Healthy on-trade = healthy drinks industry
Guinness was good for Diageo this year. Island of Ireland sales grew 4% as did global sales.
This puts Oliver Loomes, Diageo’s Country Director for Ireland, in ebullient form as we chat at St James’s Gate about the brands and the bars, the advertising and the advent of the Alcohol Bill.
“Guinness is in great shape at the moment” he enthuses, “and that’s great for Ireland too because it puts us at the forefront of Ireland’s exports so it’s great for other Irish exporters to have a healthy Guinness brand out there.”
He sees putting ingredients, brewers and beer back at the heart of the business again as key to unlocking growth for Guinness.
This has also unlocked innovation.
“The consumer has a new-found interest in all things beer so there’s been a bit of a renaissance in beer. Consumers are interested in different types of beer, how they’re made, who makes them, where they’re made, what ingredients they’re made with etc and we’ve such a rich story to tell, we’re dripping with all of that heritage, authenticity and brewing capability.”
The Brewers Project and the opening of the Open Gate Brewery at the back end of 2015 gave Diageo a vehicle to take all that dripping heritage and authenticity, combine it with innovation and come out with beers like Dublin Porter, West Indies Porter, Golden Ale and latterly Hop House 13.
“They’ve injected a vibrancy into the Guinness brand because Guinness is a brewer of beers ‘made of more’ as opposed to Guinness only being the black beer with the white creamy head.
“It’s credible that Guinness is playing into that space in porters, ales and lagers once we’re bringing more to the equation. Consumers are looking for more and we’re satisfying that need.”
Oliver Loomes is often given to throwing in sales and marketing slogans during our conversation – but who can blame him, he’s a Guinness man through-and-through.
Until he took over the Country Directorship from David Smith last year, he’d been Guinness’s Global Brand Director since 2011, responsible for its worldwide marketing – it’s chief cheerleader during Guinness’s 250th celebrations in 2009 and then responsible for launching Arthur’s Day the year afterwards.
Sales & marketing
Apart from a robust advertising campaign, its rugby programme has also been hugely successful for Guinness, he says. “Guinness has a very rich connection with rugby and we’ve been centrally connected into it for many years now so the Guinness brand shows up in culture via rugby sponsorship in a way that resonates with consumers. It just taps into the zeitgeist at the moment. Rugby has certainly been good for us and that’s definitely an area we’ll continue to invest in and grow that presence.”
Growth opportunities
In a recent Irish Times interview he referred to there being “lots of growth opportunities” here.
“I think what I meant was even at a macro level we went through a number of tough years for Ireland’s macro economy and industry Post Celtic Tiger. My sense is that we’re starting to see green shoots. The economy’s headwinds are moving more towards tailwinds: GDP growth, one of the fastest-growing economies in Europe, unemployment falling from 14% to 9%, tourism growing in double-digits – the indications at a macro level are of more tailwinds and more buoyancy.
“In the alcohol industry we’re seeing a much more stable industry now with solid foundations, with opportunities to turn the conversation to growth where the last few years have been about decline.
“There’s more diversity and the consumer is looking for more stories, for more heritage, for more authenticity, so it’s brilliant to see that dynamism and that diversity happening within the industry. I think that’s a real opportunity not just for Diageo but for the whole industry to excite consumers and satisfy their needs.”
Spirits
Spirits is an important part of the equation too and an important part of Diageo Ireland’s business.
“The premium/super premium end of the spirits market is also enjoying quite an invigoration at the moment, good double-digit growth in that space,” says Oliver, “So World Class has been fantastic for us.”
Advertising & alcohol
Diageo might have to re-engineer its promotional spend if the forthcoming Alcohol Bill’s proposals on sponsorship are enacted….. but Oliver stops me there…. “First of all what I want for the industry and Diageo’s business in Ireland and the country as a whole and for our culture, is a relationship with alcohol that’s mature and sensible,” he offers, “Alcohol misuse is in nobody’s interest.
“Ireland is one of the most regulated markets in terms of advertising and sponsorships,” he points out, “That regulated environment works very well. I want to work with government to ensure that what we do in terms of regulations etc continues to work.
“We want to tackle alcohol misuse but not interefere with having a drink as part of a healthy social life. You don’t want to target the minority in a way that impacts negatively on the majority.
“The good news is that alcohol consumption has come down by 25% in last 15 years so we’ve made huge progress in terms of alcohol consumption in the country, but of course the journey doesn’t stop there. There’s still alcohol misuse in Ireland and we’d want to work with government in partnership to address alcohol misuse – but a holistic approach to our relationship with alcohol amongst all stakeholders and all parties is the way to do that.”
On-trade investment
Diageo continues to invest really heavily in a healthy pub business, working in partnership with publicans across the country to ensure that having a healthy Guinness brand is central to the pub – and having a healthy pub is important to Guinness as well.
He reminds me that Hop House 13 was an ‘on-trade only’ brand initiative for its first year.
“That’s about us partnering with the on-trade to give them something that works to grow their business.
“That partnership and having a team of people working with publicans across the country who’re investing in their pubs, giving them the information and the support, ensuring great quality, educating bar staff so that they can act as advocates in this beer renaissance – are all very important parts of Guinness’s growth.”
And he’d expect that Diageo’s present commitment to publicans across the country will continue.
“We’ve just spent €200 million in capital investment in Ireland in the last few years” he points out, “that’s a huge vote of confidence in Ireland; it’s a significant investment and it says to me that we’re putting our money where our mouth is.”
In partnership with the publicans Diageo looks to ensure that their business is growing and this, in turn, will result in Diageo’s business being in great shape.
“We tie-in with the publicans quite often to talk about what could be a new trending thing and we think that this impacts their knowledge which is really important because it not only gives us a better relationship with publicans but helps us understand what’s trending in the bar too.
“We need to continue to evolve the Irish pub and the industry needs to continue to evolve the offering in Irish pubs to meet those changing consumer needs whether that be by having different beers or the bar staff’s understanding of beers or great-tasting cocktails.
So, to define the on-trade growth drivers for Diageo Ireland: advertising that resonates, an assortment of sponsorships and a strong focus on Guinness being at the heart of a vibrant pub industry.
He’d agree, summing-up, “I think it’s important that we don’t stand still, that we continue to innovate, continue to change and evolve. Do that and the future will remain bright for the Irish pub.
“Grow the on-trade and the industry will be healthy.”
“In the alcohol industry we’re seeing a much more stable industry now with solid foundations, with opportunities to turn the conversation to growth where the last few years have been about decline.”
