Diageo seeks to innovate

15 May 2012

LONDON: Diageo, the spirits group, is tapping emerging markets, new consumer demographics and "pioneering" communications techniques in a bid to fuel growth.

Developing nations currently yield 40% of Diageo's sales, and its marketing spend in these regions has doubled in the last five years. Among the trends attracting particular attention here are customer recruitment and premiumisation.

Investing in indigenous firms such as Shui Jing Fang in China, Halico in Vietnam and Mey Içki in Turkey has also enabled Diageo to localise its portfolio in numerous countries.

"This brings together fantastic local brands and the combined strength of marketing knowledge ... from both parties," said Andy Fennel, Diageo's CMO. "In tandem, some of our most successful innovation launches and marketing work is being pioneered in these parts of the world to drive organic growth."

As well as the emerging middle class – due to expand by 50m people in Latin America and 40m in Africa in the near term – Diageo is prioritising women, over 50 year old and multicultural segments.

"Historically ... there was an assumption that targeting younger men was the most efficient way of creating aspiration among the entire population," said Fennel. "This may have been true in the past, but we no longer believe that it is."

The company is also moving beyond the traditional premium and super premium sectors, pushing "ultra premium" lines like Cîroc and Johnnie Walker Blue Label, as well as value offerings including Seagram's and White Horse.

In identifying the four principles underpinning its communications, Diageo employs an acronym, FACE, standing for flair, agility, consumer insights and execution. "The fundamentals of marketing don't change," said Fennel.

However, he added that the "context for our brand building is changing now faster than at any time in history." This shift spans the way people interact and socialise, and the way they connect with brands.

In response, Diageo is tapping the "inflection points" of music, new technology, entertainment and data. "We've been aggressively experimenting with digital marketing for several years now," said Fennel. "It's our intent to be a pioneer."

As an example, the firm has formed a tie-up with Madonna, the pop star, for Smirnoff and Johnnie Walker. Elsewhere, it allied with Facebook to double its number of "likes" to 20m in a year, used Apple's iAd mobile advertising platform, and has effectively leveraged Google's search engine.

To track results, the UK-based organisation has built a global digital dashboard covering all of its brands in terms of their scale, reach and consumer engagement. It has also partnered with analytics companies like EasyInsites, Tagify and Nexus.

"We're focusing on the use of data, and data assets, to provide us with a competitive advantage and to allow us to make better choices about the investments we make," said Fennel.

When assessing the payback from these efforts, Diageo monitors a variety of areas, especially financial returns, equity changes, claimed usage, and market share, he added.

Data sourced from Diageo; additional content by Warc staff