Diageo explores expanding brands ‘beyond selling alcohol’ in bid to keep pace with culture



Diageo’s marketing and innovation director has spoken of the challenges facing the business as he revealed how the company is exploring ways to extend its brands “beyond selling alcohol on the shelves”.

Adam Ballesty admitted the alcohol industry has endured a tough period with “Diageo’s core eroding like everyone else” as businesses fail to keep pace with cultural change.

But he also outlined how the firm was attempting to bridge that gap, by taking a fresh approach to its marketing.

“If you have any mainstream brands going through mass channels, it’s pretty hard,” Ballesty said. “I spend most of my waking hours scared out of my brains and thinking about the future and what we can do.

“The cost of doing business is increasing and we are using innovation as a drug to fill the coffers instead of it being the cream on the top. So we are spending a shit load of time surviving and probably not thriving and we are all in the same boat from a business point of view.

“It comes down to culture moving faster than business, which has always been the case, but never at this pace.”

Ballesty revealed at the Mumbrella360 conference how Diageo has effectively disbanded its brand teams and created category teams in their place in a move to “disrupt ourselves”.

He said the future marketer will be those who are living the culture.

“We don’t need 42-year-olds in the room telling people what we should be doing with Smirnoff in a nightclub, we need people in that lifestyle to tell me what we should be doing ,” Ballesty said. “So we are having a crack at some of this stuff.

“The first thing we said was ‘let’s disrupt ourselves’. We changed our structure and looked through the lens of the occasions people were drinking our drinks. So I no longer have a whisky team, I have a luxury team. I don’t have a rum team, I have a lifestyle team and I don’t have a vodka team, I have a next generation team.

“We created a team that looks like a brand team, acts like a brand team and spends like a brand team but they don’t have any brands.

“We are talking about the occasions and motivations of the people who drink our drinks.

“They are creating a culture where Australians are comfortable serving mixed drinks in all these different occasions and marketing the category as a brand. We dipped our toe in the water last year and are going pretty hard at it this year.”

Furthermore, Ballesty said he recognised Diageo could no longer simply sell brands “as alcohol on the shelves”.

“We need to be leading lifestyle and culture and my ultimate goal is to have brands that can easily transcend the categories they are competing in,” he said.

“We are in the middle of working out how far we can stretch these icons and how big they can become outside of a run and cola or vodka lime and soda.”

Dennis Wong, innovation specialist and director of Added Value, a consultancy currently working with Diageo, described the market are undergoing a “seismic shift” that was “fragmenting like crazy”.

“The mass market is dead,” he told delegates during a discussion on creating culturally vibrant brands.

Dennis Wong on how culture is moving faster than brands and how established brands can find growth.

He argued how brands need to target “tribes” rather than continue with cross demographic marketing, and said marketing has not kept pace with change.

“Selling brands is marketing 1.0,” Wong said, suggesting how brands should be at the forefront of lifestyle and culture.

“I am astounded by how many marketers can’t articulate what their brand characters are or why they exist,” he said.

“I hope, and I think it will happen, is that energy will move out of the sales orientated side [of marketing] and more time spent dwelling in culture and behaving authentically within it.”

Wong gave the example of marketers in Silicon Valley who want to understand the customer journey and “find ways of adding value at every touch point” in exchange for “valuable data”.

He quoted the president of software company Xero, Russell Fujioka, who said the future CMO will have “an engineering mind with a creative soul”.

Meanwhile, Ballesty said the move to consolidate Diageo’s number of agencies and extend Leo Burnett’s remit to cover both creative and media buying, has worked.

He said it has saved money and created cohesion in the business.

“One benefit is that we have more time to solve the biggest problems because we are all in the room together,” he said. “There is less posturing in the room because there is one agenda.

“Lots of agencies can work well together but they have all got to pay their people so they have all got to have a point of view so they try and build stuff. So we are now building less and that means we spending less money.”

He added that his own teams have more time simply because they are managing fewer people.

Asked about any downsides, Ballesty said: I’ll be quite open and say my procurement team had some question marks about putting so many eggs into one basket.

“But we are getting some pretty phenomenal results out of our Bundaberg campaign and are doing things on that brand that we have wanted to do for a few years. Now is that because we have one agency or is the idea just epic and it works? ”

Ballesty added that work currently in the planning phase with its drinks culture team – work which goes live in September – would not have been possible “had there been multiple agencies in the room”.

“It’s been a remarkable transition,” he said.

Steve Jones


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