Brand Health Check: Baileys

Baileys: falling Western Europe sales
Baileys: falling Western Europe sales

The Diageo cream-liqueur brand faces a fight to retain consumer interest.

Baileys, the Irish whiskey cream-liqueur brand, has certainly tasted sweeter times.

Earlier this month, Diageo's figures for the six months to the end of December revealed a volume sales drop for Baileys of 9% compared with the same period in 2010, across Western Europe. Organic net sales and reported net sales fell by 6% and 5% respectively.

As Great Britain is Baileys' second-biggest market behind the US, its performance will have had a major bearing on Diageo's fortunes in the region.

The company's European president, Andrew Morgan, blamed a 2% fall in UK value sales on its strategy of pulling back on deep discounting in the grocery channels, on brands such as Baileys, in the run-up to Christmas.

Baileys may also be receiving less attention than it has in earlier, more successful times. Last year Philip Almond, the global marketing director for Baileys, left the company; instead of replacing him, Diageo merged his role into the Guinness marketing team.

Meanwhile, Baileys' marketing strategy appears to be shifting, as the endline 'Let's do this again' was nowhere to be seen in its last TV ad campaign, in support of the launch of its biscotti-flavoured variant at the end of last year.

Additionally, Diageo has stated that it intends to focus its marketing spend on brands in growth categories, such as Smirnoff Red and Captain Morgan - another factor that does not bode well for Baileys.

So what should Baileys do to make its way back into consumers' drinks cabinets?

We asked Matt Edwards, chief executive of creative agency WCRS, which has worked on innovation projects for Bacardi, and John Hosking, partner of strategy consultancy Cognosis, who is a former consumer planning and research director at Diageo.

MATT EDWARDS - CHIEF EXECUTIVE, WCRS

(which has worked on innovation projects for Bacardi)

Baileys is an essential part of Christmas. Every year it nestles in the shopping trolley alongside other once-a-year favourites like Jacob's Biscuits for Cheese and the tin of Quality Street. It then fights to get into the fridge, loses the battle because its bottle is too big, and retreats to the drinks cupboard. By February it's been hustled to the back of the cupboard by gin and vodka to see out its days.

Along with escaping its association with the Christmas occasion, it also faces a challenge from the changing palate of its target drinker.

Baileys is an alcoholic drink for people who don't like the taste of alcohol, the flavour variants and cream masking the Irish whiskey. Numerous brands now have a similarly easy-drinking taste profile, from flavoured ciders to bottled pre-mixed spirits.

However, Baileys remains the world's number-one liqueur brand and Diageo has said it stopped heavy discounting in supermarkets this Christmas. The sales dip could thus well be disguising a significant improvement in profitability.

REMEDY

- Use TV sponsorship to extend Baileys' relevance beyond Christmas. The Sex and The City tie-up was one of the best pieces of marketing the brand has done in recent years - find the next one.

- Justify the price premium over the supermarket versions. Baileys' marketing focuses on occasion and style, but substance is important, too.

- Find ways to package the brand for gifting occasions such as Mother's Day without deterring consumers by making it more expensive.

JOHN HOSKING PARTNER, COGNOSIS

(ex-consumer planning and research director at Diageo)

Baileys was introduced in 1974 as the first Irish cream on the market, and remains one of the drinks industry's biggest innovation successes in living memory. A product that tastes great, and a brand with real emotional warmth.

To some extent, it has become a victim of its own success. Its critical annual price promotion that drives footfall in the vicious retailer battle that is Christmas means that price has become increasingly central to the proposition, leaving less room for building brand equity.

It is a difficult cycle to break out of, but, to its credit, that is what Diageo started to do last Christmas.

The recent launch of flavour variants is interesting, but doesn't solve the issue. It doesn't introduce Baileys to new consumers, nor open up new drinking occasions. It stocks cupboards, but also takes focus away from the core of the brand.

REMEDY

- To introduce the brand to new consumers, Diageo should continue protecting it from excessive seasonal price promotion. Have faith in a great product and a great brand.

- Focus on the core brand - don't get distracted by line extensions - rebuilding the emotional warmth that the price cycle has eaten away.

- Create value-enhancing promotions that maintain visibility, encourage impulse purchase but reduce the emphasis on the price cut.

- Make sure it gives a reason to consume, as well as purchase. No one buys Baileys if there's still a bottle in the cupboard.

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