 |
Geoff Biggs: Investment and innovation were key factors in a challenging 2009 |
AMERICAS. Diageo’s regional business in the Americas is being driven by a powerful combination of investment, innovation, consumer insights and improved engagement with airports and retailers – with a stand-out performance from leading Scotch brand Johnnie Walker Black Label in its centenary year, 2009. That’s according to Global Travel & Middle East (GTME) Regional Director Americas Geoff Biggs.
As reported last week, Diageo GTME revealed interim results to 31 December with volume climbing +8% and net sales up by +4% on a year earlier. That came “in the face of a remarkably harsh economic climate where the competitive pressures increased significantly,” noted Biggs, but also emphasised the company’s core strengths, “particularly our responsiveness and continuing commitment to investment and innovation”.
In a trade briefing in advance of the IAADFS Duty Free Show of the Americas next week, Biggs said: “The general mood could have been intimidating; very much driven by the global financial crisis and its impact not only on air traffic but also across borders and cruise, including an impact on the quality of the traveller profile.
“However, we kept looking forward and maintained our strategy, which we launched around three years ago, with the aim of being the industry’s most celebrated supplier and doubling the category. In fact, we didn’t simply maintain investment in our brands through the crisis we actually increased it to record levels on a number of activations, such as the global Johnnie Walker Black Label activities.”
 |
Diageo GTME has forged a strong partnership with Aldeasa at Cancun Airport in Mexico |
Biggs singled out Johnnie Walker as a “star performer” among the company’s leading brands in 2009, highlighting the activity around Formula 1 and the Johnnie Walker Black Label centenary – each of which boosted the business in a challenging climate.
Biggs said: “Our approach not only ensured that we maintained direction but actually put us into a relatively strong position in the last quarter of the year, where we saw sales pushing back up and increasing performance month-on-month. We achieved that position by sticking to our investment in the key categories, particularly in running new promotions. We’ve seen particularly strong benefits from this around Johnnie Walker and Crown Royal and had consistent reports of increased sales across our retail partners.”
By location, Biggs noted the strong performance of Scotch in South and Central America. “Our return to Caracas airport in August 2009 was a strong boost after around two years away. Working with a very insightful retail partner, Global Brands (a division of Motta), the last quarter of the year was very promising and we also have the opening of a second store (by DFASS) to look forward to.”
He also noted the “momentum” generated by Diageo’s partnership with Aldeasa, which has resulted in increased listings in the Americas. Biggs also noted the enhanced presence with Aldeasa of the Baileys flavours, Zacapa, Crown Royal, some malts and Johnnie Walker variants.
The trend towards “˜premiumisation’ has also continued, even in a difficult year, he said. Super-deluxe Scotch reported a marginal decline in the year, but this was countered by growth in the deluxe category.
Biggs said: “Although the desire to trade up is still there it’s understandable that consumers are feeling cautious right now but I have no doubt that premiumisation will accelerate as the global economy recovers confidence.”
Innovation
Innovation continues to be a big factor in driving the business, he noted. The introduction of Baileys with a hint of Coffee has boosted the liqueur category – and crucially it has driven interest in and the performance of the Baileys family.
 |
The Johnnie Walker Black Label Centenary campaign (pictured with International Shoppes at New York JFK Terminal 8) was a key driver throughout 2009 |
There was also big innovation around the Johnnie Walker label, with the introduction of the Johnnie Walker Blue Label Elite pack and continued investment behind Johnnie Walker Blue Label King George V. “The arrival of Johnnie Walker Blue Label The John Walker Edition was also a major highlight of the year,” said Biggs. “The whole range of Johnnie Walker activity certainly helped to stabilise sales and, in some cases, take share from rival brands in the deluxe and super-deluxe.”
Most recently, the company has introduced Johnnie Walker Double Black through International Shoppes at JFK, which the company said promises to drive further growth in the category.
Biggs also highlighted the performance of Crown Royal in Canada, where it achieved single-digit growth year-on-year in the period to January 2010. “This iconic brand has continued to perform consistently well, including its presence as part of a strong summer season driven by the powerful “˜mix “˜n’ match’ promotion we launched across the region, offering the full brand range on a two-tier approach,” said Biggs.
Engaging the airports
Biggs also noted the “˜Trinity’ approach to partnerships that Diageo has embraced, typified by the relationship with Dufry and Aruba Airport Authority (AAA) at Aruba International. There, the brand owner has taken promotional space into the concourse, including sampling activities.
Biggs said: “We know that the combination of our brands and retail partners like Dufry can deliver exceptional experiences that drive footfall and conversion – but we need the airport to demonstrate the foresight shown by AAA in sharing the concourse space.
“Our insight programme tells us that the vast majority of non-shoppers have not actually closed their minds to the idea of buying; they simply need to be drawn by a more engaging and convincing experience. In particular, the fact that the time between the initial agreement for the Aruba activity and its execution in-store was just six weeks highlights how well we shared the approach. The partnership we shared with Dufry and AAA at Aruba demonstrated that when we work in close partnership in that way, we can deliver a better experience for the shopper, a stronger category and stronger results for everyone involved.”
 |
Geoff Biggs singled out the strength of Diageo’s partnerships with retailers such as Dufry in the Americas |
He also singled out the experience at Toronto, with The Nuance Group and the Greater Toronto Airport Authority.
“This season we have partnered to launch the “Canadians Can” campaign targeted at educating Canadians about purchasing in travel retail,” said Biggs. “Toronto Airport and Nuance share an impressive pioneering history in that approach and they’re about to launch another total retail solution promoting the retail offer at Toronto.”
Category focus
Diageo GTME’s category management approach has been a big platform in its growth drive, including in the Americas. Among the key activities was that at Aruba Airport at the time of the ASUTIL Conference last September, when brand owner and Dufry worked to redesign the store layout.
“The brands and categories were represented in proportion to their contribution and this drove clear improvements in sales so we’ll continue to develop this approach with global partners, especially Dufry, Nuance and DFASS to further drive this shared category approach,” noted Biggs.
Opportunities in the cruise market
Although the cruise business has proved tough during the recession, there were signs of recovery in late 2009, which GTME has sought to exploit through enhanced activity around Johnnie Walker and Crown Royal.
The company’s Miami-based specialist team (established almost a year ago) has been developing stronger and more direct relations with cruise lines and with distributors and concessionaires, noted Biggs. “Partnering directly with the cruise lines, we’ve focused very strongly on developing smarter strategies,” he said. “This includes aligning Pouring and Retail in a shared focus on optimising the passenger experience, whereby we can develop remarkable synergies and mutual support to drive onboard revenue.”
Among the cruise lines he noted the stronger direct relationships with “innovators such as NCL” and said the brand owner was creating other opportunities for collaboration with Royal Caribbean, Carnival and Azamara. Biggs said: “The strength of these partnerships means that we are now covering a much broader remit, often right across the whole cruise experience, on the islands and on-trade and retail.”
Inflight comes through the turbulence
Despite the downturn in traffic and its impact on the inflight retail market, it remains a sector full of possibilities, said GTME.
“The highlight for us has been our global partnership with DFASS, where we’ve shown that our shared thinking can bring new approaches and opportunities,” said Biggs. “We’ve seen some significant growth in the channel, especially with DFASS expanding its exceptional portfolio of airlines in Asia as well as in the Americas, including American Airlines, Singapore Airlines and Tiger Airways. The synergies derived from our relationship enable us to communicate with the target shopper at multiple points of their journey.”
New developments
GTME is working with Dufry on its new-look Newark store, said Biggs, after it won a tender for space at the location. This includes an “intense focus on customer marketing and category management to support their concepts for the liquor category,” he said.
“The new stores are scheduled for an opening around March-April and will certainly set a new benchmark for the category. We are also keenly anticipating the opportunities at Chicago too with the tender process well advanced.”
