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Diageo Reserve’s New On-Premise Playbook: The Inside Story

August 12, 2016

Facing a furor in the whisky world over the end of its Masters of Whisky ambassador program, Diageo tells SND that what’s been cast as a cost-saving move is actually an aggressive increase in its on-trade investment in the U.S. market.

“There’s a lot of noise out there that we’re backing away from whisky education. That’s untrue,” says Stephen Rust, president of Reserve brands at Diageo North America. “I can confirm that there’s a substantial increase in the budget we’re putting against the on-trade. It’s about becoming more collaborative with accounts and building deeper relationships to help drive our business.”

Rust’s comments come after an outpouring of concern in whisky-focused publications that Diageo’s move to dissolve Masters of Whisky—which fielded 24 ambassadors to conduct tastings and other events in the U.S. market—will negatively impact Scotch whisky education efforts. The Masters of Whisky program was run in collaboration with the MKTG agency. Diageo has now lined up a new agency partner, Enthuse, to drive on-premise efforts across its Reserve brand portfolio, which includes Johnnie Walker Blue, Platinum and Gold Labels, as well as single malts like Talisker and Mortlach, and other spirits brands like Cîroc vodka, Don Julio Tequila and Zacapa rum. However, former Masters of Whisky may be hired back under the new initiative, which will have an increased headcount compared with the MKTG-led program, Diageo said.

Rust expects the new strategy to stimulate the Reserve unit’s on-premise business by emphasizing account activation. “The narrative has been about Diageo and its responsibility to Scotch. We actually believe that if we’re selling more Scotch, we’re helping the industry,” he says.

To drive the new effort, Diageo Reserve will be adding a yet-to-be-named senior director reporting to Rust. “This is a new senior role we’re putting into the organization solely to focus on this business, whereas before that responsibility was basically embedded in all the different brands,” Rust notes.

The changes will not affect Diageo’s existing “Activation Army,” a previously formed $50-million investment devoted to “putting more feet on the street in the on-trade,” Rust added, nor its Guinness Seals program, which is focused on building on-premise relationships and promoting the quality credentials of the Irish beer brand.

Diageo’s Scotch portfolio saw improved performance in the U.S. in the company’s fiscal year ended in June, as Reserve-level whiskies drove a 7% increase in Johnnie Walker’s net sales. Speaking to analysts in recent days, Diageo CEO Ivan Menezes said, “We’re upweighting our Reserve focus in the U.S. significantly. And it’s not just the malts—it’s also super-deluxe Johnnie Walker blends like Blue Label, which are doing very well in the U.S. I want to really accelerate that momentum. That’s the very vibrant end of the marketplace.” —Daniel Marsteller

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