The secret to a winning portfolio

What is the ‘secret sauce’ to managing a portfolio of category-leading brands?

Who better to ask than Sally Smallman, the Global Consumer Planning Director for Whiskies at Diageo? In this episode of the Persuasion Game podcast, Adam and Laura sit down with Sally to do just that, exploring the challenges and opportunities managing multiple brands presents.

Diageo owns some of the most famous whisky brands in the world, and at various price points. Sally shares her experiences of protecting heritage whilst maintaining relevance, gives us an insight into the ‘Diageo bible’ on how to build brands, and tells us why increasingly there’s a focus on growing a category as a whole to benefit your brand.

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This is an 18Sixty production for Forge.

Transcript

Adam: This is the Persuasion Game, Forge’s podcast all about the art of persuasion. Each episode we connect with marketers, business leaders, and beyond to learn how they use persuasion to influence their customers, convince their stakeholders, and drive their businesses forward.

Adam: Hello Laura.

Laura: How are you, Adam?

Adam: I’m very well today. Yeah, all good. We are in this period of the British weather which seems to be like Benidorm, pure blue skies, sun’s out every day. I don’t know when this podcast is going to be going out to our listeners, but yeah, there was that bit back in March where it was like 6 weeks of sunshine.

Laura: Yes, It’s almost cruel just knowing how quickly it’s going to fade and yes, the grey will return. But yes, let’s enjoy it while we can huh.

Adam: Absolutely. So today we’re going to be talking all about portfolio. Again, it continues to be a really interesting topic for us at the Forge. Lots of our clients have been coming to the Forge with portfolio questions and we’ve got another brilliant guest today, someone that you think would be great for this discussion. Who have we got coming on today, Laura?

Laura: Well, actually, thanks to the very able and eloquent Dan Quinn, we have managed to persuade Sally Smallman, who is the Global Consumer Planning Director of Whiskies at Diageo, to come and join us. And I think it’s a fabulous opportunity. The category is synonymous with so many Diageo brands – from luxury to everyday whiskies, it’s something that Diageo do night and day. They also have such iconic brands. It’s not a one-size-fits-all. They really have interesting differentiated positionings. And I think understanding how they do that whilst growing the category overall is going to be fascinating.

Adam: Yeah. And if I had a pound for any time someone said that Diageo was a standout example of a business doing really well, I think I’d be very, very wealthy

Laura: and you wouldn’t be doing the podcast.

Adam: So I’m very, very excited to have our first Diageo guest on this podcast.

Laura: Fabulous.

Adam: Welcome Sally.

Sally: Thank you. Great to be here.

Laura: Great to have you on the podcast.

Adam: So Sally, you’ve had two stints at Diageo. Before we get into the second stint, I’d love to just ask you about your time spent in Bundaberg because I worked in Bundaberg as a backpacker when I was travelling around the world when I was 18.

Laura: And you worked in the factory?

Adam: Well, no, I was doing fruit picking.

Laura: Oh right.

Adam: But we were in the town of Bundaberg. So how was that experience for you?

Sally: Oh my god, it’s such a brilliant way to start actually. So I joined Diageo when I was living in Sydney, back in 2003/4, and Bundaberg Rum is still actually the big local powerhouse brand for the Diageo Australia business. Diageo Australia is an absolutely brilliant part of our business – was then and still is today. I originally joined having been agency side, moved client side, and I had worked at a client organisation before in London before I moved to Australia. But this was kind of the first time I’d really worked at a big FMCG company. And then having worked there for probably about 12 months, I obviously knew what Bundaberg was as a brand in terms of its role within the business, and then I went to Queensland for the first time, which is where Bundaberg is in northern Australia. I went to Brisbane and I told the taxi driver that I worked for Bundaberg and I literally felt like a queen. It was the best feeling. When you go to Bundaberg, the town, it’s a small, remote place with the biggest heart in the world, and it makes this incredible rum which is loved all over Australia. It really is the epicentre of that town. Now, it kind of reminds me a little bit of some of the towns in Scotland where we have our Scotch distilleries as well. It’s the heart and soul of the community, and what it does over time really, really matters and it gives the brand unbeatable authenticity, I suppose. But yeah, I will never forget the taxi driver.

Adam: So you left Diageo at the end of 2012, but then came back in 2017. What have you been doing since you came back?

Sally: Yeah, so I joined Diageo in Amsterdam at that point. I’d previously been living in Sydney, as I said, in Australia. I’m originally from the UK, married to a Pom as well. Had my son in Australia and gradually slowly became more and more homesick and feeling like we were a long way away. And so it was quite a personal reason actually for wanting to move back. But I was hugely fortunate because the global brand team on Johnnie Walker is based here in Amsterdam. And if there had been one job that I’d really wanted to do when I was at Diageo in the first stint, it was to be the Global Planning Director on Johnnie Walker. Andrew Gagan, who was the Head of Consumer Planning at Diageo at the time, called me and said “This is your moment if you still want it.” So I put my hat in the ring and I was lucky enough to get it. So I joined the global brand teams at Diageo at that point. And since then I’ve worked on Johnnie Walker for the first few years and then across whiskies, gins, and more recently our premium brands. I’ve had quite a few different roles over the last seven years. It’s such a privilege because you work with people in such a massive variety of cultures. But the lovely thing about working on Johnnie Walker is the central role it plays in the portfolio in almost every Diageo market. It was a big responsibility, but it was a privilege too.

Adam: I think Diageo is remarkable in that, you mention Johnnie Walker being such an exciting brand to work on, but there are so many others within the stable of brands across all those different categories – Smirnoff, Captain Morgan, Don Julio, Tanqueray, Gordon’s, or Guinness in beer. These are amazing brands. What do you think is the secret to some of that success of having so many leading brands in different categories?

Sally: I’ve always felt it was an incredibly privileged position to be in, actually. Yes, they’re big brands, worth a lot, and yes they’re available in lots of countries, but what that really means is that lots and lots of people all around the world really love choosing our brands. You know, really love having a Johnnie Walker highball or a pint of Guinness or whatever it happens to be. And we shouldn’t forget that ever. This is ordinary people, when it comes to their moment of socialising, when it comes to that moment they want to share with their friends. What do they choose? In whiskies, one in four times they choose a Diageo whisky.

And I think one of the really critical things is actually recognising that with branding, you’re building a reputation both functionally – for the quality of the product, for the way you show up on the shelf or in the bar – and you’re building a relationship emotionally. You know, you want people to always prefer your brand, and you want people to be excited about what your brand is doing and to care. I think at their very best, our brands can create that kind of connection.

That’s not to say that we can rest on our laurels from a recruitment perspective. We all know how brands grow, probably inside out I would say in terms of the theory there and what’s been proven. But I think there is an amazing amount of love around the world for our brands.

Laura: I think one of the things that’s so interesting about your brands is they’re very established, but they also have a real sense of energy to them. There’s a sense of them having heritage but not being staid or stale, which is actually quite an easy trap to fall into in the spirits world. I’m just wondering if you have a sort of secret sauce or a way of approaching that kind of consistency of brand building whilst also tapping into culture and being really relevant?

Sally: Remembering the human who’s at the heart of the decision making – I think that’s absolutely critical. And Diageo is well known for being very consumer-centric. The consumer planning function that I work in now is a global one, really integrated into marketing and innovation. Diageo marketers are trained almost to keep that consumer right at the heart of their thinking when they’re ideating, when they’re making decisions. There should always be a human at the middle of all of that.

And I think the other thing that Diageo has been very committed to really the whole time the business has existed is the Diageo Way of Brand Building — or DWBB, we call it internally. This is the bible really on how we build brands over time and it’s an ever-evolving thing. More recently we have had a big focus on culture in particular — brand vibrancy in culture. We’ve also done a lot of work around how you harness creativity on one hand but then with very precise deployment on the other. So we talk about “famous ideas precisely deployed.” And I think that just reflects the era of marketing that we’re now in and what’s become possible over the last ten years in terms of technical advancements around marketing. But everybody in Diageo who comes into marketing — and actually people beyond — are trained in that Diageo Way of Brand Building. And it’s not a really rigid box-ticking exercise. It’s built to make you think, and it’s built with empathy for the consumer and with a sense of restlessness and always wanting to be better next time.

Adam: One thing that’s interesting hearing you say that – you talked about the opportunity to precisely deploy in the new landscape. I’m quite struck by that because at Advertising Week I definitely got the impression that there were a lot of brands that saw the new media landscape as almost a bit of a disadvantage, especially if you were a bigger brand because cutting through was harder. It was much more of a flat structure and it was harder to get attention. What’s your perspective on the opportunities that you have and how do you think that fits with the Diageo restless culture?

Sally: It’s really interesting actually because there’s no doubt that the number of media touchpoints that the average person is exposed to was — I think it was 500 twenty years ago or something — and today it’s 15,000 and it’s growing exponentially every year. It’s a crazy amount. I think though the risk that faces big brands is that they’re too concerned with almost the legacy of what they’ve done before in terms of how they’ve connected with consumers.

It’s very exciting when you launch a new brand, and reflecting when we launch innovation as well, it’s very easy to have a very tight plan to really disproportionately invest in certain touchpoints to have a very unique identity. But when you’ve got a big sprawling brand that’s widely available across multiple channels, it just tends to proliferate if you’re not careful. And then you end up being a little bit present everywhere, which basically means being kind of invisible because you’re never cutting through.
So I think the challenge for more established brands in the new context is to be really choiceful and to really be brave in terms of overcommitment to certain touchpoints — the ones that you think will make the biggest difference.

Adam: One thing that struck me about what you just said was the having your heritage lead too much. If you think about some of the biggest Diageo brands, you’ve got 25 years of “Keep on Walking” or “Guinness is Made of More.” Many of our listeners working at other brands would be really envious of having those platforms. How do you strike the right balance between staying true to that heritage whilst also breaking new ground?

Sally: Yeah, I think you have to really cherish the idea. When you’ve got a great idea, part of the definition of a great idea, I think, is longevity and depth. And it might not be that obvious what that depth is when you first start working with an idea. But I think there’s something in going back to powerful creative ideas that are based on pretty straightforward human truths.

So “Keep Walking,” as you said Adam – it’s basically all about people’s desire to feel that they’re progressing, which is an incredibly broad idea. And we’ve had to really work hard to make sure Keep Walking has stayed relevant. What we’ve realised particularly in the last few years on Johnnie Walker is that there are some quite traditional ideas of progress that are all related to sort of hierarchy and stereotypes and so on. And as soon as the brand goes into that space, you get a very flat response from consumers. It’s not their definition of progress anymore. But also, people want to feel a sense of progress every day. It’s not all about what can I achieve in a year. It’s “do I feel good about what I’ve done today, this week, recently?” There’s an immediacy around progress which needs to be true within what we do on Johnnie Walker if we really want it to resonate.

But you mentioned Guinness as well – Guinness is such an amazing brand. I think from the way that we’ve built that over the last few years – nothing to do with me, all credit to the Guinness global brand team – there’s just a truth in the power of community and Guinness has found so many interesting ways to explore that idea, which means they’ve been able to keep it fresh. That’s the secret sauce at the end of the day.

But I think what is really difficult about that is sometimes a great idea doesn’t look like a great idea, or you need to know how to nurture it. And we’ve got some incredible agency partners who help us to do that. But it can be difficult because people feel nervous, especially if it’s something new and different. Naturally people are cautious around new ideas sometimes. And I think that’s why bravery is a big part of the necessary attributes of building a brand reputation over time.

Laura: And conversely, I think one of the big things – the real skill that you as brand managers and brand thinkers have – is not to get over-caught up in the execution of an idea. Because sometimes something can be presented to you with huge bells and whistles and feel really exciting, and actually being able to interrogate it – what’s underneath it, how sustainable is that over years rather than just one big campaign, one big splash — is a real art.

Sally: Yeah, I think Bailey’s actually is a great example. The realisation a few years ago that Bailey’s isn’t an alcoholic drink in the same way as all others – it’s actually a treat. And then instantly the kind of playing field that opened up for the brand. But it took time. And if you’re going to build a reputation like that and shift almost from being a bit of a Christmas drink into being a genuine treat that people will reach for in those moments of their week, you have to do that very intentionally. And the bigger the brand is, almost, the more intentional you actually have to be.

But I think there is something really admirable in how Bailey’s has taken that space. I know the planning lead on that team quite well and I can remember those early days where people weren’t as convinced it was a good idea – and yet now we’ve had the incredible success we have.

Adam: I think one of the things that’s so interesting about whisky is the range of different price points and how premium it can go. At the top end it’s a luxury product, but at the bottom end it’s something you can drink every day… responsibly. Could you share a bit more about how that relationship works between the luxury sides of the category and the premium parts – is there a halo effect? How do you make decisions around where to play though?

Sally: I think whisky in its broadest sense has probably been the category within Diageo where we’ve had the longest time to practise our portfolio management skills. We’ve got a lot of brands and it’s also a category that’s very diverse geographically around the world for us. So we have a different shape to the portfolio in different markets, covering particularly the premium and up price tiers.

Over the last few years we’ve had a very deliberate strategy of premiumisation. We’ve developed our malts brands led by the Singleton globally. We’ve also developed Johnnie Walker particularly as a contemporary luxury icon – deliberately putting more emphasis on the higher price tiers within that portfolio.

But one of the things that underpins all of that is the understanding we have around occasions and the value pools that are linked to different occasions. We call it the Consumer Choice Framework, which basically allows you to look at the TBA category – the total beverage alcohol category – but with an occasion-first lens, and then we can overlay how price tiers play across those different occasions. What’s powerful about it is it shows us where the scale is and shows us where the growth is. So if we can marry scale and growth, those should be the value pools and the markets where we’re deploying our biggest brands with the most investment.

It’s never quite as simple as that – it’s obviously quite a huge jigsaw puzzle – but we’ve got an underlying framework which we’ve actually invested in refreshing just over the last year, which drives our portfolio decisions in a category like whisky and makes sure that we have the brands distinctly positioned, not competing with each other but genuinely competing with the competition. And then of course beyond that there’s the wider Diageo portfolio as well. So how do we operate broadly across spirits and beer and make sure again that we’re covering those different price tiers with a focus on growth and scale. And It’s quite a challenge I think – we’re putting more emphasis on category leadership now than we have done in the past. We’re very well known for brand leadership, almost. But putting yourself in the portfolio mindset is actually much more true to the consumer. People don’t think about “which whisky shall I have” – they think “which drink shall I have.” And so it forces us to be more consumer-centric and then to shape our portfolio based on that. It’s been a very interesting shift for example for the teams working on whiskies – to actually move almost out of that brand focus. You know people work on global brand teams here in Amsterdam, so of course your number one priority is the brand you’re working on, but I think increasingly people are realising the benefit of having more of a category and portfolio view, because it allows you to carve out your distinct space for your particular brand.

Laura: That links really nicely into what you were saying Sally about being brave and making choices and being focused. Also what’s interesting to me is that if you try and be all things to all people, your brand is going to be less than. I suppose the traditional mindset might be “oh, it’s really annoying, I’m closed off from playing in this space because I’m excited about that shiny new thing or that cultural trend.” But what you’re saying is having that mindset where you really understand your role in building the overall category — not just Diageo’s category, but the category story that consumers are interpreting — means that you can actually find some really interesting little niches, some interesting spaces as a brand to go after and go after wholeheartedly.

Sally: Yeah, if we look at it purely from a market share point of view, we’ve got about 4% share of total TBA. So any value pool you choose to mention, we’ve probably got such tiny share in it versus the total opportunity. It can feel exciting! And of course a lot of these models are built on “this is your core opportunity and then this is your growth potential,” which instantly everyone just looks at the growth potential bit and goes “great, we’ll go over there.” But it doesn’t always work. Sometimes it’s the right thing to do, but sometimes the better thing to do is to really own your space. And I think this is also when consumers say that they want to trust brands. I think this is what they often mean. “I know what you’re for. I know when you’re going to be the best possible thing I could choose in a particular moment.” They don’t mean “are you sustainable, are you this, are you that” – that might matter as well. But what trust really means is “show up reliably and be a great quality experience for me.” And if you can do that, I trust you. I also think there is — we do operate with a lot of brands that are category leaders, but we also operate with a lot of small brands. We’ve got a beautiful luxury single malt called Mortlach, mainly in Asia-Pacific. These are very very small but should be very highly talkable brands and they add to the interest and the excitement and the intrigue, particularly of a category like whiskies where consumers want it to be crafted and special. They appreciate those elements of the category as well. I don’t think big brands should be scared of small brands actually — the small brands create noise and energy and excitement in a category. They create loads of diversity and actually often it’s the big brands that benefit from a lot of that noise.

Laura: So one thing that was really striking to me was when you were talking about how if you’re going to be consumer-centric, you’re going to acknowledge that people choose different things on different occasions. And that is 100% true. And it’s also sort of quietly revolutionary because what it means is you can’t really have your sort of target consumer in quite the same way. You’re not going to say, “that’s Tim, and his Johnny Walker morning, noon, and night.” My question was, how do you share or create a culture of sharing insights around different consumer groups across your portfolio so everyone has a good understanding of who they’re appealing to on each occasion?

Sally: Yeah, it’s such a live topic. One of the things that we are talking about a lot internally at the moment is this idea of conscious learning. We’ve always been an organisation that has had a lot of information. We’re very fortunate really that we operate in an industry that is pretty well monitored. And we have a lot of information ourselves and a quite a big learning agenda. So markets will learn, the global teams will learn — we’ve always had that commitment to learning and hearing from the consumer and really making data-based decisions rather than it being all intuition or just an individual person’s judgment. But one of the things that we have realised is that the actual flow of learning around the organisation could be improved. There’s a lot of people with a lot of knowledge, but we’re still a little bit in that phase of “you need to know who those people are and then you can reach out to them.” What we’re looking at, at the moment is how do we take our learning and unlock the value of it, particularly using tools like AI, but also introducing a different sort of behaviour around learning. The real power of the learning we do is how far you share it, not just the fact that you do it in the first place. Almost a bit of a partnership really of a different behaviour which is more about being externally curious and really thinking about “so what” of what we’re hearing, paired up with use of emerging technology and all those evolving tools, to actually make sure that our learning genuinely goes all the way across the organisation and doesn’t just stay in pockets.

So that’s really a very kind of live conversation that we’re having at the moment and it’s also very linked into a broader agenda around conscious creation — really using the campaigns and assets that we have to their maximum advantage. There’s a nice pairing of conscious creation and conscious learning that we’re really committed to changing over the next couple of years.

Adam: Thank you so much, Sally. That was so so interesting. You’re such a thoughtful guest and I’ve really learned a lot today, so thank you.

Sally: Thank you. It’s been an absolute pleasure.

Laura: Lovely to see you Sally, thank you so much. 

Adam: Laura, what a brilliant guest. Thank you for getting Sally on the podcast. What did you enjoy about that talk?

Laura: I enjoyed loads of it, but I think the big takeaway I would have is her argument – which is extremely powerful – which is that having a portfolio mindset is actually the best way to have a consumer-centric mindset. It’s very very tempting for any of us that work on a brand in any way to just start to overestimate the significance it has in consumers’ everyday lives. Whereas the truth is we all go to a shelf and we all choose different products according to the different occasions we’re in, according to different needs. And showing how much that is about having the right consumer-centric mentality – and how that can actually unlock a really powerful, resonant and strategic category approach and better brands, better targeting for where brands play – is just a really powerful argument.

Adam: Yeah. And I think what’s really remarkable about Diageo is the approach it takes to the portfolio and to the category doesn’t stop it from having these really really powerful brands that sit within it. For me, the thing that I found really quite interesting is the idea that some of these brand platforms have been around for such a long time. And to hear Sally say that the challenge that a lot of brands face is that they’re stuck too much in the past or think too much about their heritage or their baggage — to hear someone that works with brands that have got heritages that stretch decades — it’s really interesting to see how they’re constantly refreshing them and thinking about the future and where they’re going to take them next and how they’re going to show up. It’s clearly a very well-oiled marketing machine, that business, isn’t it?

Laura: Yeah. Very inspiring, very restless, very agile, and not resting on its laurels in any way.

Adam: Yeah, Brilliant. See you next time. Thanks for listening. If you’d love to hear more from marketers, entrepreneurs, and business leaders about how to use the art of persuasion to drive your business forward, then make sure you’re following the podcast in your favourite podcast app. And just a last ask from us – this is a new podcast and we’d love it if you could be persuaded to help us spread the word by telling somebody else about it, leaving us a review, or even better, sharing an episode on social media. Search Forge on LinkedIn.