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Interview, Part 2: Tom Looney, President, Diageo Guinness USA

July 10, 2014

In Part 2 of this SND interview, Diageo Guinness USA president Tom Looney discusses plans for the beers in the DGUSA portfolio beyond Guinness, as well as the fate of the pouch business and the group’s latest efforts on the innovation front.

SND: Guinness Blonde American Lager will be launching in the fall. What about the other blonde beers in the DGUSA portfolio—Smithwick’s, Harp and Red Stripe?

Looney: We’re now investing in them regionally, playing to their strengths. The new Smithwick’s, package is on the shelf, and that seems be having an impact. The lion’s share of its sales are in the off-premise, so we need that pack to work very hard for the brand. As for Harp, it’s chiefly consumed by men over 40. We’re changing that pack as well, going from a green pack to a very contemporary-looking blue. On Red Stripe, the focus will be on its lager style and refreshing taste. We’re excited about all three brands, but they’re more of a regional investment.

SND: What about the rest of the RTD portfolio beyond Smirnoff Ice?

Looney: Pouches were a big part of the decline in our first half. The pouch business took the market by storm three or four years ago with Daily’s. Those were wine-based and were handled by spirits and wine distributors. We then came out with Parrot Bay as a malt-based pouch for beer distributors to sell. Combined, Parrot Bay and Smirnoff Ice today are number-two in the pouch business. Clearly the category is not what we had hoped it would be, but we can still sell a lot of pouches between April and September. I think you’ll be seeing fewer products in the category. Many companies’ pouch businesses will go away altogether, and the number of offerings will be reduced. We’ll take (our portfolio) from 12-13 SKUs down to five, focusing more. At $1.99 retail, they still create good margins for suppliers, distributors and retailers. They can still provide value.

SND: Any other innovations outside the Guinness and Smirnoff orbit?

Looney: Yes. Part of our future growth will come from products rolling out right now. One is Tragos Frescos, which is aimed at Hispanic consumers and is now launching in about seven states with strong Hispanic populations. Tragos Frescos is a non-carbonated fruit drink at 5.8% abv. Retailers are telling us it’s something very different from what they normally see. Another interesting new product is Parrot Bay Margarita with coconut water and lime. That’s a national rollout targeting the growth trend in the Margarita and progressive adult beverage (PAB) segment. It will have a lower abv and calorie content than some of its competitors. Overall, there’s a lot of optimism around our innovation agenda.

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