The Outside Line Goes First

The leading indicator

Before Ford Media Lab, before the bar, I worked in finance. The first thing that job teaches you is to stop staring at headline numbers and watch the leading indicators, the small signals that move before the big ones do.

In spirits marketing, the leading indicator is the outside creative budget. It's the first line cut when a category softens and the last one restored when it recovers. It moves quarters, sometimes years, before anyone says the word restructuring on an earnings call. If you run an outside studio, you feel the category turn long before it shows up in a press release.

This year the spirits business said it out loud. Those of us on the outside have been feeling it for years.

What the trade is reading now

The headlines this year have been hard to miss. US spirits supplier revenue fell 2.2% to $36.4 billion in 2025, even as volume rose. Pernod Ricard closed fiscal 2026 with US sales down 14%. Diageo's average workforce fell 6.4%, close to 2,000 people. We walked through the wider round of layoffs in The pendulum swings back, so we won't repeat the list here.

The number that matters most for anyone who makes the work got less attention. Diageo's marketing investment fell 13.1% in fiscal 2026, from $3.66 billion to $3.18 billion. That is roughly $480 million less behind the brands, from one company, in one year. Media, shoots, campaigns, content: every outside partner paid from that line felt it shrink. The filing calls it efficiency and more targeted allocation. From the studio floor, it reads as the line that pays outside creatives getting shorter.

Where the cut lands

When marketing shrinks, it doesn't shrink evenly. The outside line goes first because it's the only one without a desk in the building.

The ANA's latest in-house study found 65% of members had moved established work from outside agencies to their internal teams in the previous three years. Spirits houses have been running the same play for a while. In 2020, Pernod Ricard USA described its new media agency appointment as part of consolidating its global agency roster for a more cohesive ecosystem and greater efficiencies. Fewer partners, bigger networks, more work pulled toward the center.

The detail worth sitting with is in Diageo's own half-year report. The company credited its marketing efficiencies partly to AI, Virtual Content Studios and its internal brand teams, with Johnnie Walker content produced centrally and AI tools helping markets adapt it. Read that next to this year's wave of polite emails telling outside studios that the brand wants less AI and more human connection. One of the largest spirits companies in the world is building AI content capacity in-house. The outside creatives are the ones being told AI is the problem.

What the studio floor saw

A leading indicator is only useful if somebody writes it down. Here's ours.

For our first few years, outside creative in spirits worked the way it had for a generation. Shoot days, a crew, the bottle on black plexi, a library of finals. Brands also kept outside studios on long social retainers, and we ran several.

The first turn came in 2021, when brands started folding dedicated US social accounts into global ones. Less than a year after Pernod Ricard USA announced it was consolidating its roster, we lost Chivas and Beefeater US social in the same year. Chivas kept coming back to us for photo projects, which told us the work was never the problem. Nobody called it a downturn at the time. It was called efficiency.

The second turn was in-house. Seagram's social ended in June 2023, when the work moved inside. Redbreast should have gone around the same time. We'd run its US social since October 2018, and the brand managers fought to keep us for roughly another year and a half. The role had turned over several times, and the outside studio had become the brand's memory. Keeping the people who knew the brand best was the safer bet than rebuilding that knowledge in-house, until December 2024, when it went in-house anyway.

Through all of it, the traditional briefs thinned year over year, quietly, the way a leading indicator moves. Fewer full shoot days. In 2025 we rebuilt the studio around hybrid production, with the camera still at the center and generative tools extending what it captured. We have not received a single request for traditional-only photography since.

None of that showed up on an earnings call until 2025 and 2026. By the time a CFO says restructuring to investors, the outside studios have usually already had the hard conversation about their own lease.

When a spirits house cuts staff, there's a process: notice, severance, a transition, often a kind post on LinkedIn. Diageo's fiscal 2026 results carried $514 million in severance costs, according to the Financial Times. An outside studio gets an email. The contract won't be renewed, budgets have shifted, and it has nothing to do with the quality of the work. It's not you, it's me. We've received some version of that email more than once, and we've never doubted the people who sent it. It still lands differently when the studio is two people and the account was the brand's memory.

Human is a budget word

This year the cut has started arriving with a reason attached. The brand wants its content to feel more human. Community and connection matter. AI will have a role, just a smaller one.

In spirits, human has a specific meaning. It's the bartender who hand-sells a bottle on a slow Tuesday. The ambassador who knows every back bar in a market. The people who build the drink, light the glass and know why the brand belongs in the room. Those are the same people the category has spent two years cutting.

The audience, for what it's worth, is less bothered than the memos assume. In FreeWheel's 2026 research, 48% of media buyers assumed viewers find AI creative off-putting. About one in ten viewers actually said so. When the people making the budget call overestimate the objection by a factor of four or five, human stops describing the work and starts justifying the cut.

Two punches, one brand

Rachel made the first half of this argument after the latest round of ambassador cuts. The whole argument lands as a combination.

The first punch lands on the back bar. The ambassador is the person who trains the staff, builds the menu placement, works the guest shift and gives the bartender a reason to reach for one bottle over the one beside it. That reason is measurable. In CGA by NIQ's 2025 Global Bartender Report, 92% of bartenders said they're likely to recommend a brand to guests when they feel fully supported by its supplier, and 90% said they'd push to get it stocked. Cut the ambassador and the support stops. The bottle stays on the shelf. The hand reaches past it.

The second punch lands on the feed. When the outside creative budget goes, new work stops and the library gets recycled: the same hero shots resized, reposted and recaptioned until the audience stops seeing them. Paid social punishes exactly that. Frequency climbs, engagement falls, and the platform charges more to show an ad people have already tuned out.

Either punch alone is survivable. Together they take a brand out of both places a premium spirit gets discovered: the bar and the phone. The bar matters well beyond the bar, too. CGA found that more than half of US consumers have bought a drink in a store that they first tried in a bar or restaurant, and 61% are more likely to look for new brands in a bar than on a shelf.

So what happens to the bars? They don't close. They lose the support layer ambassador budgets used to pay for: staff education, guest shifts, events, the cocktail program help that made a brand easy to say yes to. And the studios? They lose the brand's memory first, then the lease. The brand manager is left holding a smaller budget, a back bar that no longer hears the story, and a feed running last year's pictures.

What leaves with them

The argument about whether AI is art, theft or slop will run for years. While everyone has been having it, the work itself shrank. US employment in advertising, PR and related services fell by 6,900 jobs between August 2025 and August 2026, with entry-level roles especially exposed. In the UK, the IPA's 2025 Agency Census found creative agency headcount down 14.3% in a year, and the share of agencies employing any graduate trainees or apprentices fell from 56% to 43.4%.

That junior end is how this industry has always made its experts. My own career exists because a spirits company had room for a bartender with a phone full of cocktail photos. Rémy Cointreau's agencies started using them, and photography became my job before I owned a full-frame camera. Rachel went from behind the bar to become Tanqueray's national brand ambassador. Neither path required anyone's permission to be AI-native or AI-free. They required a company willing to pay someone to learn.

Trade fluency can't be briefed into a studio that has never stood behind a bar. It builds up one shift, one shoot, one botched reflection at a time, and only when someone is being paid long enough to accumulate it. Cut the juniors, cut the ambassadors, cut the outside studios, and in ten years the category runs short of people who know what a great drink photo looks like, or why it matters.

Which humans are left

We'd rather this rally creatives than divide them. The in-house designer, the freelance photographer, the agency art director and the two-person studio are all watching the same line get shorter. Arguing about tools while it happens is a luxury none of us can afford.

The question worth asking is the one hiding inside every memo about human content. Which humans? The one who has stood behind the bar at 1 a.m. and knows how a coupe catches light? The one who has lit glass for a decade and knows what refraction is supposed to do before a model gets it wrong? Or whoever is free to hold the phone this week?

Outside studios have been reading this indicator for years. The category is reading it now. Ask which human, then pay them.

FAQ

Are spirits companies cutting marketing budgets in 2026?

Yes. Diageo's marketing investment fell 13.1% in fiscal 2026, from $3.66 billion to $3.18 billion, and its average workforce fell 6.4%. Pernod Ricard's US sales fell 14% in the same fiscal year, and US spirits supplier revenue declined 2.2% in 2025 to $36.4 billion.

Why do outside creative budgets get cut first?

Outside partners are the easiest line to reduce without restructuring a team. The ANA found 65% of its members moved established work from outside agencies in-house over three years, and spirits houses have consolidated agency rosters since at least 2020.

Are spirits brands using AI for content in-house?

Some of the largest are. Diageo's fiscal 2026 half-year report credits marketing efficiencies partly to AI, Virtual Content Studios and centrally produced content for brands like Johnnie Walker.

What happens to creative quality when budgets shrink?

The short-term risk is volume without craft. The long-term risk is the talent pipeline: entry-level creative roles are shrinking, and trade fluency in spirits takes years of paid work to build.

What happens to on-premise brand visibility when ambassador programs are cut?

Bartender support stops, and recommendations follow it. In CGA by NIQ's 2025 Global Bartender Report, 92% of bartenders said they're likely to recommend a brand to guests when they feel fully supported by its supplier. When creative budgets are cut at the same time, brands lose visibility in the bar and on social at once.