Distilling product innovation: Four lessons from Diageo

Whether it is new flavours or brands, limited editions, partnerships or packaging, innovation is part of our DNA at Diageo. Ever since people like John “Johnnie” Walker and Arthur Guinness thought differently from their peers all those centuries ago, our brands have sought to remain fresh, relevant and innovative. Here are some lessons that I have learned and that serve our Innovation teams well.

Use your radar

New product ideas can come from anywhere, so it is vital that we keep our 'radar' switched on. Inspiration might strike from inside the business (from existing brands, for example) or it might come from outside. Our innovation team works hard to understand how consumers think and behave, right across the region, and spends time talking to consumers and customers to find out what makes them tick. We also look at what is going on outside the drinks industry – emerging trends in luxury goods, fashion or film, for example. It is vital to remain constantly open and receptive.

Raise the bar continuously

Our own product development process has a number of key phases: from the initial idea, we then undertake several rounds of design and testing, before launching with clear execution plans. We aim to drive higher standards of creativity and quality, both in development and execution, never accepting “average”.

Diageo’s innovation laboratory in Hong Kong plays a crucial role in our innovation process. It is here that our technical team develops and tests products for the region. They are a team of scientists with backgrounds ranging from biochemical engineering to nutrition. Their role requires a combination of science and art: the technical expertise of how diverse ingredients work together married to the knowledge of which flavours and appearances delight consumers.

Be sensitive to cultural nuances

Much of our innovation has been around our existing “heritage” brands to cater for specific local tastes across the region. Indians’ love of sweetness and spice led us to develop Smirnoff Honey and Chilli vodka; In Japan, you will find Smirnoff Moscow Mules, to satisfy the Japanese fondness for ginger. We look at tastes in all of our markets and innovate accordingly.

Sometimes brands are culturally resonant in ways that could hardly have been imagined when they were created. Baileys is very popular with women in China, where women often come from one child families and a strong camaraderie exists between peers. To capture the opportunity linked to this insight we created a new gifting occasion (“Sisterhood Day”) and continue to innovate with flavour extensions such as Baileys Chocolat Luxe.

It’s not just about taste. Asians really value having a physical connection to products, particularly in the luxury segment. This is why we created the Johnnie Walker Houses – embassies for whisky culture allowing us to reach consumers through new luxury experiences, multi-sensory mentoring and personalised selling. The Houses are also a perfect channel through which to introduce exclusive limited editions, such as the Chinese Mythology Collection. In Korea, we launched the commemorative 1949 “Epic Dates” exclusive, celebrating the year Johnnie Walker was first introduced to Korea.

Our “super deluxe” finishing centres in Singapore and Shanghai design and develop how our most exclusive products look and feel: whether it is premium engraving of the limited edition bottles from our Johnnie Walker Houses with gold, or crafting the boxes and decanters for John Walker & Sons Odyssey.

Act like an owner

I always encourage my team to be bold and brave, like the people who founded our brands. It is important to take risks, as long as our reputation is not harmed. And above all, don’t be afraid of failing—as long as we learn and don’t repeat the mistakes. We have sometimes decided to change a product or halt production, six months after launch. These should be celebrated as much as our successes, with learnings taken from both.

Acting like an owner also means being restless and agile, being obsessed with winning and not getting entangled in bureaucracy. With this attitude, we have shortened our development cycle by almost 40 per cent in the last few years.

Innovation is at the heart of everything we do in Diageo and has certainly helped step change our performance.

Apurvi Sheth is Diageo's general manager of innovation, Asia-Pacific.