US: Diageo holds high hopes for Guinness Black Lager
Diageo makes "big play" with Guinness Black Lager
Guinness Black Lager is Diageo's "big play" in the US beer market in the group's current fiscal year, according to Oliver Loomes, Guinness global brand director. Having tested the beer in San Diego and Chicago, the group has launched the brand nationwide this month as it seeks to tap into consumer thirst for flavourful, bottled lagers.
"If we can crack it, the numbers will be big," said Loomes, speaking to just-drinks in Dublin last week. "In the US, Guinness is a small player, so if ... we could get [an extra] 1% or 2% share of the market, then that would be quadrupling the current size of the business."
In the past Guinness has proved a tough brand for Diageo to expand. Many consumers have shunned new takes on the established brand and not enough new consumers have been wooed. Added to this, in the US specifically, overall beer sales are in low single digit decline.
Momentum, though, is already with Guinness in the US. Sales rose by 3% in both volume and value off a small base in Diageo's last fiscal year, to the end of June. Loomes believes that US consumers have "endorsed Guinness Black Lager as something credible from the Guinness brand". At 4.5% abv, it is being pitched at around US$8.49 per six-pack, which Diageo says is in-line with other premium imported beers.
"If our test markets are going to be replicated nationally, then we're on to a big opportunity," said Loomes, who declined to comment on specific sales targets.
For now, the US will be Diageo's focus for Guinness Black Lager, but there is scope for launches in other markets if all goes well. In terms of profit margins, Guinness Black Lager could also pay dividends. "Safe to be said that if we can make this thing successful in the US then over time it'll be very successful for the business," said Loomes.
"In the world of beer, the majority is lager, while stout is a relatively small part. If we could tap into all of those people that are consuming lager via the Guinness brand, then that would clearly offer us huge potential."
As well as in the US, the Guinness brand has shown growth in Africa and Asia-Pacific. But Europe, which accounts for 40% of sales, continues to drag on results. For Diageo's full-year, Guinness sales dropped by 5% in value and volume in Europe, despite share gains in the UK and Ireland.
"If 40% of your brand isn't doing well then that will definitely have an impact on your global performance," said Loomes. "We're very focused and very determined to get to a positive place [on sales]."
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