New Diageo boss: when less is more

Simon Litherland, the newly-appointed managing director of Diageo GB, talks to Robyn Lewis about developing and growing his flagship UK drinks company.

Isn't it funny how some people talk 19 to the dozen, meandering with sub clauses, fleshing out the bare bones of a conversation with questions and observations, while others prefer a more pared down approach. Answer the question. Next question.

Simon Litherland, the 45-year-old newly-installed managing director of Diageo GB, is definitely more of the latter than of the former.

Litherland, one gets the impression, is a man for whom less is definitely more. A man who does not like wasting time and who does not relish sitting around. When asked what he likes to do to relax, for example, he says: "My first priority after work is my family. Then golf, squash, tennis and some rugby coaching." Phew!

As the man charged with developing and growing one of the UK's flagship drinks companies, this characteristic will surely be no bad thing. He has by his own admission been "busy in the extreme" since taking over the helm from Benet Slay last July.

From the beginning​

South African Litherland began his career in the insurance industry before joining the Pillsbury division of Grand Metropolitan, moving over to the drinks division of the company a few years later. He has since run businesses in central and eastern Europe, Ireland and, directly before this role, in South Africa where he set up a business called Brandhouse in 2004.

Brandhouse is an unusual business model, a joint venture between three big drinks companies — Heineken, Namibia Breweries and Diageo — which comprises some 40 drinks brands across the beers, wines and spirits categories.

"It is quite an unusual set-up," he says. "I think there are only a few other examples of that in the entire world but, in terms of Brandhouse at least, the structure worked incredibly well."

The unusual business model has more in common with the Diageo GB business than you might think, suggests Litherland.

"Despite perhaps normally being viewed as primarily a spirits company, Diageo has a full portfolio of drinks brands across beer, wine and spirits, which is really just another example of Brandhouse," he says.

The markets each operates in however, are very different, he admits.

"The UK market is a very mature one, a low-growth market if you like, whereas South Africa is an emerging market with a growing middle class and is very much in a different place. But there are similarities as well in terms of how we work with our brands to strengthen their position, how we work with our customers in a collaborative way, how we find areas of growth that we want to go after. There's a lot of consistencies."

One of the big lessons Litherland says he is bringing to the job from his experience in markets such as South Africa, is how to develop a closer relationship with customers. This is something which critics of Diageo have said the company has lacked in the past.

"I'd agree with that to a certain extent," says Litherland.

"I think Diageo has traditionally been quite consumer-centric and brand-led, but I think over the last little while we've been much more focused on our customers. Working collaboratively with customers will create opportunities for us and them."

To this end the company has established a new customer marketing division, along with a new luxury arm, Reserve Brands Group, which has been charged with looking after the premium brands in the portfolio, a second area of growth Litherland has pinpointed for the UK market.

"I genuinely believe there is still scope for growth in the UK, even though the market is clearly relatively flat and conditions will remain tough in the short term," he explains.

"Aside from the new business divisions we are all working towards growing our brands, taking share from competition, which is absolutely an avenue we are after. Also working with different segments of the market — convenience, independents, for example, as well as in big grocers and in the on-trade as well, of course."

Challenge of the on-trade​

The on-trade is an interesting challenge for Litherland who acknowledges that the UK is a market that has been shifting in favour of at-home consumption for some time. He is adamant however that pubs, bars and restaurants remain as important to the Diageo business as ever before.

"Of course the shift has affected our business model and the on-trade has had a tough time of late, but declines are slowing now and I think they will continue to do so. Furthermore the trade that remains has consistently higher standards and is determined to deliver a better all-round experience to its consumers." This is, of course, not only positive for consumers, but is also something that suppliers like Diageo can participate in and benefit from, he notes.

"I think we already support the trade and will continue to do so. The best example of that is our programme of support for Guinness stockists, which includes a helpline, engineers on the ground and plenty of marketing support, and there's our Finished Drinks programme as well.

This addresses how we present finished drinks to consumers in the on-trade, how we work with trade to educate and support businesses and how to get great looking, great tasting, finished drinks out there every time.

The on-trade experience will continue to influence the at-home experience, so it's important we get it right."

Outside of the on-trade directly it is wine and beer that Litherland is also looking to for growth. Its wine arm, Percy Fox, which includes such brands as Blossom Hill and Piat D'or and its fine wine division J&B Wines, are performing well and are ripe for further development he says.

"Wine is a very important part of our business and it is doing very well. Blossom Hill is the lead brand in the portfolio and we've just taken on another brand, Arniston Bay (a South African range "by coincidence"), and I think there's a lot of potential there. We've also been working on a relaunch of our Piat D'Or range and fine wine continues to perform for us, so I'm delighted to have such a strong position in a category that continues to grow."

In terms of beer, Litherland says that the "small but growing share" of the category the company has with Guinness continues to be exciting, but says he is keen to look at how Diageo participates in the category with a broader range of beers.

"We are in the process of launching Windhoek Lager here, which is the biggest brand in Namibia and part of the Brandhouse stable. We've got an interesting world beer portfolio at Diageo, brands like Tusker or Senator from Kenya, and with world beer growing here I think that is something we can participate in."

Innovation​

Diageo's track record for new brand launches has been a mixed bag in recent years, with the success of brand extensions such as Bailey's flavours and Smirnoff Apple and Lime contrasted by the high-profile failure of launches like Quinn's and Slate 20. However Litherland is adamant that the company isn't shying away from genuine new-product development in favour of importing brands or adding brand variants to an existing range.

"Innovation, by its very nature, is always going to produce mixed results," he reasons. "We have had more success recently with brand variants rather than new brand launches, but they are still targeted at consumer needs and occasions that weren't being met.

It just so happened that they were a great fit with existing brands. If we identify occasions that aren't being met that we can't see any of our brands fitting, then we'll be absolutely happy to bring out a new brand that will."

Litherland hopes his tenure at the helm of Diageo will result in the company becoming "the most celebrated consumer goods company in the UK".

"The UK can be a great market for Diageo and will not only continue to be important, but to increase its importance to the business," he states.

Litherland on the Guinness price rise​

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