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August 12, 2003

Baileys challenge a Glide for Diageo

Despite attracting more consumers each year than any other drinks brand in the UK, Baileys Irish Cream can count only a fifth of its consumers as regular drinkers. Chris Brook-Carter met Diageo’s innovation manager, Chris Stagg, to hear more about Baileys Glide, a new line extension designed to change that.

Despite attracting more consumers each year than any other drinks brand in the UK, Baileys Irish Cream can count only a fifth of its consumers as regular drinkers. Chris Brook-Carter met Diageo’s innovation manager, Chris Stagg, to hear more about Baileys Glide, a new line extension designed to change that.

Not noted for its progressive nature, the liqueurs market in the UK got something of a shake-up last year when the world’s two largest spirits groups, Diageo and Allied Domecq, announced their intentions to take the sector to task.

Allied launched Tia Lusso, a Baileys-style cream liqueur, while Diageo extended its Baileys brand for real with the packaging extension Baileys Minis. Both brands have proved hugely successful, with Tia Lusso adding £5.5m of sales in the first seven months of its launch. Meanwhile, the launch of Baileys Minis has now been extended to the US, Ireland and Australia, with 2.2m 4-packs sold since its arrival.

Given the interest generated, it is perhaps not surprising that Diageo has taken the decision to extend Baileys further. The result is Baileys Glide, a longer, single serve and lighter version of the drink. Despite the increased activity within cream liqueurs this drink, the company says, is not a response to the competition but a result of the further opportunities it sees within the category.

“I think if you focus on your competitors you will be in the here-today-gone-tomorrow category and we are not interested in that at all,” says Chris Stagg, senior innovation manager at Diageo and head of the team that is launching Glide.

Glide as a project has been in the Diageo business plan for just over a year and is part of a perceived solution to the problem that has held back the liqueurs category for many years – its relevance to drinkers outside special occasions.

With the launch of Baileys in 1974, the company hit upon what was to become one of its star performers. A total of 5.7m cases were sold last year and the drink now claims 14m consumers in the UK alone. However, despite recent high profile marketing campaigns, including the sponsorship of the popular Sex and the City television show in the UK, Diageo can only count around 3m of those as regular drinkers. 

“It’s [Baileys] got more drinkers than any other drink brand in Great Britain; about 14m people drink Baileys on a yearly basis,” says Stagg. “We know that those 14m people are really into the brand. The questions arise when you talk to those consumers about how they drink Baileys and on what occasions they drink it. What we found was that those 14m people can be split up into broadly two groups. There are about 3m consumers who drink Baileys on a regular basis.

“There are a much larger proportion – about 11m consumers – who are just occasional drinkers – perhaps once or twice at Christmas, perhaps once at Easter. Those 11m consumers have been firmly our focus for the innovation team.”

Diageo’s research indicated there were two barriers to extending Baileys consumption. The first is that people simply view Baileys as too special.

“That Christmas image of Baileys for some people means that they don’t see it as relevant outside the Christmas period,” says Stagg. “So from an innovation team we bought to the market Baileys Minis last September, which put Baileys in a format that is much more suitable for everyday occasions.”

The second barrier surrounds people who view Baileys as too short or too rich. “If you are a female and catching up with friends and cracking open a bottle of wine, Baileys doesn’t really go there. By the same token if you are a group of lads and drinking a bottle of beer, Baileys doesn’t really fit here either,” explains Stagg.

“So bringing Baileys Glide out, which is obviously a longer drink and lighter in texture due to the inclusion of vanilla in the mix, means that you have a product that is much more suited to occasions where you are catching up with mates having a natter and just relaxing.

“Drinking isn’t the important part of the occasions; it’s very social and we know from the research that we have done that Baileys Glide fits in well.”

Diageo’s research has been extensive, with 1000s of consumers tested, and Glide has apparently been well received. Despite this and the power of the Baileys brand, there will still be a few nerves before the launch into the off-trade in September.

The company’s recent innovation record has been a little hit and miss, with the success of the likes of Smirnoff Ice balanced by failures in the US with brands such as Captain Morgan Gold and in the UK with Gordon’s Edge.

That said, the £6m being put behind the launch aside, Baileys Glide gives more reason for optimism than most of its successors.

“The fact that we are talking to a group of consumers who are quite into Baileys anyway but just don’t drink it on that many occasions [means] we are in the right place,” argues Stagg. “If we were trying to talk to a group of consumers who weren’t into Baileys at all it would be quite a leap of faith to get them into Baileys Glide. We don’t think that is insurmountable at all, and we know that there are a lot of people who haven’t been into Baileys who will find this a great way to try the brand.

“But I guess our fundamental focus is with those who do have quite a strong relationship with the brand and have quite strong feelings towards it, just don’t drink it that often. We are relating to a group of people who are predisposed to Baileys anyway,” he adds.

This is also the reason Stagg is unconcerned by any fears of cannibalisation of the parent brand.

“I have been on the project now about four months and that was the first question I had: how does this cannibalise Baileys? But actually it’s really low, less than 10%. And initially that struck me as quite surprising. But when you think our core target here is 11m consumers who are drinking Baileys a couple of times year, it becomes quite clear that we are not really a major part of those consumers’ drinking habits even though they have a strong association and affinity to the brand.”

The next four months will prove to be a busy period for Stagg and his team, in what is a hard launch. Most of the £6m will be spent by Christmas and Diageo will ship to all its customers within the next couple of weeks.

However, while the focus will be firmly placed on Glide, Stagg does not rule out further such launches in the future. “We are always talking to consumer so I wouldn’t for a moment say that this was the end of innovation for Baileys for the foreseeable future. By the same token we [Diageo] have a huge portfolio of brands and we have a lot of innovation projects.”

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