Open Editor's Digest for free
Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.
When I visited my nearest pub in east London this week, there was no sign of the major Guinness shortfall. Despite stories of pubs having to ration portions of modern Irish food, the bartender filled a glass with the correct double pour, leaving a white head and bubbles bathing the cold, dark liquid.
Oh my God, oh Guinness, as John Gilroy's advertising posters declared in the 1930s. The marketing gods have smiled on this strange drink among Diageo's brands as the UK's drinks company He still has a hangover From the madness of the Covid cocktail. Forget Johnnie Walker scotch and Smirnoff vodka, Guinness is where it's at.
Guinness is not a new product, although the non-alcoholic version launched in 2020 is also doing well. The stout, invented by Arthur Guinness and brewed at St James's Gate in Dublin since the late 18th century, is an example of long-term success. From regular old people, it has spread to young men and women: sales are up by about 20 per cent this year in Great Britain.
Meanwhile, Diageo's sentiment was at a low ebb. The company has adjusted its brand portfolio towards hard liquor such as the Casamigos Tequila brand co-founded by George Clooney. Which he bought for as much as $1 billion in 2017. This seemed like a good idea at the time, but Casamigos' sales fell 20 percent during the year through August, sending its stock price down.
The resurgence of Guinness is remarkable, given that both craft and imported beers have done so Erosion of sales of other familiar brands. Anheuser-Busch InBev's failed attempt to broaden Bud Light's appeal shows how difficult that can be. I believed And that the political backlash over its marketing use of transgender influencer Dylan Mulvaney would fade away, but I was wrong.
Guinness's success has lessons for many companies: Be careful not to underestimate proven performance in favor of newer products. Guinness was one of the two companies that merged to form Guinness Diageo In 1997, while maintaining its confidence in Brave, spirits It was at the heart of her strategy. It's easy to miss the potential of brands that have been around a long time.
This one is particularly traditional and modern. Food and beverage startups often work to convey a sense of identity and origin to consumers, but Guinness innately has both. While it spends significant amounts on marketing and has created numerous advertising campaigns, they all evoke the same truth. It is a distinctive product that has been brewed in the same manner for centuries.
For a big beer brand, Guinness is quite the custom: it may not be a craft beer but there is craft in its delivery. It arrives at the bars in kegs and It must be stored and poured Specifically to achieve the right combination of body, head and skin on the glass. Woe to the dirty boys, as their failures are satirically chronicled on Instagram and X accounts like @shitlondonguinness.
It has been perfectly adapted to social media because it is so recognizable: one knows by the bar who drinks Guinness, or perhaps a Murphy Stout. Next to Guinness, ales and ales are greatly diminished. Nothing is as powerful in marketing as the recognition of a color, like Tiffany blue (or FT pink).
More broadly, Guinness is a social drink. It's much more common on draft than in cans, although Diageo has made a special device that replicates a pour of Guinness for home use. It was easy to confuse the popularity of spirits in the pandemic with permanent change, but Guinness is making a comeback as younger drinkers spend more time in bars with friends.
Emotion and identity weigh more heavily than portfolio strategy, and it pays to maintain trust in brands with long histories and established values, even if one sometimes has to be patient. Ivan Menezes, former president of Diageo The executive who led the drive for premium spirits often wore a Guinness harp pin. His heart was telling him something.
Other companies will envy Guinness' good fortune. Diageo is now investing heavily in the brand, investing £30m in its St James's Gate brewery to increase production and a further £200m in a new brewery in County Kildare. But all of this will take time and remains a rare and worrying situation for the brewery to be unable to meet demand.
This could be a costly mistake, given that nearly 300 million pints are expected to be served in British pubs in December, making this the busiest season of the year. But it will also enter into the brand's mythology. Luxury companies attempt to engineer product scarcity to create a sense of mystery. Those who can't find a pint of Guinness at Christmas may crave it even more.
