Diageo’s Sophie Kelly on why great brand-building starts offline

In this episode of The Big Impression, Kelly breaks down how Diageo is turning tequila into a global cultural force. One standout example: a six-city collaboration with DJ and fashion icon Peggy Gou that combined out-of-home, merch drops, pop-up events and hyperlocal storytelling.   From a Hong Kong hot pot party to a Milan piazza activation, every detail was designed to blur the line between brand and experience.    Episode Transcript Please note, this transcript  may contain minor inconsistencies compared to the episode audio.   Damian Fowler (00:00): I'm Damian Fowler. Ilyse Liffreing (00:01): And I'm Ilyse Liffreing. Damian Fowler (00:02): And welcome to this edition of The Big Impression. Ilyse Liffreing (00:08): Today we're talking about how one of the fastest growing categories in the spirits industry, tequila and mezcal, is being shaped by culture, identity, and global consumer trends. Damian Fowler (00:20): Our guest is Sophie Kelly, SVP of Global Tequila and Mezcal Categories. At Diageo, she's leading the strategy behind some of the world's most iconic tequila brands, helping Diageo navigate its growth, changing cultural expectations, and the new ways consumers connect with celebration. Ilyse Liffreing (00:39): We'll talk about how Diageo is bouncing global scale with local storytelling, and in short, how tequila has become a cultural force beyond just the shot glass. Damian Fowler (00:50): So let's get into it. Ilyse Liffreing (00:51): Diageo is no stranger to bold campaigns and really intersecting in today's culture. How does your latest work in the tequila and mezcal category continue that legacy? And with your latest campaigns, what was one core story or rather insight that you're trying to bring to life? Sophie Kelly (01:13): Our moment of consumption is normally when people are out socializing, trying to have the best times of their lives or celebrate a major moment in their life. So think birthdays, weddings, Ilyse Liffreing (01:25): Or even here at Sophie Kelly (01:26): Can, even here at can, right festivals. So what is really important for us as we build our brands and think about how we go to market is that we are creating experiences for consumers to participate in. I think some of my favorite stuff across the category is on Don Julio. I mean, we launched a brand new product, 1942 Manys, which was a 50 ml supposed to allow people to access the luxury of 1942 at a better price point in a fun format. And we did that in the Oscars, right? But the most recent one, which I just adore and am still obsessed with and is still going, would be our cultural global collaboration with Peggy Goo. She is a number one DJ globally. She's also an icon in the fashion world, and she creates a load of fashion jewelry. We discovered her in Southeast Asia and she was a massive fan of 1942. (02:32): As marketers, we just started to ride along with her and gift her and be a part of her experience. So we approached her and said, any interest in creating a 1942 special limited edition with us? And she was blown away. She was like, yes, but can I design the product? Can I design the experience? Can it be global? Can it travel? Can it be teased? We said yes to all of the above. So we started off in Miami where we had an intimate party, but that intimate party probably had influences at it that had over a hundred thousand followers on Instagram. So we started to tease the collaboration, which was called the 1942 goo. And that's a really important element because we changed the logo of 1942 to be 1942 goo. We teased the campaign with outdoor and these events and we went from Miami to New York, to London to Milan and then to Seoul and then to Hong Kong. New York had a pop-up souvenir store in a car park. When we went to Milan, we did it in a piazza. When we went to London, we did it differently. When we were in Hong Kong, we did a hot pot pop-up. One of the most special parts of the experience was in Seoul, right in her home neighborhood and right next to where she was going to perform. And that was already up six weeks before it came. So we are teasing the drum roll in and the desire for people to be a part of this limited experience. Ilyse Liffreing (04:12): Now, I know you're talking a lot about out of home, but what were some of the other marketing channels that you leaned into for this campaign? Sophie Kelly (04:18): Everything in the popup was consumable or was collectible. So whether it was the key chains, whether it was the hats, whether it was her specifically designed scars, consumers could collect it, they could create content on it and they could share it broader. So then what started to happen was they were creating their own content. She was creating her own content and influencers within her sphere were creating their own content. And then there was the tease that we were moving to a new city. So that was creating a hype in that. So when you think about channel mix, it was digital, it was static, it was experiences, real life experiences, and most importantly, actions doing something, not just talking about it and then providing people with beautiful little artifacts that they could collect from the experiences to participate and create around. Damian Fowler (05:18): We want to get to what your takeaways are in a minute, but before that, I want to ask you, it is interesting when you watch the kind of trajectory of different spirits, it seems like tequila's having a serious moment right now. I mean, for example, in New York, just the other week I ordered a mezcal Negroni, it was Sophie Kelly (05:39): Amazing. 800 new craft brands have been launched into tequila in the last, I dunno, two years. Ilyse Liffreing (05:47): Wow, that is a lot. Sophie Kelly (05:47): So we are seeing a boom in tequila in the same way we saw in North American whiskeys in bourbon in the last five, six years and as a global business unit that I represent. So you are running the gamut of understanding the benefit of the experience of tequila, which is high-end tequilas that are incredibly versatile, that are suitable for multiple occasions and multiple drinks in a culture like the US to teaching people that tequila is no longer that bad shot you had in college. How do you educate? How do you train, how do you get these drinks into culture so that people choose them? Well, you got to have strong brands. You got to have the love of the bartender and the on-premise and you create the biggest rituals there beyond anywhere else, and they travel into the home and then you've got to pick up how consumers are interacting, right? So I'll give you a fun one. For example, we were in the ski fields and we observed that people were taking hot chocolates in shot glasses and then they were tipping the mini that I gave you, the 1942 mini into the top of the shot glass, and that was a serve. So we took that and we scaled it across the ski resorts, right? So from simple mixed drinks to sipping age liquids to fun novel rituals in clubs is how you really fuel what's going on. Damian Fowler (07:19): In terms of takeaways, do you have any kind of data points that show the growth and interest in this category? Sophie Kelly (07:26): It's the fastest growing spirits segment in the category right now and is forecasted to be that way for the next five years. So if you've got spirits running at about three or 4%, you've got tequila running at about six to 11%, which is kind of amazing. It's also very specific on its development. So if you look at the US, it's more developed. You look at Mexico, it's very developed and the rest of the world it's between five and 15% penetration. Give you a fun fact like whiskey and vodka is up around 36, 42 depending on the market. Yeah, too many people associated tequila with college shots. That is not the experience of tequila. It is playing across high energy. It's in the club, it's with the VIPs, it's with the celebrities, but it's also playing in casual connect moments and simple mixed drinks. So you're able to get into cocktail culture as well as simple mixed drinks. So I think that's a lot of the key to the growth we're seeing and just the versatility and the taste profiles. Damian Fowler (08:36): Now that the campaign's out there, you did hit on some of these obviously, but are there key signals and metrics that you look to on your dashboard? As it were, Sophie Kelly (08:45): Our consumers had watched over 190 days of content. We got up to 9 billion impressions, which is pretty extraordinary. And what I'd say is lots of chat about AI and is it going to take over. I think the beautiful combination of cultural collaboration with talent, the right kind of elements in the experience to create talkability and then utilizing tech from a generate insights about the communities and how we're going to combine them and what they need in the experience to also distribution, right? Taking the influencer content, taking the bartender content, taking the experience content and amplifying that out to further bigger audience was critical on distribution. Ilyse Liffreing (09:34): Sophie, can you tell me whether there is a market or a moment that delivered the most surprising engagement or maybe taught you something new out of this whole campaign? Sophie Kelly (09:46): One of the most surprising stats was just how many hours of content our consumers consumed on the campaign because it was so engaging, right? The other thing I'd say is as she traveled, she went into global duty free, she signed bottles, she met consumers, and that exploded as well. So I think one of the surprising things for us was this relationship started in Singapore and then we cultivated it and then we were able to scale it globally, but also make it extremely local to that market. Ilyse Liffreing (10:30): So Sophie, from your perspective, and here's your big impression here, how are those broader cultural shifts really influencing the way Diageo approaches brand building in the tequila and mescal space? Sophie Kelly (10:46): You must create experiences that allow what we like to talk about, which is accessible luxury for people to engage in. So when you think about this, we created the baby mini Peggy Goo bottles, which are 50 ml bottles, and you can access the taste of the experience. I mean, I think formatting is a really simple way of doing it. I think inviting people in to experiences at multiple layers and letting them access a world that they may have sought was out of reach is super important when you're creating experiences. And then I think giving them little artifacts from that to carry through that represent that something special that represents the experience they were able to engage in. I Damian Fowler (11:36): Want to ask you, this is a very important question. What new drinks around tequila are available now? Are you seeing pop up? Sophie Kelly (11:43): I think you said it, the Negroni, the espresso martini. We're even doing old fashions with tequila, and that is a real result of, versus people thinking about tequila as just blanco or mixed in a margarita. We have this huge explosion in aged tequilas, which are really sourcing from whiskey moments and rituals as well as kind of the versatility of tequila. Ilyse Liffreing (12:14): So Sophie, you've worked across several iconic brands. What's one lesson about cultural storytelling that stayed consistent throughout your career? Sophie Kelly (12:22): Work with people who love your brand. Listen to what's happening with your brand and culture, and then add to that, enhance the experience. Don't interrupt it and don't make it up and don't play where you don't have a right to play. Is there a Ilyse Liffreing (12:37): Non Spirits brand that you admire right now for the way it connects with people emotionally or culturally? Sophie Kelly (12:45): Labubu. Have you seen these things? Oh yes. Yeah, they are little kind of monster icons that everybody is hanging off their bags. I just love it. Damian Fowler (12:53): A final question I think is what's your favorite drink? Sophie Kelly (13:00): You know what? I am a Don Julio or a Casamigos Reposado on rocks with a slice of orange. I love my 1942, but so they're mine. Damian Fowler (13:16): And that's it for this edition of The Big Impression. Ilyse Liffreing (13:18): This show is produced by Molten Hart. Our theme is by love and caliber, and our associate producer is Sydney Cairns. Damian Fowler (13:25): And remember, Sophie Kelly (13:27): Work with people who love your brand. Listen to what's happening with your branding culture, and then add to that, enhance the experience. Don't interrupt it and don't make it up and don't play where you don't have a right to play. Damian Fowler (13:41): I'm Damian and I'm Ilyse, and we'll Sophie Kelly (13:43): See you next time.