SEC investigating Smirnoff maker for excess inventory to distributors

The Securities and Exchange Commission (SEC) is looking to see whether  Diageo PLC, maker of Smirnoff Vodka,  and Johnny Walker has been shipping excess inventory to distributors to make the company bottom line look better than it really is. By doing so,the company is able to report increased sales and shipments, according to these people.

 

The North American region is the largest and most important to Diageo’s bottom line. It accounted for about a third of the company’s $15.9 billion in sales in 2014 and around 45% of operating profit. Volume in the region decreased 1% last year, but price increases helped sales rise 3% to about $5.34 billion.

In the U.S., Producers like Diageo ship to wholesalers,  then ship to retailers. Liquor companies can record shipments as sales when they ship them to the wholesaler. The Wall Street Journal broke this story.

Jeffrey Newman represents whistleblowers