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Interview, Part 1: Tom Looney, President, Diageo Guinness USA

July 8, 2014

Diageo Guinness USA (DGUSA) has a portfolio led by Smirnoff Ice, the biggest brand in the ready-to-drink (RTD) category, as well as Guinness, one of the world’s most iconic beer brands. DGUSA has experienced some rough sledding in recent years, due mainly to the vicissitudes of the RTD business. In the six months ended December 31, 2013, the unit’s net sales fell 10%, following a 6% sales decline in Diageo’s full fiscal year ended June 30, 2013. In April of last year, veteran Diageo executive Tom Looney became DGUSA’s new president, moving from his previous role as Diageo NA’s chief commercial officer. SND executive editor David Fleming met recently with Looney to discuss developments at DGUSA under his leadership.

SND: You’ve now been president of DGUSA for a bit more than a year. What priorities did you establish at the outset, and how is progress so far?

Looney: The top priority was to stabilize Smirnoff Ice and grow Guinness. Since then, Smirnoff Ice has been the big surprise, driven by flavors such as Screwdriver and some other innovations. We also began communicating to the right consumer. In the past we’d been talking mainly to white males, who comprise less than 10% of our volume. We instead began to address our female audience in our advertising and marketing activities, since they comprise the majority of Smirnoff Ice drinkers. We also changed the packaging and now have a consistent, standardized pack instead of variants—a situation that was confusing to the consumer. And we fixed the mix. We talked to retailers about the top sellers among the 10-13 SKUs available. We started to tell that story and narrow things down to the four or five packs that are doing the best. In most accounts today, you should see Smirnoff Ice Original, Screwdriver, Green Apple and Peach Bellini and then one regional brand that’s doing well in the retailer’s market. We also rotate in a new seasonal. As a result of all these changes, we’re now in turnaround mode. There are real trend improvements, and you can see the uplift in the Nielsen data.

SND: What about Guinness? Where does it stand today?

Looney: Guinness is healthy, but the current challenge is to grow it both inside and outside of the stout category. The big news on Guinness is that we’re launching the new Guinness Blonde American Lager this fall. Our experience with Guinness Black Lager taught us a lot. We learned that consumers are receptive to a new Guinness offering, but want us to go further. So we’ve created a blonde lager. For Guinness, the strategy will be similar to that for Johnnie Walker, with variants under the brand umbrella, offering different consumer experiences.

SND: What will happen with Black Lager?

Looney: Black Lager will stay. There’s still a consumer out there who loves the richness and darkness of Guinness but wants a lager-style beer. It’s not as big today as we’d hoped, but we think we can capture (greater sales) with a blonde lager. We’ll also be working hard on the perception issue with Guinness. There’s an impression that it’s dark, creamy and delicious, and therefore must be high in calories. That’s not true. A 12-ounce serving of Guinness Draught has 124 calories, which is low. We’re starting to get that message out.

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