The Big Interview: how Diageo GB boss Charles Ireland is lifting UK spirits

One hundred and three million pounds. Think about that number for a second.

That’s the amount of extra cash British shoppers spent on Gordon’s Gin in the supermarkets over the past year [Nielsen 52 w/e 11 August 2018]. What’s more, £75.2m of that growth came from Gordon’s Pink, which hit shelves just last year, yet already rivals some of the nation’s biggest brands in terms of value. It will undoubtedly go down as one of the alcohol industry’s most successful launches of the past decade

This, understandably, has left Charles Ireland somewhat pleased. Diageo’s GM for GB, Ireland and France, who moved to London two years ago after a spell as MD of its East African Breweries division, has arguably already secured his legacy.

“This was all planned, but maybe not to quite the scale we’ve seen,” he admits. “We spotted the pink gin trend in Spain first – people were out drinking G&Ts in big copa glasses, and other brands were beginning to invest in serve quality at the time.”

Diageo’s innovation group flagged its potential to Ireland, and shortly afterwards, the decision was made to “go large” with it. “We took it to buyers, talked them through the story and our point of view and got a lot of support.” An exclusive launch in Tesco drummed up shopper interest, and within weeks there were national news reports of the flamboyant SKU going repeatedly out of stock. It also spurned a veritable slew of imitators from large and small rivals alike.

“When I was working in Africa, there was perhaps a belief that the UK, because it was more developed as a market and more mature, that it was less dynamic,” he says. “But it is incredibly dynamic. And our portfolio is really well suited to a lot of the dynamics in our market, such as premiumisation and more holistic lifestyles.”

Several Diageo brands are indeed in rude health. As The Grocer’s Britain’s Biggest Alcohol Brands revealed this year, while Gordon’s has overtaken Hardys, Strongbow and Jack Daniel’s to become the UK’s sixth-biggest booze brand, Captain Morgan has also finally trumped Bacardi to become its favourite rum, sales of Guinness spin-off Hop House 13 are up 244.4%, and Gordon’s posher sister gin, Tanqueray, grew sales by 50% [Nielsen 52 w/e 21 April 2018].

Whisky sour

That’s not to say there aren’t weak spots. With Diageo’s gin portfolio firing on all cylinders, the spirits giant’s focus is turning to Johnnie Walker. The blended scotch is arguably the cornerstone of Diageo’s business, and one of the world’s biggest booze brands, selling 18.3 million nine-litre cases worldwide in 2017, according to the latest Spirits Business ranking.

Its UK performance is underwhelming, though. With value sales of just £18.1m last year and a modest 1.6% (£289k) growth [Nielsen 52 w/e 14 July 2018], Johnnie Walker doesn’t even come close to playing in the same league as the likes of Grouse, Grant’s or Jack Daniel’s.

“We’re trying to change that”, says Ireland. “Johnnie Walker is so loved across Asia and at a global level, but we haven’t really invested very much to make it available and respected by consumers in the UK. I would love it to be the UK’s leading whisky.”

Whisky revival: spirits category report 2018

The first step is a multimillion-pound investment into not just Johnnie Walker (which is getting a massive new visitor centre in Edinburgh) but a considerable roster of distilleries, from which many of Johnnie Walker’s constituent parts are sourced. He also hints at a sizeable above and below the line marketing investment.

Ireland says he “fundamentally believes” in the potential of whisky, because it shares many of the same characteristics and cues that have brought craft beer to prominence. “It is an amazing crafted liquid with layers of flavour that come directly from the skill of the craftsman, the wonderful ingredients used, and the time it spends maturing, getting its depth and breadth of flavours.”

The challenge for suppliers, Ireland admits, has been in communicating story. “We need to ensure that consumers begin to appreciate it in the way that people who already get whisky do. We and other manufacturers need to help bring it to a wider cohort.”

Ireland’s remit extends beyond being one of the spirits sector’s most powerful executives. Sitting on the board of the WSTA, he is “very active in the greater thinking of the trade”, according to a senior industry source. “He is more than just the country head for a large corporation, he is an active player. When you’re with him there is always a debate and a discussion going on.”

Thus despite Diageo’s recent successes, Ireland is eyeing the coming months with a touch of caution. First there is the matter of a potential duty rise in the autumn Budget this month, against which Diageo is rallying.

“I was delighted last year when the chancellor announced there would be no increase in excise tax,” he says. “Excise tax in the UK is already the highest in Europe. As a country we account for something like 13% of the population of Europe, yet we pay 40% of the excise tax on alcohol. Taxes are high enough.”

The problem extends beyond supplier margins, he stresses. “It means domestic producers are quite often left at a disadvantage compared to importers – I’d just like a level playing field. And it makes great sense for the government: when the Chancellor announced the duty freeze in the last Budget we saw excise tax collections in total going up.”

There’s also that, while the spirits sector has gleefully embraced premiumisation, and thrown its weight behind convincing consumers to trade up and seek quality over quantity, Ireland believes there is a limit to how far prices can stretch before they lose interest.

After all, he says: “Consumers are the final decision makers. We’re not complacent about this and we know we need to earn the right to be chosen by them.”