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GUINNESS BLACK LAGER IN US 'NOT THE SCALE OF SUCCESS WE WOULD HAVE LIKED'

Diageo: Talkin’ 'bout the next generation…of Guinness drinkers

By Ben Bouckley+

28-Nov-2013

Diageo reflects on the relevance of Guinness in pop culture (Picture: Rupert Ganzer/Flickr)
Diageo reflects on the relevance of Guinness in pop culture (Picture: Rupert Ganzer/Flickr)

Diageo’s beer innovation head insists the firm needs to strengthen Guinness’s premium credentials and 'reframe' the drink for a new generation of drinkers to reignite growth.

John O’Keefe, global head of innovation, beer and Baileys, told investors on November 19 that Guinness had grown 3.4% over the past five to six years up to and including 2012.

But he admitted that 11% growth in Africa over this period and rising sales in Southeast Asia was offset by declines in Western Europe, due to difficult economic conditions, particularly in Ireland.

“If I take our top three market of Great Britain, Ireland and Nigeria – which collectively account for over 50% of Guinness sales – you can see that our market share performance has been flattish,” O’Keefe said.

Boosting price, equity, market share

Diageo CEO Ivan Menezes’ told investors at the same seminar that, across the board, the firm aimed to grow price, equity and market share performance, and O’Keefe explained how this applied to brand Guinness.

“There are essentially two consumer issues that I believe we need to address in terms of driving the equity on the Guinness brand,” he said.

“Firstly, we need to better underpin the premium positioning for this brand. Secondly, we need to do what we’ve always done for the 255 year history of this brand, which is reframe it for the next generations, keeping it relevant and important in popular culture.”

Diageo is relaunching Guinness Foreign Extra Stout in new packaging (see below) across Africa this year. It has already made the change in Nigeria and Southeast Asia, and is launching in Ghana this week.

Guinness gets a makeover

Using the example of Nigeria, O’Keefe said that Guinness is typically priced at a 40-60% premium compared to mainstream beer, but that the old pack “no longer justified that premium”.

Moving to draught markets, he added that new counter mounts, taps and glassware were critically important, given the importance of winning at the “point of purchase” – 25% of consumers who enter a bar do not know what they will order; 85% will stick to that drink for the rest of the evening.

Addressing the US and a 4% fall in Diageo’s beer volumes in fiscal year 2013, O’Keefe admitted that Guinness Black Lager, now a 600,000 case brand, “hasn’t been to the scale of success that we would have liked it to be”, but was successful in craft brewing terms, and is in the top 15% in terms of value created for craft brands.

“If you actually break down the craft trend, what’s that all about? It is consumers who are looking for brands with more authenticity, more heritage, more provenance and also more taste,” he said.

“I think Guinness ticks an awful lot of those boxes. I just think we need to play more into that trend than we have been so far,” O’Keefe added, noting that Diageo was trying to extend Guinness beyond its Irish pub footprint in the US and undue dependence on St Patrick’s Day and Christmas sales.

One campaign that did help the brand is a YouTube advert (see above) that has 17.2m YouTube views to date, and according to Google is the most watched alcohol advertising in the history of YouTube.

“Over the last two months we’ve actually seen a lift, especially off premise. We’ve cut the loss on premise in half and off-premise the [core Guinness] brand is actually growing,” Larry Schwartz, Diageo president, North America, explained.

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