How They Did It: Diageo NA’s Innovation Supply Chain

This is an excerpt of the original article. It was written for the September-October 2015 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2015

It’s September, which means the kids are going back to school, and soon, you’ll spend the evenings helping them with their lessons. September is also the month that we publish Gartner’s annual look at the Top 25 supply chains. While the Top 25 is a celebration of great supply chains, the leaders also offer lessons for the rest of us who aspire to the top. It’s news you can use right now in your planning. And, we’ll have you home for dinner on Tuesday. We hope you’ll join us for this inaugural event.

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In November of 2014, Diageo North America introduced Regal Apple, a new flavored Canadian whisky with the premium taste of Crown Royal that is infused with natural apple flavors. While any new product is a roll of the dice, this one hit the jackpot. By the end of June 2015, it was the top selling innovation in the US for the year, driving a 12 percent growth in Crown Royal sales.

More importantly, it was one of more than 250 product innovations—Diageo NA’s term for new products, brand changes, and renovations of existing products—managed in fiscal 2015. Across all of Diageo’s regions innovations accounted for over £500 million in sales for the year. Rolling out new SKUs at an average pace of approximately three to four per week, Diageo NA’s innovations were as varied as Guinness Blonde American Lager, a single grain scotch called Haig Club developed with soccer star David Beckham and Simon Fuller of American Idol fame, and the Orphan Barrel Whiskey Distilling Co., which locates and bottles forgotten barrels of premium aged whiskey.

Getting all of these new products onto retail shelves is made possible by an ongoing supply chain transformation journey fine-tuned for agility, responsiveness, and growth. Diageo’s efforts have been recognized by Gartner, which named it to the consumer products Top 10 list for 2015. Supply chain and the supply base are involved in the innovation process from the start, not after the fact. “We want our supply chain to be a competitive advantage,” says Paul Gallagher, President of North American Supply at Diageo. “By involving Supply early in the innovation process, we enable Diageo to have first mover advantage.”

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