The great Guinness shortage has lessons for Diageo

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When I visited my nearest hipster pub in east London this week, there was no sign of the great Guinness shortage. Despite stories of pubs having to ration the newly fashionable Irish stout, the barman filled a glass with the correct double pours, leaving a white head and bubbles suffusing the cold, dark liquid.

My Goodness, My Guinness, as the advertising posters by John Gilroy in the 1930s proclaimed. The marketing gods have smiled on this odd-drink-out among Diageo’s brands as the UK drinks company continues to suffer a hangover from the Covid cocktail craze. Forget Johnnie Walker scotch and Smirnoff vodka, Guinness is where it’s at.

Guinness is not a new product, although the zero-alcohol version launched in 2020 is also doing well. The stout invented by Arthur Guinness and brewed at St James’s Gate in Dublin since the late 18th century, is the epitome of long-term success. From older regulars, it has spread to young men and women: sales have risen by about 20 per cent this year in Great Britain.

Diageo’s spirits are at a low ebb, meanwhile. The company has shuffled its brand portfolio towards hard liquors such as the Casamigos tequila brand co-founded by George Clooney, which it bought for up to $1bn in 2017. This seemed like a good idea at the time, but Casamigos sales dropped by 20 per cent in the year to August, leading its share price down.

The resurgence of Guinness is remarkable, given that craft and imported beers have eroded sales of other familiar brands. Anheuser-Busch InBev’s botched attempt to widen the appeal of Bud Light shows how tricky that can be. I thought that the political backlash to its marketing use of the transgender influencer Dylan Mulvaney would wear off, but I was wrong.

Guinness’s success has lessons for many companies: beware underestimating steady performers in favour of newer products. Guinness was one of two companies that merged to form Diageo in 1997 and, while it has kept faith with the stout, spirits have been at the heart of its strategy. It is easy to miss the potential of brands that have been around a long time.

This one is both traditional and peculiarly modern. Food and drink start-ups often labour to convey a sense of identity and provenance to consumers, but Guinness has both innately. While it spends heavily on marketing and has devised many ad campaigns, they all evoke the same truth. It is a distinctive product that has been brewed in the same style for centuries.

For a mass beer brand, Guinness is quite bespoke: it may not be a craft beer but there is craft to its delivery. It arrives at pubs in casks and must be stored and poured precisely to achieve the right combination of body, head and lacing on the glass. Woe betide sloppy pourers, for their failures are recorded derisively on Instagram and X accounts such as @shitlondonguinness.

It is perfectly adapted to social media because it is so recognisable: one knows from across a pub who is drinking Guinness, or maybe Murphy’s stout. Beside Guinness, lagers and ales pale into insignificance. Little is as powerful in marketing as being identified with a colour, like Tiffany Blue (or FT pink).

More broadly, Guinness is a sociable brew. It is far more popular on draught than in cans, despite Diageo making a special device that reproduces the Guinness pour for home use. It was easy to mistake the popularity of spirits in the pandemic for permanent change, but Guinness has come back into its own as young drinkers spend more time in bars with friends.

Emotion and identity are weightier than portfolio strategy and it pays to keep faith in brands with long histories and consistent values, even if one sometimes has to be patient. Ivan Menezes, the former Diageo chief executive who led the push into premium spirits, often wore a Guinness harp pin. His heart was telling him something.

Other companies will envy Guinness’s good fortune. Diageo is now investing heavily in the brand, putting £30mn into the St James’s Gate brewery to raise output and another £200mn into a new brewery in County Kildare. But this will all take time and it remains in the rare, unsettling position for a brewer of not being able to satisfy demand.

That could be an expensive error, given that almost 300mn pints are expected to be served in British pubs in December, making this the busiest season of the year. But it will also enter the brand’s mythology. Luxury companies try to engineer product scarcity to create a sense of mystique. Those who cannot find a pint of Guinness at Christmas may come to crave it more.

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