Sunday 24 September 2017

Ireland did its bit for Guinness -- but Diageo responds with job cuts

Linking the country so closely with the 'black stuff' during the royal and Obama visits looks like a mistake, writes Siobhan Creaton

US President
Barrack Obama
speaking in
Moneygall on
Monday. Photo: Getty Images
US President Barrack Obama speaking in Moneygall on Monday. Photo: Getty Images

PRESIDENT Obama's massive publicity boost for Guinness has left a bitter aftertaste, as just 24 hours after he sank a pint of Ireland's famous black stout, the drinks group was telling 400 of its 1,700 Irish staff to brace themselves for job losses.

While everyone else here is hoping to cash in on the US president's and Queen Elizabeth's recent visits to our beautiful but financially distressed shores, the giant Diageo drinks group has not factored in a sales boost in Ireland.

An estimated €23m worth of free global publicity for one of Ireland's most iconic brands might be good for Guinness but it isn't enough to shore up the decline in its business at St James Gate in Dublin.

"It is disappointing news at a time when everyone else is being so positive about the spin-off from these visits," says Siobhan McAleer, a senior marketing and sales management specialist at the Irish Management Institute.

"There was an 'ouch' for everyone when the economic realities immediately came back to bite us," she says.

The bad news for staff working at Diageo's marketing and other support functions in Dublin was always going to be delivered to St James Gate in May, the company says.

It did wait until the president's Air Force 1 had landed in London to break the news -- but only just -- and this has raised questions about whether it was a mistake to allow Guinness the extraordinary platform it received in recent weeks in the push to market Ireland abroad.

One advertising executive suggests that the opportunity to support companies that were creating and sustaining jobs in Ireland has been squandered.

"I didn't understand Guinness being the dominant brand last week," he says. "I thought we had moved on from the shamroguery of the pint of Guinness to depict Ireland. Food should be replacing drink when we are promoting the country.

"The Queen's visit to the English Market in Cork was a far better image for Ireland abroad and is more along the lines of what we are trying to achieve -- creating employment."

More jobs are being created in the food sector, which accounts for the bulk of Irish exports, compared with those supported by the alcohol sector, he says.

However, it can be difficult to sell a broader concept and other industry professionals argue that Guinness is still the brand most strongly associated with Ireland and therefore it provided the most powerful imagery for the country.

Sean McCrave, chief executive of the Institute of Advertising Practitioners in Ireland (IAPI), argues that Ireland's image abroad is still Guinness.

"Guinness is synonymous with Ireland in the way the Royal Family is with London and bullfighting is with Spain," he says.

He believes that it contributes to the overall hospitality package that the tourism body Failte Ireland is promoting.

Guinness's massive publicity, particularly after President Obama's tipple in Moneygall, can only help with the "Ireland of the welcomes" image that the Government is keen to promote in order to encourage tourism.

"People will come to Ireland to go to the pub for food as well as drink," says Mr McGrave, but perhaps other brands could have shared the limelight.

"More could have been done in that regard, particularly when President Obama went to the Siopa Beag in Moneygall. It would have been nice to see a few more Irish brands there" he says.

Planning the most effective marketing campaign around these momentous events is a tricky task because people respond negatively to overt marketing, according to Ms McAleer.

She says that young people, in particular, may respond to social media but will reject a hard sell.

"It might work for older people but for Guinness the fact that President Obama, who is seen as 'cool', drank a pint was so positive in terms of branding for younger people."

With an eye to elections next year, the US president is likely to have had an input into the products he would imbibe during his short stay here.

Just as Bord Failte knows that promoting Guinness goes hand in hand with showcasing Ireland abroad, the president also knows that these images will play well with the Irish-American vote.

As one advertising executive notes, while Obama thoroughly enjoyed his pint in full view of the world's media, Queen Elizabeth and her husband simply admired the pint of plain, but not a drop touched their lips. They had different agendas.

Ms McAleer says what is good for Guinness should ultimately also be good for Ireland and its tourism industry in the months ahead.

The Queen's visit, in particular, provided the widest array of everything the country has to offer.

"From a cultural perspective, the concert was a very positive message. We are known for music, poetry and art.

"Even President Obama gave a nod to this when he remarked that if you want a story told, you should get an Irish person to tell it," she says.

Only time will tell just how much of Ireland's marketing efforts will translate into hard cash in the future.

In the meantime, Guinness's harsh jobs announcement brings the immediate economic realities facing the country firmly into focus.

Tuesday was a bad day on the jobs front, not only for almost a quarter of the company's Irish workforce but also for many of their colleagues in other parts of its European operations, who were also learning that they too were facing the axe.

Their jobs are being sacrificed in a new round of cost-cutting designed to boost Diageo's profits in its next financial year.

By initiating a consultation process with staff now, it hopes to be in a position to finalise the redundancies within a few months.

In Ireland, the company is planning to cut €8m in payroll costs -- something that could trigger up to 100 job losses over the coming months as it continues to hollow out the famous brewery where Guinness was founded in 1759.

Key part

The company is keen to stress that Ireland will remain a key part of Diageo's European operations, with the head of its operations here, John Kennedy, to become the chief executive of its west Europe business.

It's a "reorganisation" that is necessary "to secure Diageo's success in Ireland," according to Kennedy. The company remains "fully committed" to Ireland, he adds.

"Ireland is important for them but the market is declining" says Ms McAleer.

"Guinness is still open for business here, even though it has a big plant in the UK that could be more efficient".

In reality, if manufacturers can keep iconic brands relevant with consumers, it doesn't matter where they are produced, she says. But there is a danger that drinkers will feel cheated if Guinness was no longer made in Ireland.

One industry insider says that at the end of these hugely successful and historic visits we are entitled to say: "Ireland has done its bit for Guinness -- the question is - will Guinness do its bit for jobs here?"

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