Diageo's New Hispanic Strategy Includes Big Buy on Univision

Spirits Maker Looks to Woo Growing Demo Away From Beer

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Seeking to boost Hispanic consumption, liquor giant Diageo is turning to TV, making a major upfront buy on Univision Communication's Galavision cable network as well as on every owned and operated Univision station.

The year-long deal represents the first time a liquor company has bought upfront time -- the period in which marketers buy up available commercial inventory from networks before the fall season -- on every Univision station, Univision told Ad Age . The piecemeal purchase was necessary because Univision does not accept national liquor buys on the network.

"This is groundbreaking from the sense of scale and number of stations and markets they are buying," said David Lawenda, Univision's president of ad sales and marketing.

It's also a big step for Diageo, which has historically targeted Hispanics with on-premise events and experiential marketing, along with some smaller TV buys. But like other alcohol companies, Diageo is boosting its outreach in search of a bigger piece of the demographic, which is expected to account for 23% of drinking age-adults by 2030, up from 16% last year.

Ads will begin airing this week, starting with a new spot for Ketel One vodka, Diageo said. Other brands will go on air in the coming weeks. "The buy for us is very significant," said Marc Strachan, VP-multicultural marketing for Diageo USA. "From the standpoint of where we were and where we're going, it's about a 3,000% increase in terms of the actual dollars that we are spending in this marketplace."

The media buy was handled by roster agency Carat.

Diageo, whose brands include Smirnoff, Johnnie Walker, Cuervo and Captain Morgan, ranks as the nation's 63rd biggest ad spender, according to the Ad Age Data Center. The company spent $147.7 million on measured media last year, but none on Spanish-language network TV and only $220,000 in Hispanic newspapers, according to Kantar Media. Earlier this year, Diageo tested ads on Univision in Texas. Diageo also has previously run ads on Galavision, as have other liquor companies, according to Univision.

The investment comes as Univision Communications touts new Census data to lure more spending from major marketerssuch as Kraft Foods.

The Census data, which showed the U.S. Hispanic population growing 43% in the past 10 years, "has led to more demand than ever, not just for our networks [and] our cable network but for all of our platforms," Mr. Lawenda said. The "lion's share" of Diageo's buy "is actually going to our television stations, which is unusual," he said. "You don't typically hear about upfront buys for television stations, but that 's what the Census has done for us." Univision has 36 owned-and-operated stations, which the company says cover 60% of the country.

The challenge for Diageo and other spirits makers is to lure Hispanics away from beer brands, which have a commanding lead in the demographic and are spending aggressively to grow even more. Hispanics spend 50 cents of every booze dollar on brews, compared with 22 .87 cents on spirits, according to Nielsen data recently cited by beer importer Crown Imports. By contrast, non-Hispanic consumers spent nearly 30 cents on spirits and 38.1 cents on beer.

But there are signs that liquor companies are gaining ground. Year-to-date beer-case sales volume dropped 2%, compared with just a 0.9% drop among non-Hispanics, according to a recent report by beer trade publication Beer Business Daily, citing Nielsen. "It appears Hispanics are shifting some beer occasions to spirits, as Hispanic spirits volume is up 13.7% vs. the general market at 2.6%," Beer Business Daily said in the report, titled "Are We Losing Hispanic Drinkers to Spirits?"

Mr. Strachan attributed the growth to a new focus that spirits brands are putting on the audience. "Traditionally our beer colleagues have had much more earlier and longer-term advertising awareness and relationships," he said. "I think spirits are now really seeing this and catching up and making sure they are front and center just as well along with beer. And you're starting to see the results in the marketplace."

But liquor marketers still have work to do. Compared with whites, Hispanics underindex on every liquor variety except for tequila, brandy and cognac, according to a survey published last year by market researcher Mintel. Still, marketers have a big opportunity with fruit-flavored spirits, which Hispanics prefer at higher margins than other groups, according to Mintel. And that might explain one of Diageo's newest offerings released last year: Ketel One Oranje, an orange-flavored vodka with "hints of warm spice."

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