Diageo bets on ecommerce in Brazil to make up for closed bars and restaurants

By Gabriela Mello

SAO PAULO, June 26 (Reuters) – Diageo Plc, the world’s largest spirits maker, has doubled efforts to strengthen its presence in e-commerce channels in Brazil as the coronavirus pandemic triggered lockdowns, driving customers to drink at home, a company executive said on Friday.

“Consumption at home has increased significantly over the past three months, but does not fully compensate revenue lost with the closure of bars, restaurants, nightclubs and events,” Diageo’s managing director for Brazil, Paraguay and Uruguay, Gregorio Gutierrez, told Reuters in an interview.

He did not specify how much sales have fallen in the region since the outbreak started, but noted that the so-called “on-trade: segment – in which alcoholic drinks are sold for consumption in licensed premises – represents between 40% and 50% of Diageo’s business.

“As soon as these on-trade channels closed, we reallocated our resources to an online task force,” Gutierrez added.

The Johnnie Walker whisky maker currently has partnerships with major retailers in Brazil, including international players such as Amazon.com and MercadoLibre, as well as the local subsidiaries of French supermarkets groups Casino Guichard Perrachon SA and Carrefour SA.

Despite efforts to boost online channels, Brazil’s alcoholic beverages association Abrabe estimates the coronavirus crisis reduced total sales by an average of 50%.

Brazil has become the epicenter of the coronavirus outbreak in Latin America, reaching over 1.2 million confirmed cases and almost 55,000 deaths by June 25, according to Health Ministry data.

For Gutierrez, it is still difficult to tell when Diageo’s operations should return to pre-COVID-19 levels even as authorities begin to lift restrictions in some locations.

In Sao Paulo, Brazil’s most populous city and the first to confirm a coronavirus case, bars and restaurants are allowed to reopen as of July 6.

In the meantime, the Tanqueray gin maker has been working to prepare its partners for the reopening, setting aside US$100 million to help bars and restaurants around the world. (Reporting by Gabriela Mello; editing by Jonathan Oatis)