Warc Blog

Diageo refocuses marketing spend

31 January 2014
LONDON: Drinks giant Diageo has cut its marketing investment in Western Europe and Asia-Pacific while increasing it in Africa and focusing it on premium brands in North America.

During an earnings call, reported by Seeking Alpha, chief finance officer Deirdre Mahlan outlined an approach designed to increase efficiency and effectiveness.

"While our marketing reinvestment levels are broadly flat, Western Europe is now applying the learning from North America to drive further efficiency in marketing spends and increasing the amount we spend on media," she said.

With premium core brands representing 60% of Diageo's business, "we have to ensure that they all have proven growth drivers behind them, marketing campaigns, innovation and a strong route to consumer", she continued, while conceding that performance in the second half of 2013 had been mixed.

In terms of specific territories and brands, in North America Diageo had put money behind Johnnie Walker Whisky's super and ultra premium variants as well as Ciroc vodka and Guinness stout. Media spend had increased on Crown Royal Canadian whisky and Captain Morgan rum while investment in reserve brands was up 10% driven by Don Julio tequila and the launch of Ciroc Amaretto.

In Western Europe, marketing investment had been reduced in line with net sales and focused on strategic brands, with "a switch from small-scale activities towards scalable activations".

Marketing spend was also reduced in Asia Pacific, particularly in Korea and Southeast Asia, although there was increased investment in Baileys Irish Cream liqueur in China and Vietnam.

A recent market research conference heard Ellen Zaleski, Diageo director of consumer planning, explain how the company was driving engagement across its portfolio, using Johnnie Walker Scotch whisky and Baileys Irish Cream as examples.

That entailed understanding what the brands meant to consumers and building on it. So, for example, people associated Baileys with the Christmas holiday period leading marketers to seek to create a more timeless emotional connection with the brand and make it a year-round purchase.

At the same time, Diageo had adopted a common tracking model in order to keep an eye on how different brands are performing under different conditions at different times of the year.

Data sourced from Seeking Alpha; additional content by Warc staff

 
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