Diageo boss calls for ‘sensible’ drink rules
Diageo Ireland boss Ollie Loomes says the company will handle Brexit but small firms may struggle, writes Business Editor Samantha McCaughren
OLLIE Loomes, country director of Diageo Ireland, has warned that new restrictions on the marketing of alcohol could damage Ireland’s brands abroad and hit investment.
“It could have very significant negative consequences in terms of international reputation of Irish brands and of their growth abroad.
“And, ultimately, I think that will have an impact on investment in Ireland,” he said.
The Public Health (Alcohol) Bill is the Government’s attempt to curb alcohol abuse in Ireland. The drinks industry has been lobbying hard against it.
“I would call on the Government to engage with the industry and find a way to work with us to find an appropriate, sensible solution that tackles misuse problems. But one that doesn’t set us back in terms of our international reputation and our export growth and our investment in Ireland.”
Loomes said he accepted that there was alcohol misuse in Ireland, which was not good for Diageo or society. He also said that he does not have an issue with new legislation.
“We want an alcohol bill that’s evidence based, that’s proportionate and ultimately something that’s sensible. We want an alcohol bill that’s pointed at the problem of alcohol misuse, not pointed at products and the industry and the average consumer,” said Loomes.
“I think it’s worth remembering that we actually have a wonderful industry, we’ve got some wonderful Irish brands and products that have become huge Irish success stories on the international stage, accounting for very significant exports,” he added.
“And, definitely, we want to be proactive in terms of how we get after misuse of alcohol in Ireland.”
He said that the proposed alcohol rules were coming at a time when the food and drinks sector was facing into uncertainty around Brexit.
“Our estimate is that we would have something like 18,000 cross-border truck movements a year between beer and Baileys, which is clearly a very significant quantity of truck movements.
“And when you get into the impact in terms of costs, of delays at borders and so on, that would have a big impact on our business in terms of cost but also just complexity and ability to run our business.”
WHEN, as a young Irish marketing executive based in the UK, Ollie Loomes first got a job working at Guinness, he felt it was his dream role. Guinness is unquestionably one of the country’s most important brands, but Loomes was initially unaware of the responsibility that would come with it.
“One of the first things I learned about working for Guinness, is that your boss in Diageo isn’t your only boss. I remember, in my early days with Diageo, getting a taxi to an event and on the way the taxi driver, as they do, asked me where I worked. Innocently — and mistake number one — I proudly told him I worked for Guinness,” says Loomes.
The driver proceeded to give him chapter and verse on the quality of the pint in his local pub, claiming the stout was not up to scratch, and he suspected that there was some issue with the line cleaning.
Loomes said he would look into it but confesses that he thought little more of it.
Several months had passed when Loomes was heading to the airport — he got the same driver, who complained bitterly that the pint had still not improved.
“Needless to say, I no longer tell taxi drivers I work for Guinness,” says Loomes, who has risen through the ranks of the drinks giant to become country head of Diageo Ireland.
It was a lesson for Loomes that a generation of people feel they have ownership of the black stuff. Indeed, Guinness’s links with Dublin are felt in everything from the distinctive smells of Dublin 8 to much of the architecture of the Liberties.
Guinness may be close to the heart of many Irish people, but the country’s official relationship with it and other alcohol companies has soured somewhat in recent years.
Concerns around alcohol abuse have seen restrictions on the marketing of alcohol ratchet up over the past decade and the controversial Public Health (Alcohol) Bill proposes significant new restrictions for the promotion of beer, wine and spirits.
While there are many vocal supporters of proposals aimed at curbing consumption of drink, the industry is vehemently against the bill as it currently stands.
Unsurprisingly Loomes is among them. He maintains that he is willing to accept changes but is critical of the Government for not working with drink firms to reach a more industry-friendly solution.
There are four provisions in the bill covering labelling, advertising, minimum unit pricing and structural separation.
“Our concern in a nutshell, is that Ireland will become one of the only countries in the world that will require alcohol products to be labelled with one-third of the label having a cancer/carcinogenic warning,” says Loomes.
“It could have very significant negative consequences in terms of international reputation of the industry’s brands, of fantastic Irish brands, of their growth abroad. And, ultimately, that will have an impact on investment in Ireland.”
Yet Diageo itself has been investing heavily in Ireland, even with this new legislation looming in the background. Among the projects are an €18m expansion of the Guinness Store House and a €25m investment at a new distillery at St James’s Gate for its Roe & Co Irish whiskey brand.
While Loomes points out that Irish drink consumption has fallen 25pc in the past 15 years, there is no getting away from the fact that the sight of young inebriated people is a common feature of most weekends in Irish cities and towns.
Loomes accepts the problems with alcohol abuse continue. “There’s still misuse of alcohol in Ireland and that is not good for Diageo, it’s not good for the industry, it’s not good for us as a culture, as a society.
“We’re doing a lot,” he says, referring to Diageo’s introduction of detailed labels and warnings on packaging and eduction programmes. It is a battle the drinks industry will continue to fight.
Loomes, who grew up in Castleknock in Dublin, had an interest in brands from a young age. He studied business in UCD and then did a masters at Michael Smurfit Graduate Business School. His first jobs were with confectionery and pet food giant Mars, where he held various sales and marketing roles in Ireland and the UK over eight years.
When he married his wife Sarah, who was based in Ireland, he began looking for a role closer to home. “So that’s when the opportunity came up to work in the Guinness brand. It was a bit of a dream come true for an Irish lad who had been interested in brands and marketing and advertising, to work as the marketing guy for Guinness,” he says.
When he first joined the group, the current cautiousness around drink advertising was more muted and there were fewer concerns about the link between sport and alcohol.
“Hurling was a central plank to what we were doing in Guinness at the time. I suppose we worked with the GAA to continue to drive the popularity of hurling. We did some fantastic campaigns, including ‘Not Men but Giants’.
Loomes went on to hold several roles in the Ireland, heading up marketing for spirits and then the lager division.
“It was a really exciting time,” he says of a marketing and innovation role which he held between 2007 and 2011. It involved travelling all over the world, to the likes of Nigeria and Indonesia where Guinness is hugely popular.
Loomes later went on to take the role of director of the Western Europe beer category director for Diageo, before taking up his current position in 2015. He was less than a year in the job when the result of the Brexit vote shocked the business world.
The Irish operations of Diageo have been highlighted as an example of a business which could be at the coalface of the fallout. “From a total Diageo perspective globally, our point of view is that we will take Brexit in our stride,” says Loomes.
From an Ireland perspective, it’s not quite so simple. “We’ve got very much an integrated, all-Ireland supply chain. We’ve got manufacturing operations in Dublin on Guinness, right here at the brewery. We’ve also got a manufacturing packaging plant on beer up in Belfast.
“And on Baileys again, we’ve got manufacturing in Dublin and we’ve got manufacturing up in Northern Ireland. And we’re employing about 1,200 directly as part of those operations.
“Our estimate is that we would have something like 18,000 cross-border truck movements a year between beer and Baileys, which is clearly a very significant quantity.
“When you get into the impact in terms of costs, of delays at borders and so on, that would have a big impact on our business in terms of cost but also just complexity and ability to run our business as well.”
He added that dozens of small businesses and communities are linked into that activity and there would be concern about their future.
“We feel confident from a Diageo perspective that we’ll manage through it, but some of this is the lifeblood of smaller communities.”
While Brexit and regulation are clouds on the horizon, there is plenty of good news in St James’s Gate also.
After struggling for many years, Guinesss stout has stabilised and indeed seen modest growth. In addition to that, Hop House 13, which was born in Brewers Project in Dublin, has enjoyed considerable success both here and internationally. It is helping Diageo compete with the trendy craft beer market, while Guinness itself is also appealing to drinkers seeking history and provenance.
The other big news at St James’s Gate is the announcement of plans to develop 12.6 acres of the site. Loomes claims that while the plan has to make financial sense, it is not all about profit.
“This is not a money-making exercise for Diageo, we’re not popping up a ‘For Sale’ sign and selling, we’re looking to partner with a world-class property partner to do something wonderful here.
“We’re at the beginning of the process, we think it will take something like 12 to 18 months to find a property partner who’s got the same level of ambition and vision for what we can achieve here.
“I’m imagining a mixed-use area with residential, with leisure, with commercial, etc and that mix of wonderful old buildings, vat houses and brew houses. Plus that, juxtaposed with beautiful modern architecture, it really can be a very vibrant part of town.”
That project may take several years but its new distillery producing whiskey, Roe & Co, will open in March 2019.
“We’re putting €25m into the distillery and we see opportunities to build the Roe & Co brand in Ireland but also across Europe and ultimately potential opportunities beyond Europe as well. Actually, when you think about taking what has been a brewery for 259 years and now investing to have a distillery here as well, it’s very exciting.”
For all its challenges, the history of Guinness and its heritage is never far from Loomes’s conversation. That lesson from the taxi driver was an important one.
“The thing about Guinness in Ireland is that you don’t really own the brand,” he says. You’re a custodian.
“You’re minding it on behalf of the people of Ireland, and your job is certainly not to screw it up — but to work to leave it in better shape than you inherited it.”