Late last year, multinational alcoholic beverages company Diageo invested £30 million to bring back to life two moth-balled distilleries at Port Ellen and Brora in Scotland. Production is likely to begin next year, but the Scotch whisky from these distilleries won’t be available for consumption until 2032.

“In other words, we’re making decisions today about whisky that people won’t be drinking until perhaps after I’ve retired!” noted Diageo’s Corporate Communications Director Dominic Redfearn at a recent media interaction in London. Redfearn’s point was intended to emphasise the company’s claim to taking the long-term view while creating business value. The history associated with Diageo’s iconic brands, too, bears testimony to such far-sightedness. As far back as in 1759, for instance, the legendary Alec Guinness signed a 9,000-year lease on a Dublin brewery!

A footprint in India

It is with a similar perspective on the opportunities over the next 20 to 30 years that Diageo frames its business in India. “Our acquisition of USL was part of a journey to acquire companies and brands - and a broad geographical footprint,” Redfearn says.

The USL buy, which added about 5,000 employees to Diageo’s global workforce, wasn’t just about gaining access to a strategically important market. The company’s Indian talent pool and its investments in IT and service centres in India serve not just the Indian market, but the group globally.

And a lot of the product and process innovation that happens at Diageo, on which the company justifiably prides itself, is now starting to come out of India, says Redfearn.

‘Premiumisation’ project

And having overcome the legacy issues associated with the USL acquisition, Diageo has set itself the ambitious target of “changing the alcohol industry in India,” he claims. Much of that effort revolves around a campaign to inculcate the spirit of ‘responsible drinking’, which translates into reinforcing moderation, and in promoting road safety in collaboration with State governments.

And the way Diageo hopes to make the transformation in India is to “premiumise” the business by inducing consumers not to “drink more”, but to “drink better”, by moving to up-scale brands. That has also seen it franchise out some of the lower-end brands it acquired along with USL, and renovate its brands.

Diageo is already the world leader in luxury spirits, but it has developed a ‘Reserve’ brand-building model to accelerate growth in the segment, says Tanya Clarke, General Manager – Reserve, Diageo Europe.

Diageo’s effort, alongside State governments, to influence the way the excessively regulated industry is perceived in the nanny state of India is already bearing fruit. The industry that was earlier seen only as a cash cow to be milked is gradually being invited by State governments to partner in policy decisions that could impact it – and the broader society.

Lofty as Diageo’s plans for India are, its international ambitions are even grander. When Indian-origin CEO Ivan Menezes took over in 2013, he charted it out explicitly: “to be the best performing, most trusted and respected consumer products company in the world.” “Not just the best alcohol company,” points out Redfearn, “but the best consumer products company.”

That may sound a trifle over the top, but when it comes from a company that owns 200-plus brands in over 180 countries, which has a rich heritage of building businesses over generations, it somehow seems eminently realisable.

The writer was in Scotland recently at Diageo’s invitation

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