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Subject: Executive Update
Date: Tue, 27 Oct 92 16:00:26 EST
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10/27/92

TITLE Executive Update

#m#sw#m#At Britain's Guinness, Brand Buildup Never Ends

CEO Is Following Up Predecessor's Revamp With Targeted, Global
Efforts

Marilyn Much In New York

Anthony Greener has a tough act to follow.  The chief executive
of Guinness PLC, Britain's largest consumer goods company and the
world's most profitable alcoholic beverage producer, stepped in
at a critical juncture.  "We've gone through a major period of
reconstruction in the past few years, and as the company settles
into the

Marketing


structure with a lot of new (managers), we will start to reap the
benefits in terms of management and operational effectiveness,"
said Greener in an interview.  Greener was named Guinness' chief
executive last January and becomes chairman next January. He
succeeds Sir Anthony Tennant, a 30-year veteran of the spirits
business who set London-based Guinness on the straight and narrow
financial path in the wake of a 1986 insider trading scandal.
Guinness' then-chairman, Ernest Saunders, had artificially in-
flated his company's shares so he could make a $4.1 billion cash
offer for United Distillers Inc., maker of Gordon's gin and
Johnnie Walker Scotch. Guinness purchased United Distillers, but
Saunders was fired, arrested and imprisoned.  Tennant came to the
rescue as Guinness' chief executive in 1987 and was named chair-
man in 1989. Besides the financial scandal, he also had to con-
tend with United Distillers' neglected operations.

Tennant revamped both the spirits and brewing businesses into
clearly focused operating companies, assembled a new management
team, divested 25 peripheral businesses and took marketing con-
trol of 85% of the company's spirits distribution.  He also im-
plemented a new global marketing strategy for spirits, changed
the image of Guinness' beer business and targeted it toward a
younger audience, and developed a tiered pricing strategy.

"The underlying purpose of all this activity has been to focus
our resources on building up and strengthening our unrivaled
portfolio of brands, a process that will run for many years,"
said Tennant.  Guinness, with $7.7 billion in 1991 sales, has
been bearing the fruits of his program. From 1987 to the end of
1991, earnings grew an average of 23% a year on sales increases
averaging 17%.  Now all eyes are focused on Greener, former
managing director of both Guinness and United Distillers, which
is the company's biggest moneymaker, accounting for 60% of 1991
sales and 76% of profits, analysts estimate.  Greener's challenge
is to keep the company moving forward and enhance the image of
its spirits brands.

Guinness' spirits business has been hit by a slowdown in world
economies, shrinking inventories and an economy-related downgrad-
ing of consumer buying patterns from midmarket brands to lower
market brands, according to John Wakely, an analyst with Lehman
Brothers International Inc. in London.  In the first half, Guin-
ness' earnings per share inched up 4% to 24 cents (based on an
average exchange rate of $1.90 per pound) from 23 cents a year
earlier. Sales grew 5% to $3.33 billion from $3.18 billion.
Analysts estimate earnings for the full year will rise only about
4% on about a 6% increase of revenue.  Greener, considered a shy,
unassuming man, remains unruffled by the loss in momentum.  "You
will find that relative to most companies in our industry, our
results are pretty good," he said.  He is confident the company
will continue to outperform its competitors as he implements the
programs Tennant has put in place.  A veteran marketer, Greener
is credited with reinvigorating United Distillers' portfolio of
brands, which were in decline when Guinness acquired them.  The
brand development program will continue as Guinness works to en-
sure its products appeal to consumers around the world. Marketing
is aimed at convincing consumers that its brands are worth more.
"They make you feel like serving the brand when you have your
father-in-law over for dinner, so he will think you are a person
of taste," Jonathan Goble, an analyst with Barclays de Zoete Wedd
Ltd. in London, said of the company's recent Johnnie Walker Black
U.S. print ads.  Markets outside the United Kingdom now represent
85% of Guinness' profits, Greener says.  "We are literally a
marketer of branded merchandise all over the world," said
Greener. "We look primarily at value and margin as the key to our
profitability and success rather than volume." If the market for
Scotch whisky is flat, Guinness can still grow its share and sus-
tain high margins as people trade up to premium products. Markets
such as Latin America and the Asia/Pacific region - where Guin-
ness sees considerable growth prospects -tend to be characterized
as deluxe markets where consumers drink higher grades of Scotch,
he illustrates.  Line extension is another important facet of
Guinness' marketing efforts. The goal is to raise the aspiration-
al ceiling and fill specific market niches.  The Johnnie Walker
brand, for instance, has gone from only Red and Black labels at
prices ranging from under $10 duty-free to $12 in 1986 to a
current range extending from about $10 for Red Label up to $225
for Honour. The Johnnie Walker brand now represents about 40% of
Guinness' total profits.  Guinness also has shown a knack for
marketing in the beer business, where premium pricing and posi-
tioning is the exeception. Guinness' beer business represents
about 30% of its profits.  Guinness Brewing is one of the
fastest-growing beer companies in the world, with operating pro-
fits up about 10% this year on a 7% sales increase, estimates
Lehman's Wakely. Greener credits its success to effective market
segmentation.

An example is the company's domestic stout business, which has
doubled in market share over the last decade. Ten years ago,
stout was a dying product consumed by an aged consumer - 60-
year-old males. Today, the typical consumer is 20 to 35 years
old.  "We progressively moved the stout brand down in age terms
and moved it up the socioeconomic ladder by improving presenta-
tion and distribution of the brand," Greener said. "We achieved
this result by carefully targeting advertising and promotion to
make the brand relevant to younger consumers." Greener plans to
use this touch to build the company's brands even as expected
market growth continues to fall short of levels in the late
1980s.

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