Diageo will lose more than it gains from Kilmarnock closure

Published on Thursday 2 July 2009 20:02

CONSIDER the case of two iconic drinks brands and the conglomerate that owns them – Guinness and Johnnie Walker, both made by Diageo.

In 1759, Arthur Guinness leased the St James's Gate brewery in Dublin for 9,000 years. By 1914, St James's Gate was the biggest brewery in the world. Even today it remains the largest stout producer on the face of the planet and the iconic home of the drink Ireland gave to the world. The visitor centre at St James's Gate is Ireland's No 1 tourist attraction – more than four million people have visited it since 2000. But two years ago, at the height of the Irish property boom, the Diageo bean-counters in London concocted plans to close the brewery at St James's Gate and sell the land for houses. The gale of protest that erupted caused Diageo to back off. Guinness will continue to be made in Dublin and 8,750 years remain on the St James's Gate lease.

Now look at what is happening in Kilmarnock, the home of Johnnie Walker blended whiskies since 1820. Johnnie Walker is the most widely drunk brand of blended Scotch in the world, with annual sales of over 130 million bottles. And each and every one bears the word Kilmarnock on the label. But this has not stopped Diageo from deciding to close the Johnnie Walker packaging plant in Kilmarnock, wiping out 700 jobs and ending the historic link with the town. Diageo pleads it will create new jobs by expanding its packaging plant in Fife.

No-one can really fault Diageo for trying to remain competitive, especially in a recession. Diageo expects to generate cost savings of 120 million in the financial year ending 30 June 2010 and another 40m the year after. However, much of that is coming from Scotland, though the company also has manufacturing facilities in the United States, Canada, mainland Europe, Africa, Latin America, Australia, India and the Caribbean. Have Diageo's management in London truly considered the blow to the Johnnie Walker brand and Diageo's name in Scotland, of cutting the link with Kilmarnock?

For instance, would non-executive board member Laurence Danon, a former civil servant at the French ministry of industry and energy, sit by and let Diageo "rationalise" production in France? We know the answer to that without thinking. Another Diageo non-exec is Nick Rose, who is also on the board of ScottishPower. Is he comfortable with the possible negative impact on Diageo's reputation in Scotland likely to arise from the sacking of 700 workers in a town with a population of only 44.000? Yet another director is Paul Walker, who also sits on the board of MyTravel Group. Has Mr Walker asked himself why Diageo invested 2.5 million in the St James's Gate visitor attraction in 2006, yet has not had the imagination to do anything similar in Kilmarnock?

The word Diageo is formed from the Latin dia (day) and the Greek geo (world), symbolising the company's presence every day, everywhere. Everywhere except in Kilmarnock.

Afghanistan strategy is a calculated risk

THE war in Afghanistan has reached a decisive stage. The Taleban insurgents have a significant presence in about 100 of Afghanistan's 400 administrative districts, with 11 entirely in their hands. Nato forces are now trying to break Taleban control of the latter, ahead of the August presidential elections. Some 4,000 US marines fresh from Iraq are now trying to seize the lower Helmand River valley, the heartland of the Taleban insurgency and the major area for the production of opium. Last week,

It is a sad reflection on western strategy that eight years after the UN-sanctioned invasion of Afghanistan swept the Taleban from power, we should still be embroiled in that country. The lesson is that we need a permanent solution for Afghanistan's woes, or western troops still will be dying in Helmand a decade from now. This latest offensive against the Taleban is a calculated risk. It deserves to succeed. But if it fails, we need to take stock.

President Hamid Karzai will probably win the election but he is far from popular and his writ does not run outside of Kabul. The American policy of trying to eradicate opium production has failed and the Afghan economy remains a basket case. The best hope is that more "moderate" Taleban can be persuaded (or bribed) to enter the political process, letting western troops leave the country as soon as possible.

No more Mr Nice Guy, it's time we had a winner

IT is unlikely that Andy Murray will read these words. Quite rightly, he has decided to ignore the crescendo of media interest surrounding his steady progress to becoming – fingers crossed, knock on wood – the first Briton since Fred Perry in 1936 to win the men's title at Wimbledon. Instead, he is concentrating on his game. Apart from the odd photo opportunity and the wearing of silly hats, that is.

Today, Murray confronts the two-time Wimbledon finalist Andy Roddick, in the semi-finals. In previous encounters, Murray has beaten Roddick six times, including a straight-sets win at Wimbledon back in 2006. So Britain can afford to get its hopes up that our Andy can beat the Tim Herman jinx. Herman reached the Wimbledon semi-finals on four occasions, always to be denied a place on the Centre Court for the finals. If Murray wins today, his place is assured in the history books. Meanwhile, Roger Federer remains the bookies' favourite to win the championship. But even here, we are allowed to cheer for Andy, who has a 6-2 winning streak against the Swiss and bested him at their last four meetings.

It is said that Tim Herman was too nice a guy to have the aggression needed for the final push to the top. So it's down to self-confidence and if you're reading, Andy, we don't want you to be Mr Nice Guy, we want you to win.