol in moderate quantities is healthy, and that it is the way it is drunk rather than the amount that is dangerous.38 Despite the massive industry funding behind this research, this assumption has been adopted by the UK government whose alcohol policies suggest that binge drinking is the only problematic aspect of alcohol consumption.

www.icap.org/ICAP/index.html“>International Centre for Alcohol Policies (ICAP)

‘Health, quality of life, and responsible drinking are interconnected’ -‘Permission for Pleasure’, a 1998 conference hosted by ICAP and based on a book by its president Marcus Grant.39

A US-based international SAO aiming at ‘helping reduce the abuse of alcohol worldwide through dialogue and partnership involving the beverage alcohol industry.’40 Diageo is a founder, sponsor, and current Chair of ICAP. Similarly to the oil industry approach to climate change, ICAP emphasises the complexity and controversy of the issue under the banner of a ‘balanced approach.’41 For example, its research suggests that there is ‘no causal relationship whatsoever’ between alcohol and violence, and plays the usual industry line that ‘how people drink is at least as important as how much they drink.’42 Its report into drink-driving downplays the importance of blood alcohol level regulation by stressing the lack of consensus around what is an acceptable level;43 a study into mandatory health messages on alcohol labelling highlights uncertainties about the effectiveness of labelling;44 and the Alcohol and Pregnancy report claims that there is ‘insufficient evidence regarding moderate consumption’ for governments to make recommendations.45

In 1995, ICAP entered into a partnership with the US Health department’s Centre for Substance Abuse Prevention (CSAP), which received severe financial cuts from Congress that same year,46 allegedly due to an assault on it by the alcohol industry.47 CSAP and ICAP formed a ‘working group’ which produced a joint publication on alcohol terminology,48 which applauded its role as a ‘non-traditional partnership’ between the ‘alcohol industry and the public health community.’49 In discussing terminology, the report attempted ‘to highlight the controversies inherent in’ terms such as ‘binge drinking’50 and ‘abuse,’51 which allegedly are ‘laden with judgement or emotional baggage’, so should be ‘used with a high degree of awareness about the prejudices’ involved.52 The report also outlines the industry’s objections to stigmatising social drinkers by referring to alcohol as a ‘drug.’53

This approach is far from CSAP’s previous image when it was condemned by neo-liberal thinkers for its ‘aggressive’ anti-alcohol behaviour,54 its promotion of ‘alcohol excise taxes, restrictions on advertising, and destruction of private billboards’55 and its wish to ‘incorporate principles of social justice’ and direct attention towards ‘populations that have been traditionally disenfranchised’,56 by directing federal funds to grassroots campaigning groups.

www.amsterdamgroup.org/“>The Amsterdam Group (TAG) A European-wide group, of which Diageo is a member. TAG suggests that ‘only a balanced approach, where the drinks industry is part of the solution, can help reducing the negative impacts of alcohol abuse on society.’57 TAG’s website contains a section on ‘Scientific Developments’ which ‘covers scientific information on reported potential benefits of moderate alcohol consumption for non-scientists.’58 TAG states that alcohol problems are related not to per-capita consumption but to problematic drinking behaviour, and that collective regulation should not replace individual responsibility.59 In 1998, TAG asked the EC to let it take court action against France’s regulations banning the screening of sports fixtures featuring alcohol advertising.60

www.meas.ie/index.php“>Mature Enjoyment of Alcohol in Society Ltd (MEAS) MEAS is an Irish organisation which ‘envisions an Irish society where alcohol is enjoyed in a mature, sensible and appropriate manner’ and aims to ‘promote the mature enjoyment of alcohol amongst consumers.’ It states that ‘you can have a great time while respecting alcohol and respecting yourself.’61

Other SAOs which Diageo is a member of around the world include:

Goda (Denmark),

Enterprise et Prevention (France),

FISAC (Mexico),

STIVA (Netherlands),

ARA (South Africa),

FAyS – (Spain),

TBAF – (Taiwan),

SASPI – (India),

REACT – (Thailand), which was founded by Diageo.

These SAOs all share with Diageo a platform that the harm alcohol causes coexists with its benefits, and that in moderation, alcohol can be good for you. This approach is shaped by the interests of the industry, despite claims to independence.

4.3 Diageo’s Policy on Responsible Drinking

‘Where alcohol is consumed excessively or irresponsibly, this can create health or social problems for the individual or society’ – CEO Paul Walsh 62

Central to Diageo’s position on alcohol is the idea that while alcohol can cause problems, these are the result of misuse by irresponsible individual consumers, not integral to the drug (See the introduction to the www.corporatewatch.org/?lid=1709“>Corporate Crimes section, for a contradiction of this stance by the World Health Organisation). It is in the context of the possibility that ‘alcohol beverages may be consumed irresponsibly,’ that alcohol creates problems. In fact, Diageo’s policy on responsible drinking focuses on the positive, suggesting that drunk in moderation, alcohol can be healthy. The website boasts that ‘alcohol beverages bring pleasure to millions of adults every day,’ and play ‘a unique part’ in the ‘social lives and celebrations of many cultures.’63 According to another statement on Diageo’s website, ‘excessive alcohol consumption can lead to medical, psychological and social problems’ but ‘a belief in the health benefits of moderate consumption of alcohol has been part of the folklore of many cultures’ and ‘many independent researchers have concluded that there is a scientific basis to some of these beliefs.’64

This idea that alcohol can only be bad for you when operating in an inappropriate context is reflected throughout Diageo’s policy on a number of issues, which highlight individual responsibility:

On under-age drinking, Diageo’s policy acknowledges that ‘it is very important for young people to be educated about the nature and effects of alcohol,’ but qualifies this by shifting the responsibility onto individual families, stating that ‘best way for parents and other role models to influence the likely drinking behaviour of their children is to set an example…by drinking responsibly.’65
On binge-drinking, Diageo claims, in response to the suggestion that marketing has an adverse effect on binge drinking and under age drinking, ‘independent research suggests that many influences besides advertising shape young peoples’ drinking attitudes and behaviour, especially parental and peer influences.’66
And on drink driving, likewise, ‘individual responsibility is paramount.’67 This concern with the effects of alcohol gives the company, in its opinion, a say in formulating government policy on alcohol:‘The public health community has an obvious role to play in helping governments to develop policies and strategies which aim to promote responsible drinking and reduce the incidence of alcohol misuse. Diageo believes that the drinks industry also has an important role to play in support of this effort.’68
Diageo’s presentation of itself as a responsible company benefits its ability to market a product it sees as normalised and non-problematic. By singling out irresponsible misuse of this product, the potential for suggesting that the product itself is not a problem for health and society is protected and even strengthened. This in turn has given the alcohol industry a voice in policy formulation, allowing it to present to the British government a platform which normalises alcohol and criminalises its misuse – a platform the government has been responsive to. The emphasis on education, likewise, supports a shift to ‘choice’ and individual responsibility rather than regulation. Similarly, in choosing to market the alcohol ‘responsibly’ by disassociating it from dangerous or anti-social behaviour, the separation is strengthened between the product and its misuse (See ‘Marketing’ under the www.corporatewatch.org/?lid=1709“>Corporate Crimes section of this profile on advertising to young people). Overall, a platform is presented which is not inimical to the commercial interests of the company and its shareholders, and which is allowed to be propagated to, and to exert an influence on, government.
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4.3.1. Self Regulation of Marketing

Alcohol companies have been anxious to self-regulate and co-operate with government on marketing. This can be seen as an attempt to stave off governmental regulation of alcohol marketing, which compared to tobacco marketing, is subject to little regulation.
Diageo has a Code of Practice on Marketing Alcohol (see also section on ‘Marketing’ under ‘Corporate Crimes’), written in 1998 and updated in 2003.69 There is also a Code of Practice on the Naming, Packaging and Promotion of Alcohol Drinks produced by the Portman Group, an industry body Diageo is closely involved in, written in 1996 and updated in 2003 (see section on the ‘Portman Group’ above).70
The focus of these codes of practice is to protect the industry from complaints and regulation. A conference on ‘marketing alcohol drinks’ in September 2004 had as its aim introducing ‘greater creativity to the marketing process to pre-empt aggressive legislation,’ and offering ideas on ‘how marketers can target two audiences successfully – government and consumers.’71 The Portman Group’s code ‘reflects the industry’s determination to make self-regulation work,’‘fulfils a dual purpose of protecting the public and also ‘protecting the industry from the threat of legislative clampdown that inevitably would arise if self-regulation were to fail,’ so that the ‘socially responsible promotion of alcoholic drinks’ can continue.72
Alcohol support and campaigning groups express concern that the voluntary, self-imposed system of marketing and advertising regulation is not enough. According to Eric Appleby, Chief Executive of Alcohol Concern, ‘we’d also like to see them consider bringing the present voluntary code for marketing, packaging, naming and web promotion of drinks – currently run by the trade’s Portman Group – under a regulatory regime independent of the drinks trade.’73 Likewise, former health minister Frank Dobson sees the Portman code of marketing as a ‘code for rapacious booze producers.’74
www.portman-group.org.uk/codeofpractice/152.asp
4.7 Diageo’s Influence on Education

Diageo ‘is actively involved in community-based alcohol education projects, as well as educating and informing consumers.’75 The company sees education on responsible drinking as a central forum for tackling alcohol related problems, in line with their view of these problems as brought about with individual irresponsible behaviour. Diageo is involved with projects promoting responsible drinking in many countries including Brazil, Peru, South Africa, Uruguay, Chile, Germany, the US, Scotland, Ghana, Seychelles, Thailand and Norway. The idea is that educating about alcohol will allow people to drink in the right way, with catchphrases used such as ‘intelligent consumption’76 and ‘celebrate wisely.’77
The Alcohol Education and Research Council 78
A British body focusing on education relating to alcohol, which includes representatives from the industry as well as from public health and research communities. A Diageo representative is joint Vice-Chair of its Developing Peoples and Organisations Committee.79
Diageo sponsors three publications for teachers, produced by the Teacher’s Advisory Council on Alcohol and Drug Education (TACADE), aimed at educating young people about alcohol.81 Vanessa Williamson, Social Responsibility Project Manager at Diageo GB, is a member of the ‘TACADE peer alcohol education project advisory group.’81
In Australia, Diageo is the main sponsor of the ‘Think Before You Drink’ website, which aims to teach teenagers about the effects of alcohol. The emphasis on the website is on pleasure: there are online games unrelated to the education programme, and the encouragement for children to read the material is that the games’ high scores will only be displayed if they correctly answer a question based on the material.82
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4.4 Diageo’s Links with the Government

Diageo has also appointed a ‘Government Affairs Director’ in the UK for ‘closer liaison’ with government. This is Tim Rycroft, former ‘special advisor’ to the Secretary of State for Health,83 and therefore, we can imagine, able to give the company influential contacts and knowledge within the department most likely to want to impose regulation.
Diageo has also been boosting its links with government through its participation in forums, conferences and seminars in which industry representatives come together with government ministers to play an active role in policy making.
For example, a ‘Responsible Drinking Seminar’ was held on 20th May 2004, which led ministerial policy on alcohol.84 The conference was commissioned and hosted by Diageo. A further link was through the Institute for Public Policy Research (IPPR), which organised the conference, whose founder and leading trustee Baron Hollick is also Diageo’s senior non-executive director.(See www.corporatewatch.org/?lid=1707“>Who, Where, How Much section of this profile.)85 The conference spearheaded the government’s policy of partnership with the industry, and the focus on social rather than health problems associated with alcohol. It was attended by the Prime Minister Tony Blair, who said that binge-drinking was in danger of becoming ‘the new British disease,’ as well as by Home Office Minister Hazel Blears, Public Health Secretary Melanie Johnson, and representatives from the police and health services.86
On 7th September 2004 a Westminster Diet and Health Forum National Seminar was held on ‘Alcohol, Advertising Regulation, Licensing and Public Health,’ to examine reform on alcohol regulation, and contribute to comprehensive briefing documents for senior policy makers. Speakers at this conference included Tim Rycroft, Diageo’s ‘Government Affairs director,’ as well as other members of the Portman Group.
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4.4.1. Impact on Policy

‘Public health policies concerning alcohol need to be formulated by public health interests, without interference from commercial interests.’87
World Health Organisation, 2001
This section will look at the case of current British alcohol policy, which has proved amenable to industry interests, to the severe concern of alcohol campaigning groups and health experts.
The government has issued statements that echo the language used by the industry. In January 2005 the government stated that alcohol policy ‘requires partnership working at both national and local level,’ including with ‘the drinks industry,’ and expressed the aim of creating ‘a culture where drinking sensibly is the norm.’88
Tony Blair, speaking at the IPPR ‘Responsible Drinking Seminar’ which Diageo hosted in May 2004, sounded not unlike Paul Walsh, Diageo’s CEO, in his attack on irresponsible binge drinking and defence of moderate drinking and industry partnership:
‘Millions of people drink alcohol responsibly every day. No-one wants to stop that pleasure. But there is a growing problem on our town and city centre streets on Friday and Saturday nights…I know the industry is working hard on codes of practice… I want to give the industry a chance to build on the good work that I know is already out there and to prove that it is committed to tackling the problems of binge drinking.’89
The section will look first at the generalised strategy of the Blair government on alcohol, released in March 2004, and its priorities, then at specific items of legislation over the last few years, then at general trends in the corporatisation of politics:
National Alcohol Harm Reduction Strategy
Blood Alcohol Level, 2002
Increase in Licensing Hours, 2003
Measures Targeting the Individual, 2004-5
Corporate Involvement in Policy

Partnership with the Industry: National Alcohol Harm Reduction Strategy, 2004

On 15th March 2004 the government published its ‘Alcohol Harm Reduction Strategy for England and Wales.’ The focus of the policy was on self-regulation, and it structured its proposals around the interests of the alcohol industry. The strategy was underpinned by the idea of cooperation with the industry, which it saw as ‘a substantial and valuable part of the UK economy and society,’ with ‘a valuable role in helping to prevent and tackle the harms caused by alcohol misuse.’ The Report congratulated the industry’s self regulation and formulated a scheme of further self-regulation, participation in which ‘should initially be voluntary’ as ‘we are keen to allow the industry to demonstrate its willingness to abide by best practice.’90 This overlooked advice to regulate rather than cooperate with the industry. Martin Plant, Professor of Addiction Studies, said that:

‘voluntary agreements have a tendency to result in token or minimal compliance. The latter is unacceptable in relation to such an important health and social policy issue as alcohol.’91

Public health and voluntary sector experts criticised the policy, seeing it as ‘a disappointment and a sop to the industry’ (Professor Christine Godfrey, advisor to the Strategy Unit).92 Allegedly, the industry responded with relief to the policy, Jean Coussins, Chief Executive of the Portman Group saying ‘I am pleased that the government has recognised that it can build on the good practice already in place amongst leading companies within the industry.’93 In line with industry suggestions and against public health advice, the strategy targets a minority of binge drinkers rather than overall consumption of alcohol, taking up the industry’s emphasis on ‘public order’ rather than health, and the industry’s assumption that harm is caused not by alcohol consumption itself but the amount consumed and behavioural patterns of those drinking.

Many health experts dispute the industry assumption about alcohol harm, suggesting that liver failure caused by sustained drinking, rather than anti-social behaviour caused by binge-drinking, account for the majority of people treated in Accident and Emergency for problems caused by alcohol.94

Alcohol Concern suggested that ‘the failure of the strategy to tackle per capita consumption represents a failure of political will and a breakdown of ‘joined-up government’, with departments working with the industry winning a flawed strategy over those responsible for protecting the nation’s health.’95 Richard Doll, a leading epidemiologist pointed to a 1000% increase in liver cirrhosis over the last 30 years, which was left out of the report, and stated that:

‘Every scientific committee I have ever sat on has concluded that reduction in harm caused by drinking can only be achieved by reducing our overall consumption. It just doesn’t work to target a minority. The only people I have seen recommend this are the strategy unit.’96

The effective result of these priorities are policies which include partnership with the industry, education campaigns, and targeting of individual anti-social behaviour. Those measures which could have harmed the industry, including targeting of drinking venues, advertising and drinks prices, were ignored despite their preference by health experts.97

The overall attitude of the government was summed up well by home office minister Hazel Blears:

‘I respect the scientific view, but it wasn’t for us. We needed practical measures.’98

Blood Alcohol Level, 2002 In March 2002 the UK government went back on its 1998 plan to reduce the blood alcohol concentration limit for drink-driving from 0.08% to the EU level of 0.05%. A House of Lords Committee noted that ‘this decision [not to reduce the level] contradicts all the evidence we have received’ and that ‘the Department’s position coincides with that of the alcohol industry,’ despite opposition from ‘local authorities, the police, the British Medical Association, the Automobile Society, the Royal Society for the Prevention of Accidents, the Transport Research Laboratory, and the Parliamentary Advisory Committee for Transport Safety.’99 The decision not to reduce the acceptable level came after meetings between the department and the Portman group, who despite their anti-drink-driving campaigns100 were against the reduction when it was proposed in 1998,101 and the government drew on research carried out by the Portman Group in their 2002 decision.102 Allegedly, The chair of the House of Lords Committee, a Labour peer, noted that he ‘was surprised by the apparent influence of the drinks industry.’103

Increase in Licensing hours, 2003 In 2003 the government extended potential licensing hours, with local authorities able to grant a license for up to 24 hours from February 2005.104 This despite substantial concerns about binge-drinking and widespread belief that extended licensing hours would contribute to it. The government department responsible for licensing hours is the Department for Culture, Media and Sport (DCMS), which makes it separate from other areas of alcohol policy under the Home Office and Office of the Deputy Prime Minister (ODPM), a concern of tourism and entertainment rather than health or crime. Journalists, the wider public, statutory agencies and alcohol campaigning groups have expressed concerns that the extended licensing hours will lead to an increase in crime and violence associated with alcohol. A report by the Metropolitan Police contradicts the government claims for the new Licensing Act, forecasting an increase in drink-driving due to the lack of late night public transport, a growth of illegal taxis, and greater disturbance to residents,105 and suggests that ‘with the drinking culture that is firmly entrenched in the country, the relaxations in permitted hours will for the foreseeable future fuel this culture.’106

Although the 2003 Act states that license extensions will ‘still need the licensing authority’s agreement,’ after objections have been made by the police and local people,107 the DCMS published a Draft Guidance in March 2004 which restricted the scope of licensing authorities. In the view of researcher, Robin Room, the guidance reveals a successful campaign on the part of the industry to ensure government limits the possibilities open to local authorities and thereby ensure their interests are protected from local authorities who may be less flexible towards them than central government.108 In the guidance, the first stated aim of the act is to ‘give business greater freedom and flexibility.’109 The remit of licensing authorities is limited to a certain scope and cannot be ‘aspirational,’ ‘for example, conditions may not be attached which relate solely to the health of customers rather than their direct physical safety,’ as that is not a concern of this piece of legislation.110 Additionally, once people are ‘beyond the vicinity of the premises’ concerned, their behaviour is a matter ‘for personal responsibility of individuals under the law.’111

On 21st January 2005 the government announced measures to counteract the possible dangerous effects of the licensing overhaul, including banning orders on people persistently drunk and disorderly, and charges on pubs to pay for further policing in areas judged as ‘alcohol disorder zones,’ after a warning.112 Srabani Sen of Alcohol Concern, suggested the charges would be insufficient, with the taxpayer continuing to pay for increased policing needs.113

Measures Targeting the Individual114

Alcohol policy reflects the ideological affinities of the Blair government including its tendency to define social problems in individual terms without reference to their social context, and to find solutions which focus on the behaviour of the individual. This correlates well to the alcohol industry’s focus on individual misuse of alcohol, which the government has adopted in the policies described above. At the heart of the policy is a range of measures aimed at the individual which suggest their blame for these problems and the industry’s innocence. These include on-the-spot fines in the form of fixed penalty notices (FPN) and penalty notices for disorder (PND),115 acceptable behaviour contracts, and anti-social behaviour orders (ASBOs).116 On January 21st 2005, the government announced a system of drinking banning orders for anyone who had had three on-the-spot fines or convictions, to function similarly to ASBOs.117 According to Home Office Minister Hazel Blears, ‘it is very much built on the idea that it will be a swift punishment for people.’118

Corporate Involvement in Policy

The involvement in policy formulation given to companies, whose interests will always focus on profit however much they are committed to social responsibility, fits in well with the business-oriented priorities of Britain’s New Labour government. As shown in the above examples, alcohol campaigning and support groups as well as public health experts believe that this amount of influence is inappropriate where a serious health issue is at stake, and that Diageo and the industry bodies it is involved in are dictated by corporate needs. On the influence of social aspect organisations on policy, the Global Alcohol Policy Alliance state that,

‘the view of Social Aspect Organisations that they have an equal place at the policy table fails to recognise that the evidence that they bring to the table is not impartial and favours the commercial interests of the beverage alcohol industry.’119

References 1 Jo Revill, ‘Mid-life drinkers who booze at home risk disease,’ The Observer, 23.01.05 http://observer.guardian.co.uk/politics/story/0,,1396586,00.html – viewed 07.02.05

2 Chief Executive’s Review, Diageo Annual Review, 2004 http://web16729.vs.netbenefit.co.uk/c2.htm viewed 05.05.05

3 IBLF, ‘Diageo’ www.iblf.org/csr/csrwebassist.nsf/content/f1b2a3g4.html viewed 24.11.04

4 ibid.

5 IBLF, ‘Members’ www.iblf.org/csr/csrwebassist.nsf/content/f1b2a3.html viewed 24.11.04

6 ‘IBLF in action – principle branded programmes’ www.iblf.org/csr/csrwebassist.nsf/content/f1c2a3.html#1- viewed 24.11.04

7 The Human Capitalism Campaign, www.iblf.org/csr/csrwebassist.nsf/content/f1c2a3h4.html – viewed 24.11.04

8 Tomorrow’s People, 4th Floor, Rothermere House, 49-51 Cambridge Rd., Hastings East Sussex TN34 1DT 01424 718 491; http://fame.bvdep.com/cgi/template.dll?context=33Y78C&tpl=reportframe&bitnr=805522&pushlink=0 9 Tomorrow’s People Website, www.tomorrows-people.co.uk/company.htm – viewed 20.01.05

10 Andrew Clark, ‘Spirit of Healing,’ the Guardian 05.11.01,

http://society.guardian.co.uk/givinglist/story/0,,579397,00.html – viewed 25.01.05

11 Tomorrow’s People, www.tomorrows-people.co.uk/company.htm – viewed 20.01.05

12 Memorandum Submitted by Tomorrow’s People to the House of Commons Select Committee on Work and Pensions, April 2002, www.publications.parliament.uk/pa/cm200102/cmselect/cmworpen/815/2050806.htm – viewed 09.02.05

13 Andrew Clark, ‘Spirit of Healing,’ the Guardian 05.11.01,

http://society.guardian.co.uk/givinglist/story/0,,579397,00.html – viewed 25.01.05

14 The Diageo Foundation, www.diageo.com/pageengine.asp?menu_id=0&site_id=4&section_id=21&page_id=966 15 Disinfopedia, www.disinfopedia.org/wiki.phtml?title=Edelman – viewed 20.01.05

16 Disinfopedia, www.disinfopedia.org/wiki.phtml?title=Circulation_Expert%ED – viewed 20.01.05

17 John Merson, ‘A Trojan Horse?’, http://evatt.labor.net.au/publications/papers/122.html, viewed 28.11.04

18 Disinfopedia, www.disinfopedia.org/wiki.phtml?title=Quinn_Gillespie_%26_Associates – viewed 24.01.05

19 Quinn Gillespie, www.quinngillespie.com/ – viewed 20.01.05

20 Ravi Chandiramani, ‘Diageo hires Reputation Inc and C&W to CSR accounts’, PR Week 31.10.03, www.prweek.com/news/news_story.cfm?ID=193821&site=1 21 United States Senate Office of Public Records http://sopr.senate.gov/ – viewed 15.02.05

22 Disinfopedia, www.disinfopedia.org/wiki.phtml?title=Beer_Group_APPG – viewed 01.12.04

23 ‘Disabling the Public Interest:Alcohol Strategies and Policies in England,’ Centre for Social Research on Alcohol and Drugs, Institute for Alcohol Studies 2004 Issue 3 www.ias.org.uk/publications/alert/04issue3/alert0403_p6.html viewed 04.02.05

24 www.wig.co.uk/ viewed 29.11.04

25 www.disinfopedia.org/wiki.phtml?title=American_Legislative_Exchange_Council 26 Congressional Wine Caucus www.radanovich.house.gov/wine/ – viewed 15.02.05

27 Millie Howie, ‘Keeping Wine on the Congressional Agenda,’ November/December 2001, www.practicalwinery.com/novdec01p9.htm – viewed 15.02.05

28 Wine America – the National Association of American Wineries, www.americanwineries.org/newsroom/caucuschildren.htm – viewed 24.01.05

29 ‘Congressional Wine Caucus Grows,’ the Crush, April 2002, www.cawg.org/pdf/crush02apr.pdf – viewed 25.01.05

30 ‘Lobbying by wine caucus is vivacious yet earnest,’ Atlanta Journal and Constitution, 23.03.00, www.radanovich.house.gov/wine/press/032300AVAreception.htm – viewed 24.01.05

31 Eurocare – Advocacy for the Prevention of Alcohol related harm in Europe, ‘the Beverage Alcohol Industry’s ‘Social Aspect Organisations: A Public Health Warning’ 2002 www.ias.org.uk/publications/theglobe/02issue3/globe0203_index.html – viewed 15.02.05

32 Sally Jackman and Linda Hill, ‘Global Perspectives on Alcohol Marketing, New Zealand Drug Foundation,’ 26.05.03 www.adf.org.au/pdf/dyp/GlobalPerspectives_screen.pdf – viewed 24.01.05

33 ‘Paying the Piper: The Effect of Industry Funding on Alcohol Prevention Priorities’, 1996 www.cspinet.org/booze/ppstudy.html, – viewed 24.01.05

34 Eurocare – Advocacy for the Prevention of Alcohol related harm in Europe, ‘the Beverage Alcohol Industry’s ‘Social Aspect Organisations: A Public Health Warning’ 2002 www.ias.org.uk/publications/theglobe/02issue3/globe0203_index.html – viewed 15.02.05

35 The Portman Group, www.portman-group.org.uk/about/121.asp – viewed 29.11.04

36 Disinfopedia, www.disinfopedia.org/wiki.phtml?title=Portman_Group – viewed 22.11.04

37 The Portman Group, www.portman-group.org.uk/about/121.asp – viewed 29.11.04

38 Robin McKieDrink Like the French and Stay Alive, The Observer, 28.11.04 http://observer.guardian.co.uk/uk_news/story/0,,1361282,00.html 39 ICAP website, ‘Executive Summary: Alcohol and Pleasure: A Health Perspective’, www.icap.org/download/all_pdfs/book_exec_summary_pdfs/alcohol_pleasure.pdf, last viewed 04.04.05

40 ICAP website, www.icap.org/ICAP/about_ICAP/sponsors/index.html – viewed 07.02.05

41 ICAP website, ‘Letter from the President’, www.icap.org/about_icap/about_icap.html 42 ICAP website, ‘ICAP approach: Patterns’, www.icap.org/ICAP/index.html – viewed 07.02.05

43 ICAP website, Issue 11, May 2002, Blood Alcohol Concentration Limits Worldwide, www.icap.org/download/all_pdfs/ICAP_Reports_English/report11.pdf, viewed 04.04.05

44 ICAP website, ‘Health Warning Labels’, Issue 3, 1997, www.icap.org/download/all_pdfs/ICAP_Reports_English/report3.pdf, last viewed 04.04.05

45 ICAP website, ‘Governemnt Policies on Alcohol and Pregnancy,’ Issue 6, January 1999, www.icap.org/pdf/report6.pdf – viewed 29.11.05

46 ‘Director’s Report to the National Advisory Council on Drug Abuse, September, 1995’ www.drugabuse.gov/DirReports/DirRep995/DirectorReport8.html, viewed 24.11.04

47 Hillary Abramson, ‘Big Alcohol puts on a Front’, Multinational Monitor, December 1998, http://multinationalmonitor.org/mm1998/98dec/front1.html, viewed 15.02.05

48 Center for Substance Abuse Prevention/International Center for Alcohol Policies, Joint Working Group on Terminology, Working Papers, www.icap.org/download/all_pdfs/Other_Publications/CSAP_ICAP_Terminology.pdf viewed 05.05.2005

49 ibid. (Preface Karol Kumpfer, PhD), p1

50 ibid. p8

51 ibid.p6

52 ibid.p6

53 ibid. pp14-15

54 The Center for Substance Abuse Prevention (CSAP): What You Didn’t Know, David J. Hanson, PhD www.alcoholfacts.org/, viewed 25.11.04

55 ‘Paying for other people’s politics’, Doug Bandow, www.libertyhaven.com/theoreticalorphilosophicalissues/protectionismpopulismandinterventionism/peoplespolitics.html 56 Testimony before the House Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, 20.06.95, www.cato.org/testimony/ct-ab629.html, viewed 25.11.04

57 The Amsterdam Group, www.amsterdamgroup.org/main.html viewed 29.11.04

58 The Amsterdam Group, www.amsterdamgroup.org/main.html viewed 29.11.04

59 The Globe, Issue 1 2002, Global Alcohol Policy Alliance, www.ias.org.uk/publications/theglobe/02issue1/globe0201_p8.html viewed 29.11.04

60 Ethical Consumer Magazine, Issue 75 February-March 2002, Research Supplement, Beer Lager and Cider, p. 4 – 5. ECRA Publishing Limited issue 75 March 2002

61 Mature Enjoyment of Alcohol Society, www.meas.ie/ viewed 29.11.04

62 Diageo Annual Report 2004, www.diageo.com/download%5C3000—R531.pdf – viewed 15.02.05

63 Diageo website, ‘Responsible Drinking’ www.diageo.com/pageengine.asp?menu_id=0&site_id=4&section_id=21&page_id=46 viewed 24.11.04

64 Diageo website, ‘Diageo’s Policy on Alcohol Issues,’ www.diageo.com/download%5C3000—R400.pdf – viewed 07.02.05

65 Diageo website, ‘Diageo’s Policy on Alcohol Issues,’ www.diageo.com/download%5C3000—R400.pdf – viewed 07.02.05

66 Diageo Corporate Citizenship Report, 2004 www.diageo.com/download%5C3000—R532.pdf p. 12 viewed 15.02.05

67 Diageo website, ‘Diageo’s Policy on Alcohol Issues,’ www.diageo.com/download%5C3000—R400.pdf – viewed 07.02.05

68 ibid.

69 Diageo Code of Marketing Practice for Alcoholic Beverages, www.diageo.com/download%5C3000—R401.pdf – viewed 15.02.05

70 The Portman Group, Code of Pratice on the Naming, Packaging and Distribution of Alcoholic Drinks, 2003 www.portman-group.org.uk/codeofpractice/152.asp – viewed 10.02.05

71 World Advertising Research Centre Limited, 9th Annual 1 day Conference, ‘Marketing Alcoholic Drinks,’ 28.09.04 http://store.warc.com/ProductInfo/3279.asp – viewed 10.02.05

72 The Portman Group, Code of Pratice on the Naming, Packaging and Distribution of Alcoholic Drinks, 2003 www.portman-group.org.uk/codeofpractice/152.asp

Further Information and Resources

Campaigning Groups Dealing with Alcohol Issues, and Support Groups

Institute of Alcohol Studies http://www.ias.org.uk/ The Institute of Alcohol Studies aims to ‘increase the understanding of alcohol and of public policies necessary to reduce the problems associated with its use.’ Its research and publications look critically at government policies for dealing with alcohol.

Alcohol Concern http://www.alcoholconcern.org.uk/ Alcohol Concern is an important British alcohol agency working ‘to reduce the incidence and costs of alcohol-related harm,’ and it also works to influence public policy. See some of their press releases about recent policy:
www.alcoholconcern.org.uk/servlets/doc/897 www.alcoholconcern.org.uk/servlets/doc/827 www.alcoholconcern.org.uk/servlets/doc/813)

World Health Organisation (WHO) www.who.int/en/ In highlighting the global health costs of alcohol, the WHO has also questioned the role of alcohol corporations and the leverage given to them. For example see their Global Status Report on Alcohol Policy, www.who.int/substance_abuse/publications/alcohol/en/)

Thalidomide UK www.thalidomideuk.com/ The support, advocacy and campaigning organisation for survivors of thalidomide in the UK. In recent years they have campaigned on issues surrounding the compensation received by survivors from Diageo and parent company Distillers who manufactured the drug in the 1950s.

Campaign for Real Ale www.camra.org.uk/SHWebClass.asp?WCI=ShowCat&CatId=221 A consumer group defending British real ale, who see part of their campaign as defending small brewers and independent, small scale production of ale from takeovers by large multinational companies. See their campaign on breweries at risk.

The Centre for Recovery www.recovery.org.uk/

Royal College of Physicians www.rcplondon.ac.uk/

Alcoholics Anonymous www.alcoholics-anonymous.org.uk/

Turning Point www.turning-point.co.uk/

British Medical Journal http://bmj.bmjjournals.com/

Interesting Articles on Diageo and related issues

Robin Room, ‘Disabling the Public Interest: Alcohol Strategies and Policies for England,’ Centre for Social Research on Alcohol and Drugs, March 2004www.ias.org.uk/publications/alert/04issue3/alert0403_p6.htmlA powerful article about how the UK government’s alcohol policy has been created with the interests of the industry in mind.
Hillary Abrahamson, ‘Big Alcohol Puts on a Front,’ Multinational Monitor December 1998, vol 19 no 12 http://multinationalmonitor.org/mm1998/98dec/front1.html
Sally Jackman and Linda Hill, ‘Global Perspectives on Alcohol Marketing,’ New Zealand Drug Foundation, May 2003www.adf.org.au/pdf/dyp/GlobalPerspectives_screen.pdf

‘The Beverage Alcohol Industry’s Social Aspect Organisations: A public Health Warning.’ Eurocare Advocacy for the Prevention of Alcohol Related Harm in Europe,www.eurocare.org/publications/socialaspects.pdfAlcohol Policies Project, ‘Paying the Piper: The Effect of Industry Funding on Alcohol Prevention Priorities,’ 1996
www.cspinet.org/booze/ppstudy.html
These two articles show the impact of industry funding of research into alcohol harm.

The Guardian has a number of articles and features about the problems with alcohol abuse in Britain. See for example:

Jay Rayner, On the Streets of Binge Britain, 05.09.2004
Alan Travis, Drinkers Face Three Strikes Ban, 22.01.2005 and Peter Hetherington, ASBOs are not just for Yobbos, 08.09.2004 – on the focus of government alcohol policy (as well as other policy areas) on marginalising invdividuals guilty of irresponsible behaviour, rather than on regulation
Sarah Hall, New wave of ‘sophisticated’ alcopops fuels teenage binge drinking, 14.12.02 about the role of marketing of alcopops in fuelling unde-age binge-drinking
Adrian Levy and Cathy Scott-Clark, Under the Influence, 20.11.04
Julia Finch, Drink Firm’s Shock for Bingers, 09.10.04

An article in The Telegraph about the Metropolitan Police warning on the dangers of increased licensing hours: Philip Johnston, 24 hour drinking “will fuel crime”, 20.03.04

BBC News articles:

About the pressure on the NHS caused by alcohol: Alcohol puts huge pressure on NHS, 6.03.04
About marketing: ‘Creative Adverts’ Selling Drinks, 15.03.04
About the Guinness Affair: Mike Verdin, Guinness Four fail in fight for acquittal, 21.12.01
About whiskey in Scotland: Whisky prices anger Scots farmers, 28.02.2002; Diageo Attacked over whiskey cuts, 23.07.04