At the end of every week, we look at the key stories, offering our view on what they mean for you and the industry. From Diageo’s appointment of Dave Lewis to Waitrose’s rom-com starring Keira Knightley, it’s been a busy week. Here is my take.
In good spirits
Investors in Diageo will have sounded a collective ‘whoop’ on Monday at the news Dave Lewis has been drafted in to rescue the ailing drinks business.
Hailed as Tesco’s saviour, he is credited with orchestrating one of the most significant business turnarounds in recent history. Within weeks of joining the supermarket in 2014, it was embroiled in an accounting scandal, and the following year it reported a £6.4bn loss – one of the biggest on record in the UK. With confidence low and brand perceptions plummeting, he set about rebuilding the business from the ground up.
He spent time getting the basics right and bringing back stability. Cost cutting was key; he simplified the business, ensuring it could concentrate on its core offer, but even more critical was its laser focus on customers. A former marketer, with nearly three decades of experience at Unilever, the importance of putting customers at the heart of all decision-making was front and centre. By the time he departed in 2020 Tesco was firmly back on track.
Diageo will be hoping he can pull off a similar feat, but despite Lewis’s credentials it is by no means an easy job.
Diageo has been struggling to find growth in recent years. The cost of living crisis has left people with less disposable income, couple that with changing drinking habits – especially among younger consumers – and weaker demand in markets like China and it’s created a less than favourable environment for the premium drinks business.
It’s not just Diageo that has been suffering. The drinks market in general is experiencing a slowdown, with the spirits category in particular facing significant declines. Global spirits volumes are forecast to fall by 1.3% in 2025, according to IWSR data.
The challenge at Diageo is not the same as the one Lewis faced at Tesco, but cutting costs, streamlining the business and understanding customers will likely be high on the agenda again. Whether he has the same success remains to be seen, but the fact Lewis’s appointment resulted in around £2bn being added to Diageo’s market valuation certainly shows the confidence the industry has in his abilities.
Take two
Christmas ads for the final two big supermarkets landed this week, and their approaches couldn’t be more different.
Waitrose has gone for a big blockbuster approach, with an unheard of four-minute hero ad starring Hollywood royalty Keira Knightley, while Tesco has created 11 mini episodes that showcase the funny idiosyncrasies of family get togethers over the holidays.
Waitrose has certainly grabbed the headlines by creating its very own rom-com, and again doing something a little different, building on the dramatic storytelling focus created in its ‘Sweet Suspicion’ whodunnit last year. Conscious that interest often wanes after the initial reveal, it’s hoping to maintain that buzz with a suite of other activity to keep the conversation alive until 25 December.
Tesco has taken an episodic approach for the same reason, but rather than launching with a big splash, it is looking to build momentum steadily over the next six weeks with a series of humorous vignettes. Grounded in customer insight and data, it will be bringing to life relatable Christmas moments – some of which are genuinely recognisable and funny – as it looks to cut through the noise. A constant drumbeat rather than a big bang.
Very different approaches, albeit with emotional storytelling at the heart of each, but both have been well-received. It shows there is not one winning formula for Christmas ads. But of course, the true test will be whether they result in getting more people through their doors, which won’t be revealed until January.
Diversifying appeal
Brand is a powerful thing. For Premier Foods, which owns big names like Mr Kipling, Ambrosia and Bisto, it is its bread and butter, and a key driver of growth.
These brands now generate 90% of its total revenue – up from 83% a few years ago – with the rest made from its private label business. In its latest six-month period, branded revenue rose by 1.9% versus 0.7% for the business as a whole. Not an easy task given sales of own label products within the overall UK grocery market are rising, accounting for 51.2% in September, according to Worldpanel data.
Investment in brand building and innovation both play a crucial role at Premier Foods. It has committed to upping marketing spend in the second half, with a focus on attracting younger consumers to its brands via digital and social channels.
The strength of its brands is also enabling it to drive incremental revenue as it seeks opportunities in adjacent categories. Premier Foods generated 41% revenue growth from new categories in the six months to 27 September.
Having well-liked and trusted brands creates a springboard effect when launching products into new categories. It opens up opportunities and means consumers are more likely to be receptive to trying something new.
With the launch of products such as Ambrosia porridge, Premier Foods has extended the brand’s appeal beyond evening meals and dessert occasions and into breakfast. It creates an additional opportunity for consumers to buy into the brand, without reducing interest in its hero product or diverting attention.
The week ahead
We will be doing an in-depth analysis of 2025 Christmas ads, looking at the key strategies and what is likely to work. We’ll also be publishing the next episode of The Marketing Week Podcast, with HSBC’s Becky Moffat.