Managing the worlds largest drinks brands (Guinness, Johnnie Walker, Smirnoff & more) - Ed Pilkington, CMO Diageo NA

22:26So there's a piece about that. I can talk a bit more about that. The other piece is, I think, then good brand management and focus and business deciding. because we have, as a business for years, made conscious choices that Johnny Walker is a massive priority for us. And therefore we have kept a focus on it, kept investing on it, put great people on that brand, delivered great work and grown it. So that's a conscious choice. There are whiskey brands that we own that frankly are not as big and not as successful because over the years we've not managed them as well or we've consciously decided not to because they've not been as big a priority.

23:00So I think there is a bit about that. So it's really about the moment that, you know, you think about when gin boomed in Europe. There was a mix of, you know, if you'd gone back to 2005, everyone would be saying gin and tonic. It's really boring. Don't want to do that. It's my mum's drink and my grandfather's drink, all this stuff. And it was served in an awful little wine glass in Europe. It was terrible. It's similar to what people thought about tequila here. It's all about shots and stuff like that. Categories can really evolve. But to evolve, they need to they need they need something that needs to shift.

23:26And it's normally a cultural thing. It'd be about bartenders getting behind it. It's about changing the serve. It's about a drink that gets into culture. It's about celebrities going, being seen with it, drinking that, getting behind it. And, you know, this applies in other categories. It's all that stuff, basically. The thing I loved about gin, actually, was not necessarily what happened in the UK, which was impressive. But in Spain, where they suddenly started drinking gin out of these enormous goblets, and they literally would fill the entire goblet full of ice. And it just created theatre.

23:51And it seems that the kind of theatre and the way things are served is particularly important in this category. Well, that was where the whole gin revival, which then went into GB and the rest of Europe and parts of the world didn't quite hit here because kind of tequila and whiskey happened here. It started in Spain. It was Fran Adria of El Bulli, who was the one who put it actually gin into the big copa glass, which is a bit like a big brandy glass, tons of ice, put it all in their gin. Actually, he was partnering with Fevertree, who obviously did a brilliant job of building their brand, and then put all the kind of the whatever, whatever your favorite garnish is.

24:28But, you know, and often a lot of garnish in there. And you got this amazing. So I remember going to Spain in 2009, it must have been, and having my first big, you know, Copa glass. And it was like a fishbowl of gin. It was amazing. And actually, I then went to run gin, vodka and rum globally. And we went to a lot of the markets. I remember talking to the GB team. And it was like literally we produced a lot of those glasses and just put them into the GB trade. some of our competitors did and initially there was this pushback which was it'll never work these glasses are too big and actually they weren't as big as those original ones and they won't work in dishwashers in a pub i mean literally as simple as that fast forward to 2014 15 any decent pub you went to so any sort of you know cool pub in london manchester wherever it would be you know you'd have you'd be served a proper jit so absolutely the serve in culture suddenly became cool behavioral economics people start doing it so all the stuff around you know don't like tonic because gin was polarizing and tonic was polarizing but suddenly you took something that in theory was polarizing and made it taste and look great and then the other thing is of course that hit when instagram became big so suddenly you know the importance of beautiful drinks so when we did pink gin so if you think about gin was becoming really big and everyone was drinking gin and tonic but there were still some people who go i kind of like it because everyone does it and it's kind of cool but it's still isn't my favorite favorite drink so suddenly especially for sort of legal drinking age plus 20-something sort of females especially and you know so the the pink gin was an amazing success because actually it took gin made it slightly easier to drink for people and it just looked beautiful it did didn't it it looks a big part of that it's funny actually talking about in bar insights actually pivoting a little bit to soft drinks like so i worked most of my career in soft drinks a fascinating insight on j2o actually because because j2o is a brand that um you kind of juice brand but it was in a it was it was inspired by two dogs or in hooch at the time.

26:14The idea was, what if you put a soft drink in a, you know, kind of a premium package spirit packaging and make it cool for kids? I think it was probably the idea. But I remember one of the reactions from the bars was you've made it, the bottle's slightly too big because the glassware was 250 mil and the bottle was 275 mil. But it was genius because they had to give the bottle to the person drinking. So rather than just, with soft drinks, it's, you know, probably the third most important thing. You've got the alcohol, then you've got food, then soft drinks is a distant third, you know. So most of it is like cracked open like a Coke, thrown away, you never ever get to see the brand.

26:47Whereas in this one, you know, bartenders were forced to hand over. So suddenly you went, oh, you're drinking something else. And that was actually one of the insights that actually started the, you know. That's interesting. So yeah, so literally bottle on the table so you see it again. So what was a problem, you know, from a bartender point, like you say about dishwashers, turned into an advantage for the brand. That's amazing. Yeah, that's quite a little known thing. Talking about fashion as well, One thing I notice in particularly in this market is the role of celebrities. So we talked about gin, you know, Ryan Reynolds with Aviation Gin.

27:18Why are celebrities being used so much for, you know, for marketing? Well, celebrities are being used a lot because I think they have a lot of influence. I mean, it's as simple as that. You know, when we talk about influencers, you know, and how do brands reach, you know, different consumer groups, one way is to talk to influencers who can access whatever consumer group you want to get to. It's as simple as that. and you know some celebrities have have broad reach um so if you're thinking with us if we go back to that 2007-8 actually when we partnered with with sean combs with diddy who actually i've got a meeting with today um on ciroc you know he was almost one of the first in the spirits world to really get behind a brand really drive it put it out there talk about the brand with you know a broad consumer group and basically make it very successful in spirits as well i think so that was a bit of a model.

28:04I think what happened is consumers saw that it was an interesting category. It's kind of, for many people, an attractive category. It's a very social category. So I think a lot of influencers enjoy, if they are in the category, they enjoy being part of it. And they can see that they can build brands. So it has been successful. So clearly, what George and Randy did with Casamigos has been highly successful. And that's one of the reasons we bought that brand, similarly with Ryan Reynolds and aviation. And there's many other success stories as well. But it is just the fact that the consumers have reach and influence.

28:34You have to do everything else. When they do it, it's still important you've got to get distribution right, you've got to be in other places, you've got to land all the right brand messages and stuff. But they have influence. No, they do. One thing that's mentioned earlier, actually, is investment in brands, obviously high margin business. I think anyone looking into the business is always very envious of the amount of investment you put behind brand building and the long term view you take. Is that a conscious decision by the business to kind of take a broader view? And how do you build the argument for kind of investing in marketing?

29:04Yeah, no, it's a conscious decision. We've been lucky. We have our leaders. If you take Ivan or Sir Ivan, who's our outgoing CEO, he's done a fabulous job for the last 10 years, and Deborah, who's our incoming CEO. They're brand builders. They believe in brand building. They believe investing behind our brands. What they want to know is we're investing well behind our brands, but they understand that the way that we will grow our business is about taking the right portfolio of brands, the right brands and doing great work behind them to grow them, basically. And that's it. So we fund them. And to do that, you know, you have to, you need the right amount of money to reach your consumers.

29:34It's as simple as that. So if I went back a few years, in some cases, yeah, some of our brands were underfunded. And then if you come back to the basics of brand building, if you're not reaching the right amount of consumers with the right message, and you're not as physically and mentally available back to those basics, then it's going to be hard for you. Simple as that. So I think we did a pretty good job, I think, internally of sort of selling the argument for why more investment works. I mean, a really basic level, and all the CMOs and marketers listening on this will get it, is, you know, if you're erratic, if you're not pretty much on all year round in most of your big brands, and you lose a period where you just don't become top of mind anymore with consumers, we all know consumers have repertoires.

30:10We all know that consumers have other choices. So we're not arrogant enough to know that the only whiskey that anyone's going to buy is Johnny Walker or Bullet or anything, you know, people have repertoires, These are active categories. So you have to keep your brands relevant and current and present. But one of the challenges, because obviously you're a portfolio business, how do you decide which brands get investment? And how do you avoid the innovators dilemma as well? So the idea that if you're trying to innovate as a big business, it's harder to do that because obviously you've got big brands to focus on.

30:39So how do you get that balance between, I guess, where you invest, but also how do you nurture innovation where you've got mega brands that have got a lot of money behind them? Yeah, so first thing is you have a portfolio strategy. So at a very macro level for us, you go, where do you want to participate? What are the big, literally, what are the big trends? If it's like wellness, you know, looking after yourself, as I said, indulgence, I meant to luxury. You know, you start with the big trends and then you go down to what are the hot categories, so tequila, whiskey, etc. So you sort of start to make some natural prioritization choices.

31:07And then within that, you start to say, what are the brands? How do you prioritize within the brands? Where are the brands in their stage of development and what do they need? And actually, a lot of that will come down to how big is the brand? So what level of penetration have you got? So have you got like 2 million consumers? Have you got five? Have you got 20? Have you got 40 million? So looking at almost what the brand needs and what you need to do to grow that brand. Because as we all know, the best way to grow a brand is just get more consumers in. As simple as that is drive penetration. So you know how to reach more consumers.

31:31So we look at it at a trend category level. As we do our planning process, we start by looking at trends. We do a sort of broader piece. We do category strategies, look at how we want to participate. And then we look at all of our brands. And basically, a few of us pull together a portfolio strategy. So we'll make sure that we're investing, call it ahead or in the right way, behind the really hot brands, the hot categories, or smaller brands in those categories where we want to get them to accelerate them. And then we'll look at maybe some of our big brands where we're not expecting as much growth, but we need to make sure we've got the right level of plans which can deliver against those.

32:05And then it's balancing small, medium, and long brands. What are we doing for the smaller brands, which we know are going to be the medium brands and then the bigger brands of the future? and making sure they're set up for success. Well, I think that's a challenge balancing short and long, isn't it, in a way? Really important because it's very easy to just, a lot of the smaller brands, just keep them ticking along and not actually accelerating them. And then one day you'll wake up with a load of big brands. And the way that our business and many businesses grow is you need things to be taking off.

32:30You need the next thing. So back to innovation. It could be something in innovation. It could be a new thing on Crown Royal, a new thing on Don Julio. It could be a new brand. But you do need things which are going to accelerate. Our business has benefited from tremendous growth in our whiskey brands and our tequila brands. But you've always got to be thinking, what's the next thing that's going to come through in the next two, three, four, five years? And you've got to be setting that up for success. So how do you do that? Do you launch a range of things, see which one seems to work and then back them?

32:57Or how do you make those decisions on what to back for growth? It's a blend of stuff. I mean, so at a category level, you'll look at the category. You'll say, where are we participating? So you'll segment the category in different ways. One, you'll segment it. You do a classic kind of consumer segmentation. You'll do it and you'll say, well, we might compete in a traditional. We might be more modern or more progressive. Whatever nice segmentation that the team will come up with. So you'll look at that and you go, well, we've got an opportunity in this segment. Then at a basic level, you look at price pointing.

33:24And you'll go, well, we compete well in 20 to 30 and 40 to 50, but maybe there's some opportunities there. So you look at the categories and you write an opportunity. And you say, look, we're big here. We're there. We need to grow here. So how do we get into this space? and then that's down to you either innovate, you acquire, whatever, and that helps to shape our future strategies. So you look at those areas. So that's how we approach it, basically. And it works in different ways as well. Each brand will also look at itself and have an innovation strategy. So what's the role that innovation plays for that brand and what can you do?

33:56You need to build your base because the base is really important. We're not an obsolescent business. We don't have the latest edition and we throw the old one out. That's not what we are. so you need to know the role of innovation but a big piece is really looking at the the consumer landscape the opportunities the categories we operate in and then deciding where we want to participate and then frankly making choices then you have to make choices about and in some cases it may be you go we've got a lovely little brand in whatever a whiskey brand we're going to just keep it ticking along and it may be just regionally it's really important as well here or wherever we may say we're just going to have this focused on two states for the next year keep it growing learn about it, validate the growth drivers, make sure we're doing it.

34:37And if we start to get some success and we'll put more money in in two years and a bit more in three, and then you never know, it might hit a tipping point and then off you go. Yeah, yeah. No, no, it makes a lot of sense. And I'd love to round up actually by asking you a couple of questions on your biggest success and your biggest failure. And just for fun, while you think, I'll tell you my, well, my biggest failure, I'll put that in quotes. And a brand that we share actually, di sorono di sorono amaretto you know but um i was working on di sorono this must be about the 2002 and and the timing is super important it just goes to show how important timing is now you'll know this of course because you know you've managed to brand as well di sorono has got a very distinctive smell you know and uh you know it's one of those love it and hate it brands isn't it you've got absolute people that adore that kind of almondy you know almondy's flavor and smell and people that just can't stand it sort of thing and i i came i came up with an idea that because Christmas is critical to liqueurs, isn't it?

35:32I mean, literally as, you know, 80 % of all the annual sales went through in December. And I had this idea, we had the big campaign out of home campaign in London. We're doing some sampling in bars. And I thought, wouldn't it be great if I took over the underground, the four biggest stations, right? And what I decided to do was basically, you know, like you go into a supermarket or a grocer's store over here and you can smell the bread. And it just like, oh, lovely. It makes you go to the bakery. And I thought, wouldn't it be great to actually pump the smell of almonds in the underground, you see.

36:02So everyone gets his waft. And then as you go down the escalators, you've got De Sirono adverts. And I even employ people to give out the little mini 50 mil bottles when you go through. They're cute, aren't they? Little kind of square bottle. Now, they say timing is everything and everything is timing because this was, as we're about to go to war with Iraq, and there was, you know, all the talk of weapons of mass destruction, right? And the campaign went live on a Monday morning at 9 o 'clock. the same morning the sun newspaper ran a headline which warned the public to be vigilant for a possible terrorist attack the number one threat to the uk on the front page of the sun was a cyanide attack in the underground and the way way you spot cyanide the smell of almonds no yes so i was at a trade show right when this happened so i hadn't got my phone on and then by lunchtime my phone went mad and it was like hi it's so-and-so from the daily mail so-and-so from the times i mean literally every journalist was phoning me up and what's your statement what you're going to do so we obviously had to you know well i i say cancel the campaign it's funny how these things work because it actually made the front page of the main newspaper in italy right and it went one and a half million pound campaign goes down the drain sort of thing oh goes down the tube actually all i had to do was just turn off the centimeters that were in the The rest of the campaign was absolutely fine, but it just got a life of its own.

37:25And that weekend, I was the subject of have I got news for you? Remember the game show where you had to go, what's the story? And they kind of like, you know, I was the topic. And then in the independent, there was a whole page article about when marketing goes wrong. And I was literally the case study of it all going wrong, basically. Producer James, by the way, anyone listening and watching that wants to know, Producer James has pulled up the quote. So basically I said, oh, that was funny as well. By the way, sorry, in the Sunday Times, right, they have this, they used to have this thing. I can't beat this, by the way.

38:01This is called, I'm just giving you time here. Who's got the most epic failure? But in the Sunday Times, they used to have this thing called the verbatim, the quote of the week, right? They had a quote from JFK, they had a quote from Tony Blair, and then they quote from me. And the quote was, I don't think this is the same quote, but it's something like, while we're disappointed, that the consumers won't enjoy the wonderful aroma of almonds in the underground. Clearly, security is more important than marketing. And of course, I didn't write the quote. Our PR agency quickly got something out there.

38:33But anyway, that quote is still up in my downstairs toilet at home, proudly framed. But the lovely end to it is we saw sales that Christmas hit a record. It's like, no PR is bad PR. But that's my funny sort of alcohol drink. I think I can match that. I once, I really, that's a brilliant story. That's just extraordinary timing. I know, I know. I mean, unbelievable. Well, everyone, by the way, I never knew that cyanide smelled like almonds either. Well, I didn't, clearly. I was, I don't know where I was in the world then when you did that, but I, anyway. I had one where I was, this is back in the UK actually, and I was launching a frozen pouch ice drink and it was meant to be for the summer.

39:15And the whole idea was, it was like this drink and, it was a drink, so it was basically frozen pouches. It was going to be with Smirnoff. You'd sort of get this, and it was like freeze, crush, and suck it, basically. You'd do it, and you'd be able to have this pouch and suck it on the dance floor, and it'd be, like, really cool. It was a time when all the raving was going on and clubs and stuff like that. So it was a sort of, you know, cool way of doing it without people participating in other areas, which were less good for you, shall we say. Anyway, so the idea was there. Anyway, so we tried to get it right, and it's one of the joys of supply, of innovation, is working with supply and getting it.

39:48I mean, our supply people are great, to be very clear. But anyway, the bottom line is we completely missed the summer. We ended up, it was being manufactured in Italy. We had all sorts of production issues. The Italians then went on holiday as they do in, you know, in August, which now most people do. Anyway, we ended up with this stuff in October, testing it in Leeds in October, where it was miserable. Absolutely freezing. Absolutely freezing. Totally missed the summer. We had a load of this stuff. okay we had more than we knew what to do with and then it and we talked about like freeze crush and suck it which is probably you know and so we probably shouldn't be anyway the damn things were rock hard so you you couldn't even so you took them out the freezer they were like that and then they were so icy they'd stick to your hands then we had to start to produce gloves that you could hold on that you could hold on to these things that anyway we ended up binning the whole lot oh wow and that was it so that was that that was one of those innovations which was well You know, the idea was good.

40:48It was like, I don't know, back to my point at the start. Was there an insight? I don't know. I think that might be product-driven and stuff like that. Yeah, definitely. Maybe you didn't have the great insight. Just because you can doesn't mean you should. Just because you can, yeah. Do people really want frozen drinks in their hands? I always wonder whether, I thought the pound store model is genius because I think basically going to pound stores and you see things that you don't see anywhere else, and I reckon it's basically all that. Yeah, it's a lot of stuff. It's all the stuff that didn't work.

41:12I think some of it is. Where someone's got a little stock in their warehouse, what do we do with this? They sell it for almost nothing. I mean, sometimes when we have stuff which isn't quite as successful, we'll find different channels because we want people to sell it. And normally, it's going to be good. Yeah, exactly. There you go. If you want to find an obscure thing. I'd forgotten about that until you triggered a thought. Well, they always say end on a high, of course. So as you look back on your career, what are you most proud of? I think I'm most proud of a few things. I mean, everywhere I've been, I've loved it.

41:43I've been really lucky and the businesses have been great. So I'm proud of sort of leaving, normally leaving businesses and going, you know, I touched on Guinness, you know, my five years in Europe were amazing. We went from a minus five business to a plus five business and we did some great work. You know, I'm very fondly on what we did on gin and Guinness, especially in those brands there were great. I had an amazing time in Australia years ago and we had a lot of fun with brands like Bundy and stuff like that were down there, which was awesome. Living down there was amazing. I'm really proud of what we've done here in North America over the last five years and the growth.

42:12We've put on a lot of growth in the business since I've been here. And I'm really proud of that and some of the work we're doing on the brands. So if I go through, you know, I look back, I feel very privileged and lucky to have been able to work in fantastic markets and different roles around the world and be part of hopefully growing the brands and, you know, working on some amazing brands and doing some good work on them as well. Great. So, you know, so very good. I noticed you dropped some conversation earlier meeting with Sean Coombs. Yes, exactly. That can't be a bad way to spend your day.

42:38I've met a lot of good people. A lot of interesting people in your time. We still work with Sean on Sir Rock. We've got a meeting with him this afternoon to talk about the What Next. Amazing. Who was the most surprising... He invents himself, actually. He really does. Really, yeah. Yeah, who's the most surprisingly nice celebrity that you've met? Oh, that's unfair too. You can't be drawn on that, yeah. Because I always think it's funny when you meet celebrities, how they differ to their personas. Yeah. I think what you realize with working with celebrities, and I can say this, is what's amazing, they are brands.

43:11And what they are doing is they build their brands brilliantly. And they're very conscious of their brand and how it is, back to what I said about Sean, how he looks at who he is, who he is talking to, who he communicates to, how he reinvents himself. And I think there's a lesson for all of us as we build brands. Being very conscious about who you are, being very conscious about as a celebrity, where you are literally in your life stage and how relevant you are and stuff like that. I mean, I found that I sponsored Anthony Joshua when I was working on LucasAid. And he's, I was so impressed because every time that we did something together, he would remember my name.

43:41He'd remember the fact I had young kids. And he would, I mean, if we were a press release or something, he'd go, John, why aren't you in this photo? You know, come on up on this. And I was just like, there are thousands of people he must meet. I mean, I wasn't even day to day. I was kind of one step removed from the negotiations and the organization sort of thing. but his ability to make you feel special and remember your business and what you're trying to do and i remember on lucasade actually we had x number of days a year that we kind of agreed with him and we were going to start this new kind of made to move campaign which is about inspiring people to exercise and i think on the day that we launched we just had this idea well what if he just tweets to say join me for a run in my local park or whatever and he said yeah fine and he's just very happy to kind of go way beyond whatever was in the contract or we've had team meetings he'd turn up and we'd do a workout with him or something.

44:27We did a boxer-size class actually and set a record for the most number of people doing a boxer-size at the same time. So I think it's just all those kind of things. It's just the over and above relationship. It's amazing. It's really nice, isn't it, when you work with celebrities and realise they care a lot. But it was the fact he knew his brand, he even knew his tone of voice, that he was very positive in boxing, particularly as a boxer. He cared about people, cared about the story and authenticity and all that kind of stuff, you know, it's quite nice. It's nice, yeah, that's great. No, they do.

44:58That's true. That's great. Well, have a wonderful meetup, Peter. He's sending my love. Cheers, John. It will do. Thanks for coming on. Yeah, appreciate it. Thank you very much. Enjoyed it. It's a great chat. Thanks a lot. Cheers. Bye. Ladies and gentlemen, thank you so much for listening or watching to the Uncensored CMO. It's great to have you with me. If you enjoyed that and you never want to miss an episode again, please do subscribe wherever you get your podcasts or if you're on YouTube, please do hit the subscribe button. If you'd like to get in contact with me, please do. I'm on Twitter at Uncensored CMO over at LinkedIn under John Evans.

45:25Thank you for joining and I'll see you next time.