Diageo Pushes Pricey Pods For Chilled Beer Displays

Excerpted from WSJ, “Diageo Serves Up New Campaign Aimed at Shoppers” By Aaron O. Patrick, Apr 7, 2009

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With people going out less often amid the recession and drinking more at home, Diageo is adding a twist to its marketing.

The company, whose brands include Johnnie Walker scotch and Guinness beer, is developing in-store displays to encourage shoppers to buy more of its products in supermarkets and liquor stores. Central to its approach is a plan to roll out big refrigeration units so stores can sell their beer chilled.

The idea is to create a partially enclosed, refrigerated beer zone within a supermarket aisle, using a design Diageo calls “the pod.” The refrigeration units, which will cost retailers roughly €10,000 ($13,000) each, are intended to hold all kinds of beer, not just Diageo’s brands, in an attempt to boost beer sales overall.

No retailer has yet bought the pod … But Diageo says it is working with Spar, a European food chain, to install a smaller version this spring.

The effort is part of a strategy by Chief Executive Paul Walsh to make Diageo, the world’s biggest alcoholic-beverage company by revenue, better at working with supermarket chains, an increasingly important outlets for alcohol sales …

Diageo is installing computer screens in liquor stores to help people plan parties. Customers type in the cocktails they want to serve and the number of guests they are expecting, and the computer prints out a list of ingredients and quantities, including ice. The machines, which the company says are in 500 liquor stores in 38 U.S. states, can also send cocktail recipes via email …

Analysts say Diageo’s retail push seems to be working. Sales of its Smirnoff vodka grew 2.2% in the U.S. in January, twice the rate of the spirits market as a whole … while sales of most big spirits brands fell … In Europe, Diageo’s Irish unit has emerged as a leader in the supermarket strategy. In the past few years it has given away 600 display stands that hold spirits, mixers and condiments …

Spirits account for most of London-based Diageo’s profit, but beer is especially important to it in Ireland, where it brews Guinness as well as such brands as Budweiser and Carlsberg. Diageo Ireland learned that 78% of those who buy beer in Ireland drink it within three hours, says Henry Dummer, the company’s head of customer marketing in Ireland. Many Irish supermarkets don’t sell chilled beer, missing out on sales, he says.

Now, Spar has agreed to install Diageo-designed beer refrigerators in all 50 of its Irish Eurospar stores over the next two years, says Declan Ralph, Spar Ireland’s retail-development director … Diageo is in talks with other retailers about the pod.

Edit by SAC

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