Striding to a new experience
Ivan Menezes arrives at Diageo’s modest Scottish headquarters on Edinburgh’s Gyle business park amid some excitement that the group CEO had flown in for a rare public appearance in Scotland.
He greets the assembled media with a Hollywood-style smile that would not look out of place at a red carpet premiere. Dressed in a pressed blue suit and a tie bearing the Johnnie Walker logo he is very personable, while every bit the company man.
“When I am greeted at immigration around the world I don’t say I work for Diageo I say I work for Johnnie Walker,” he says, delivering the line with the smoothness of a silky single malt. If it hadn’t been fed by his PR machine, then it should have been.
Menezes was in Scotland to announce a £150 million investment in scotch whisky tourism, the biggest ever programme of its kind and one that aims to be transformational for the category on home soil.
“The investment will ensure there is a connection between Scotland and Scotch,” he says during an interview with Daily Business.
Some may think the link between the two is already deeply embedded. After all, Johnnie Walker has been a fixture in whisky shops and bars since it was first distilled by John Walker in Kilmarnock in 1820. It is now the most widely distributed brand of blended Scotch whisky in the world, reaching almost every country, with 223.7 million 700 ml bottles sold in 2016.
Yet despite being Scotland’s biggest brand, it is not its biggest seller to native Scots. Indeed, as Menezes says: “We do not sell much in the UK. It’s not even in the top ten.”
A big chunk of Diageo’s latest investment aims to rekindle Johnnie Walker’s association with its home land via a massive visitor centre planned for the centre of Edinburgh.
It will bring to life the whole story around Johnnie Walker, appealing to a proportion of the 440,000 whisky tourists who now visit one of Diageo’s 12 visitor ‘experiences’.
That figure is growing at 15.2% a year and Diageo clearly sees an opportunity to capitalise on a willing band of enthusiasts, combined with Edinburgh’s growth as a world tourism capital.
“Scotch is at the heart of Diageo, and this new investment reinforces our ongoing commitment to growing our Scotch whisky brands and supporting Scotland’s tourism industry,” says Menezes.
He is not saying where the new visitor centre will be built, but it will be in the heart of the tourist trail. It intends to build something similar to its six-storey Guinness Storehouse in Dublin, which is Ireland’s biggest paid-for tourist attraction, contributing €361m to the Irish economy each year.
Menezes has led the company since taking over from Paul Walsh in July 2013. He proved his worth in marketing, working with external entrepreneurs to develop breakthrough innovations and running North American operations before being appointed chief operating officer in 2012.
It is now a $17bn revenue group that owns many of the most well-known alcoholic brands, not just whisky, but Smirnoff vodka, Captain Morgan rum, Baileys Irish Cream, Tanqueray gin and, of course, the top-selling stout, Guinness.
Menezes may be running one of the world’s biggest companies but he recently said the biggest challenge he gives himself is how to keep a large company feeling small.
“I write a blog – and I do it myself – for our 32,000 employees across the world. We encourage everyone in Diageo to act as if they own the business,” he said.
He is hot on innovation and watching consumer trends is a given. He says they are “moving faster than ever before” and the companies that thrive will be “those who interpret and quickly deliver against those insights.”
There is a pipeline of product ideas, including the need to persuade a new generation of consumers to try whisky.
The company came up with Haig Club, an introduction to Scotch and for consumers of lighter whiskies. It is blended to match with food in China, one of the initial launch markets, where David Beckham [the former footballer], the face of Haig Club, has extraordinary name recognition.
In November 2014, the company introduced Crown Royal Apple, which combines the brand’s Canadian whiskey with Regal Gala apple flavours. This has attracted new customers to whiskey – particularly women – and way exceeded the company’s expectations in its launch year.
He acknowledges that within the marketing campaigns is a recognition of changing attitudes towards alcohol, particularly among the young. People are “trading up”, he says, drinking less but drinking better.
Millennials, he believes, want authenticity, so they’re interested in the skill and crafts involved. Yet they also want to treat themselves and he says this is why gin has become so popular – blending taste with locally crafted skills.
“Gin drinking is a phenomenon largely in Europe – Spain and the UK – which has not yet taken off elsewhere in the world. Scotch is much more global. A lot of the growth in gin is at the expense of wine and beer.”
While the boss may be keen to encourage his employees to think small, it’s the company’s size which helps it combat geo-political and macroeconomic pressures. Brexit, the trade ‘war’ between the US and China, and tensions with Russia are matters to be factored into expectations, though Menezes says Diageo is big enough to sail through the choppiest of waters.
“As a global business we are keen to see as much frictionless change as possible,” he says. “The world has a degree of volatility, but it is nothing new.
“We take Brexit in our stride. Unlike many other industries we are committed to Scotland. Our supply chains are more straightforward.”
He said recently that the company has worked through trade arrangements over the decades, indeed centuries.
The figures certainly point to inexorable growth. Global brands, like Johnnie Walker, Guinness, Captain Morgan, all grew by 5%. Each region around the world was in growth. The company is seeing strong growth in China, India is very solid, the US has performed solidly, and Europe grew 4%.
“I remain confident that our business, and scotch whisky, in particular, which is our main category, will have a fair runway to trade around the world,” he says, “and that they will continue to prosper and grow.”
Job: Chief executive, Diageo
Birthplace: Pune, India
Education: St Stephens College, Delhi; Indian Institute f Management Ahmedabad; Kellogg School of Management
Family: He is the son of Manual Menezes,who was the chairman of the Indian Railway Board. His brother Victor is the former chairman and CEO of Citibank.