May we introduce ...

Each month, LuxeSF.com profiles a member of The Luxury Marketing Council. In April 2006, we talked with Glen Philpott, Commercial Director and custodian of Diageo's Reserve Brands Collection, representing some of the world's most renowned luxury beverage spirit brands and the very first Founding Member of the San Francisco chapter.

LuxeSF: Give us a quick overview of Diageo and the Reserve Brands Collection.

Philpott: Diageo is the world's leading premium drinks business with an outstanding collection of beverage alcohol brands across the spirits, wine and beer categories. A British company, Diageo has over 20,000 employees and trades in over 180 markets around the world, with the U.S. as its biggest market. Annual turnover is £10 billion, and market cap is approximately £23 billion.

Diageo's world-renowned brands include Johnnie Walker Scotch Whisky, Tanqueray Gin, Bailey's Irish Cream, Bushmill's Irish Whiskey, Smirnoff Vodka, Captain Morgan, and Jose Cuervo. Diageo also features a Reserve Brands Collection, an exciting and broad line up of spirit brands in the ultra-premium segment including Johnnie Walker Scotch Whisky (Blue Label, Gold Label, and Green Label), Cîroc Vodka, Tanqueray No. TEN Gin, Godiva Chocolate Liqueur, Don Julio Tequila, and an exquisite collection of single malt whiskies from Scotland , including Oban, Lagavulin and Talisker.

LuxeSF: Why the development of a luxury collection?

Philpott: Consumers lead us in that direction. For health and lifestyle reasons, consumers are drinking less but better. Consumers find that the better the spirits they drink, the better they feel about themselves, and the better they feel about their health. So consumers are trading-up their drinks repertoire, driving above-average growth in ultra-premium segments. Diageo created the Reserve Collection to refine our marketing strategies and to streamline our service for these segments.

LuxeSF: How do consumers define luxury within the spirits category? Is it a price issue?

Philpott: From the consumer's point-of-view, and this is the way we view it, luxury is a state-of-mind, a lifestyle. It's how you feel about yourself and your environment when you're enjoying that luxury. Luxury spirits follow this same pattern. Of course, everything starts with the quality of what's in the glass, from highest-quality ingredients, to traditional yet modernized production processes, to distinctive product heritage. From there, the luxury spirits experience would not be complete without elegant and impeccable service, beautiful glassware, a comfortable environment, and enjoyable conversation or reflection. Premium pricing is simply a reflection of the care and attention that goes into delivering that full experience.

LuxeSF: Is luxury spirits consumption tied in any way to level of affluence? Can I be of moderate wealth and still buy high?

Philpott: You certainly can, and we see it every day. In our business, it's what we call "mass-tige." Having substantial financial means helps, of course, to remove a barrier from buying luxury spirits. So, yes, affluence is a factor. But more than that, luxury spirits consumption reflects consumers' desire for enjoying a certain lifestyle. We believe that our great brands allow us to bring the prestige of luxury to a broader segment of consumers. Perhaps not every day, but that occasional glass of Don Julio 1942 tequila or Lagavulin single malt Scotch whisky can really make you feel special about yourself. These experiences allow you to enjoy a luxury lifestyle at a relatively affordable price point.

A fully integrated luxury lifestyle is affordable to very few consumers. Most consumers, instead, seek luxury experiences as special complements to their everyday lives. You'll see consumers who drive mid-priced cars and who fly coach class, but who will happily spend $300-plus on designer shoes. It's their link to the luxury lifestyle. In our business, consumers do the same thing. They may not be extremely affluent, not be into fashion, jewelry or fancy cars, but they are true connoisseurs of single malt whisky and they are constantly on the lookout for new and exciting malts. It's their luxury indulgence.

LuxeSF: Your strategy for creating, developing and maintaining the luxury status of the Reserve Brands Collection ... what's your primary thrust?

Philpott: We of course pursue above-the-line image building activities, primarily media, advertising, and PR. However, these activities only seek to bring attention to the uncompromising quality of our products -- quality in the liquid, in the production process, in the packaging, in the presentation, in the selling process. Managing the route to the consumer is critical in what we do to preserve the image of the brand. After that, we employ advertising and PR to reinforce quality and to bring the brand image to life.

LuxeSF: What lines won't you cross in the branding process?

Philpott: Diageo's Reserve Brand Collection speaks directly to consumers' desires for status and discernment. A discerning consumer is one who knows something good from something better, whether that is the quality of the liquid, the package or the service. These consumers are thirsty for brand and product information and knowledge, and we endeavor to provide that knowledge in entertaining and compelling ways. Some consumers also seek status in their beverage alcohol choices, considering their brand of choice to be a sort of badge of honor and guarantor of quality. In this case, we are fortunate that our brands have received numerous awards and accolades from some of the most-respected professionals in our industry.

Other spirit brands have been very successful focusing on other consumer need states, such as releasing your inhibitions or fitting in with the group. These are very powerful desires, but ones that are not reflective of the luxury-seeking mindset.

LuxeSF: Let's talk about the rise of "connoisseurship" -- people who don't know about quality and luxury, but who want to learn. If I aspire to quality and luxury, but I don't know what it is or how to recognize it, how do you address that in your branding strategy?

 Philpott: Consumers learn about our brands in a couple of different ways. The first and most important way is through word-of-mouth. It's amazing how people who love our brands want to share their experiences with friends. It's all about discernment and being able to tell something good from something great. In the wine and spirits business especially, consumers take great pride and interest in being able to talk to their friends knowledgeably and confidently about a beverage they've tried. "Listen, after dinner last night I discovered an incredible single malt Scotch whisky. Let me tell you about it ..."

Our consumers also gain information, knowledge and experience about our brands in the retail environment, whether at a lounge, a restaurant table, or a fine wine shop. There, they have access to experts who can help them learn about the brands -- a bartender, the sommelier, or the retail outlet salesperson. Consumers expect sales and service staff to be knowledgeable about the brand, and in most cases they are. We rely heavily upon the retail trade to deliver brand messages and product information, and to do it in a way that is consistent with the luxury image of the brands. We focus significant resources and efforts on educating the trade and inspiring them to believe in the quality of our brands.

A somewhat newer phenomenon in the ultra-premium spirits business is online shopping and information seeking. More and more people look for information from the comfort of their own den or living room. They go to our websites and to our retailers' websites looking for information about our brands. So we make sure that our web-based information is up-to-date, accurate, and well presented. It must be compelling in a very sensual way, making the flat screen experience comparable to sniffing and swirling a glass of gin in a lounge. So the strategy encompasses three components. It's encouraging word-of-mouth communication. It's educating and influencing what we call the Gatekeeper, the person who's serving the consumer. And it's enabling consumers to seek out information by themselves by having compelling and up-to-date web messaging.

LuxeSF: Why did you elect to join The Luxury Marketing Council?

Philpott: The luxury consumer has so many aspects to his or her life, and ultra-premium spirits are a great complement to a luxury lifestyle. As an example, you're traveling, on the deck of the cruise ship, and you are ready for a nightcap. Here is a perfect opportunity to indulge in a Godiva Chocolate Liqueur. You're having friends over for nice meal. What more enjoyable way to kick off the evening than with a delicious cocktail, maybe a Don Julio margarita or a Cîroc grape-tini?

I think that what The Luxury Marketing Council is doing is bringing together a group of luxury companies, which in many ways are speaking to the same consumers, but speaking to them about different aspects of their lives. I'm eager to learn how other luxury companies approach their consumers and trade channels and what they see as the next evolutions in consumer tastes and desires. There may also be opportunities to work with other member companies to deliver innovative luxury experiences to those consumers we already know and who trust Diageo Reserve brands. Glassware and food experiences are obvious examples. But more creative experiences may be possible, too, including travel, retailing and jewelry, especially when it comes to gifting. We were already members of the Luxury Marketing Council of New York, and that membership has already opened up great opportunities, so when the San Francisco chapter was created, we naturally wanted to get involved.