Diageo's Marketing Under Review - Analyst Blog

By Zacks Equity Research,

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Reportedly, the world's leading brewer, Diageo Plc. ( DEO ), has been asked by the Federal Trade Commission ( FTC ) to provide the details of its digital marketing and data collection.

The commission has taken this measure to stop the underage teens getting access to the advertisements and promotions undertaken by the alcohol company. This initiative is a part of FTC's periodic review and it is aimed at finding how effective the industry's voluntary guidelines are in reducing marketing messages to underage audiences.

However, Diageo can be claimed to be a socially responsible company and has taken active part in supporting the FTC's public awareness programs. In September 2010, Diageo had announced its active support for the agency's anti-underage drinking campaign, We Don't Serve Teens. This campaign aims at making the adults aware that they should stop providing alcohol beverages to the underage drinkers and it is an endeavor to reduce underage drinking in US.

In the same year, the company was honored by the Washington Regional Alcohol Program ( WRAP ) for the second year in a row for its whole-hearted support of WRAP's efforts to combat underage drinking and drunk driving in the Washington Metropolitan Area.

Moreover, Diageo had urged its wine lovers to drink responsibly during the holiday season of 2011.

The retail giant took several steps to promote responsible drinking and also distributed thousands of free water bottles that provided the party-goers with tips on responsible drinking. The water bottles were distributed on the popular party nights of the last holiday season in the busiest party circuits of London.

The FTC has also asked several other alcohol companies like Anheuser-Busch InBev ( BUD ) and Pernod Ricard to provide the same information by June 11 this year.

Over the years, alcohol advertisements have followed stricter rules and the commercials are now flashed in such a way so that 70% of the audience is 21 and older. Previously in 2003 the threshold was determined at only 50%.

Diageo, which faces stiff competition from Molson Coors Brewing Company ( TAP ) holds a Zacks #3 Rank, which translates into a short-term Hold rating. Currently, we have a Neutral recommendation on the stock.

ANHEUSER-BU ADR ( BUD ): Free Stock Analysis Report
DIAGEO PLC-ADR ( DEO ): Free Stock Analysis Report
MOLSON COORS-B ( TAP ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BUD , DEO , FTC , TAP , WRAP

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