Guinness invests millions to fight sales drop

GUINNESS in Ireland is continuing to pump millions into its Irish operations to counter the dip in consumption of the black stuff.

Market sources estimate that last year the group, part of the multinational drinks group Diageo, spent up to 40 million supporting its products in Ireland.

Clive Brownlee, deputy managing director, Guinness UDV Ireland, said the marketing and advertising spend annually in Ireland was very substantial, but refused to confirm the figure. Not all of the money goes on promoting Guinness stout but the group is committed to maintaining its profile and its dominance of the stout market here, he said.

Results for last year show, however, that beer sales by the group fell by 2% for the year.

Guinness volumes fell 3% during the year having dipped by 4% in the first six months.

Heavier marketing and advertising in the second half stalled the dip and the decline was halved from 4% to 2% in the second six months period.

The estimated 40m figure covers promotions, advertising and general product marketing as well as the continuing drive by the group to improve the quality of draught Guinness over the years. Despite the best efforts changing tastes and a greater variety of spirit drinks has seen status of Guinness slip from 50% of the total beer market to closer to 40% today.

Mr Brownlee pointed out that while the dip in the figure is not what the group want to see he rejected the view “Guinness was reaching the end of an era.”

“Far from it. The product is beginning to turn the corner and the group combined with publicans in Ireland is engaged in a continuing quality campaign to ensure that the pint is up to standard in any pub where it is served.”

While the group may be struggling somewhat with Guinness it is still the biggest selling beer in Ireland while Budweiser and Heineken continue to dominate the lager market and Carlsberg is also continuing to make ground.

Bud volumes were up 2% on the year as was Carlsberg consumption.

In the spirits market Baileys and Smirnoff did very well with the former growing volumes by 7% year on year.

Overall in an Irish context Guinness UDV Ireland boosted operating profits by 3% to 245m while sales fell 1% to 1bn over the period. The slower sales reflected “tough marketing conditions” reflecting the weaker state of the economy and a serious absence of tourists, said Mr Brownlee.

Much the same climate continues to prevail in the current year.

The year just gone was a very good one for Baileys which sold a total of 66 million cases of product in the year ended 30 June, 2002. That is up from 60m the previous year.

In the broader context Diageo Group reported a 9% rise in operating profits and an 8% boost on an organic basis.