Diageo & Brand Innovation | In Practise

Diageo & Brand Innovation

Former Innovation Director at Diageo

Learning outcomes

  • The essence of brand innovation from a product and marketing standpoint
  • How Diageo rolled out Johnnie Walker's premium Double Black line
  • Diageo's 'Gate Process' to analyze potential brand innovation ideas
  • How Coca-Cola approached innovation versus Diageo
  • Traps young marketeers fall into when pitching brand innovation ideas
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Executive Bio

Alicia Garcia

Former Innovation Director at Diageo

Alicia has over 23 years experience in marketing and innovation for leading global brands. She started her career as a brand manager at P&G before joining Coca-Cola as Marketing Manager in Spain. Alicia then joined Diageo in 2003 as Marketing Director for J&B, a global leading scotch brand, before being promoted to Innovation Director where she spent 7 years leading Diageo’s European Innovation agenda. Alicia is now Associate Professor at IE Business School where she teaches Integrated Marketing Communications. Read more

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Alicia, could you explain what the role of an innovation function is, within a big brand group, like Diageo?

Innovation is the way to keep your brand fresh and relevant with consumers. Consumers are, I think, are promiscuous. We live in an era where there are tremendous offers and we’re all inclined to try new things and to experiment with new things. In big corporations, like Diageo, that have hundreds of years of history – the brand of Guinness is over 250 years old – unless you innovate and keep your brand fresh and relevant, you’ll soon be outdate, as a brand.

I think it’s also the way to respond to some of the new challenges that we see now. For instance, we are now seeing a big focus on saleability and innovation to improve the footprint of brands and other impacts on the environment and sustainability. All these things are also driven through innovation. So ways to keep your brand relevant, with consumers and also, ways to respond to some of the challenges that we are facing, in society.

How are the teams structured, internally?

The structure has changed, quite significantly. Again, it’s a moving feast. As innovation has become more relevant, I think companies have adapted their role. You could argue, actually, that almost everybody is part of the innovation department. For instance, before in brands, there wasn’t an innovation team. Innovation was a totally separate team and now brands have, within them, people who are responsible for innovation, for keeping that brand relevant.

There is also innovation that is a bit more transformational or substantial and there is a big department that takes care of that. That department was, initially, geographically based and it was about finding needs in certain geographies and developing projects that would reply to those needs. But then the realization was that that ended up in very small projects. In fact, consumers aren’t that different, between countries. They ended up creating big platform groups, becoming experts on certain things. For example, lower ABV – lower alcohol – or new drinking experiences, or something like that, were tackled by groups.

Innovation was tackled almost in a matrix structure – from a brand perspective and also from a challenge perspective.

Now they have an innovation team/person in the actual brand. What’s their role? What do they actually do, on a day to day basis, in that brand?

Some are incremental innovations, so something that would keep your brand refreshed, which is probably not very complicated. Although it’s key to stay very close to the mother brand, that would be tackled within the brand the team. Whereas something that is either the launch of a new brand or of a technology that is much more challenging or something that can work across brands, like a new format, would be developed by that separate team, to actually benefit from all that knowledge and apply it to the different brands.

When I say innovation, what does that actually mean to you?

That’s a great question. Innovation, traditionally, has been understood as a new product or service offering. However, as we were saying, nowadays, innovation can also be a new way to accessing the consumer. I think it varies between companies. Many companies call the innovation team the team who are responsible for new products and services. But more so, I am seeing in different companies, innovation is developing ways to access consumers or new services that might be adjacent to the type of products that you were selling before.

Moving on to look at a Diageo innovation case study. Using a brand of your choice, how did you approach the market research phase, when looking for new ideas to innovate within a product?

Research is not always the start point. Sometimes, the point might be a business challenge or a question from a client. By a client, I don’t mean a consumer, but a bar or a group of bars or something like that. They are very close to the business and they might have a business challenge. The start point isn’t always research. In many instances, it is. You see new consumer trends; you see new ways in which consumers want to enjoy your product and you need to be able to respond to those. But I think it’s important to point out that it isn’t always the case.

For instance, Johnnie Walker Double Black, which is, as you know, a line extension of the Johnnie Walker brand. Within that, the Johnnie Walker Black variant is within that brand. There wasn’t a crying need for another version of Black, but what we saw was, there was an opportunity for premiumization. Johnnie Walker Black was a variant that had lots of adorers behind it. People really liked how different it was from other whiskys – its great quality, its slightly smoky flavor – and we were in a project to actually innovate a whisky and to refresh the image of whisky. Whisky, in some markets, had an association of an old man’s drink and something that was a bit still, somehow.

So we went for Johnnie Walker Black, because that had a lovely balance of being a very strong variant within the Johnnie Walker range, being premium, but not exactly being premium, and being able to access lots of customers who liked it. We ended up doing a version, which was almost Blacker than Black. We decided that the key differentiating factor for Black was its smoky flavor, so we launched a variant that was even smokier than Black. We called it Double Black. It was just taking that brand, with all those adorers and launching a more premium version.

I selected this, because I teach marketing as well, and I always find it very hard to find examples of brands that have been able to premiumize or launch more premium variants. There are thousands of examples of brands. You have car brands, clothing companies that have launched more accessible variants of their brands. Whereas Johnnie is the brand that has managed, actually, to premiumize. I think, from Johnnie Red to Johnnie Blue, or the limited-edition variants that they have, it’s a brand that has premiumized itself constantly. Within that, Johnnie Double Black was a fantastic example of premiumizing, staying very close to the original variant, but managing to launch something that was, not only more premium, but also had a wonderful halo effect on the rest of the brand.

What made it work so well?

It’s always easier to work off a strong brand, with a strong consumer base. That was the case with Johnnie Walker, in general and Johnnie Walker Black, in particular. The product was excellent, so it was not visibly different. Something that worked well is that it wasn’t for everybody. You had to like smoky whiskys. That works very well, in spirits. That idea of having something that is slightly challenging, so that you feel you are in know. That worked very well. From a product perspective, you had the right level of challenge and, also, the whole marketing around it, building on Black and darker than Black and having that slightly edgier image, worked very well. You stay close to the brand and leverage on everything that the brand has and yet, has that extra punch, and therefore, it’s acceptable to charge a premium for that.

I think we managed to hit the right level, with that brand, which is not always easy. In hindsight, it’s always easy.

How did you communicate the message to younger consumers and premiumize the brand, in that sense?

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