Age of innovation

07 April, 2015

Diageo has launched a golden ale, a fruity cider and a white rum and now competes in virtually every BWS category imaginable.

Guinness golden ale, Pimm’s Cider Cup and Captain Morgan White are just three of seven additions to a formidable line-up for the UK trade.

They are joined by RTD Smirnoff Ice Double Black, frozen pouches for Pimm’s and Gordon’s gin, and a pineapple variant of Cîroc – and Diageo has no plans to slow down its innovation pipeline.

“Three years ago innovation was 3% of turnover,” said Andrew Cowan, country director for Great Britain. “Last year it was 14%. Within the next three years it will be about 20%.”

Diageo defines “innovation” as a product released in the past five years. This would include the likes of Baileys Chocolate Luxe, David Beckham-backed Scotch whisky Haig Club and all sorts of flavour extensions to its core brands.

“Diageo accounts for 30% of spirits sold in the UK, but last year we accounted for 68% of innovation in the marketplace,” said Cowan. “We are refreshing current trademarks with a twist, or introducing brand new categories. A couple of years ago frozen pouches didn’t exist.

“It’s a 400-year-old industry but it can grow in the UK. In the UK 27% of total beverage alcohol is spirits, compared to 37% in the US. The US teams in the marketplace have driven this growth.

“We want the business to grow. We see lots of potential for UK growth and innovation from a commercial perspective is very important for us.” At the heart of its innovation drive

is a laboratory in Bishop’s Stortford, Hertfordshire, where 56 scientists play around with a kaleidoscope of bubbling liquids in a bid to create the drinks of the future. In the promotional videos they are all laughing and drinking, making it look like a happy science lab – one with booze.

“We love playing and it’s really important that we encourage that in our environment,” said Sian Anderson, who heads up the research and development team.

Another centre in west London has a virtual off-licence and bar to help the team figure out how its drinks should best be sold.

The new Pimm’s Cider Cup, which blends Pimm’s, apple cider, strawberry and cucumber, should sit next to the likes of Kopparberg on shelf or in the chiller, according to UK head of innovation Louise Robinson.

“The cider category has undergone a revolution,” she said. “First the over-ice serve and then fruit cider, and now we believe we can move it into new territory.

“It’s less sweet and retains the taste of Pimm’s and that’s what consumers are asking us for. Pimm’s has had its challenges in terms of accessibility, adding ingredients and mixing it. But we have the premixed cans and now the cider and pouches.”

James Cragg, head of category development, believes Diageo is equally well placed to make inroads into the white rum category.

“White rum is the biggest part of rum, worth £350 million in retail and 40% of the British rum market,” he said. “But all is not healthy in that sector. It has been in decline since 2012. Spirits are up by 2% but white rum is down 4%. It’s becoming an anchor on the total spirits category. We want to revitalise white rum.

“Captain Morgan is a fantastic brand, worth £220 million in the on and off-trade combined, but it has only played within dark, spiced and golden.

“White rum is 35-plus, female skewed, so we think there’s an opportunity to bring younger people into the category and revitalise it.”

He added that the frozen pouch market is worth now worth £15 million and he is confident Diageo can grow this to £30 million within two years, giving £1 million marketing support to its new Pimm’s Summer Crush and Gordon’s Frozen Cooler.

Guinness launched a range development project last year and said its two new drinks – West Indies porter and Dublin porter – were the number one and three bestselling PBA releases of the year.

It has now followed up with a golden ale and plans to launch a broad range of beers under the Guinness banner.

Nick Curtis-Davis, marketing director, said: “We started with porters. That was a deliberate move, but not a statement of intent. We want to explore the whole beer category. We really feel like we have unleashed something creative here.”

It has already released an on-trade lager in Ireland and that may eventually find its way across the Irish Sea.

“We have had an experimental brewery on site for over 100 years. It’s one of our best-kept secrets. But now people are interested in the creative process behind beer it becomes relevant.”

Robinson said the guarana- laced Smirnoff Ice Double Black is designed to appeal to a new breed of drinker. “The RTD category has been in double-digit decline. The original Smirnoff Ice is declining by 20% among 18 to 24-year-olds. But among 25 to 35-year-olds, who were drinking it in its heyday, it’s growing at 30%. We want to make it more relevant to 18 to 24-year-olds.”

Nick Temperley, head of reserve brands, Diageo’s luxury arm, said Cîroc has already overtaken Belvedere and is now chasing Grey Goose in a bid to become the number one super-premium vodka.

“Last year the reserve portfolio grew 29%,” he said. “This year it’s up around 50%. It’s a strong portfolio growing in a market in which people want to drink better. Innovation is massively important – 20% of reserve sales are already from innovation.”

Cowan claims the new releases are simply the latest chapter in the story of a host of brands “built on the shoulders of giants” such as Arthur Guinness, James Pimm, Sir Henry Morgan and Johnnie Walker.

It might be hard to imagine those men sitting around sucking a frozen RTD pouch, but they might salute the concerted attempts of the world’s biggest spirits company to breathe life into the brands they founded.




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