Tom Cavanagh, Advocacy Manager at Diageo, shares a detailed analysis of the on-premise market and why Diageo is investing in bartenders. Tom focuses on emerging flavor profiles and why a brand’s human network is its most vital commercial asset. We also explore the rise of “Swicy” (sweet & spicy) serves, savory/umami profiles, and innovative kitchen-led bar techniques. Learn why Diageo’s strategic investment in middle-tier human connections is the most powerful pipeline to driving long-term retail and off-premise success.
Tom Cavanagh Presentation Transcript
Tom Cavanagh (00:03)
What we’re going to go through a little bit today is about sort of flavor trends, a little bit what’s going on with the state of the industry at the moment. Also going to go into a bit about the importance of advocacy. So, tell you a little bit about myself. My name is Tom. I am the advocacy manager at Diageo. I have been working in the drinks industry for 15 years before moving.
I worked in bars and restaurants before moving into working with brands. To start us off, what a lot of people are talking about now is that Gen Z are not drinking as much. And we are seeing that pattern across all demographics actually, in all age groups. This isn’t just Gen Z. But rather than rejecting beverage alcohol, Gen Z is redefining its relationship with it.
So as you’ll see from some of the numbers that we have on the board, there, whilst the overall rate of 73 % is still low participation for all adults, Gen Z are actually drinking in on-premise more than their older counterparts. So this presents the opportunity. They’re a very, very captive audience. They are also a bit more explorative with the categories they’re going to drink. So Steve mentioned earlier that people are going down from 3 and 1 to 2 and 1 half categories. Gen Z are actually the opposite to that in the older generation.
So there is a really great opportunity for brands to introduce them into those categories. There’s a lot of work going on now into recruiting people into whiskey. We see all of the big brands, Johnny Walker, included in that with the launch of Johnny Walker Black Ruby, shameless plug. But there’s a lot of trying to recruit people like the younger generation in, because if you can recruit that younger generation into your bar, if they become a patron of it, that regularly visit, then that’s fantastic opportunity for you, because hopefully they’ll be drinking in that bar for years and years to come.
But also for brands, there is a fantastic opportunity for you to recruit them into that category. Just wanted to highlight, it’s not all doom and gloom. Don’t worry, the younger generation is still going into bars, and we need to make sure that we’re creating those experiences and making sure that we are making them feel welcome and make sure that we try and keep them coming back into the bars to preserve the longevity of this fantastic industry that we all love so much. So next thing that I’m going to move on to is flavor profiles that we’re seeing trending.
Tom Cavanagh (02:17)
So, swicy, now it’s probably quite a key term, but sweet and spicy is one of the things that we are seeing really booming right now. I’m sure that you guys have all seen that in your bars, the rise of the spicy margarita that a lot of people are going for. And one of the reasons I wanted to put this up is to give a little bit of insight to brands on how you can curate your brand strategy and your drink strategy.
So, customers are seeking something a little bit more like a little bit more of a sensory experience. So rather than just going for those sweet flavor profiles that we might have done in the past, we’re seeing a lot more integration of spicy flavors into there. Some of those we’ve listed on there. Obviously, sugar is offset by chili. For those of you who don’t particularly enjoy spicy food, if you have a little bit of sugar with it or something sweet, that will calm down your palate. Don’t drink water. It does not help.
So that is one of the reasons that we’re seeing this massive boom in it. And it also has that adult appeal, right? It’s slightly more sophisticated than just going for a mango margarita, if you’re going for a chili and mango margarita. Tropical and global fruits dominate flavors. Flavors are shifting a little bit more away from seasonal stuff. We do see a lot of seasonality being used in drinks, but obviously, with the fact that we’re able to access ingredients from all around the globe now.
We are seeing a lot more of these drinks coming in. So there’s an authentic storytelling behind them. People are focusing on regions and making a focus on the cultural ingredients they want to use in there. We’re also seeing a lot more movement away from these very artificial flavors that are used. So people will import new flavors, ingredients that people might not have tried. And when we’re talking about that experience that people are looking for.
If they haven’t seen a flavor profile on a menu or an ingredient, then that provides a really great opportunity for you as a bartender to engage with your guests, to talk them through what that is, the flavor profiles they might like, give them some things that might be similar to, and bring them something new. And that is building that experience, which is what people are all coming into our bars and restaurants for. And obviously, the use of savory and umami flavors.
Tom Cavanagh (04:36)
So we’re seeing a lot more people using chef-led processes, fermentation, things like that, extract flavor profiles. There’s a lot more depth and complexity to using umami and savory notes in your cocktails that sugar just cannot offer. I’m sure that you’ve all seen a big rise in that kind of trend in your bars. Seeing some amazing processes that are coming out. Obviously, Jan McPherson, who works at Panda and Sons, has recently bought out Densing.
So that’s like a, for those who’ve seen densing, hands up. So a few. For those of you who haven’t seen densing, basically, what Jan is doing, he is using a vacuum blender to very quickly fat-wash things. It’s a speed, it’s a sped-up process of fat washing to laminize it, if you like. And these kinds of innovative techniques are really important. We’re seeing a lot more about texture in drinks.
Previously, there were a lot of clarified drinks served in a nice column with a nice column of ice. Not much else is going on there. Not much color. It’s just carbonated and see-through. We’re seeing a lot more people wanting texture in their drinks nowadays as well. OK, next slide. So texture is increasingly treated as part of the flavor identity, correcting tactile memories for the guest.
Kevin Armstrong from Satan’s Whiskers wrote an article on the fact that all drinks look the same right now. And I would actually go as far as saying, if you gave me 10 drinks from 10 of the best bars around London, but on a white background, I would not have been able to tell you where all of them are from, apart from the glassware, because of going in there. So we’re wanting to see a little bit more about texture becoming more important for drinks. And I think we’re starting to see a shift going back to that now on new menus.
We’re to go a little bit into brand advocacy now. Brand advocacy is hugely important. See these quite often, like cycles where brands will get rid of their brand ambassador team, and then they start to see sales downturns over the next three or four years and wonder what’s happened. It’s because they haven’t had those people going in and visiting the bars and maintaining the relationships.
Tom Cavanagh (06:57)
Whilst everyone is in the office doing the admin, paying the retros, organizing the contracts, you need those people going into the bars and building that brand love. So, for those of you who work on the brand side of things, whether that be as a brand owner or someone who’s looking at maybe starting up a brand, I cannot stress to you enough the importance of brand advocacy for helping you to build your brand in the on-trade and the off-trade.
So customers prioritize expertise in these high consideration moments. So let’s say it’s your birthday or it’s your anniversary, you’re going out. Those times are a really fantastic opportunity for the bartender to recommend your brand. If you’re going in, like, don’t quite know what I might have, we’re celebrating, someone can go, I know exactly the thing for you. And if you have built up that relationship with the bar, then it’s hopefully your brand that is the one that will be recommended.
So you can see at the bottom here, we’ve got emotion-driven visits that demand memorable experiences. That’s something that came from Nielsen IQ in their brand report from last year. So, justifying value through expert narrative and experience. When you are, we’ve all heard of upselling, right? You’ll know what it is. It’s really important to offer that. And that gives you, as the server, the opportunity to flex your expertise and your knowledge and give people the confidence that what you’re talking about is what they are coming into order, you know what you’re talking about.
So it’s a fantastic opportunity for super premium brands and premium brands to engage with guests. Also, a great opportunity for you as bars and bar owners to make a little bit more money, which is what we all want at the end of the day. So bartenders determine which brands will be remembered and revisited. So again, if someone comes in and they don’t know what they want, that’s the real opportunity for you as a brand to be that choice.
Tom Cavanagh (08:59)
So a little bit about the power of advocacy and some numbers behind it. So 74 % of consumers want recommendations, and they rely on that and rely on social advocacy for purchase. That’s based on the number that stats there. It’s basically talking about the fact that when people come in, if you recommend it to them, they are going to take your recommendation three out of four times.
Really does just go to show that if someone really loves your brand and wants to push it or they’ve got a drink, they’ve got a sales incentive that they’re after, and like some of that, they will continue to push that, and three of the four consumers will actually take their recommendation. So it’s three point five times higher retention rate from referred customers as well. If someone just tries something off their own back, then they’re not, they’re three and a half times less likely than if they have been recommended it by you as the bartender or one of their friends and family.
So we’ve actually got some of the DBA crew in. Hello, Alex. So Alex works on something that Diageo runs called Diageo Bar Academy, which is an incredible training initiative that we’ve been running globally for a number of years and still continuing with it here in the GB market. We’ve actually seen that when bartenders get training from DBA, that there is a 17 % sales increase as well.
Again, that speaks to like, not only their proficiency in terms of their skills as a bartender, but also their knowledge in being able to recommend to their consumer. And when we did a study at Tales of the Cocktail two years ago now, it actually came out that the biggest reason for a bartender to recommend a brand was the provenance and the quality of the liquid. I think that’s fairly obvious, right? You’re not going to recommend a product. I’m not going to swear on camera.
But the second most important was their relationship with the brand ambassador. So really, again, just showcasing how important it is for your brand ambassadors to be out there and for them to build a fantastic relationship with the bars and restaurants they’re working with. So the gatekeepers of liquid to lips. So some more data that has been taken from Nielsen IQ.
Tom Cavanagh (11:20)
The average bartender gives 11,000 over 11,000 like influences on a decision for consumers. Mind blowing, right? I mean, that is the average. There are some places where you won’t have that many interactions, but the average across the industry is 11,000 drink decisions that every bartender helps to influence. They’re promoting your brand, your product. Then hopefully you’re going to see that sales increase come through. Touched on the 74 % of the persuasion.
But this is a really interesting one for me. 63% of consumers admit that they can have their minds changed and be persuaded by recommendations. So even if you go into a bar saying that I would like to drink a martini, and someone goes, how about this? You will more often than not take their recommendations, 63 % of the time. We also see a huge amount of impact from this in premium venues and fine dining.
A lot of the time when you’re going into these fine restaurants, whether it be a Michelin-starred environment, that recommendation is hugely important. And to just round off a little bit more about the impact of advocacy and tee up for a brand ambassador coming next, George, is talk about the impact of what it can drive for you in the off trade. So the majority of consumers will first try your spirit in the bar, in the on-premise. But that then translates into those off trade sales, which is where brands really do make their money.
We see that listings in grocery are where brands really drive revenue, right? But the impact of the on-premise into driving that volume is hugely important. The sort of knowledge that I want you all to take away from today is really from the brand side of things is make sure that you are continuing to invest in advocacy. It is a really, really important tool for your brands and how they’re going to show up in the on-trade.