Diageo on how it is adapting to changing night life habits

With night clubs shutting down and consumers drinking less alcohol, Diageo is exploring new routes to market and is looking at its role in the soft drinks market.

Smirnoff Diageo brand

Diageo is adapting to changes in how and where people consume alcohol, identifying “chameleon spaces” such as festivals and non-alcoholic options as potential areas for growth.

Speaking at audience agency Protein’s 2016 drinks report briefing last night (28 November), the company’s head of culture and entertainment Leila Fataar said changes in night life “greatly affect” the business, but that it is determined to take a positive outlook.

These changes include a drop in alcohol consumption, with 80% of adults making some effort to drink less alcohol, according to Protein’s report. Plus, the number of night clubs in the UK has almost halved in a decade, dropping from 3,144 clubs in 2005 to 1,733 in 2015.

“There’s a constant transformation in terms of night life spaces, which is interesting for us. We aren’t going to change the brand but we’re going to have to change how we [reach consumers]. It’s exciting for us, as it allows us to show up in different ways,” she said.

That means Diageo, which owns brand such as Guinness and Smirnoff, is taking a closer look at where people are drinking. While it still considers the on-trade and off-trade very important to the business, the company has also identified new “chameleon spaces” through which it can reach different audiences. These can include pop-up events, festivals and other locations besides night clubs.

“For us, it’s about identifying different occasions and then making sure we deliver the product in the right way. For example, we can look at new innovations and products like Smirnoff Cider, [where we can integrate] into festivals, parks or people drinking at BBQs. We want to look at our products in a different way to adopt new ways to reach the consumer,” she explained.

When asked if Diageo sees non-alcoholic drink brands as competitors, Fataar said soft drinks are “definitely” on its radar and that the brand is  exploring what its role needs to be in that space.

“We are looking at consumer behaviour to guide what’s happening. We have a few tricks up our sleeve that I can’t talk about right now, but we’re definitely looking at it as a big area to address,” she explained.

To adapt to changing consumer behaviour, Diageo is also prioritising purpose-led marketing campaigns around issues such as diversity and inclusivity. For example, Guinness partnered with Boiler Room to broadcast the Notting Hill Carnival in August and “tell a positive story about Carnival and the people behind it’”.

She concluded: “There is a big difference between badging and partnering. It has to have a purpose. That’s what all big brands need to be looking at, what is the authentic way to do it and to not just slap your logo next to something.”