The great Guinness shortage has lessons to offer for Diageo

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When I visited my nearest hipster pub in east London this week, there was no sign of the major Guinness shortage. Despite stories of pubs having to ration the newly fashionable Irish stout, the barman filled a glass with the correct double amount, leaving a white foam and bubbles in the cold, dark liquid.

My Goodness, My Guinness, as John Gilroy’s advertising posters proclaimed in the 1930s. The marketing gods have smiled on this strange drink among the Diageo brands as the British drinks maker continues to suffer from the hangover of the Corona cocktail craze. Forget Johnnie Walker Scotch and Smirnoff vodka, Guinness has got you covered.

Guinness is not a new product, although the non-alcoholic version launched in 2020 is also doing well. Invented by Arthur Guinness and brewed in St. James’s Gate, Dublin since the late 18th century, stout is the epitome of long-term success. From older regular customers, it has spread to young men and women: in the UK, sales have risen by around 20 percent this year.

Meanwhile, Diageo’s mood is at a low point. The company has shifted its brand portfolio toward hard liquor, such as the Casamigos tequila brand co-founded by George Clooney, which it bought in 2017 for up to $1 billion. That seemed like a good idea at the time, but Casamigos’ sales fell 20%. By August, its share price fell 10%.

Guinness’s resurgence is notable considering that craft beers and imported beers have eroded sales of other well-known brands. Anheuser-Busch InBev’s failed attempt to broaden Bud Light’s appeal shows how difficult that can be. I thought the political backlash over transgender influencer Dylan Mulvaney’s marketing efforts would subside, but I was wrong.

Guinness’s success has a lesson for many companies: Beware of underestimating stable performers in favor of newer products. Guinness was one of two companies that merged to form Diageo in 1997, and while the company has remained loyal to stout, spirits have been at the heart of its strategy. It’s easy to overlook the potential of brands that have been around for a long time.

This is both traditional and particularly modern. Food and beverage startups often strive to provide consumers with a sense of identity and provenance, but Guinness inherently has both. Although the company spends a lot of money on marketing and has developed many advertising campaigns, they all reflect the same truth. It is a distinctive product that has been brewed in the same style for centuries.

For a mass-market beer brand, Guinness is pretty tailor-made: it may not be a craft beer, but there is craft in its delivery. It arrives at pubs in casks and must be stored and poured precisely to achieve the right combination of body, foam and flavor in the glass. Woe betide the sloppy pourers, as their mistakes are mockingly documented on Instagram and X-accounts like @shitlondonguinness.

It’s a perfect fit for social media because it’s highly recognizable: you know from across the pub who’s drinking Guinness or maybe Murphy’s Stout. Next to Guinness, lagers and ales fade into insignificance. Hardly anything is as effective in marketing as identifying with a color like Tiffany Blue (or FT Pink).

In a broader sense, Guinness is a social brew. It is far more popular on tap than in cans, although Diageo makes a special device that reproduces the Guinness pour for home use. It was easy to mistake the popularity of spirits during the pandemic for a permanent change, but Guinness has found its way back as young drinkers spend more time with friends at bars.

Emotions and identity are more important than portfolio strategies and it is worth trusting in brands with a long history and consistent values, even if you sometimes have to be patient. Ivan Menezes, the former Diageo chief executive who led the push into premium spirits, often wore a Guinness harp pin. His heart was telling him something.

Other companies will envy Guinness’s good fortune. Diageo is now investing heavily in the brand, investing £30m in the St James’s Gate brewery to increase production and a further £200m in a new brewery in County Kildare. But all of this will take time and it leaves a brewer in the rare, worrying situation of being unable to meet demand.

That could be a costly mistake considering almost 300 million pints are expected to be served in British pubs in December, which is the busiest time of year of the year. But it will also enter the brand’s mythology. Luxury companies try to create product shortages to create a sense of mystique. Those who can’t find a pint of Guinness at Christmas may find themselves craving it even more.

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