INTERVIEW – Paul Duffy: “But seriously folks…”

Since returning to Ireland to take the helm at Irish Distillers, Paul Duffy has enjoyed major success with Jameson, a seriously well-made whiskey that is not to be taken too seriously. Roger Brownlie reports

With brands from all corners of the globe you could be forgiven for thinking that Pernod Ricard is an international company. But on closer inspection, the mainly male list of management executives reveals a company that retains a distinct French flavour – with one notable exception.
Appointed chief executive officer of Irish Distillers in 2005, Paul Duffy is tasked with
the enviable job of heading up production of one of Ireland’s oldest exports, whiskey. In particular, Irish Distillers has enjoyed success with its leading brand, Jameson, which has recently celebrated global sales of two million cases.

For Pernod Ricard, a local boy being left to run a local business is a rare privilege, especially considering Pernod Ricard is normally split into either brand-owner companies or distribution businesses. Unusually, Irish Distillers is both.

“The attraction of this job in Ireland was that it is one of the few companies in Pernod Ricard that has both responsibilities,” says Duffy. “I have responsibility for two domestic distribution businesses: the island of Ireland, and South Africa, which reports through Dublin.

“And then there is the brand-owner arm. The brand-owner role in Pernod Ricard is to manage all matters relating to production and to originate marketing, whereas distribution is about the execution of marketing.”

Back to brands
But Duffy was not always based in Ireland. Before his appointment in Dublin in 2005 he was chief executive of Pernod Ricard in the UK. One wonders why, apart from being an Irishman, he would make the move from CEO in the UK to CEO Ireland, a move that, on the face of it, could be considered a retrograde step. But Duffy is quick to explain the attractions.

“My responsibility in the UK was as a distributor. In the UK I didn’t have that brand-owner responsibility. To have that responsibility for a brand like Jameson is very enticing and compelling. And to have a crack at distribution as well is pretty exciting. Professionally and personally speaking I’m delighted to be back.”

Called to account
Duffy’s first move after completing accountancy training at KPMG in Dublin was to Paris, where he stayed for four years. With his French connections in place he returned to Dublin in 1994 to take up a position with Irish Distillers, where he ultimately became finance director. But in 2001 he moved to the UK as CEO of Pernod Ricard UK, only to return to Dublin once again in 2005 to take the top job at Irish Distillers.

A little over a year into the job, Duffy’s plans should be firmly in place. But Pernod Ricard is a publicly traded company, and as an accountant with experience at chief financial officer level there can be only one plan, and that is growth. But what kind of growth? Value? Volume? Or a combination of both?

“What I’m trying to do is take on the legacy of my predecessor [Philippe Savinel] and improve it. There are two key strands to our business strategy here. First, in our export business, it’s to grow our Jameson volumes at double-digit growth and to grow our value at a higher rate than our volumes.

“Second, in our domestic business, we consider ourselves to be the leader in wines and spirits. We have five of the top 10 spirit brands in Ireland and three of the top wine brands, so we’ve got a really good, rich portfolio,” he explains. “We’re very bullish, and in those terms what we are fundamentally trying to do now is create value. Volume for us is a very good indicator, but it’s value that we’re about.”

So far Jameson has enjoyed strong growth internationally thanks to a £30m marketing and promotion programme, including the ‘Beyond the Obvious’ advertising campaign.

“We’ve played with what we call the Jameson paradox,” says Duffy. “As a brand, Jameson is serious in the making, but not in the drinking. It’s a premium whiskey with a relaxed, open style and this seems to have resonated with our consumers. So when you take an advertising campaign that communicates some of these things – it does seem to have worked.”

Investing in growth
Jameson had a growth rate in Ireland of 13% last year and there was much celebration over the announcement of 2m cases sold globally. More than 10% of that figure was sold domestically and 10% was exported to the UK, leaving around 1.6m cases for the rest of the world.

“Our business is also about making the investment to grow the value of our brands. So we are investing and it is responding very well,” says Duffy.

“Our target for the end of the decade is to reach 3m cases. So we have very high ambitions. We are trying to accelerate that rate of growth but we are also making sure we put value ahead of volume.”

According to Duffy, driving value – that holy grail of the drinks business – means premiumisation. “We are bullish about premiumisation,” he says. “And we have a brand in Jameson that is growing very strongly,” he says. “In the UK we increased the price of Jameson by a significant percentage. The retail price moved from about £14.50 to £15.50. As expected, the month after we saw a volume reduction. But it only happened in May 2005 and already we have seen volumes return.

“Historically, we might have been benchmarked against Scotch, but we see our benchmarking now against premium mainstream spirits – the likes of Jack Daniel’s with its pricing of £17.50 in the UK – and that is where we would like to retail at.”

Duffy thinks this is sustainable because Jameson is different; it’s not a Scotch. “We’re a very different offering for consumers. But it will take time to get us up to that value proposition,” he adds.

Brand of choice
But Jameson is not Irish Distillers’ only whiskey. Powers, Paddy and ultra-premium Redbreast and Midleton whiskeys are all popular in Ireland but virtually unheard of in the UK. A whole category has been left unloved and underinvested perhaps?

“Realistically we couldn’t concentrate on the whole whiskey category. We had to choose one whiskey that we could build as a brand,” says Duffy. “From that, we made our investment decisions accordingly to get money behind the brand. But we certainly couldn’t do that behind the whole category,” he adds.

It is normal, however, for a whole category to develop based on the success of a market leader – in this case Jameson. But Duffy denies that this was a goal.

“It’s not our goal at all. Jameson is the leader in the category,” he says. “Our goal is not to grow Paddy around the world, for example. But we do want Jameson to act as a ‘lighthouse’ for the category – as a leader. The category will follow us because we are the biggest player.”

And the success of the contemporary campaign, which interestingly did not focus on the brand’s Irishness, is undeniable. As well as its local market expanding 13%, the US has grown 20%, South Africa is now enjoying 100,000 cases from zero
12 years ago and the UK is growing at 6%, despite the price rise.

“We have growth in pockets around the world,” says Duffy. “We have six markets that sell over 100,000 cases and 24 markets increasing with double-digit growth. So it’s a broad base that’s been buying into the Jameson proposition and it’s not concentrated into one or two markets.”

More than whiskey
But a company cannot survive on whiskey alone. Another speciality at Irish Distillers is gin, with its brands Cork Dry Gin and its premium proposition Cork Crimson Gin. Pernod Ricard also owns Beefeater Gin.

But like most brands in the category, Irish Distillers’ gin sales are stagnating and they have fallen into the category of old favourites rather than market leaders.

“It certainly has not been growing like vodka,” remarks Duffy. “We have seen vodka growing at fantastic rates. I think it’s fair to say that gin has been losing to wine, due to a change of drinking habits.

“One of the things that we’ve been focusing on is the premiumisation of gin, with the launch of Crimson Gin in November 2005. This is one way of stimulating demand back into the category. We’re trying to bring some life in from the top end.

“However, other opportunities have come from Allied Domecq – with brands such as Stolichnaya, Kahlua and Tia Maria. While these brands are not new to the market they are new to us. So we’re very optimistic about these. They are reaching new audiences for Irish Distillers.”

Inevitably, the conversation turns back to Jameson, a brand that Duffy is clearly pleased as punch with, as it leaves other whiskeys bruised, battered and barely registering in international export terms. Irish Distillers proudly claims to have turned Jameson into a top 50 global drinks brand by volume (according to Impact drinks research). Jameson is at number 47 caught between Cacique rum from Diageo and Tanqueray gin from … Diageo.

Roll on 2010 when, if all Duffy’s plans come to fruition, he will be rubbing shoulders with the 3m-case boys like Pernod Ricard’s 100 Pipers, Seagram’s Gin and Malibu – much more convivial company. But then again, by 2010 perhaps the whole world will be drinking vodka. 

Paul Duffy

 Born Dublin, Ireland
 Completed professional accountancy training, KPMG in Dublin, 1990
 Lived and worked in Paris, 1990-94
 Joined Irish Distillers, 1994
 Finance director of Irish Distillers, 1997
 Chief executive of Pernod Ricard UK,   2001
 Chief executive of Irish Distillers, 2005

© db February 2007