As of October 13, leaders at Diageo’s well-known vodka brand Smirnoff are making sure their $12.99 price point is heard with a “pregame hook,” as highlighted in a recent press release.
It is “too early to get into insights” on whether or not the $12.99 Smirnoff price point will draw new customers, according to a Diageo spokesperson in an email to Expana.
Instead, company officials will keep focusing on premiumization while activating the wider portfolio to serve more customers across more occasions, according to the August Capital Markets Day presentation. Diageo’s team projects North American spirits value down 3% in fiscal 2027 and down 2% to flat through fiscal 2029. Plus, smaller formats and ready-to-drink cocktails may be among consumers’ ways of moderating alcohol intake, according to leaders.
So, on October 15, the Diageo brand began releasing weekly “drops” of items like an inflatable bar and a vintage photo booth for $12.99 each (the suggested retail price of a 750mL bottle of Smirnoff No. 21).
At the same time, North America fiscal 2026 net sales of $7.17 billion are down 8.5% organically, according to Diageo’s restated regional results which show volume fell 7.0% and organic operating profit fell 11%. EMEA, Latin America, and India grew 5.9%, 7.6% and 7.1%.
The new Smirnoff campaign arrives as Diageo confronts a stretched US consumer. At its August 2026 investor day, company leaders forecast US value growth of minus 2% to flat over three years, calling affordability the main pressure.
“If you look back over 15 years, [there’s been three] distinct cycles. We had a long-standing premiumization cycle. There was COVID acceleration, and most recently, a consumer reset that’s been largely affordability driven. Despite recent pressure, especially in the US, spirits, including [ready-to-drink or RTD have] been in long-term growth… Most recently, RTDs has been a really significant growth contributor… Premium beer [is] also in long-term growth,” said Diageo’s Chief Strategy and Transformation Officer, Hannah Brooks.
In North America, Smirnoff has lost share for eight years, according to company officials who blamed inconsistent campaigns, cloudy recycled PET packaging, and 24 flavors, rather than price.
“As I’ve traveled around the US in the last two months, I’ve been struck by how poor on shelf we look with Smirnoff. There’s a number of packaging missteps that we’ve taken, which I’m currently undoing. We’re going to move from recycled PET, which is cloudy and opaque, hard to see through to virgin PET. Purity after all is at the heart of this proposition. We’re going to have both virgin PET and glass on shelves together. After all, different consumers require different packaging for different occasions. And finally, we’re going to add back the handle on our biggest SKU, the 175, which frankly, without it, is too heavy to lift, not portable, and difficult to pour,” said Diageo’s North American President, John O’Keeffe.
“In addition, we’ve had an array of flavors, 24 flavors. It’s too complex for our customer. It’s too complex for our supply chain. And frankly, it’s too complex for our consumer. We’re going to have to deploy a more disciplined approach to how we use flavors within Smirnoff. I’ve also inherited a capacity constraint on small formats. I’ve approved a $20 million investment in CapEx, which has gone live, which means that not just for Smirnoff, but in fact, for a number of our brands, including Crown, we will now have unlimited ability to go after our small format opportunity starting from the second half of this fiscal and closing out those distribution gaps.”
During the investor call back in August 2026, analysts pressed on complexity: How do more RTDs and pack sizes fit with simplification?
However, SKUs and innovation projects are being cut, and that competitiveness is “not just price,” according to CEO, Dave Lewis.
“If you look at the complexity we have today in terms of SKUs and you look at the complexity we have today in terms of innovation, it’s colossal,” said Lewis. “So 1,200 innovation projects in Diageo in a year is colossal, right? The project size is going up as we cull that portfolio. The SKUs are going down as we simplify. So actually getting bigger, more impactful innovation, whilst it is, yes, in that portfolio or it is in RTDs, overall, we’re taking a massive amount of complexity out of Diageo as we make these changes… I’m really very confident we’re going to be a much simpler business as we go through this change with better innovation and better productivity by project and by SKU.”
Still unanswered is whether $12.99 holds across sizes and regions, and how packaging costs and tariffs affect margins. Diageo did flag India as a 4%–6% growth market, hoping tariff reductions boost whiskey. Expana has put these questions to Diageo’s team.
Image source: Adobe
Written by Ryan Gallagher
