Guinness brands showing the strain

Guinness Brewing has been hit by a series of advertising gaffes, indifferent brand management and a launch failure, with internal wranglings adding to its problems.

Ernest Saunders has got a point. The disgraced ex-Guinness boss told the company’s shareholders at the annual general meeting last week that Guinness had “lost its way”. It is a view shared by many in the advertising and marketing industry.

Saunders says Guinness should reduce its dependence on alcohol and move into soft drinks, which for many traditionalists will seem an outlandish idea. But he could just as easily have suggested moving into any one of several other areas.

Guinness Brewing seems to have lost some of its edge in recent times. It has hit the headlines on a number of occasions in the past year and not always for the right reasons.

First came the lengthy delay in the launch of the draught lager Enigma because of production problems. Then came the “gay ad” fiasco, with the company denying it had produced an ad with a gay flavour for Draught Guinness, despite reports to the contrary from people who had seen the Tony Kaye-created ad.

The problems were compounded by delays in the Guinness Black & White campaign and threats of legal action over the Anticipation ad by a director who accused Guinness of stealing his idea. Finally, agency EURO RSCG Wnek Gosper resigned its Guinness business after the brewer moved the 5m account for its Kilkenny brand to Publicis.

The Black & White ad campaign was due to launch last July but didn’t reach the screens until early this year because of the popularity of Anticipation.

In the midst of all this, Guinness Brewing decided to move marketing director Rob MacNevin to a European role and bring in Julian Spooner to replace him. Spooner had little top-level experience of brand marketing, having worked for the National Dairy Council on marketing milk, a commodity rather than a brand.

As it happens, Guinness Brewing continues to be respected by the City as a strong arm of Guinness plc, leaving aside the disastrous acquisition of the Spanish Cruzcampo business which it bought in 1991 for 550m and generated profits of only 2m in 1994. One financial analyst says there are few “must-have brands” in beer retailing, but Guinness stout is one of them. Any bitter sentiments about the company are directed towards the spirits side, with United Distillers – which accounts for about three quarters of Guinness’ turnover – providing plenty of headaches for chairman Tony Greener.

Since Spooner’s arrival, things have not improved dramatically for Guinness GB’s marketing. Enigma draught lager, finally launched in April 1995 in a blaze of surreal advertising by Publicis, has not fared well. Some trade observers dismiss Enigma as a complete flop while buyers say it just ticks over. Either way, Guinness is slashing the price of Enigma and effectively undermining its position as a premium lager.

Guinness spent 4.4m on advertising the launch of Enigma (Register-MEAL), making it the third most expensive beer campaign of 1995. Its initial sales represented a healthy 2.4 per cent of the premium lager market, according to Stats MR figures. But its volume share fell sharply after the campaign finished last autumn, and in January and February of this year it slipped to only 1.7 per cent. The brand has vanished from television screens and has started disappearing from supermarkets as well – the 800-strong chain Iceland has recently delisted it.

New advertising is thought to be in the pipeline for Enigma but it seems Guinness has lost interest in the brand in favour of Kilkenny, the latest from its stable of new product developments.

The switch of the Kilkenny work out of EURO RSCG Wnek Gosper into Publicis just weeks before the advertising is due to launch could present problems for the brand. Bass was the first into the Irish Cream Ale market with Caffrey’s, and Guinness will need to act quickly if it is to jump safely onto the bandwagon – and stay on. It is already facing competition from Beamish Red, which has launched in Ireland. Some observers even see signs that Caffrey’s is beginning to wane, be-cause its high alcoholic strength makes it less of a session drink.

Even with Guinness stout, things are not going as well as they were when Rutger Hauer talked about Pure Genius. Whitbread, which produces rival Murphy’s, claims the market leader is stalling. While the stout market is growing at four per cent per year in the take-home trade, Original Guinness is declining, while Canned Draught Guinness is growing in line with the market. By contrast, Murphy’s is growing at 11 per cent, claims Whitbread.

Whitbread’s marketing manager for stout, Pip Landers, says: “Murphy’s has stimulated the whole stout market and is taking share from bitter. New drinkers are coming in via Murphy’s because it is less bitter.” Still, Guinness is holding onto its 74 per cent share of the market so there is no immediate need for it to worry.

Another unanswered question dogging Guinness is – whatever happened to Kaliber advertising? The low-alcohol brand had an award-winning advertising campaign with Billy Connolly’s “Hello, Girls” poster ads. But again, no ads have surfaced since then. The brand has fallen victim to the overall decline in the low/no-alcohol sector.

And if EURO RSCG did have anything up its sleeve on Kaliber, it will never come to light now the agency has resigned the brand along with Pilsner Urquell.

One problem for Guinness Brewing Worldwide is that its divisions are all pulling in different directions. Guinness GB and Guinness Ireland are understood to be somewhat at loggerheads over which should produce the ads, and which campaign is better suited to its individual market. Add to this tensions with the European and Worldwide Guinness operations and some of the Guinness disarray is perhaps explained.

Spooner seems to have had a rough ride at Guinness. An insider says: “He needs something he can take to the board which really is his own.” This could explain the shifting of the Kilkenny work into Publicis and the delays in the Guinness and Kaliber ads.

But what Spooner will do with Enigma is anyone’s guess, and he must feel he has been saddled with an expensive white elephant.

Observers will be watching Guinness Brewing closely over coming months to see what it does with the Kilkenny brand and its advertising for other brands.

The warning from Ernest Saunders may have missed the mark but he clearly believes something is not right at Guinness. United Distillers is indeed a headache for chairman Greener. But UK beer marketing has become an equally big headache for Julian Spooner.

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