Aviation Gin doesn’t offer a blueprint on how to build a brand

Marketers seem to believe that Diageo’s acquisition of Aviation Gin provides a blueprint for how to grow a spirits brand but it would be better if they focused on what makes their brand practical and unique.

Diageo aviation-gin-ryan
Diageo has just bought Aviation Gin, which is fronted by actor Ryan Reynolds

Voltaire’s Candide, ou l’Optimisme, first published in 1759, is widely considered one of the most influential books ever written. It depicts the life of a privileged young man, the titular Candide, who becomes indoctrinated with Leibnizian optimism by his mentor, Professor Pangloss. Eventually, Candide comes to believe that all things are for the best (as the optimism argues, a premise in turn predicated upon the infallibility of God) and that things are as good as they will ever be, the world being the best of all possible worlds.

As Pangloss puts it: “It is demonstrable that things cannot be otherwise than as they are; for as all things have been created for some end, they must necessarily be created for the best end. Observe, for instance, the nose is formed for spectacles, therefore we wear spectacles.”

It is easy to spot the fallacy – noses were not designed to wear glasses, glasses were designed to fit noses – yet when it comes to business and marketing analysis, many of us fall victim to the same error almost daily. The recent Aviation Gin acquisition by Diageo provides a prime example.

For those who are unfamiliar with the brand, Aviation rose to fame through the creative genius (and, oft-forgotten, sizeable PR platform) of Ryan Reynolds. The actor bought a stake in the company in 2018, after which the super-premium subcategory gin grew its volumes by more than 100% and contributed to roughly 40% of national subcategory growth in the US.

Diageo acquired the brand, together with Astral Tequila, Sombra Mezcal and TYKU Sake, by purchasing Davos Brands for a reported $610m (£460m), $335m of which is to be paid upfront while another $275m hinges on Aviation’s performance over the next 10 years. Presumably in order to improve the odds of the total amount being paid out, Reynolds has agreed to remain the face of the brand for that decade.

Barely had the ink dried on the agreement before industry thought-leaders declared that there was now an easy-to-follow recipe for guaranteed success for any spirits brand to copy.

The acquisition, in and of itself, seemingly makes sense. It follows Diageo’s explicit strategy to acquire high-growth brands with attractive margins that support premiumisation. This has previously led to the similarly structured purchase of super-premium tequila brand Casamigos (co-founded by George Clooney).

Although the financials are unavailable, there are no reasons to doubt that Diageo’s data supports the price point. Production costs should be a relatively small matter to lower, with further improved margins to follow. Highly visible premium brands can also be used as leverage to get other, more mainstream, offerings into establishments, in turn increasing overall portfolio penetration both on and off premise. And the super-premium gin subcategory has doubled its share of the overall gin category in the last five years – growing at a compound annual rate of 18.5% – making it the fastest growing spirits segment in the US.

Indeed, the analytical issues do not lie with Diageo’s acquisition as such, but rather with the conclusions about Aviation that followed in its wake. Barely had the ink dried on the agreement before industry thought-leaders declared that there was now an easy-to-follow recipe for guaranteed success for any spirits brand to copy.

Why success is never guaranteed

Much like Pangloss, the commentators make the mistake of believing that things cannot be otherwise than as they are, and that each step that Aviation took (that they can see, mind) was created for the best end. Or to put it more colloquially, that Aviation has demonstrated how, as they say, it is supposed to be done.

The problem is that Aviation’s path to perceived success cannot be precisely emulated.

There are many reasons why. For one, accelerating growth has never been as simple as merely employing a popular celebrity to be the face of your brand. High-profile endorsements have been a staple of communications since the dawn of our profession, regardless of what half-witted influencer marketing devotees might claim. Nor is merely identifying a growing category much advice beyond the banal – anyone with a shred of strategic training can do that.

But more than anything, the explanation lies in the complexity of markets.

Effectively, there are three kinds of systems in nature: ordered (in turn often broken down into simple and complicated), complex and chaotic.

Ordered systems are demarcated by causal connections. These may be simple and clear (a question has a correct answer, doing A will lead to B) or complicated and require analytical expertise to unearth (a question may have a range of correct answers, doing A will lead to either B, C or D).

Conversely, cause and effect in complex systems can only be determined after the fact (there are no correct answers, doing A will lead to a different result each time). In chaotic systems, cause and effect are entirely unclear.

In Aviation’s case, cause and effect have been determined in retrospect, but the value it holds in prospect is entirely limited – the context will have changed. This is both due to the inarguable fact that each company’s context per definition will be unique and that, as Diageo vice-president of consumer planning Jason Chebib points out, once something is successful, it upends market conditions.

Even if Aviation itself were to launch its winning strategy today, the results would inevitably turn out differently. The inherent complexity of the market ensures it.

As much as craving simple explanations to complex problems is a human instinct deeply rooted in all of us, the reality is that they do not exist. Although management consultants would have us believe otherwise, there are no guaranteed paths to success. If there were, markets would be entirely predictable.

In Voltaire’s satirical novella, Candide eventually grows painfully disillusioned as he witnesses and experiences the hardships in the world. Upon realising that not everything turns out for the best, he rejects Pangloss’s version of optimism in favour of a much more pragmatic approach.

Strategists would do well to do the same. Instead of optimistically trying to copy that which inherently cannot be copied, they should instead focus on the practical and unique context of their own brands.

I’d bet an Aviation gin bottle that would improve the odds of their brands taking off. It might even save some from becoming disillusioned with our industry.

Or maybe that’s being overly optimistic.

JP Castlin is the chief executive of international consultancy Rouser and a strategy keynote speaker