How Diageo is Redefining the Beverage Industry

From Smirnoff to Seedlip, Diageo Ventures is Redefining the Beverage Industry.?

In a recent discussion - at the 2024 The Lead Summit - with Sallie Jian , the Director and Head of Ventures North America at Diageo, she delved into the fascinating world of one of the most influential companies in the spirits industry. With a portfolio of over 200 brands sold in over 180 countries, Diageo is a powerhouse behind many beloved names such as Bulleit, Johnny Walker, Tanqueray, Ketel One, and Captain Morgan. However, the breadth and depth of resources that fuel these iconic brands often remain unknown to the public.

Diageo’s Ventures arm is particularly interesting due to its purposeful shift in focus towards low-alcohol and non-alcoholic spirits, reflecting the evolving beverage preferences globally. This strategic pivot is not merely about capitalizing on trends but is deeply rooted in two primary pillars: supporting founders and investing in brands that cater to emerging markets in the beverage sector.

When discussing the broader beverage landscape, Jian clarified Diageo Ventures does not invest in beer, wine, soft drinks or cannabis. Today, the company’s strategic direction is laser-focused on spirits, with a particular emphasis on innovative brands. This selective approach underscores Diageo's commitment to finding and nurturing founders and brands that resonate with their purpose: “Celebrating life, every day, everywhere.”

The investment process at Diageo Ventures is both rigorous and discerning. Jian highlighted that although formal meetings occur roughly a few times a year, the team is always open to conversations with potential partners. This openness signifies Diageo's proactive stance in scouting for groundbreaking opportunities continuously.

For entrepreneurs and founders looking to catch the eye of Diageo Ventures, Jian emphasized the importance of approaching from a place of value. She stressed that Diageo seeks highly differentiated value propositions, which means that potential partners must demonstrate something unique and compelling about their product or brand. But how can one achieve this?

One effective strategy is to incorporate cultural relevance into the product, tapping into growing consumer interests. Additionally, leveraging celebrity can significantly elevate a brand’s profile, provided the celebrity's image aligns well with the brand’s ethos. Another angle is new flavors tied to consumer trends, which can help a brand stand out in a crowded market.

“There’s been a seismic shift in alcohol consumption among the next generation of drinkers (GenZ). This generation isn’t built to go out and get drunk (like mine was). It’s a generation that over-indexes on the value + connection with what they put in their body. Health is wealth. Diageo’s moves into low alcohol and no alcohol positions them well for this generation and beyond.”? - Lee R. Roth, Co-founder of The Actionists

For instance, brands like 21 Seeds, Mr Black and Seedlip have successfully carved out niches by aligning with these trends. 21 Seeds made waves with its fruit-infused tequila, appealing to consumers. Meanwhile, Seedlip has pioneered the non-alcoholic spirits category, offering sophisticated alternatives for those seeking to reduce or eliminate alcohol consumption.

Diageo Ventures’ strategy revolves around identifying and supporting innovative brands. The focus on low-alcohol and non-alcoholic beverages is not just a trend but a reflection of broader lifestyle shifts.?

“Diageo Ventures startup portfolio reflects what we believe are complementary to Diageo’s overall strategy as well as includes emerging, exciting brands that will enable Diageo to grow its consumer base and continue to be a leader in the beverage industry,” said Jian.?

Entrepreneurs looking to engage with Diageo must present a clear, compelling and unique value proposition. By doing so, they stand a better chance of aligning with Diageo’s vision and securing investment from one of the leading names in the spirits industry.

I hope you found some value in my article. If you have comments or thoughts, find me on LinkedIn. I'd be happy to connect & discuss them further. Perhaps get a cocktail!??