Diageo preps £15m innovation drive for spirits category

Diageo has launched what it claims is the world’s first accelerator scheme for start-up spirits makers in a £15m push to uncover a brand to match the success of its own upmarket vodka Ciroc.

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Diageo has launched a £15m push to uncover the next premium global spirits brand.

The “Distill Ventures” initiative, developed in partnership with accelerator agency Independents United, sees the drinks maker offer entrepreneurs marketing advice and funding which could potentially lead to it owning a stake in the most promising brands.

Five companies will be awarded between £150,000 and £200,000 as part of a seed programme in November, which will focus on helping companies develop core business skills to get their product fully developed and launched. A growth initiative will launch next year that will invest up to £2m per brand to help it expand globally.

The venture is launching in the UK now and will roll out to Berlin, Warsaw, Madrid and Copenhagen in the coming months. The company is hoping the initiative will increase the number of consumers willing to trade up to premium spirits in Western Europe after seeing dwindling demand in across the region stunt its growth in the second quarter of 2013. Diageo’s efforts are buoyed by the increase in spirits sales in North America with growing demand for brands such as Ciroc and Smirnnoff contributing to a 5 per cent year-on-year jump in sales for the market.

The drinks maker says the move aims to tap into the “remarkable entrepreneurial spirit” in the drinks sector.

Syl Saller, chief marketing officer of Diageo, says: “The combination of cash and expertise, whilst leaving them in control of their business, will help new brands to flourish. There is a remarkable entrepreneurial spirit in the drinks sector right now. We are seeing some brilliant new brands being born and built that are achieving commercial success. Our joint commitment to Distill Ventures will nurture, develop and grow the ideas and the people to create the pioneering premium spirits brands of the future.”

Diageo is the latest in a string of high-profile brands turning to start-ups to fuel its innovation efforts. Nike, Unilever, Red Bull and Budwesier are all currently supporting accelerator schemes in the UK.

Diageo’s push for the spirits category comes as rival Pernod Ricard also looks to increase its share of the market with a redesign of its entire flavoured Aboslut vodka range. The company describes the move as its “biggest and most transformative design project ever”.

Jonas Tåhlin, VP global marketing at Absolut, says: “This is an exciting time for Absolut. While most flavoured vodkas look more or less the same, we are bringing a full range of innovative designs to market. Artistic, modern and unlike anything else around, we believe they will reinforce our position as creative leader.”

Elsewhere, Diageo has launched a new Baileys Cholcate Luxe variant, which uses real Belgian chocolate blended with Irish whiskey. The launch will be supported by a £5.5m UK marketing push across TV and in-store. It is the latest in Diageo’s ongoing efforts to reinvent the brand as a more stylish and aspirational drink.

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