Perhaps the only thing more desirable to a beer wholesaler than Guinness, are the Modelo and Heineken brands, though Stella could be a close second. Even before the 1970s, when imports were the crafts of that time, Guinness and Heineken were considered staples.
As discussed in previous posts, no brand of beer owns a holiday as well as Guinness . Sure, Cinco de Mayo is all about Mexican beers, but Corona, Tecate, Dos Equis and other Mexican beers have their own share in that holiday. Oktoberfest belongs to the Germans, but it’s more a style of beer that celebrates that holiday. Many German beers do well, including the six Munich breweries who are the official Oktoberfest beers, and other German breweries that brew special beers for the fall celebration. Though not sold in Germany, these exported beers do well in the States as well. To thicken the competition for Octoberfest, many American crafts brew Oktoberfest beers. Even at this time of year, one will see Oktoberfest beers on the shelves.
When March rolls around and St. Paddy’s day arrives, however, it is all about Guinness! Over the calendar year, the month of March could represent 50% or more of Guinness’ annual sales. So the question is, what else does the future hold for Guinness? In the mid-1980s, Diageo came out with Smirnoff Ice, one of the first RTDs, along with Bartle and James from Gallo. In test markets, Smirnoff Ice was a big hit and when rolled out nationally, the brand did very well. Today with all the competition, Smirnoff Ice is still a viable brand.
Then there is probably the biggest flop in the beer industry. In 2002, Diageo rolled out Captain Morgan Gold. An immediate flop. Diageo spent hundreds of thousands of dollars on not only marketing, but destroying unsold product. Needless to say it left a bad taste in the mouth’s of many. Since that time, Guinness has added more line extensions, some of which have failed while others, like Guinness Blonde and Nitro, have succeed. Through the first half of 2016, Diageo’s beer portfolio is off three percent, including Smithwick and Harp.
Diageo just announced it was expanding its investment in the US beer market by changing its name to Diageo Beer Co. USA. This will signal the company’s “commitment to the broad category of premium beer,” the company said. On Friday, Diageo said it has “a deep innovation pipeline for beer and flavored malt beverages” including creating a new alcoholic soda line and launching a Smirnoff spiked seltzer.
This expansion represents a culture and mind-set shift for Diageo which, on the surface, should make all the Guinness wholesalers happy given the investment in the US. Even as early as last year, Diageo was focusing on Asia and Africa for growth. This shift in their approach will mean one or two things for Guinness: one much better growth and profitability; or two, Diageo could just be positioning its beer division for divestiture, as has been speculated by many pundits in recent years. ABInBev….
Sometimes the right path is not the easiest one….
Editors note; 52 week Nielsen numbers show that Guinness dollars are up +9% and volume up +8.2%.
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