Once again it was Diageo who attracted the bad press. Two days ago, scotchwhisky.com reported that the US-based Masters of Whisky brand ambassador programme is going to be “axed” at the end of September. 40 people in toal will lose their jobs including 24 brand ambassadors.
This was followed up by a more in-depth look at the decision and also by an unusually scathing rant by Dave Broom whose writing normally is much more moderate in tone. If you haven’t done so yet, please read the articles. I was their scoop and I don’t want to repeat everything here.
Just as a short summary, the Masters of Whisky programme has been run by an external agency named MKTG. Now ENTHUSE, a branch of the Inspira agency which has already been working with Diageo, will take over. The focus will be on the on-trade marketing for the Diageo “Reserve Portfolio” that bundles the higher end brands of the copmany. Ambassadors of the old scheme are given the possibility to apply for the new jobs created by Inspira. There is currently a whole bundle of job openings for “On-Premise Specialists”.
What this effectively means is that the whole marketing will be geared towards on-premise “expericences” in key venues with a focus on (perceived, not necessarily real) luxury. Whisky will only be one drink among others.
The most important thing that is lost here is the educational work of brand ambassadors. Yes, brand ambassadors are also salesmen. They have to convice people that they should buy their products and not those of the competitors. And I have to admit that somtimes I bite my lips when brand ambassadors are overly enthusiastic in promoting their brands, and more than once I had to think by myself “They can’t honestly believe themselves what they just said.”
But brand ambassadors have also done a very good job in educating the public not only about the brands they represent but also about the category in general. Just take masterclasses at whisky shows as an example. Here you can learn a lot about whisky, and a good hosted whisky tasting is much more than just a show-off of the product range.
We don’t have to look far to find a reason for the decision to end the Masters of Whisky scheme. Diageo already announced that they are looking into their spending for external agencies.
Here is the official statment by DIageo’s US spokesperson Zsoka McDonald:
Diageo has hired ENTHUSE, the luxury division of Inspira agency to support our on-premise Reserve business. MKTG remains a trusted partner and continues to work on our business including the Ketel One, Guinness, and Crown Royal Ambassador programs.
We made this decision to evolve our ambassador program – after a review that included feedback from distributors, the trade and brands – because we believe it will benefit our Reserve business, a big part of which is Scotch and North American whisky. We remain committed to educating consumers about our brands and to supporting our whisky brands with the right resources and investment.
The key phrase here is “it will benefit our Reserve business”. By funneling everything through the Reserve portfolio channel Diageo obviously hopes to cut costs significantly.
An army of 24 ambassadors costs a lot of money to maintain. Salaries, travel, booking of event locations, catering, whisky freebies, you name it. If you let sink in that an annual 120,000 people have been “mentored” by the Masters of Whisky you can see that the yearly cost will easily run into seven-digit territory. I would not be surprised if the total costs eat up the profit of a small malt whisky distillery.
On-premise events will save on booking costs, a regionalised approach will save on travel expenses, and so on. I am sure the cost cutting will be noticeable soon.
What I am not so sure of is if the neglect of investment into consumer education will not eventually backfire in the long run. Your best customer is the one who is passionate about your product because he or she will most likely return. But can there be true passion without education? The bling effect of an event in a luxury setting can wear off quickly. A good brand ambassador can ignite that passion because a good brand ambassador already has a genuine passion for the category and does not only promote a fancy bottle with a fancy label.
So far I have only noticed bewilderment about this decision, especially from people working for Diageo’s competitors. The big question remains if this was a solitary move by Diageo due to the peculiarities of the American whisky market or if this is an experiment deisgned to find out if classic brand ambassadors are still necessary at all. But that would indeed send serious shock waves through the entire spirits business.
for some time now I wonder what is going on within Diageo. I have no in-route to classified knowledge but what is public begs questions.
Key figures in decision making marketing and finance leaving by the score.
Re-shuffling teams in Austria Switzerland and Germany and travel retail.
“Innovations” like Boxing Hares Smoky Goat and Huxley by Whiskey Union – if this is the future of whisky you do not need educators… or many more of them.
Mr Menezes saying Brexit is no big thing for Diageo and in the same breath demanding protection for Scotch whisky from the governments.
Investing in non-alcoholic companies via Distill Ventures and giving money to overnight booze suppliers at the same time.
The claim that Diageo is aiming for a leading role in the non-alcoholic drinks sector while maintaining the the role as biggest spirits company.
All propper and possible and probably a coherent strategy…. which I am unable to see.
To me it seems Diageo is has lost its touch and is tumbling without a clear sense of direction or goal but fiercely in search for higher profits in the case spirits and especially whisky will collapse any time soon.
And that is my short version. Now the cancellation of the Master programme…. and many little things more.
It begs the question what the heck is going on?
I reacted to Dave Broom’s article in much the same way. I thought he was unusually forthright and accusatory. Apart from the obvious cost cutting benefits you’ve covered, I concluded that Diageo were no longer happy funding a category promotion (of which Dave approved) rather than a Diageo portfolio specific function. I don’t necessarily agree with the decision, but I can see why they made it.
it seems Diageo has taken enough flak on this subject and while they drifted merrily down the river of putting mass before quality the order to row back upstream has been issued.
“Brand Ambassadors – Redundant Or Not?” is a good question, but I’d have to argue yes. Given that being a brand ambassador is usually about hyping your company’s product at the expense of the truth and even common sense, and given there are a lot of amateur whisky writers willing to do that, and be more readily believed by the public, for the price of a few sample bottles, it only seems like a sound business move to trim the dead wood.
As for the “educational” angle, that’s a double-edged sword. Is one more likely to be fired for saying age does or doesn’t matter to whisky depending upon its label? Until the industry can separate that which is true from that which simply sells cheaper product, it can’t make any claims of educating anyone about whisky.
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