http://news.bbc.co.uk/1/hi/business/7244336.stm
Some of you may have noticed a story in the news the other week (well, maybe not, it was only released on Valentine’s Day…when our minds tend to be on other things) about Diageo, the drinks giant, announcing a half year pre-tax profit of £1.37 billion – 5% up on last year.
You may wonder why this is in any way interesting – other than being a sort of proof that when the economy starts to wobble, we drink more.
There is, unsurprisingly, far more to it than that. For a start, you’ll have to have been living under a rock for some time now not to know that worldwide sales of beer have been dropping for some time. In Europe this problem led to an episode last year where Ireland was, for a while, replaced as the second biggest Guinness market (after the USA) by Nigeria.
Sales have, however, rallied (up 4% in the UK & Ireland stout market) firmly putting Ireland back in second place. Diageo say this is as a result of the latest “Good Things Come To Those Who Wait” advertising campaign.
Secondly on the “interesting if advertising is your thing” list is that Diageo attribute the other part of their increasing profits to a big push in premium spirit advertising and the acquisition of a 50% share in Ketel One vodka – though that deal was only announced last week.
Of interest is the fact that these two points demonstrate two perennial truths about advertising…and perhaps life in general.
1. If it ain’t broke, don’t fix it. Guinness has, for years now, been renowned not only for its taste but also for the ad campaigns used to promote it – stylish, sharp, often becoming a piece of pop culture in their own right…two things, however, never change; the prominent use of black and white, colours inextricably linked to Guinness and the strapline, “Good Things Come To Those Who Wait”.
True, this latest in the series cost £10 million to make – but the black and white is there as is the tagline. A 4% sales rise shows its still working. In short, when sales are falling, don’t panic – look for what has worked before and do it first…it most cases it will work again.
2. People will spend more if they think they are purchasing exclusivity. The premium spirits market has, since the early 2000s, really taken off. This is due, in part, to resurgence in the cocktail market and increasing knowledge of drinks but mostly to the ever increasing range of choice available. Every new spirit on the market these days seems to pitch itself as “premium”. As a result, consumers who view it as a high-end product purchase it…and so sales rise. You have to wonder though – what makes a drink premium? Is it, perhaps, nothing more than an ad campaign?
As the celebrated champagne blind taste test of a few years ago proved – a brand name and perceived sense of exclusivity do not, in actuality, make a product better…just ask all the celebrated champagne makers that came second to a high-street supermarket’s own-brand label.
See, we told you there was interesting information to be had…more next week.
