Thursday 17 August 2017

Post-boom hangover forces Guinness to cut back 'significantly' on advertising

Guinness has been advertising more or less constantly in Ireland since 1928
Guinness has been advertising more or less constantly in Ireland since 1928
Peter Flanagan

Peter Flanagan

GUINNESS may be good for you, but Ireland isn't good for Guinness right now and an icon of Irish advertising may disappear as a result.

The long-running Guinness ads could become a thing of the past after the stout-maker's parent company said it would be cutting back "significantly" on advertising in Ireland.

Diageo chief executive Andrew Morgan told investors that his company expects to reduce advertising and promotion in Ireland, Greece and Spain as business in those countries continues to decline.

"For the time being, we have no choice. We are prepared to drop our spend significantly," he said.

"We think of Europe as three types of markets: the challenged, declining economies of Ireland, Spain and Greece; the higher growth Russia; (and others such as) Great Britain, France and Germany. Going forward, we'll be reducing our cost base in the former low-growth markets and fuelling growth in the latter."

About one in every three pints sold here is a Guinness but the market -- the third largest in Europe for Diageo -- has shrunk some 15pc since the boom, with pubs and restaurants hit particularly hard. Guinness has been advertising more or less constantly in Ireland since 1928, when the "Guinness is good for you" slogan first appeared.

The company's most recent "Dark Life" advert was launched in Ireland in December, while the 2007 "Tipping Point" campaign cost a record £10m (€11.3m).

As well as straight advertising, Diageo also sponsors a number of events including the hurling championship and November rugby internationals. Both of those involve long-term deals, however.

Guinness is not the only big brand owned by Diageo. The company also counts Smithwicks, Baileys, Smirnoff vodka and Captain Morgan rum among its products. Last night a spokesman for Diageo Ireland said it was "too soon to comment on any cost reduction programme in Ireland".

"Diageo Ireland regularly reviews its cost base to ensure we meet both our customer and consumer needs," they added.

Mr Morgan said first-half earnings were down 9pc on the back of the problems in Ireland and the two other countries, which make up some 40pc of the firm's profits in Europe, and defended the decision to cut back on spending here.

"I absolutely feel that's the right thing to be doing given the problems we face on trading," he added.

"Consumers are just not there responding to the marketing that you do. Even if they love your advertising, (people are) not out there buying the product.

"They've all got significant increases in personal taxation and our products have become more expensive. It simply does not make sense to maintain your absolute levels of marketing in that sort of climate."

Irish Independent

Also in Business