Diddy Factor Invigorates Vodka Sales for Diageo

Source: FT. By Greg Farrell in New York
Published: October 20 2010

Diageo, as the world's largest spirits maker, is a master of mass-market selling, but it also nurtures some of its brands within specific ethnic target groups before rolling them out broadly.

A recent example involves Ciroc vodka, which was introduced by the company in 2003 into the "ultra premium" vodka market. Its point of difference is that it was the only high-end vodka made from grapes.

Sales were modest in its first few years on the market. Then, in late 2007, Diageo inked a marketing deal with Sean "P Diddy" Combs, the US rap star.
Mr Combs, who is also a music producer and actor with a brand of urban casual wear, has a wide following in the African-American community. He became more than a frontman for Ciroc. In exchange for a 50-50 split of the profits on Ciroc sales, he developed the branding and positioning for the vodka.

The results were remarkable, says Jim Mosely, senior vice-president for consumer planning at Diageo. "Only twice in my career have I seen an immediate response in our brand tracking," he says of the jump in visibility Ciroc enjoyed after the announcement of the partnership with Mr Combs.
"We saw it really take off in the African-American community, and it has started to broaden its appeal. Throughout the entire economic recession, it was one of the few brands that never slowed down."

In the first six months of 2007, before Mr Combs signed on, Diageo sold 60,000 cases of Ciroc. The following year, sales grew to approximately 169,000. In the full year ended June 2009, volume spiked to 400,000 cases. Sales rose another 48 per cent in fiscal 2010, according to Diageo's earnings statements.

Under the direction of Mr Combs, Ciroc has declared itself to be the "official vodka of New Year's Eve". It has also come out with several new flavored vodkas, including berry and the even more popular coconut.

Mr Mosely says that after establishing a solid foothold in the African-American community, the brand has caught on in the larger Caucasian market, which now accounts for about 40 per cent of all Ciroc sales.

In the US, the African-American community plays an out-sized role in determining which brands are "hot", he adds. "As a community, African-Americans are leaders in terms of style, fashion and image," Mr Mosely says. "They can take brands and make them very big themselves."