Keep Talking - but do it quietly

Having a name that you want to symbolise ‘every day, everywhere’ and having a company ethos that can best be described as innovative and creative, especially when it comes to marketing, what happens when you are no longer permitted to promote your key products. Greg Lowe finds out how Diageo Moet Hennessy has been meeting the challenge.

Marketing brands and products in an increasingly competitive environment is hard enough at the best of times. So imagine being set the task of building market share and sales turnover with the restriction that you cannot talk about the specific product itself.

Added to this, no promotional mechanisms can be used, discounts are out, competitions and lucky draws are history.

This is not some fiendish part of an MBA entrance exam, or hypothetical task on a psychometric test. It is the reality of Thailand's alcohol industry's new operational environment since the implementation of the Alcohol Consumption Control Act last February.

In search of understanding how the industry is adapting to the new regulations, and what input it has on adjusting government policy, Director talks to leading executives at drinks giant Diageo Moet Hennessy (Thailand) about how they are responding to the Act.

The Ban

"Working in our industry has just got a lot tougher," says Vice President, Marketing, Diageo, Zanita Kajiji, who is responsible for a number of brands, including the Johnnie Walker portfolio. "But it has got more exciting and more challenging at the same time. We have to think much harder now about how to build our brand within the current restrictions."

And what restrictions they are.

Since February, the Act has banned all promotional activities related to the sales and marketing of all alcohol products. In addition to the ban on sales between 2pm and 5pm that were brought in 2004, special offers, discount promotions, value-added campaigns, and lucky draws have been banned. Furthermore, all advertising of products themselves is prohibited. There can be no mention of the drink, pictures of pack shots or bottles; only the brand can be mentioned.

Brand (New) Focus

In effect, this means that Diageo can market Johnnie Walker as a brand, but not the products. So no mention of, for example, Johnnie Walker Red Label or Johnnie Walker Black Label, or anything that hints that the product is actually an alcoholic drink.

With its ‘Keep Walking’ advertising campaign, launched in 1999, the company has shifted away from the act of drinking towards emphasising lifestyle and positive brand messages associated with the Johnnie Walker brand. However, in the post-Act environment the only product placement, a five-second pack shot at the end of the advert, has been relegated to the cutting room floor.

"Think about shampoo. About how you could market and promote it without mentioning the shampoo itself. Without talking about the liquid," says Zanita. "Gone is the ability to discuss the actual attributes. That it prevents hair from going frizzy, for example. You can't talk about the ingredients, about the manufacturing process.

"All that is left is to focus on the brand, say Pantene. About the positive messages associated with that brand. That makes it easier for someone else to say exactly the same thing, and you then can't differentiate the product for the consumer."

Socially Responsible

Despite rankling over restrictions on sales and marketing, Diageo and the alcohol industry in general support the Act's core aims.

Raising the legal drinking age from 18 to 20 years is not a bone of contention for the industry, neither are the initiatives to reduce under-age drinking, driving under the influence or other problems associated with alcohol abuse.

The company's code of conduct stipulates its commitment to full legal compliance with government policies and law. It also strongly pushes the need for its staff to promote responsible drinking, anyone caught drink driving or acting recklessly under the influence of alcohol is promptly released from the business.

Getting the Right Balance...

While Diageo supports the motivations behind the policy, as part of an industry that last year generated THB100bn for government coffers it is lobbying hard for a fair and realistic ministerial regulations regarding the legal interpretation of the policy.

"The Act's intentions are very clear. It's a good health policy overall, but it needs to be targeted in some areas," says Diageo Vice President, Corporate Relations, Wimonwan Udomphorn. "However, when it came out the Act was a bit of a muddle, legally speaking. The government needs to issue ministerial regulations to clarify the process and the precise details on what can and can't be done. We're still not clear on how to interpret the Act, so we're taking the opportunity to work with the government on the regulations to ensure that they are fair and focus on the targeted policy and on the alcohol abuse issues."

"Diageo doesn't see that how the controlling or banning of promotional mechanisms will reduce alcohol abuse as most of these activities take place within the relevant retail or entertainment environments."

...And a Level Playing Field

Legal clarifications are also needed to ensure that the entire industry is dealt with fairly across the board. Current loopholes allow industry players with still and soda water arms to their business to carry on promoting the products in schools and other institutions, as well as using these non-alcoholic beverages to bolster their main brands. "It's still the same brand related to their alcohol products," says Wimonwan. "This is not fair treatment."

Another paradoxical issue, according to Diageo, is that the ban on advertising and promotion could end up supporting what it says are cheaper, lower quality products. Premium global brands need to promote themselves more to build market share more than cheaper mass-market offerings. The cheaper the product, the less promotion necessary, the argument goes, as the standard price point is the main marketing mechanism.

"Because we are selling global brand name products, in terms of quality and image, it is clear that whenever the government prohibits the media communication of our products it will have significant impact," says Wimonwan. "It shifts the market towards the local brands and the cheaper products who don't advertise for quality."

Opportunities Lost?

The sponsorship of major sporting events, and Thailand's ability to attract such competitions, is another reason why Diageo is pushing for further clarification.
Last year, Thailand hosted the Johnnie Walker Classic, a premier golfing event. While Zanita says the event is "a property in its own right, not directly related to alcohol sales", the opportunity for Diageo to drive sales throughout the Johnnie Walker brand portfolio is immense.

Beyond that, sporting events create significant prestige, positioning and revenue for Thailand. But under current restrictions, could such an event be held in Thailand again?

"We're talking about that a lot, but we haven't reached a conclusion yet," says Wimonwan. "We can do the event, but with the prohibition on media communications and marketing, our team is not confident about the feasibility. If you don't have the promotional freedom, you have to consider whether it is worth doing or not."

Standing firm by its position as a responsible member of the alcohol industry, Diageo is keen to stress it is not at loggerheads with the government over the new policy. But that as an industry group, in conjunction with the Wine Association, the Hotel Association and organisation such as the American Chamber of Commerce, it presents compelling reasons for easing the restrictions on sales promotions, marketing and advertising.

The Next Step

Financially, Diageo says it is too early to say what the impact of the act is. The company also says that under the current legislation, launching a new product will be the toughest challenge.

As the festive season approaches, it does so as the first one subject to a ban on the promotional gift baskets and hampers, often stuffed with bottles of Johnnie Walker Black Label. Will it be ‘eat, drink and be merry’, or the added cost, that is most prominent on consumer's minds?

Regardless of the law, and the challenges it brings, Zanita is adamant the Johnnie Walker brand is strong enough to survive and thrive. It just involves maintaining a positive approach.

"We have to think much harder now about how to build our brand within the government policy," she says. "We have to be ready to adapt and learn."

"But there is so much to learn."