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Speaker 1: Ultimately, we’re trying to create a marketing mix where it

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Speaker 1: doesn’t so much matter how much we’re investing in specific

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Speaker 1: ad channels. It’s more how everything works together. And if

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Speaker 1: we invest more in retail media, we get better insights

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Speaker 1: and data back, both in terms of our ad performance

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Speaker 1: and also in terms of our customer behavior. We’re trying

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Speaker 1: to get a better understanding on how all these different

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Speaker 1: channels within a media mix work together versus just looking

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Speaker 1: at things, let’s say, in silo. on how they might

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Speaker 1: work based on a last-click perspective. We’re really trying to

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Speaker 1: get a better understanding of how everything works together and

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Speaker 1: find that holy grail.

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Speaker 2: Welcome to today’s episode of Brave Commerce.

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Speaker 3: I’m Rachel Tippegraph, the founder and CEO of Micmac.

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Speaker 2: I’m Sarah Hofstetter, president of Profitero.

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Speaker 3: And this is a show that talks about what’s relevant

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Speaker 3: in e-commerce for the world’s biggest brands. Sarah, did I

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Speaker 3: ever share with you the story how Micmac built a

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Speaker 3: product for the alcohol industry in 2019?

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Speaker 2: You did not, but that sounds pretty prescient. Let’s hear it.

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Speaker 3: So I was speaking at a conference that Meta was

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Speaker 3: putting on.

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Speaker 2: It was not called Meta back in the day.

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Speaker 1: No.

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Speaker 3: And it was around this time. It was September, if

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Speaker 3: I recall. I was presenting a L’Oreal case study. A

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Speaker 3: lot of our customers at the time were beauty brands.

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Speaker 3: And after I spoke, this gentleman came up to me

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Speaker 3: who ended up being the VP of Bacardi and said, hey,

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Speaker 3: what you’re doing for beauty, can you do for alcohol

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Speaker 3: in the US? And I naively go, I don’t see

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Speaker 3: why I couldn’t. And then he starts to tell me

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Speaker 3: about the three-tier system and just how challenging it is

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Speaker 3: for him to relate his digital marketing investment activities to

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Speaker 3: retailer outcomes. And my next reply to him was, can

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Speaker 3: you introduce me to your legal team? Because it was

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Speaker 3: very clear what we needed to do was actually build

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Speaker 3: for legal to solve this compliance issue. And so fast forward,

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Speaker 3: you know, Micmac now has 80% market share in alcohol

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Speaker 3: because of the compliance tools that we built in 2019.

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Speaker 3: Now that’s applicable to the US market. Alcohol outside of

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Speaker 3: the US is a very different animal.

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Speaker 2: It’s so interesting. When I got to Profitero in 2020,

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Speaker 2: had the reverse experience. So I was like, okay, let’s

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Speaker 2: think about where our most successful client relationships can be.

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Speaker 2: And because of the different rules inside and outside the U.S.

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Speaker 2: He said, let’s really focus on the world of Babel

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Speaker 2: outside the U.S. And then as the U.S. matures, we’ll

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Speaker 2: go otherwise. Obviously, this was right before COVID hit. And

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Speaker 2: we had, I don’t know, we might have even had 100%

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Speaker 2: penetration of Babel companies in 2020 outside the U.S. The

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Speaker 2: trick was once the role of digital influence started playing

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Speaker 2: So critically, so people would research online, but then buy

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Speaker 2: in store. We started seeing that the relative weight of digital,

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Speaker 2: whether that was retail media or just PDP content improvement

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Speaker 2: or whatever it is going there. And now I believe

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Speaker 2: we’ve got, I actually don’t know what our market share

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Speaker 2: numbers are, but they’re really freaking high in Babel. Whereas

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Speaker 2: I would say in the beginning of 2020, we had

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Speaker 2: a little bit and now it is a critically large market.

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Speaker 2: Vertical for Profitero and the expertise to your point, whether

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Speaker 2: that’s on legal and compliance or retail media or just

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Speaker 2: overall behaviors, just totally changed the game. But once you

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Speaker 2: can speak the language, it’s a different game because you

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Speaker 2: can really identify and live the value of thinking like

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Speaker 2: a customer.

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Speaker 3: Yeah, absolutely. It’s an interesting time in the BevAlc industry.

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Speaker 3: There’s a lot of headwinds. And I don’t know if

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Speaker 3: you’re seeing this within your customer base.

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Speaker 2: My customers are all very successful. They’re very happy. Everybody’s

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Speaker 2: very happy.

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Speaker 3: All good people, but definitely tough times. What I’m noticing

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Speaker 3: is that a lot of them are trying to default

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Speaker 3: back to strategies from 2018. Say more. Meaning there’s a

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Speaker 3: lot of conversation around, have we over-invested in digital? Have

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Speaker 3: we over-invested in social? And should we be reallocating spend

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Speaker 3: back to channels like TV, off-premise, experiential? I’m seeing this

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Speaker 3: across the U.S. alcohol portfolios.

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Speaker 2: Interesting. I’m seeing a lot of this. It’s not in

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Speaker 2: conflict with that, but it’s the role that it plays.

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Speaker 2: I think back to an episode that we had, one

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Speaker 2: of our earliest episodes with Wayne Duong, who was at

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Speaker 2: Constellation Brands. And he talked about the three-tier system. And

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Speaker 2: then he talked about the importance of gaining a greater

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Speaker 2: mindshare of how people shop. It’s one of our first

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Speaker 2: episodes ever about how people shop and how people shop

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Speaker 2: for alcohol and the differences between their beer category, where

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Speaker 2: they play with Corona and Modelo, and their wine category,

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Speaker 2: and just how different it is. And I think waving

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Speaker 2: this like peanut butter approach on how you think about

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Speaker 2: the role of digital or experiential or TV or whatnot,

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Speaker 2: which by the way, most of that is still digital.

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Speaker 2: It’s experiential, not a mechanism to get lumpy data after all.

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Speaker 3: 100%. Slap a QR code.

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Speaker 2: Yeah, there you go. It’s digital now. But I think

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Speaker 2: the whole idea of the fluidity of it all and

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Speaker 2: the role that tech plays in enablement, whether that’s online

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Speaker 2: or offline, is something that’s here to stay. And the

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Speaker 2: complexities will continue to grow in a more mindful category now.

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Speaker 2: The pressure is on, but hey, with pressure comes diamonds, right?

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Speaker 3: Absolutely. Well, Sarah and I could wax poetically about this

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Speaker 3: for a while, but who better to hear from than

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Speaker 3: an actual operator who’s operating one of the biggest alcohol

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Speaker 3: portfolio companies in the UK market, which is in many

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Speaker 3: ways pretty different than the US because they don’t have

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Speaker 3: the three-tier system, yet there’s similar economic backdrops in terms

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Speaker 3: of inflation deflation. So on that note, let’s bring Shane

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Speaker 3: onto the show. Today, we are very excited to have

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Speaker 3: someone come on the show from across the pond, Shane O’Rourke,

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Speaker 3: who’s the head of performance at Diageo and is based

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Speaker 3: out of their global headquarters in London. Hey, Shane.

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Speaker 1: Hey, Sarah, Rachel. Thank you so much for having me.

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Speaker 1: Super excited to be here. And also, well done on

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Speaker 1: pronouncing my surname correctly. I’m very impressed already.

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Speaker 3: Me too, because I am very terrible at names. So

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Speaker 3: glad I got it right. She really is.

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Speaker 2: Broken clock.

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Speaker 3: What are you going to do? Shane, we were very

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Speaker 3: eager to get you onto the show because Sarah and

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Speaker 3: I love thinking about the economy, talking about the economy.

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Speaker 3: And over the last two years, it’s been very clear

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Speaker 3: that what’s happening in the UK market, there’s some similarities

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Speaker 3: to the US market. And you’re spending a lot of

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Speaker 3: your time in the UK market. Inflation, deflation, it’s happening everywhere,

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Speaker 3: but it feels like it’s been very acutely felt within

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Speaker 3: the UK, especially the spirits industry. How is Diageo UK

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Speaker 3: adjusting its strategy based on these macro conditions?

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Speaker 1: It’s a good question. I think the current economic landscape

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Speaker 1: is definitely tough. There’s no two ways about it, but

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Speaker 1: it’s also opening up some really cool opportunities for us

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Speaker 1: to innovate. At Diageo in GB, or in the UK

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Speaker 1: at least, we’re focusing on lots of different areas. to

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Speaker 1: overcome these turbulent times. So like lots of other businesses,

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Speaker 1: we’re using tech and automation to streamline our operations and

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Speaker 1: cut costs. For example, I know it’s a big buzzword.

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Speaker 1: GenAI helps us handle routine tasks and fine tune our

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Speaker 1: marketing strategies. Plus we’re boosting our digital platforms to better

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Speaker 1: connect with consumers and other personalized experiences. I think second

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Speaker 1: is premiumization. We’re getting consumers to trade up to premium brands,

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Speaker 1: especially as inflation drops slightly, thank God. In fact, across

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Speaker 1: the total alcohol industry, or also called TBA, both globally

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Speaker 1: and in the UK, we’re seeing an increase in premiumization

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Speaker 1: versus last year, especially when it comes to areas like

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Speaker 1: whiskey and tequila and beer. And then the third big

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Speaker 1: area we’re really trying to get into is moderation. So

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Speaker 1: we’re making our portfolio more inclusive to match changing consumer

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Speaker 1: behaviors towards moderation and non-alcoholic alternatives. In GB alone, the

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Speaker 1: moderation trend has increased by almost 30% since 2018, with

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Speaker 1: many people opting for fewer drinks or choosing non- or

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Speaker 1: low-alcoholic options. And this is according to a Kantar recent

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Speaker 1: study called Alcoverse. And really, by focusing on these two

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Speaker 1: consumer segments, we can really tailor our strategies to resonate

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Speaker 1: with our customers, even in tough times.

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Speaker 2: Interesting that you talk about the different trends that are, frankly,

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Speaker 2: outside of your control. But of course, when there are

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Speaker 2: things that are outside of your control, for example, you know,

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Speaker 2: trends towards moderation, targeting becomes so much more important and

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Speaker 2: making sure you’re getting the right message to the right

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Speaker 2: people at the right time. The media landscape in the

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Speaker 2: UK is so different than in other markets, much more

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Speaker 2: accelerated in retail media relative to the rest of Europe.

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Speaker 2: but very different in terms of regulations within the US.

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Speaker 2: So as you think about the role of meeting people

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Speaker 2: where they’re at with the right kinds of message, what

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Speaker 2: does the retail media landscape look like as you’re thinking

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Speaker 2: about it more holistically and what’s the same and what’s different,

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Speaker 2: especially in the Babel space?

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Speaker 1: I like that segue. Very, very natural. Retail media is

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Speaker 1: definitely a big deal for us here in Diageo, especially

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Speaker 1: in the UK, because by working closely with our key customers,

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Speaker 1: we can do more effective through the line marketing, track

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Speaker 1: everything and create a real omni-channel experience for those end users.

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Speaker 1: And this doesn’t just benefit our marketing, these customers can

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Speaker 1: help so many parts of our business. I think it’s

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Speaker 1: also worth calling out that more customers are offering us

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Speaker 1: long-term joint retail media business plans or immediate JVPs and

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Speaker 1: are looking to rival traditional ad channels like Facebook and TV.

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Speaker 1: Amazon and Tesco are definitely the leading the way here,

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Speaker 1: but we’ve also got quick commerce players like Zapp, which

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Speaker 1: are big in the US, jumping on board. And even

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Speaker 1: in hospitality, in the entree, Stonegate and Green King are

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Speaker 1: wanting to get involved here too. In terms of the

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Speaker 1: big differentiator versus other markets, back to your question, we

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Speaker 1: actually ran an internal global study and found that the

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Speaker 1: UK is way ahead in terms of retail media potential

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Speaker 1: for TBA specifically. And we looked at things like retail

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Speaker 1: media ad spend, e-commerce penetration, data access and ad regulations

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Speaker 1: and For example, in the US, they have a lot

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Speaker 1: stricter rules, which makes it tougher there. So yeah, it’s

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Speaker 1: super important for us to nail this space in the

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Speaker 1: UK for Diageo.

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Speaker 2: Just to click a little bit deeper on that, what

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Speaker 2: is the digital, do you even know what the digital

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Speaker 2: penetration rate is for the category? And if it’s different

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Speaker 2: for beer than let’s say spirits, I always love how

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Speaker 2: Diageo plays in a few different places in that ecosystem

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Speaker 2: relative to its competitors.

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Speaker 1: Yeah, for sure. So for digital, at least in GB,

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Speaker 1: We really ramped up our attention there in the last,

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Speaker 1: I would say, three years. We first set up our

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Speaker 1: standalone digital team, which had bits of marketing, bits of

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Speaker 1: sales in it, and also D2C. And as we built

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Speaker 1: up that capability, we’re now integrating it across the wider

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Speaker 1: business to really make sure it is part and parcel

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Speaker 1: of everyone’s role and not just a standalone unit, since

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Speaker 1: online is just becoming a bigger piece of the pie

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Speaker 1: in terms of participation, both in the off-trade, so grocery,

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Speaker 1: et cetera, and even in the entree, because of course

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Speaker 1: there’s things like digital menus and apps, et cetera, that

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Speaker 1: are using more, which do fall into this digital landscape.

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Speaker 3: You made a comment that retail media is becoming competitive

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Speaker 3: with platforms like Meta. And this is against the backdrop

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Speaker 3: of some overall just tough times for the spirits industry.

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Speaker 3: As you cited, consumer behavior is changing, pennies are being pinched,

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Speaker 3: pounds in this case. So When you’re talking with your

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Speaker 3: retail media partners, how are they putting together media plans

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Speaker 3: that are competitive from a CPM standpoint so your overall

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Speaker 3: modeling works out in terms of the cost per impressions?

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Speaker 1: We’re more looking at retail media as having a bigger

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Speaker 1: part to play in creating our bigger marketing mix because

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Speaker 1: ultimately we’re trying to create a marketing mix where it

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Speaker 1: doesn’t so much matter how much we’re investing in specific

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Speaker 1: ad channels. It’s more how everything works together. And if

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Speaker 1: we invest more in retail media, we get better insights

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Speaker 1: and data back, both in terms of our ad performance

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Speaker 1: and also in terms of our customer behavior. We’re trying

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Speaker 1: to get a better understanding on how all these different

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Speaker 1: channels within a media mix work together versus just looking

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Speaker 1: at things, let’s say, in silo on how they might

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Speaker 1: work based on a last click perspective. We’re really trying

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Speaker 1: to get a better understanding on how everything works together

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Speaker 1: and find that holy grail, let’s say. Might be a

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Speaker 1: pipe dream, but I’ve got to start somewhere.

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Speaker 3: It’s so wildly different than obviously from your US counterparts,

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Speaker 3: given the three-tier system, you’re in a unique position. You

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Speaker 3: also mentioned Gen AI as a way to drive cost

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Speaker 3: savings in the overall P & L. That’s a very

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Speaker 3: utilitarian description of Gen AI versus a buzzword. So curious,

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Speaker 3: what’s sort of the overall strategy internally at Diageo UK

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Speaker 3: when it comes to Gen AI? Absolutely.

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Speaker 1: When we talk GenAI as a cost-cutting method, it’s not

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Speaker 1: just a buzzword for us. It’s genuinely making an impact

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Speaker 1: on our P & L and will make a bigger

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Speaker 1: impact as we move forward. One standout example is our

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Speaker 1: virtual studio capabilities that we’re ramping up. And Diageo’s CMO,

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Speaker 1: Cristina Diaz-Handino, please God, I pronounced it correctly, actually highlighted

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Speaker 1: recently in a public announcement and said that we are

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Speaker 1: building our virtual studio capabilities with cutting-edge AI-powered adoption and

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Speaker 1: and production technology. I know that’s pretty wordy, but what

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Speaker 1: it means is that we can create locally relevant content

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Speaker 1: quickly and efficiently, a crucial need given, and this is

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Speaker 1: really a crucial need, how fragmented media has become. And

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Speaker 1: the UK is actually a pilot market for a lot

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Speaker 1: of these initiatives. We work really closely with our agency, Oliver,

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Speaker 1: or previously Inside Ideas Group, that many of you know,

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Speaker 1: to execute these plans. And I think there’s three big

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Speaker 1: things that make Gen AI not just a buzzword for us.

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Speaker 1: One is content creation. So with AI, we can produce

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Speaker 1: tailored marketing content much faster than traditional methods. Two is

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Speaker 1: cost efficiency. So by automating repetitive tasks, for example, that

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Speaker 1: can save both time and money. And three is data insights.

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Speaker 1: So AI helps us analyze consumer data more effectively so

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Speaker 1: we can make smarter decisions. So yeah, Gen AI might

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Speaker 1: sound like tech jargon, but it’s actually driving real value

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Speaker 1: here for us at Diageo.

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Speaker 3: So one thing that hopefully the transformation that Diageo is

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Speaker 3: going through in the adoption of AI is going to

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Speaker 3: enable is younger employees feeling more engaged to their work.

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Speaker 3: And Shane, when you and I were in London together recently,

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Speaker 3: we had a conversation about Diageo’s efforts to recruit, engage,

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Speaker 3: and retain Gen Z employees, which surprisingly is not a

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Speaker 3: topic that I’m often talking about with customers. So it

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Speaker 3: was pretty amazing to hear you talk about it on

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Speaker 3: stage in a conference setting. We’d love for you to

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Speaker 3: share with our listeners Diageo’s efforts around that.

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Speaker 1: Yeah, great question. At Diageo, we’re not just about attracting

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Speaker 1: Gen Z consumers, but also bringing them into our workforce.

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Speaker 1: And we’re super focused on D & I here as well,

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Speaker 1: which stands for diversity, equity, and inclusion. In the UK,

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Speaker 1: for example, we team up with, they’re called Multiverse, to

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Speaker 1: make sure our hiring practices are fair and inclusive. Multiverse,

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Speaker 1: for those who don’t work with them, works at businesses

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Speaker 1: and schools across the UK to create cool apprenticeship opportunities

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Speaker 1: that mix work and learning. And this helps us find

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Speaker 1: talented folks from all sorts of backgrounds to give them

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Speaker 1: the skills they need to shine both inside and outside

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Speaker 1: of DLTO. Also outside of my day job, I’m part

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Speaker 1: of the leadership committee for Out in Tech UK, which

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Speaker 1: is a global charity that’s all about elevating the LGBTQ

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Speaker 1: plus tech community. We’ve actually got over 2,000 members here

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Speaker 1: in the UK alone, and we create spaces for our

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Speaker 1: members to network. We offer mentorship opportunities and also support

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Speaker 1: queer-led businesses with different digital services. And we partner with

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Speaker 1: big names like LinkedIn, TikTok, Bloomberg, even JP Morgan, and yes, Diageo,

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Speaker 1: to host events that connect awesome digital queer talent with

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Speaker 1: each other. And these partnerships, whether it’s with Multiverse or

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Speaker 1: Aiden Tech, are really key to building a diverse and

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Speaker 1: inclusive workforce. while helping our employees grow their careers, both

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Speaker 1: within Diageo and beyond.

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Speaker 3: Well, Shane, we have to ask you our famous last question,

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Speaker 3: which is what’s the bravest thing you’ve ever done?

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Speaker 1: The bravest thing I’ve ever done is being myself or

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Speaker 1: at least trying to be. And I think when I

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Speaker 1: started out, the workplace felt very, very different. And I

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Speaker 1: thought I had to hide parts of who I was,

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Speaker 1: but finding and showing up as my true self has

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Speaker 1: led to both personal and professional growth. And it’s definitely

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Speaker 1: been a journey of self-discovery in my humble, humble opinion.

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Speaker 1: But I think it takes bravery to be genuine every day.

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Speaker 1: But trust me, future you will thank you for it.

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Speaker 3: Well, well said, Shane. Thank you for bringing your authentic

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Speaker 3: self to this podcast. We will catch you in the

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Speaker 3: Diageo HQ as well as on LinkedIn. We appreciate all

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Speaker 3: your insights.

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Speaker 1: Amazing. Thank you so much, both.

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Speaker 3: If you enjoyed what you heard and you want to

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Speaker 3: nerd out a lot more in alcohol, we have a

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Speaker 3: ton of episodes in the archives. First, go check out

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Speaker 3: our friend Jay Sethi, who is at Diageo, what the

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Speaker 3: time was running their beer vertical and is now running

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Speaker 3: their latin business. If you need a refresher on the

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Speaker 3: three-tier system, you can go all the way back to

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Speaker 3: 2020 to an episode that we did with Wayne Blum

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Speaker 3: at Constellation Brands, where he goes over it in great detail.

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Speaker 3: Or if you want a more global perspective on the

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Speaker 3: alcohol industry, you can go check out an episode we

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Speaker 3: did with Pernod Ricard’s chief digital officer, Pierre. If you

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Speaker 3: enjoy what you heard, tell a friend, write a review,

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Speaker 3: share on LinkedIn. Thanks for listening.

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Speaker 4: Thank you. Hi, I’m Jackie Cooper, Global Chief Brand Officer

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Speaker 4: at Edelman and the host of Touch of Truth, a

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Speaker 4: new podcast launching on the Adweek Podcast Network. My dad

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Speaker 4: gave me this incredibly smart piece of advice. Meet everyone once.

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Speaker 4: As a result, I’ve met some of the most fascinating

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Speaker 4: and inspiring people on the planet. Now on Touch of Truth,

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Speaker 4: we’re coming centre stage and sharing the mic to experience

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Speaker 4: stories of truth, insights and visions for the future that

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00:19:26,650 –> 00:19:29,119
Speaker 4: will challenge your way of thinking. Touch of Truth is

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Speaker 4: available wherever you listen to podcasts. New episodes come out

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Speaker 4: every Tuesday. I do hope to see you there.