Thursday, December 11, 2014

Diageo Aims to Boost Brands by Embracing Digital Engagement

Like most other CPG companies, global liquor giant Diageo is in constant need of innovations to entice and engage global consumers who are both increasingly adventurous as well as more fickle in their tastes and predilections when it comes to spirits – and lots of other things.

And for the U.K.-based owner of brands including Johnnie Walker, Crown Royal, Smirnoff, Captain Morgan’s, Bailey’s, Guinness and other iconic alcohol lines, those innovations come not only in the form of new products and packaging but also in terms of digital marketing solutions.

In fact, while Diageo continues to roll out new product hits such as Crown Royal Maple Finished Canadian whisky, the company is making a lot of progress as it strives to harness the digital arena that is familiar territory to a Millennial generation which has been providing a new long-term spark to the worldwide spirits market. A huge cog in that important apparatus for Diageo is its Futures Team, headed by Global Innovation Director Helen Michels.

“Our mission is about creating the future for Diageo, and that future has a dollar sign against it,” she told CPGmatters. “We’re about creating the future but also about creating future revenue streams for Diageo that don’t currently exist.”

Among the several initiatives Diageo has applied toward this goal is Diageo Technology Ventures, an operation that the company launched in 2013 to unlock new ideas and bring fresh thinking to existing business challenges. Outsiders are invited to apply for a $100,000 grant from Diageo to bring their ideas to bear on Diageo priorities. The best are awarded funding of pilot testing and, in the optimal outcome, they succeed and enter long-term strategic partnerships with Diageo.

Another new program with a similar aim is Distiller Ventures, a program for funding up-and-coming spirits entrepreneurs rather than digital marketing impresarios. “It’s about identifying new brands and ideas in categories where we don’t operate or which bring something new and different to the industry,” Michels said.

In Diageo Technology Ventures, Diageo is looking for applicants from innovative digital and technology companies of all shapes and sizes, from new start-ups to established technology businesses. Successful companies are likely to have already proven their technology and will be looking to deploy it at scale.

The way the program works, Diageo annually selects some specific issue areas where the company could use some digital solutions. This year, those areas are “responsible drinking” and “combatting theft.” 

Specifically, Diageo Technology Ventures has been seeking technologies and platforms that can be used to help consumers to drink responsibly. It’s especially interested in “simple and effective tools for young adults above the legal drinking age, both in developed and emerging markets.”

One of the outfit’s gambits in this regard was to host a digital “hackathon” in November, in which dozens of participants came together from across the U.K. and Europe to help create digital tools that would “blend into the social flow of people’s lives,” as the company put it, “enabling them to act in the moment and avoid excessive drinking and driving.”

In terms of combatting theft, Diageo is looking for new technologies and digital partners that can help the brand and its retailers thwart this significant problem. Diageo is open to solutions ranging from smart-monitoring to data platforms to new packaging technology.

“Theft is a huge category issue for us and for the entire retail sector,” Venky Balakrishnan, head of Diageo Technology Ventures, told CPGmatters. “We share the problem, and in solving the problem for Diageo, we would hope there’s a huge opportunity to make a difference in the retail space. We’re working on things that are urgently important for the future growth of our business.”

As for areas that the company will emphasize in Diageo Technology Ventures, Balakrishnan said. “We are looking at how technology can have a role to play in every aspect of our business.” One of them is e-commerce, where Diageo already has been “experimenting” around the world, including with Amazon.

“We know we don’t have all the knowledge and wealth of experience in-house,” Balakrishnan said. The Diageo Technology Ventures program “allows us to look outside Diageo and our usual business relationships.”


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