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Interview

Savouring the spirit of marketing

The man behind big-name brands such as Johnnie Walker, Smirnoff and Guinness talks about his ambitions to accelerate growth and profitability at the world’s leading alcohol company as he prepares to face the challenges of economic volatility in the West, cultural changes, and competition from emerging markets.

Andy Fennell wants to defy gravity. An hour into our interview he is talking animatedly about the “exciting” music scene in Nigeria; the new wave of Bollywood films from India; the belief in the Chinese people in their ability to take over the world; and the first generation of independent women emerging in the Sub-Saharan desert.

The man in charge of a marketing budget of more than $3.1bn at the world’s largest alcoholic drinks giant talks about a sense of optimism and dynamism that these new markets and new consumers give him. At a time when the economy in Western Europe is depressed, he believes that “if businesses can defy gravity and be more bold and creative” brands can propel towards high-velocity growth.

And he should know. Fennell has spent 15 years at the drinks company in various marketing roles and has been the global chief marketing officer (CMO) since October 2008. He is the marketer who, when he joined Guinness in 1997, took the brand to its highest ever marketshare. This is the man behind one of the best ad campaigns of all time – Guinness’ ‘Good things come to those who wait’.

Fennell launched Smirnoff Ice in 76 markets across the world, worked in the US for three years, returned to run the UK business as marketing director, and oversaw the rapid growth in Eastern Europe and Russia as European marketing director.

 As CMO, he now spends most of his time in the emerging markets. There might be too much emphasis on the word “exciting” every time he starts chronicling the fast-changing consumer habits outside of the developed world, but Fennell is genuinely fired up about how cultural changes are having a huge impact on both society and the economy.

“I was in Vietnam, where a family of four still goes around on mopeds for their weekly shop,” he says. “The GDP growth is making its way down to the middle classes and creating a sense of entrepreneurship, which gives the country this dynamism like how it must have felt in the 1950s in the US.”

Changing world order

Diageo gets about one third of its overall business from emerging markets and expects that to grow to 50% in the next three to four years. “We see opportunity among the volatility and that is what we as a company are investing in to help us get more than our fair share,” he says, talking about how Diageo is responding to the changing world order.

Diageo has a list of markets on which it is focusing, with the BRICS at its core. Turkey, Columbia, Mexico and Vietnam follow. This year, Diageo took a controlling stake in China’s Shui Jing Fang, the manufacturer of premium Baijiu – the staple Chinese white spirits brand. It has also bought Mey Icki, the leading spirits producer and distributor in Turkey. Last summer it acquired a 51% stake in Serengeti Breweries in Tanzania.

For the UK-based business with a huge footprint in the Western countries and North America, as well as an ever-increasing hold in Africa, Latin America, Asia and Eastern Europe, Diageo’s exposure to the world economy looks quite well-balanced.

Overall sales grew by 9% in the first quarter, ahead of market expectations, aided by growth in Latin America and the Caribbean, where sales were up by 30%. “Our business is in good shape and we are adding local brands all the time,” Fennell says. “But our lifeblood brands are still Johnnie Walker, Smirnoff, Guinness and Baileys. How we communicate Johnnie Walker’s ‘Keep Walking’ campaign in China to how we communicate the same idea in the US, now that is different.”

For Fennell, the basics of marketing still hold true. The enterprise value of Diageo, he says, is based on the relationship between brand and consumer. In Nigeria, Diageo organised a football friendly between Nigeria and Argentina earlier this year. Called Guinness The Match, it invited all Guinness consumers and attracted a viewership of more than 40 million on television. “It was not a sponsorship deal. It was not advertising. We put the match together and brought it direct to our consumers, taking advantage of this world where entertainment means participation,” explains Fennell. In China, Taobao – the eBay of the East – is fast becoming one of the biggest ecommerce channels for its brands.

For Fennell, ‘platform participation’ is the buzzword in his quest to engage with consumers and present the brand story in a way that inspires the consumers “at a time when they are feeling the pinch in their wallets and becoming more conservative.”

For a company that is heavily reliant on television as its medium of choice globally, how then does it allow people to participate with its brands? “We start with the participation idea, and not by saying that we want a TV ad. It’s true that TV is still our biggest spending area globally, but what we want are ideas that work on mobile and in the social space and allow physical participation,” says Fennell.

Consumer engagement

He gives the example of the recent multi-media campaign for Captain Morgan rum. The campaign is run through the brand’s Facebook page and offers consumers a chance to win prizes while also comprising television and off-trade marketing to tell the story of the brand. The brand, he says, has grown 30% in Western Europe.

He stresses that marketing and creative innovation is also translating into growth in the West. He points to Johnnie Walker’s 44% increase in Germany and the 20% growth rate across Europe in the Reserve category, which includes Premium brands that sell $47 upwards per bottle.

For Fennell, the challenges for his brands and business comes from the twin dynamics of technology and the rise of new world powers – the reason behind Diageo’s “very significant” advertising deal with Facebook. Now in its second year, it sees the two companies share skills and pool resources to find new ways to harness affinity with consumers.

Diageo is keen to tap Facebook’s large number of users in emerging markets, such as Brazil, where the two companies occupy the same office space in São Paulo. It has more than 15 million fans on its Facebook page, which is one of the many ways the business emotionally engages with its consumers because “then they are more likely to choose us when in the market to drink.”

There is very little danger of Diageo or even Fennell, who is tipped to be a business leader in the future, ever being ignored. His meteoric rise to the executive board at Diageo makes his progress look rather easy.

But how has he always kept marketing at the forefront of business? “Marketing has always been held accountable to growth at Diageo, so there has never been a distinction between what marketing does and the performance outcome. If marketing does not hold itself accountable to business, but simply becomes the buyer of creative services, that is the fastest way to relegate marketing.”

He adds: “My profound belief is that the golden era of marketing is ahead and not behind us. Marketers who embrace technology, the crossfertilisation of cultures, the fusion of different entertainment forms and retail innovation will win.”

By Sonoo Singh