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Guinness : Brand Profile

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Guinness is one of the world's best-known brands, and a key pillar of Diageo's global drinks portfolio (though also something of an anomaly as the group's only important beer). Guinness's reputation is arguably much bigger than its sales would suggest. Something of an acquired taste, the stout trails higher-selling international lagers such as Heineken or Carlsberg, although its distinctive black-and-white branding and the striking, often surreal advertising created for the brand between the late 1980s and early 2000s is recognized worldwide. In fact, Guinness has been known for the creativity of its advertising for almost 100 years, especially in the UK, where commercials such as "Waiting Man", "noitulovE" ("Evolution" reversed) and especially "Surfer" regularly feature among surveys of the country's best-loved ads.

Advertising

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Competitors

Guinness competes with the full range of international beers, but its most direct rivals are two other Irish stouts, Murphy's and Beamish, both now owned by Heineken. A sweet stout, Mackeson, is produced in limited quantities by InBev. See Alcoholic Beverage Sector index for other brands and companies.

Brand Analysis

Guinness retains its position as one of the world's best-known beer brands, but remains something of a specialist brew. Its development in important Western markets slowed dramatically in the early 2000s, and the group is working actively to open up new markets, most recently Russia. However, Guinness still enjoys a huge following in developing markets, especially in Africa, and this has underpinned the brand's worldwide performance for many years.

Around 10.4m cases of Guinness were sold worldwide in the 12 months to June 2016, up 4% year-on-year after a couple of years of slow decline. (By comparison, the Heineken lager brand sells more than twice that quantity). The drink is brewed in 51 countries worldwide, and sold in more than 150. Yet Guinness's six biggest markets are an odd assortment comprising Great Britain, Ireland, Nigeria, the US, Indonesia (under license) and Cameroon. Another three African markets, Ghana, Kenya and the Ivory Coast, feature among Guinness's top 10 territories, and that continent now accounts for almost a third of sales. Combined sales for Guinness and the small number of other beers in Diageo's portfolio were £2bn in 2015, with Africa accounting for around £900m. Western Europe represents around another £525m. In the UK, Guinness is the best-selling ale or stout, with a huge presence in pubs and bars. In the take-home market, sales were £90m in ye Mar 2017 (IRI, in The Grocer).

It's a unique mix of first and third world territories unmatched by any other mainstream brand. Ironically, while sales worldwide for this quintessential Irish brew are continuing to climb, consumption in its domestic market is in steady decline. That change says something about where the brand's image sits nowadays. In a bid to reverse declines in Europe, Diageo initiated a marketing campaign in 2009 to establish founder brewer Arthur Guinness' birthday of Sept 27th as a national holiday, "Arthur's Day". The 2012 celebration was promoted in more than 50 countries worldwide, but the annual event was finally cancelled in 2014.

In the beer's most valuable Western markets, Guinness is established as something of a style brand, a position reinforced by its extraordinarily powerful marketing. Initially, this presented Guinness as a healthy and refreshing drink. The first national advertising for Guinness was launched in 1928 by the London advertising agency SH Benson (later to become part of Ogilvy & Mather). "Guinness Is Good For You" promised these ads, many of which were illustrated by the artist John Gilroy, who worked on the press and poster campaign for 35 years. Initially, these images promoted the idea of "Guinness for Strength", depicting a woodchopper able to down a giant tree at a single blow, or a construction worker carrying an iron girder on his head. They were replaced during the 1930s by the "My Goodness. My Guinness" campaign which depicted a long-suffering zookeeper whose various animal charges run off with his pint. One of these creatures, a toucan, gradually evolved as the brand's main mascot until the late 1950s.

From 1987 onwards, the beer was repositioned as a style brand in a series of surreal ads featuring Blade Runner actor Rutger Hauer. In 1994, the unique method of serving Guinness became the subject of its UK marketing. Traditionally, draught Guinness takes time to serve because it must be poured in two helpings to ensure that the creamy head develops. (It takes almost two minutes to pour a traditional pint of Guinness correctly). This concept - good things come to those who wait - was introduced in the "Waiting Man" ad which also spawned a hugely popular computer screensaver. A series of similarly themed executions followed, culminating in the Surfer ad (waiting for the perfect wave) of 2000, widely acclaimed as one of the most popular commercials of all time.

Yet while the trendiness of Guinness advertising has done much to enhance, or perhaps preserve, sales in Britain since the 1980s, it actually hindered popularity in its core Irish market. Guinness is now perceived as something of a cultural relic in Ireland and younger drinkers have moved away from the brand in significant numbers in favour of imported beers (such as Budweiser, also brewed and marketed in Ireland by Guinness, under license from Anheuser-Busch). That process has been exacerbated by Ireland's current financial problems, with the result that local consumption of the brand has almost halved since the end of the 1990s. Instead the US, where style and Irishness have long carried a positive marketing message, proved to be one of the brand's most dynamic markets during the 1990s. Between 1993 and 2003, imports of Guinness more than tripled, making it the country's #5 imported brew. Since then, though, it has lost considerable ground to Mexican beers. In 2015, Guinness Draught was the #8 import. Total Guinness USA volumes were around 2.3m barrels in 2015. The biggest new challenge facing Guinness in the US has been the explosive growth of the craft beer sector, which intersects with Guinness even more directly than on traditional mainstream lagers.

In the later 2000s sales in both the UK and US lost their impetus as drinkers shifted towards other tipples. In fact, Guinness's unique "waiting" concept actually began to work against it. One key criticism made in many bars was that Guinness simply took too long to serve and settle, tying up bar staff who could more profitably be serving another customer. In response, the company dropped its "Good things come to those who wait" slogan in 2002 and began testing new Fast-Pour beer taps that speed up pouring and don't require settling while the creamy head develops. These reduced serving time from two minutes to around 25 seconds. Oddly enough, they tested poorly with customers who tended to return to slow-pour pints after trying out the faster system. In Japan the group began experimenting with another device, a "surger". Because many Japanese bars don't have room for Guinness draught systems, the company developed a new solution. An ordinary pint could be poured from a bottle without a foam head and then placed on the bar-top surger which used ultrasound vibration to generate a creamy head out of the gas already present in the beer.

The brand also struggled to find a new advertising message. A new commercial ("Moth") in 2004 offered the slogan "Out of darkness comes light", but seemed bland compared to past offerings. Later, Guinness offered a light-hearted remake of some of its past classics, including the dancing man and Rutger Hauer, to market the extra-chilled version of Guinness. After several false starts, Guinness finally stumbled upon a new cultural classic when AMV BBDO came up with the stunning "noitulovE" reverse Evolution spot, a fitting successor to the likes of "Surfer" and "Waiting Man". Arguably no Guinness campaign since then has achieved the same heights.

The group has also reinforced Guinness's reputation as the choice of a more robust sort of sportsman. Ads for the Irish market regularly feature tough contact-heavy sports such as rugby or traditional curling, and have also enjoyed wider coverage alongside the "urban drinkers" who appear in most of the brew's British ads. The stout has also long been associated with rugby. It has sponsored the London Irish team since the early 1990s, and in 2005, Guinness took over sponsorship of the UK rugby Premiership, as well as the British & Irish Lions rugby tour. It ended those ties in 2010, but instead agreed sponsorship deals with the national rugby bodies for England, Wales and Scotland. The association with tough sports was expanded to the US from 2010 with campaigns featuring football and basketball and the tagline "Fortune favors the bold". In the US the brand supports the Guinness International Champions Cup in which famous football clubs from Europe compete in a friendly tournament spread across several major US cities. In Ireland, on the site of the brewery, Diageo also operates the Guinness Storehouse, a museum of all things Guinness-related that is also the country's most popular tourist attraction.

Elsewhere in the world market, Guinness drinkers are largely oblivious to considerations of style and art. Although volume sales for Guinness declined 5% in the UK and 9% in Ireland during 2007, those falls were offset by strong increases in other markets, especially Africa, where volumes rose 17%. Africa has been a key region for Guinness since the 1960s, and it remains one of very few beers available across the whole vast continent. Guinness is still marketed in many regions along the lines of Guinness Is Good For You, leaning on long-held perceptions of the brand's traditional strength and trustworthiness. For many years since the late 1990s, Guinness's advertising in the region featured fictional James Bond-style character Michael Power, who overcomes problems through "perseverance and inner strength", all thanks to Guinness. More recently, the brand message has become "Nothing tastes like Greatness". The group continues to explore new developing markets. Rather than rugby, which has only a limited following in Africa, Guinness is aligned with football, and especially the English Premier League. It is the official broadcast sponsor of English Premier League football on cable TV in several African markets.

Guinness variants

There are several Guinness products. The best-known in Western markets is Guinness Draught, which accounts for around 55% of all volumes. It was first introduced in 1961, and is the only version of the stout to feature the famous white head. Guinness Draught was developed for cans in 1989, featuring an innovative nitrogen gas capsule (or "widget") which generates the creamy head when the can is opened. A related "rocket widget" device was developed to have the same effect in Bottled Draught Guinness, from 1999. An Extra Cold version of Guinness Draught is served in selected outlets, at an even colder temperature. It is exactly the same product as standard draught Guinness (and comes from the same keg), but is delivered to the pump via a super-cooler to make it around one-third colder. Draught Guinness is the version commonly sold in the main markets of Europe, the US and Australia.

The original Guinness stout, in a form more or less the same as when it was first brewed in 1820, is still available in a few markets as Guinness Original or Guinness Extra Stout. A stronger version of Guinness is brewed and served in Asia, Africa and the Caribbean, and is also available in the main markets under the name Guinness Foreign Extra Stout. This version accounts for around 40% of total global volumes. While Draught Guinness contains on average about 4.3% alcohol, the Foreign Extra Stout is almost twice as strong, with between 7% and 8% alcohol content. It was originally developed in 1801 for export from Dublin to Britain's international dominions. The higher alcohol content helped it to last longer on the journey.

The brand is also still manufactured as Guinness Original in bottles and on draught. More recently a non-alcoholic malt-based spin-off, Malta Guinness, has performed very strongly in African markets, as has new Guinness Extra Smooth, brewed with smaller bubbles for an even creamier taste. The group began rolling out Guinness Red, a lighter reddish-coloured stout, in the UK in 2007. It is made from a lighter roasted barley which gives a rich red colour and a bittersweet taste. A mid-strength variant of Guinness Draught, at around 2.1% alcohol content, was tested in Scotland in 2009. In arguably the biggest ever change to the Guinness tradition, the group began testing Guinness Black Lager in 2010, brewed the same way as ordinary lagers, but with a darker colour. It has gradually been rolled out into selected global markets, including the US in 2012 and Canada in 2013. Guinness Blonde American Lager launched in the US in Q3 2014, and was succeeded in 2016 by craft pale ale Guinness Nitro IPA.

In 2014, Diageo announced plans to launch premium-priced limited edition commemorative beers in the US each year under the Guinness Signature Series banner. The first, launched in Nov 2014, was Guinness The 1759, packaged in 750cl bottles with a $34.99 price tag. No other such products have followed. However, the UK has seen the launch of more affordably priced historical variants, Guinness Dublin Porter and Guinness West Indies Porter. However, the biggest success from what is now presented as the Guinness Brewers Project has been a new lager, Guinness Hop House 13.

In 2012, the brand lent its name to a line of Guinness snack nuts and crisps produced in the UK under license by Burts Chips.

Background

Arthur Guinness set up shop in 1759, leasing a Dublin brewery after inheriting £100 from a relative. (In an extraordinarily bold and astute move, he purchased a 9,000 year lease on the site at a fixed rent of £45 a year. That land is now one of the most valuable areas in and around Dublin, and still costs Diageo £45 a year.). He produced a wide range of ales and stouts, but it was his Extra Superior Porter stout which had the most lasting appeal. Porter was named after the porters at London's Covent Garden fruit and vegetable market, who were noted consumers of this form of beer. An English invention, it gradually fell out of favour in its home market, but remained lastingly popular in Ireland. During the early years of the 19th century, the family brewery gradually came to concentrate on production of its leading brand, until by 1840 Guinness stout represented more than 80% of sales. The harp logo, still used today, was adopted in 1862. In 1886, the brewery went public as Arthur Guinness & Sons, and expanded rapidly. By 1900, Guinness was the world's biggest brewer, and in the early years of the 20th century, the founder's great-grandson Edward Guinness, later the first Lord Iveagh, accumulated huge wealth from this business and other investments. By the 1920s and 1930s, the Guinness family was one of the richest in Britain, at the heart of London and Dublin's social elite, although it had increasingly little to do with the brewery from which its fortune originated.

Guinness first made a name for itself as a result of a memorable ad campaign which promised "Guinness is Good for You" and introduced its toucan mascot. In 1950 the company diversified, launching Harp lager, and establishing the books division which first published The Guinness Book of Records in 1955. (Reportedly this was conceived by Guinness managing director Sir Hugh Beaver during a weekend shooting party to resolve an argument over which was the fastest game bird in Europe, the golden plover or the grouse). But by the mid-1970s, the company had spread itself too widely. In 1981, incoming chief executive Ernest Saunders began to sell off many of the companies acquired by his predecessors, before drawing up a new shopping list of takeover targets. At the top of this list was Distillers Company, the maker of Johnnie Walker whisky, Gordon's and Tanqueray gin. After a fierce takeover battle with rival the Argyll Group (later Safeway and later still Morrisons), Guinness won Distillers in 1986 for £2.5bn. However a subsequent and unrelated investigation of US financier Ivan Boesky also uncovered details of a scheme used during the Distillers takeover to boost Guinness's share price, and therefore the value of the company's bid. Saunders was fired in 1987, and subsequently jailed for fraud along with three business associates.

While the Guinness company made news for corporate fraud, the Guinness family also hit the headlines during the 1970s and 1980s as a result of a series of tragic, often drug-related deaths among the younger "idle rich" members of the family. In 1997 Lord Moyne, formerly Jonathan Guinness, was investigated after the disappearance of £49m from Trustor, a Swedish investment company, of which he was chairman.

Following the Distillers scandal, new Guinness CEO Sir Anthony Tennant refocused the group on drink, buying Dewar's in 1987, as well as a 34% stake in the Moet Hennessy drinks arm of LVMH. Other big purchases included Spanish brewers Cruzcampo and Union Cervecera in 1991 and Desnoes & Geddes, the Jamaican brewer of Red Stripe lager in 1993 as well as distilleries in Venezuela and Germany, and America's Glenmore. In 1994, Guinness won US rights to Grand Marnier, and strengthened its ties to LVMH's chairman Bernard Arnault by selling him Guinness' shareholding in fashion group Christian Dior. By the mid-1990s, the group had a strong portfolio of drinks brands but was looking for a way to make a quantum leap forward. That deal materialized in 1998, when Guinness merged with Grand Metropolitan to form Diageo. [See Diageo profile for more]

Last full revision 31st October 2016

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