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With a new marketing chief, a streamlined organization and a stable of fresh ad agencies, Allied Domecq Spirits USA is poised to end the millennium with a bang.

Now it only needs to do what observers say it hasn't done previously: consistently execute focused campaigns for a brand portfolio that includes Kahlua liqueur, Sauza tequila and Beefeater gin.

Scattershot ad support and constantly shifting strategies have hurt the seventh-largest spirits marketer, according to executives close to the company.

Labels such as Canadian Club whisky and Cutty Sark scotch have seen sales steadily erode over the years.

Allied sold 8.4 million cases of its brands in 1997, up 1.2% from the year-earlier period, but still down from 8.5 million cases in 1995, according to industry newsletter Impact.

The industry grew 0.1% in 1997 compared with 1% growth in 1996; that year saw the first industrywide lift in spirits sales since 1981.

"You can't maintain a presence when the competition is outspending you left and right," said one executive close to the company.


"I have never seen the will to drive this company forward," said Tom Pirko, president of consultancy BevMark.

Will is crucial to staying afloat in the spirits industry, particularly as the biggest players grab more market share. Allied also contends with constant rumors of being acquisition bait.

Newly minted Chief Marketing Officer Paul Block thinks Allied can survive and compete against giants such as Diageo and Seagram Americas by focusing its energies behind core brands and giving them consistent marketing support.

"Our opportunity is to be more targeted and be extremely strong strategically," Mr. Block said. "I look at our biggest challenge as making our brands most relevant to our specific target audience.

"We have a stable of great products and brands," he added.

Mr. Block was hired in December from Danone International Brands, where he was VP-marketing and business planning for Evian spring water and the group's cookie business. He oversaw the successful launch of Dannon Natural Spring water.

The executive previously held marketing positions with Guinness Import Co. and Miller Brewing Co.


Allied is making Mr. Block's job easier by signaling that it will keep up spending levels behind the core brands. Allied spent $21.1 million on its brands during 1997, up 34.3% from the year-earlier period, according to Competitive Media Reporting.

That's the first year-to-year increase for Allied Domecq or its predecessor Allied-Lyons since at least 1990, when Allied-Lyons spent $37.9 million.

Allied spent $15.7 million during the first nine months of '98, according to CMR.

Besides spending more, Allied has sought new advertising ideas by placing the accounts of several brands in review.

BBDO, Chicago, won Kahlua, formerly with Lois/EJL, Chicago, and also Beefeater after incumbent Mezzina/Brown, New York, resigned the account.

Publicis & Hal Riney, San Francisco, won Canadian Club, formerly handled by DDB Needham Worldwide, New York, while Lois/EJL's New York office won Midori melon liqueur, which had been unassigned.

BBDO will be breaking a new, edgy campaign for Kahlua in the spring, executives said.


The hiring of Mr. Block fits into a wide-ranging overhaul of Allied's structure and marketing focus that began early last year. British parent Allied Domecq Spirits & Wines, which also owns Baskin-Robbins and Dunkin' Donuts, got the ball rolling in February '98 by hiring Todd Martin, a PepsiCo marketing veteran, as its first global marketing director.

Mr. Martin reorganized the structure of the company's international spirits and wine business, and sweeping changes ensued through the U.S. division.

In the U.S., Allied's Hiram Walker and Domecq Importer liquor units merged to create Allied Domecq Spirits USA. Martin Jones, CEO of Domecq, was tapped to lead the new organization, headquartered in Old Greenwich, Conn., instead of the former seat in Detroit.

The brand portfolio then was divided between core brands that would receive ad support and "alliance" brands that would get fewer marketing resources and possibly be farmed out to third parties to handle marketing.

Allied granted core-brand status to Kahlua, Midori, Drambuie liqueur, Cutty Sark, Canadian Club, Beefeater, Courvoisier cognac, Sauza, Maker's Mark bourbon and some specialty whiskies.


Earlier this month, the distiller reorganized its marketing structure, creating three group VP positions that report to Mr. Block. Cheryl Palmer, formerly VP-marketing for Domecq, was tapped as group VP-central marketing, a post that oversees research, promotion, new-product development and the management of such brands as Drambuie, Midori and Maker's Mark.

Dave Waluk, formerly marketing director-Hiram Walker whiskies and liqueurs, was chosen as group VP-marketing for Canadian Club, Beefeater and Courvoisier.

The company still needs to hire a group VP to oversee "high energy brands" including Kahlua and Sauza, as well as fill several key brand manager positions.

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