When Newbold died in the late s, Beaver assumed the position of managing director. He is credited with modernizing the company's operations, introducing new management and research policies, increasing exports, and diversifying the company's product base. On his initiative the company was officially divided into Guinness Ireland and Guinness U.
Beaver was also a strong advocate of generating new ideas through brainstorming sessions. One now-famous product to emerge from these meetings was Harp lager. When Britons began taking their holidays abroad during the s, they returned home with a new taste for chilled lager. Beaver sensed this changing preference, and during one intensive company meeting, executives decided that Guinness should become the first local firm to market its own lager. Named for the harp on Guinness's traditional label, Harp lager soon became the most successful product in the growing British lager market.
Beaver is also recognized as the founder of the extraordinarily successful publication Guinness Book of Records. Initially created as something of a lark, the book was such a success throughout the world, that it became a company tradition. By the late s the Guinness Book of Records was selling some five million copies in 13 different languages. Beaver, now Sir Hugh, retired in , but throughout the next decade Guinness continued to expand--notably abroad, in countries with warm climates.
Consistent with this strategy, the company constructed new breweries in Nigeria and Malaysia--then a second and third brewery in Nigeria as well as breweries in Cameroon, Ghana, and Jamaica. Guinness also developed a new product during this period, Irish Ale, which was exported to France and Britain. To offset the declining market for stout, the company began to diversify into pharmaceuticals, confectionery, and plastics, as well as other beverages.
Although both sales and earnings per share had doubled between and , Guinness entered the s confronting a number of problems.
Compared to those of its competitors, the company's shares sold at modest prices, largely because Guinness operated outside the tiedhouse system the five largest brewers owned and operated most of the country's , pubs , and investors felt the other breweries had the advantage for growth.
The London financial community reasoned that Guinness was at a disadvantage because the company had to absorb the added costs of retailing.
There were also problems at the James Gate brewery. The Park Royal facility continued to outproduce the older Dublin site, and the company and its employees' union reached an agreement whereby the James Gate workforce would be reduced by nearly one half.
This solution temporarily solved the problem of decreasing profits at the James Gate facility and allowed operations to continue at the highly esteemed landmark facility. By , however, the cost-cutting plan was seen to have achieved less than had been expected. Diversification efforts during this period were also less than stellar; the company had gone on a purchasing spree in which companies, producing a wide variety of products from baby bibs to car polish, had been acquired, and many of these companies were operating at a deficit.
Even in the base brewing business, Guinness had its share of troubles. The company's witty advertisements appealed to the middle class but ignored the working class that provided the bulk of Guinness's customers. The Guinness share price continued to decline. To remedy the company's problems, Guinness executives called in the first non-family professional manager to take over leadership of the company. The sixth Lord Iveagh, as well as numerous Guinness relations, remained on the board, but Ernest Saunders, a former executive at J.
Saunders saw his first task as reducing the company's disparate holdings. He sold companies, retaining only some retail businesses. He then reduced the workforce and brought in a new management team to develop and market the company's products in addition to investing in increased and more eclectic advertising.
He also made canny acquisitions in specialty foods, publishing, and retailing including the 7-Eleven convenience stores. Brewing, according to Saunders, would in the future comprise only half of Guinness's total volume.
Financial analysts, and the City of London in general, were pleased with Saunders's efforts. The Guinness share price began noticeably to climb. By mid Saunders seemed to have conquered. During his tenure the company's profits had tripled, and its share price increased fourfold. He had accomplished a dazzling takeover of Distillers Company, gaining such liquor brands as Gordon's and Tanqueray gin and Johnnie Walker whiskey.
There were rumors that Saunders might be honored with a knighthood. Within a matter of months, however, there were other kinds of rumors in the City--rumors concerning Saunders's methods in pursuing the Distillers acquisition.
In order to make the takeover possible, Saunders with two of his fellow directors, allegedly had orchestrated an international scheme to provoke the sale of Guinness shares and thereby raise their value.
Outside investors were indemnified in various ways against any losses incurred in purchasing huge numbers of Guinness shares. Bank Leu in Switzerland purchased Guinness shares with the understanding that the company would eventually buy them back. Ivan F. Boesky, the American arbitrageur who later admitted to insider trading in numerous deals, was cited as the primary source of information about the Distillers takeover. Further investigation revealed that Boesky was seemingly only one of many international investors who bought Guinness shares in an effort to increase their value.
In January the Guinness board of directors asked for Saunders's resignation, and subsequently, in March, brought legal action against Saunders and one of his fellow directors, John Ward. In May the British government brought charges of fraud against Saunders: the claim was that Saunders knowingly destroyed evidence during the Trade and Industry Department investigation.
Throughout these events, Saunders continued to deny all charges brought against him. In the late s, the whisky industry experienced a sharp decline after an initial boom in business earlier in the decade.
Temperance movements and heightened taxes caused many distilleries, some of which were in their early years, to close their doors. DCL survived, however, due to their ability to switch their production tactics to creating industrial alcohol, something which the distilleries with pot stills were unable to do.
They also did not have unsaleable whisky to sell. This meant that DCL survived with relative ease compared to other distilleries and companies. DCL purchased several floundering distilleries and companies in the wake of the decline, and by they owned nearly every patent still distillery in Scotland. The early to mids saw DCL expand and buy out some of the biggest blenders in Scotland at the time.
Mackies White Horse Distillers joined in The whisky industry underwent another drastic decline up until due to having to weather two world wars, a depression, and a prohibition in the USA. However, due to some excellent leadership in the form of William Ross who was chairman from to , DCL weathered the storm very well.
A combination of well-thought-out marketing, as well as rational and excellent whisky making and blending, meant that DCL stood in good stead to survive the crisis. William Ross is credited with the survival of the company. In the s, 60s, and 70s saw a huge boom in the popularity of Scotch whisky; alcohol was legal in America again, blends became popular, and demand soared all over the world.
The company had been holding onto old styles of management that were not suited to the new, modern styles of whisky-making that were sweeping the globe.
The company quickly became a target for takeover, and they soon were forced to sell 11 of their 45 malt distilleries as the young market turned towards spirits such as vodka and white wine in They turned to Guinness instead. Guinness took over DCL soon after. Saunders and several of his colleagues were later sent to prison. Post-takeover, the new company was named United Distillers.
This new company was soon involved in another high-profile merger. This time, it was between Guinness and Grand Metropolitan in It was during this period, in , that we acquired additional spirits and wine brands from Seagram, and we have subsequently expanded our range through both selective long term value acquisitions, strategic partnerships and innovation.
While we look always to the next step in the Diageo journey, we are grateful for the strength which the long and rich heritage of our brands brings to our company. The company operates through The company operates thro Beam Suntory, Inc. The company products include Added by chcom.
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