Vodka, Beer Now Rivals- at Least Diageo Thinks So

JWT Grabs Smirnoff Biz as Brewers, Spirit Makers Battle for Same Drinkers

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In a move that underscores the mounting rivalry between spirits and beer, Diageo has taken the unusual step of shifting global creative duties for its Smirnoff brand from Publicis Groupe's Bartle Bogle Hegarty, citing a conflict with brewer InBev.

Diageo is consolidating its global Smirnoff business with WPP Group's JWT, the spirits marketer said in a statement. The brands involved in the U.S. include Smirnoff Ice, Ice Triple Black, Twisted V and Raw Tea. JWT already handled global creative duties for the vodka.

Diageo spent $36 million in measured media for the Smirnoff products in the U.S. in 2005, according to TNS Media Intelligence.

The statement said the change came following a review of its conflict policy. "As a result, BBH and Diageo have agreed that the Smirnoff [ready-to-drink] and [flavored-malt-beverage] business should be reassigned, allowing BBH to continue a decades-old relationship with a competing beer company and pursue more beer brand assignments."

BBH is on InBev's roster and handles its Boddington's and Murphy's brands. The agency was recently a finalist in the Beck's review that was won by Ground Zero.

Whereas once a beer and spirits client on the same roster wouldn't raise an eyebrow, it's becoming more of a concern as liquor and beer companies begin to compete more and more for the same drinkers. "It's a reflection of the increasing intercategory competition [between spirits and beer]," said veteran alcohol industry consultant Arthur Shapiro. "My feeling is we'll see more and more of this sort of thing."

BBH will continue to handle Diageo's Johnnie Walker and Baileys Original Irish Cream.

"JWT has been a great partner, and their work has been integral to helping us drive Smirnoff vodka to become the No. 1 premium spirit in the world," said James Thompson, president-global marketing, white spirits and ready-to-drink, in the statement.

The brand also should benefit from increased marketing spending by its parent, Diageo PLC, which hiked spending 8% during the 12 months ending June 30. And the marketer says it expects a larger ad-spending increase this year.

According to spirits trade magazine Impact, Smirnoff sold 20.9 million 9-liter cases during 2005, up from 20.1 million in 2004 and 15 million in 2000.
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