Foreign Policy recently posted a wonderful article by Afshin Molavi about how Johnnie Walker has targeted emerging market consumers with a message of aspiration and social achievement. He looks at the company’s origins and its growth in the UK and then the United States, but the article really focuses on Johnnie Walker’s efforts in Mexico, India, China, Kenya, and several other markets. I’ll wrap this post with some takeaways and figures.
The article highlights a pattern for Johnnie Walker: go where people are doing better and ride the wave to growth, becoming a companion to upward mobility. They did this after WWII in the United States when, coming off of an era of protracted hardship that started during the Great Depression, people started to think confidently about a brighter future.
For a brilliant analysis of this, see Saul Bass’s original pitch film to Bell Systems for their rebranding in 1969. True, that is 20+ years after the end of WWII, but the themes Bass points out in the pitch film highlight the social conditions of the time, the cultural memory of the hardship those generations endured, and how that changed into a society-wide forward-thinking self-confidence in the postwar period. See below…
Though different in their specifics, similar themes are playing out in the emerging world.
Molavi’s article mentions that Johnnie Walker entered post-WWII Japan to great effect as the nation began a steady sprint to wealth and development.
Now, Johnnie Walker is continuing this tradition by looking to where consumers are starting to see themselves differently — no longer destined to be poor and struggling, the evidence of prosperity around them and the glimmer of their own possible prosperity growing brighter.
The article starts out with some figures on Mexico’s rising fortunes and segues quickly to this commercial that Johnnie Walker’s been airing there:
It’s pretty powerful stuff…
The residue of Mexico’s identity as a poor country is still lingering, as the Geoskope team has been reading in Luis De La Calle’s and Luis Rubio’s important and informative monograph on Mexico’s middle class. Writing in their introduction…
Americans may fathom the middle class as being the obvious foundation of civilization and economic development, but most Mexicans have historically seen their country as mostly poor. Unlike American politicians that attempt to appeal to the average citizen in Peoria as the epitome of the modern American, Mexican politicians tend to look at Mexican peasants in Tinguindin in the state of Michoacan or squatter towns like Chalco, in the outskirts of Mexico City. Even thinking about Mexico as a middle class society seems odd, out of place and, of course, politically incorrect. Venturing to write that Mexico is now mostly a middle class country has been deemed a provocation by some analysts and politicians accustomed to crafting their public discourse in terms of an extended and impossible to overcome poverty.
Indeed, they write that the whole idea for their widely read and well publicized monograph originated from the fact that “during the last presidential election in 2006… Felipe Calderon won largely because he understood what his contender, Andres Manuel Lopez Obrador, did not: that Mexico was rapidly becoming a majority middle class nation.”
This is all to say that Johnnie Walker hit the nail on the head with that television spot when we consider this socio-economic shift and the concomitant change in identity, which is so new that it probably decided an election and prompted some national reassessments.
Molavi’s article continues to discuss Johnnie Walker using a similar process in Kenya, changing the message just a bit to appeal to the audience there. Athletes and musicians have been hired as brand ambassadors, and they’ve added another message: “Step Up”.
For more on Johnnie Walker in Africa, more broadly, read in The Economist here. The article describes a few other tactics the company has used there, such as
• On-site promotions (with costumed spokespeople and iPads, no less).
• A tailored vocabulary for the drink.
• Training bar staff, who are largely unfamiliar with scotch.
Diageo entered India in July with a 25% stake in United Spirits (which controls 60% of the Indian market), and is seeking to raise that percentage above 50%. Their attraction to India is logical: it’s a fast-growing market and Indians consume more whiskey by volume than any other country.
But there’s another important detail, to which Molavi’s article only briefly alludes: they’re getting United Spirits’s distribution network in the deal, which is probably extremely relieving to those who are leading the effort. Distribution on that scale in India is hard, hard work — and tricky.
Diageo bought a Brazilian distiller for similar reasons.
Naturally, Diageo is doing this in China, too. From Molavi’s article:
China is the big prize, though. There alone the middle class has grown to some 350 million people. According to consulting firm Ernst & Young, by 2030 China could see 1 billion people in the middle class — some 70 percent of its projected population. And they’ll be toasting to their success: The market research company Euromonitor International predicts that China alone will contribute 50 percent of the volume growth of the spirits industry in coming years. China is already the world’s largest spirits market, followed by Russia and then India, though the South Asian giant will move into the second spot this year, according to industry estimates.
In China, whiskey consumption is still very low, with locals preferring a local alternative, baiju. In 2011, Diageo bought a large, local baiju maker, Shui Jing Fang, and started marketing to “chuppies” (Chinese yuppies), appealing to them with “Johnnie Walker Houses” — foreign sophisticated culture, whiskey education, nightlife ambience.
The pattern is clear: get to know the culture and appeal to aspirations of an improving lifestyle. Diageo suffers when it deviates: In Hong Kong, Diageo hired an ad agency that created a CGI Bruce Lee to give a monologue about success, but it drew an unpleasantly complicated reaction as his fans knew that he did not drink.
WHY ALL OF THIS MATTERS: THE GROWING GLOBAL MIDDLE CLASS
So why is all of this important? Molavi’s article cites some important figures from a 2010 OECD report from Brookings Insitution’s Homi Kharas:
• The global middle class will grow to 4.9 billion people by 2030, from today’s 1.9 billion.
• They’ll spend $56 trillion a year, from today’s $21 trillion.
• Emerging countries will supply almost all of that growth.
Also, Molavi circles back to Johnnie Walker and its parent company, Diageo:
Paul Walsh, a Diageo board member and former CEO, said in a statement about 2012 business results that the firm’s “expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth.”
Diageo earns 40 percent of its sales from emerging markets, and the Molavi article mentions that that is likely to increase to 50% by 2015.
Other brands seeking growth and opportunity, and in some cases a wide open market, need to think about culture and how to craft a narrative that will resonate with their foreign market audiences.