Social Media, Facebook and the Booze Business

Quite a bit of press about social media in general and Facebook in particular this week. All of which, of course, relates to the booze business.

First, in the US, DISCUS (Distilled Spirits Council of the United States) has rolled out new guidelines for marketing on social media sites and digital platforms. According to what I read in Wine and Spirits Daily, the European Forum for Responsible Drinking has joined DISCUS in that initiative. Among other things, the DISCUS code requires that 71.6% of the audience be of legal drinking age.

Guess what? Nielsen data shows that Facebook, Twitter and YouTube have legal drinking age audiences in excess of 80%. Nevertheless, the DISCUS guidelines (code of responsible practices) are clear and push hard in favor of responsibility. Those of us in the industry understand a basic principle in such matters – the appearance of impropriety is as bad as the impropriety itself. There are steps including “age gating,” monitoring of content and other restrictions. Good for you, DISCUS.

Next, we learned this week that Diageo and Facebook have worked out a multimillion-dollar deal to work together and share skills and resources for mutual benefit. The Guardian quotes a Diageo spokesperson as saying the deal will “drive unprecedented levels of integration and joint business planning and experimentation between the two companies.”

Translation – this is still a new medium and we can learn a lot from each other.

(This is one of those rare moments when I tip my hat to Diageo and applaud their initiative. Although, there was one item in the press that caught my eye and made me laugh. It was something like Diageo wants to tap Facebook’s large audience in markets like Brazil, where the two companies occupy the same office building in Sao Paolo. Oh, and if they were in a different part of town, no deal?)

In any event, in the UK, this new relationship did not go over well. From what I read online, the negative reaction ranged from “serious concerns” from the British Medical Association to “torches and pitchfork” rants from the anti-alcohol forces.

Come on people, Facebook and Diageo can target legal drinking age consumers and put up safe guards to keep young people out. You can’t do that with billboards or newspapers. Perhaps manufacturers should hand out blindfolds in front of every billboard in the UK where a young person is likely to walk past.

Finally, Facebook announced new features this week that include sharing more than just informing. They hope to become a “taste maker” and influencer of products and services. The reaction has been mixed with pundits and bloggers weighing in on both sides. An unscientific poll among Mashable readers indicates as much as 75% hate the news feed changes.

Time will tell whether the relationship between Facebook and Diageo is a smart move for both, or, Facebook will become the next social media darling to wane in its appeal. But with well over 300 million users worldwide, I continue to think that Diageo’s move was right on the money – despite how much it pains me to say that.

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Tough day for Diageo

Two news reports covered by the Buffalo Trace newsletter made me feel badly for Diageo.

The first, as predicted by many industry observers including yours truly, is that India’s United Spirits Ltd. has become the world’s largest liquor company by sales volume.

No big deal you say. But what about this?

The Sunday Times reports that the Beckmann family has reportedly held discussions about selling the business for shares of Diageo stock instead of cash. If correct, it would make the family the largest shareholder with 10%. That would give them the right to express opinions about how all the brands are run. Too scary to contemplate.

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“India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great grand mother of tradition. Our most valuable materials in the history of man are treasured up in India only!”

Mark Twain

Last month I was contacted by Mr. Bishan Kumar the Group Editor of an Indian magazine focusing on the liquor trade called Spiritz. Mr. Kumar is my type of editor/publisher, someone with a passion for his publication and his readers. We hit it off from the outset and the next thing you know, I’m writing a monthly column called Booze Abroad.

It made me think how little most Americans know about India. From an alcohol industry perspective, India is the subject of many misperceptions and, until recently, you could have included me in that criticism.

Things you might want to know about India and why I’m thrilled to have an audience there  –

Their spirits business is the 3rd largest in the world (236 million cases) and ahead of the US, which is # 4. The industry is dominated by brown spirits and growing at the rate of 18 to 20% per year.

United Spirits Limited (USL) run by Dr. Vijay Mallya, is the major company in the market. It’s the second largest spirits company in the world…and growing. Lookout Diageo.

The dominant factor in the market is Indian Made Foreign Liquor (IMFL) and all the major global players have a presence in the country. In fact, the # 2 player in the market is Pernod Ricard India Ltd, which had an 8% volume share of spirits in 2010. (By the way, that company was previously Seagram India Ltd. Enough said.)

The future outlook for spirits is quite good based on a number of factors — rising income levels and a growing middle class; a youthful population; international travel and exposure to premium products. All that is fueling a demand for imported products like tequila/mezcal and bourbon/other US whiskies. Currently, whisky, vodka and rum dominate the market.

Oh, and it’s not just about liquor. Beer is flying off the shelves and the wine business, while still small, is growing.

All in all, it’s a fascinating country with a robust and interesting booze industry. With all my international travel, I’m sorry to say I’ve never been to India – a situation I hope will soon change.

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