icensing production rather than investing directly in overseas breweries cuts down on the companys fixed asset investments and the provides the opportunity to exit any underperforming markets quite cheaply. Weaknesses- Even though Guinness products are available world-wide, $1.45bn of the companys $3,520bn turnover comes from the Irish market. Such an over-reliance would have an impact on the groups performance if the Irish economy were to go into recession.- The specialist beer market is growing rapidly, and consumers are willing to pay significantly higher prices for them . The Diageo brand portfolio does not include any speciality beers.- Diageo has only two lagers in its portfolio, neither of which are international brands. This weak portfolio means that Diageo is lagging behind in the lager sector, the largest part of the beer market .- The companys tactic of licensing the brewing of its products in overseas markets could be a source of weakness. This method of international expansion could prove risky - there is a danger that overseas agents pay more attention to their own domestic brands than those of Diageo.- The brewing division of Diageo accounts for only 17% of the overall group turnover - there is a danger that management resources could be focused on the larger spirits and restaurant divisions to the detriment of Guinness. Opportunities- EU expansion will bring new markets and millions of potential customers.- Population growth in the developing world will bring additional customers in the future.- Chinese beer consumption is growing by 10% p.a.- it is now the second largest market behind the US . Diageo could acquire a Chinese brewer to gain access to the market for its major brands, while also using some of the brands of the acquired company to meet the global demand for speciality beers.- The growing popularity of specialist beers - consumers of these beers are not particularly price sensitive, and they ...
