Diageo Plc (DGE)’s Guinness stout brand celebrated its 252nd birthday in Dublin yesterday with gigs by the Scissor Sisters and Stereophonics as it seeks to combat Ireland’s recession by spending more on promotions.
Bands played at venues around the Irish capital to mark what is known at Guinness as Arthurs Day -- the day in 1759 that founder Arthur Guinness signed a 9,000-year lease on the company’s St. James’s Gate brewery. The event forms part of the brand’s commitment to restoring sales growth in the country of its birth, according to Guinness chief Oliver Loomes.
“It’s hard work to get into positive growth,” Loomes said of Guinness’s domestic business. “The big part of the problem is the economy, not the brand performance.”
Sales of Guinness slid in Ireland and Great Britain in the year to June 30, according to London-based Diageo, in contrast to sales growth in countries including Nigeria, Cameroon and Indonesia. Ireland’s economy has shrunk every year since 2007 after a real-estate bust pushed the country’s financial system close to collapse, weighing on consumer confidence and spending.
Promoting the brand through sports and music events is “huge for business,” according to Loomes. Guinness is the official beer of the Irish rugby team and also sponsors local Irish teams including Munster and Leinster. The brand will also continue advertising through more traditional means, he said.
Loomes didn’t specify Guinness’s spending on promotional events such as those for Arthur’s Day and St. Patrick’s Day. The stout is one of Diageo’s 14 strategic brands, which also include Johnnie Walker Scotch whisky and Smirnoff vodka.
About one in every three pints of beer sold in Ireland is Guinness, Loomes said, adding that the brand’s market share was “stable” last year. About 90 percent of the drink sales in the country are through pubs and bars, which have struggled as consumers spend less or drink more at home. Promoting events helps drive drinkers back to pubs, according to Guinness.
“The pub is critical to Guinness -- the pint is the icon of the brand,” Loomes said.
Nigeria overtook Ireland as Guinness’s largest market last year, although the difference between the amount of beer sold in those countries and Britain is very small, Loomes said. Ireland is “at a macro level dealing with the state of the economy” and “starting to build more consumer confidence,” he said.
Africa is a “huge growth opportunity,” Loomes said. Diageo may start selling Guinness in South Africa, the largest beer market in sub-Saharan Africa, where the company has a joint venture with Heineken NV, he said, without giving details.
Guinness sales rose 10 percent last year on a so-called organic basis in Diageo’s international region, which includes Africa, while declining 4 percent in Europe.
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