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Transcript of Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol...
![Page 1: Joe Camel in a Bottle: Diageo, the Smirnoff Brand, and the Transformation of the Youth Alcohol Market James F. Mosher Alcohol Policy Consultations National.](https://reader036.fdocuments.net/reader036/viewer/2022062309/56649c8f5503460f94947f45/html5/thumbnails/1.jpg)
Joe Camel in a Bottle:Joe Camel in a Bottle:Diageo, the Smirnoff Brand, and Diageo, the Smirnoff Brand, and the Transformation of the Youth the Transformation of the Youth
Alcohol MarketAlcohol Market
James F. MosherJames F. MosherAlcohol Policy ConsultationsAlcohol Policy Consultations
National Electronic Seminar sponsored by the National Electronic Seminar sponsored by the Underage Drinking Enforcement Training Center,Underage Drinking Enforcement Training Center,
April 19, 2012April 19, 2012
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Diageo:Diageo: The Innovator of the Distilled Spirits IndustryThe Innovator of the Distilled Spirits Industry
Formed in 1997 when Guinness and Grand Formed in 1997 when Guinness and Grand Metropolitan merged, becoming the largest Metropolitan merged, becoming the largest distilled spirits company in the world.distilled spirits company in the world.
Determined to expand the U.S. market, Determined to expand the U.S. market, which has been dominated by beer.which has been dominated by beer.
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U.S. Per Capita ConsumptionU.S. Per Capita Consumption By beverage type (14 years+)By beverage type (14 years+)
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1960 1965 1970 1975 1980 1985 1990 1995
Beer
DistilledSpiritsWine
Source: Impact Databank
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Consumption Trends:Consumption Trends:Types of Distilled SpiritsTypes of Distilled Spirits1970-2000 (Millions of gallons)1970-2000 (Millions of gallons)
0
50
100
150
200
250
300
1970 1980 1990 1998
Whiskeys &GinVodka, Rum, &TequilaSpecialties
Source: Impact Databank
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Underage Drinking: A Critical Underage Drinking: A Critical Component of the Alcohol MarketComponent of the Alcohol Market
Those who begin drinking before age 15 are Those who begin drinking before age 15 are four times more likely to become heavy four times more likely to become heavy consumers than those who wait until age 21.consumers than those who wait until age 21.
Underage drinkers consume 10%-19% of the Underage drinkers consume 10%-19% of the alcohol market (almost all of which is alcohol market (almost all of which is consumed in binge drinking episodes), consumed in binge drinking episodes), producing $10-$20 billion annually.producing $10-$20 billion annually.
CAMY, 2010; Foster, 2003
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Beverage Choice forBeverage Choice for 12 12thth Grade Binge* Drinkers Grade Binge* Drinkers
*5+ drinks in one setting Source: Monitoring the Future
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Boys: BeerBoys: LiquorGirls: BeerGirls: Liquor
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Alcohol Industry “unwanted” consumption
and sales, 1999
Foster, 2003
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Diageo: Competing with BeerDiageo: Competing with Beer
Beer has significant marketing advantages over distilled spirits particularly for young drinkers:
Advertising on network television; Lower tax rates;(In Maryland: $.09/gallon for beer;
$1.50/gallon for distilled spirits) More retail outlets(In Montgomery Co. MD, 298 beer outlets
compared to 25 spirits outlets).
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Create a malt-based, low-alcohol Create a malt-based, low-alcohol beverage with distilled spirits beverage with distilled spirits branding that is appealing to branding that is appealing to young drinkers, particularly young drinkers, particularly young women, and regulated as young women, and regulated as beer.beer.
The Answer
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Developing Brand Loyalty Developing Brand Loyalty at an Early Ageat an Early Age
““Diageo rolled out Smirnoff Ice in Diageo rolled out Smirnoff Ice in the US market...it suddenly put the the US market...it suddenly put the once-stodgy Smirnoff name on the once-stodgy Smirnoff name on the tips of millions of echo boomers’ tips of millions of echo boomers’ tongues” – (tongues” – (ImpactImpact, May 15, 2003), May 15, 2003)
Echo Boomers:Echo Boomers: Americans born from 1980-1995Americans born from 1980-1995 8 – 23 years old in 20038 – 23 years old in 2003
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“The beauty of this category is that it brings in new drinkers,
people who really don’t like the taste
of beer.”
Marlene CoulisDirector of New Products
Anheuser-Busch Co.Advertising AgeApril 22, 2002
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Average Age of First Use of Alcoholic Beverages among those under 21: 15.9 years old.
Every day, 2,500 young people under 15 years old started drinking.
Who are “New Drinkers”?Who are “New Drinkers”?
SAMHSA 2010
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$0
$10
$20
$30
$40
$50
$60
$70
2000 2002 2004 2006
SmirnoffBrands TOTALSmirnoff Ice
Smirnoff Vodka
Smirnoff Vodka and Smirnoff IceAdvertising Expenditures
(U.S., millions of dollars)
Source: Impact Databank
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Smirnoff Ice Advertising 2002Smirnoff Ice Advertising 2002
1,533 television ads placed in media programming that overexposed youth, 26.3% of all Smirnoff Ice TV ads
These ads cost $6.9 million, the sixth most spent on overexposing ads for any brand (behind only the most popular beer brands)
Source: CAMY
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Smirnoff Ice LaundrySmirnoff Ice Laundry
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Smirnoff TV Ads Violating Industry Smirnoff TV Ads Violating Industry Voluntary 30% Underage Audience Voluntary 30% Underage Audience
Composition, 2005Composition, 2005
Smirnoff Ice: 1,318 ads, $1.1 million, 46.4 Smirnoff Ice: 1,318 ads, $1.1 million, 46.4 million youth impressionsmillion youth impressions
Smirnoff Vodkas: 337 ads, $463,000, 43.2 Smirnoff Vodkas: 337 ads, $463,000, 43.2 million youth impressionsmillion youth impressions
The brand with the second most violating ads The brand with the second most violating ads (behind Corona beer)(behind Corona beer)
Source: CAMY
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Television Advertising Placement: Television Advertising Placement: Youth Audience OverexposureYouth Audience Overexposure
0%
5%
10%
15%
20%
25%
30%
35%
2006
Alcopop adsDistilled spiritsBeerIndustry average
Source: Center on Alcohol Marketing and Youth
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Smirnoff Vodka Smirnoff Vodka TV Commercials, 2007TV Commercials, 2007
Rated the worst Rated the worst vodka brand for vodka brand for placement in placement in youth-oriented youth-oriented television television programmingprogramming
Center on Alcohol Marketing to Youth
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Smirnoff Marketing:Smirnoff Marketing:Going ViralGoing Viral
Smirnoff VodkaI Phone App
Smirnoff Ice Drinking Game
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Alcopop Brand Preferences: Alcopop Brand Preferences: Underage Drinkers vs. Overall MarketUnderage Drinkers vs. Overall Market
5 State Survey, 4075 Respondents, 20045 State Survey, 4075 Respondents, 2004
Youth Market Share
Smirnoff Ice
Mike's HardLemonadeBacardi Silver
Other
54%
21%
11%
14%
Wolfson M. et al. “Flavored Malt Beverage Use in a Multi-state Sample of Adolescents”, Wake Forest University, December 2005; Impact Databank
Overall Market Share
38%
38%
9% 15%
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Seven Leading Youth Alcohol Brands:
Any use and binge drinking, past 30 daysPilot study, 2011, N=108
Siegal et al. 2011
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Beverage Preference, 9Beverage Preference, 9thth-12-12thth Grade Girls Grade Girls (30 day prevalence, 2005)(30 day prevalence, 2005)
0
5
10
15
20
25
30
35
40
Ark Neb NM WY
Distilled SpiritsBeerAlcopops
Centers for Disease Control, MMWR, July 27, 2007
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U.S. Per Capita ConsumptionU.S. Per Capita Consumption By beverage type (14 years+); Gallons of EthanolBy beverage type (14 years+); Gallons of Ethanol
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1960 1965 1970 1975 1980 1985 1990 1995
Beer
DistilledSpiritsWine
Source: NIAAA
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U.S. Per Capita ConsumptionU.S. Per Capita Consumption By beverage type (14 years+); Gallons of EthanolBy beverage type (14 years+); Gallons of Ethanol
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Beer
Wine
Distilled Spirits
Gal
lons
of
Eth
anol
Source: NIAAA
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Beverage Choice for 12Beverage Choice for 12thth Grade Grade Binge* DrinkersBinge* Drinkers
05
1015202530354045
% b
inge
dri
nk
ers
Boys: Liquor
Boys: Beer
Girls: Liquor
Girls: Beer
*5+ drinks in one setting Source: Monitoring the Future
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Consumption Trends:Consumption Trends:Types of Distilled SpiritsTypes of Distilled Spirits1970-2000 (Millions of gallons)1970-2000 (Millions of gallons)
0
50
100
150
200
250
300
1970 1980 1990 1998
Whiskeys &GinVodka, Rum, &TequilaSpecialties
Source: Impact Databank
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Consumption Trends:Types of Distilled Spirits
1999-2009 (Millions of gallons)
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5000550060006500700075008000850090009500
10000
SmirnoffVodka sales
Smirnoff Vodka Sales 1990 - 2006
(U.S., thousands of nine-liter cases)
Introduction of Smirnoff IceSource: Impact Databank
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Alcopops akaAlcopops akaFlavored “Malt” BeveragesFlavored “Malt” Beverages
““Flavored malt beverages exhibit little or no traditional Flavored malt beverages exhibit little or no traditional beer or malt beverage character. … Brewers … remove beer or malt beverage character. … Brewers … remove the color, bitterness, and taste that are generally associated the color, bitterness, and taste that are generally associated with beer. … This leaves a base product to which brewers with beer. … This leaves a base product to which brewers add various flavors, which typically contain distilled add various flavors, which typically contain distilled spirits, to achieve the desired taste profile.”spirits, to achieve the desired taste profile.”
Federal Alcohol and Tobacco Tax and Trade Bureau (TTB) Federal Alcohol and Tobacco Tax and Trade Bureau (TTB) Description of “Flavored Malt Beverages” (Alcopops)Description of “Flavored Malt Beverages” (Alcopops)
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Why Distilled Spirits Are Added to Why Distilled Spirits Are Added to AlcopopsAlcopops
According to the Flavored Malt Beverage Coalition:According to the Flavored Malt Beverage Coalition:
““Flavoring ingredients that are added to a malt beverage Flavoring ingredients that are added to a malt beverage base to produce an FMB need to be stronger … base to produce an FMB need to be stronger … because of the pronounced organoleptic [sensory] because of the pronounced organoleptic [sensory] qualities of the base itself.”qualities of the base itself.”
Fact Sheet, February 2003Fact Sheet, February 2003
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Alcohol Derived from Added Distilled Alcohol Flavorings
Alcohol Percentage Derived From Added Distilled
Alcohol Flavors
Number of Flavored “Malt” Beverages
0-25% 4
26-50% 0
51-75% 5
76-100% 105
Maximum Alcohol Derived From Added Alcohol Flavors:
99.98%
Total: 114
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Volume of Beer Base Present in Flavored Malt Beverages
Volume of Flavored “Malt” Beverage Derived From
Fermented Beer Base
Number of Flavored “Malt” Beverages
0-25% 95
26-50% 4
51-75% 1
76-100% 14
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Production Schemes to Gain Production Schemes to Gain Regulatory AdvantageRegulatory Advantage
Smirnoff Ice has a different formulation in the United States than in other countries where it is identified as a spirits-based beverage.
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Alcopop Classification:Alcopop Classification:State Attorneys’ General OpinionsState Attorneys’ General Opinions
CA
Alaska
Hawaii
NEMD
ME
State Attorney General Opinion for Reclassification
State Attorney General Opinion Opposed to Reclassification
CT
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Alcopop Classification: Nebraska
2003: Nebraska Liquor Control Commission rules alcopops are distilled spirits, but suspends ruling pending federal rule making.2005: NLCC reverses 2003 ruling, adopts federal rule.2006: Nebraska Attorney General issues opinion supporting NLCC ruling.March 2, 2012:Nebraska Supreme Court rules alcopops are distilled spirits under Nebraska lawApril 2, 2012:Nebraska Legislature overrules Supreme Court and adopts federal rule.
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Guy SmithGuy Smith“Reputation & Crisis Management” Expert“Reputation & Crisis Management” Expert
2000-2008: VP for Marketing Public Relations, Diageo
1998-1999: Special Advisor to President Clinton
1975-1992: VP-Corporate Affairs, Philip Morris Company
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“In our marketing activities, we never
target people under the legal purchase age.” Diageo Corporate Citizenship Report, 2003
.
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Supersized Alcopops: “Binge in a Can”
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Diageo’s CEO Paul WalshDiageo’s CEO Paul Walsh“Diageo chief executive sees salary
package hit £3.5m [$5.45 million] as 900 lose jobs”
2009 news headline
Salary the following year: $9.4 million
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The Creators of Colt 45 Blast
Evan and Daren Metropoulos
“We want to win. We want to blow these brands out, explode them, and
make everyone lots of money.” Evan Metropolous
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Possible Unfair Business Practice Possible Unfair Business Practice AllegationsAllegations
Tax fraudTax fraud Youth market targeting that encourages illegal Youth market targeting that encourages illegal
behaviorbehavior Unfair competitionUnfair competition
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May 19, 2011Maryland Raises Alcohol
Tax
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Voter support for dime-a-Voter support for dime-a-drink, Maryland 2010drink, Maryland 2010