Magazine article Marketing

United Distiller's Brand New Spirit

Magazine article Marketing

United Distiller's Brand New Spirit

Article excerpt

United Distillers' Tim Breene has restructured UD's central marketing department for the next stage of its development. Paul Meller reports

Shareholders at Guinness' AGM in May were in for a shock. For five years they'd enjoyed soaring profits, mostly generated from the spirits division, United Distillers,and climaxing at a massive 956m [pounds] last year. Then chairman Sir Anthony Tennant warned that the good times were over. They should expect more modest returns in years to come.

United Distillers is at a turning point. The impressive profits achievement was fuelled by the Hanson-style asset stripping that accompanied Guinness' takeover of the motley cluster of Scottish distilleries then called the Distillers Company Ltd. That process provided "ample fat to fuel the growth," says one city analyst.

A marketing-led corporate strategy was put in place from the start of Guinness' ownership. Pioneered by the now infamous. Ernest Saunders, the reshaping of Distillers started by reducing the production and increasing the price of its whisky-orientated spirits portfolio. It also saw the company's ownership of its distribution partners increase from 20% in 1987 to 85% this year, boosting worldwide sales margins.

However, that lucrative era in the company's history is now over. It's going to be "harder" now, says recently appointed global marketing director, Tim Breene. "You can't keep doing that," he says. "It's something you do once and get a return on it."

Like the first five under Guinness rule, future strategy is going to be grounded in marketing. Breene with his Mars/Unilever/WCRS marketing know-how and his McKinsey/Boston Consulting Group problem-solving track record, is backed by perhaps the most marketing-literate board of directors in the country. It boasts non-executives including Tesco's Sir Ian MacLaurin and top confectioner Dominic Cadbury, as well as new UD managing director from Procter & Gamble's marketing powerhouse, Crispin Davis.

What they have to manage is a portfolio of "rejuvenated bands", as Breene puts it. UD markets spirits in 146 countries and on every continent. It claims the world's most popular brands of Scotch whisky and gin. It isn't the biggest volume producer of spirits --IDV has the edge there -- but it is comfortably the most profitable spirits company.

Guinness led UD into Japan. Now it holds the high ground in the increasingly lucrative Far East market. About 750 UD staff work in Japan alone -- 250 more than rival IDV. Prospects for growth in burgeoning economies such as Taiwan and South Korea will fuel continued growth in turnover, and provide rich prospects for UD's drive towards premiumisation.

Europe is a different story. Although UD earns a third of all its revenue here, its brands do not hold the same cache as they do in the Far East. Southern Europe is the talking point among spirits marketers. The tract of land from Spain round to Greece offers rich pickings but, UD has largely been beaten to it by rival IDV. J&B Rare is the biggest selling whisky brand in Spain. Johnnie Walker barely gets a look in.

Once Breene got his feet under the desk in early March, he instigated a radical shift in the way UD does its marketing, pushing resources from the centre to the regions. Only a month after he took over the top job, he cut back the marketers employed at the centre of the UD empire, based in Hammersmith, by 25%. Some 20 jobs that were a part of the central strategic unit -- the think tank behind all the brand rejuvenations and extensions since 1987.

Some of the marketers, like European regional director for standard brands, Heather Graham, have left the company. Others, like Johnnie Walker brands director Nick Fell, have been sent out into the regions. The future of David McNair, promoted in April to marketing services director, is still to be decided.

Breene's restructuring has come in for some heavy criticism. …

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