Diageo's Startup Incubator Could Shape Future of Drinking

Drinks giant Diageo is no stranger to startup acceleration and acquisition. Since 2013, it’s invested more than $300 million in more than 35 founder-led drinks brands globally via the backing of incubator Distill Ventures. Some of these, including alcohol alternative Seedlip and coffee liqueur Mr Black, have ultimately been snapped up by the drinks giant. The Guinness and Baileys owner is doing this through a new partnership lab, Fusion by Diageo. Benjamin Lickfett, Diageo’s global head of digital innovation, told Adweek the company is looking for growth-stage tech firms that could help develop digital concepts “beyond the bottle.” From the Stadium to the Skies: Booze-Free Brands Break New Ground With this in mind, Diageo is hoping scrappy entrepreneurs could hold the key to helping it navigate a world where emerging technologies are influencing what consumers drink and how they socialize. From AI-generated whiskies to connected bottles and VR-enabled home entertainment, the landscape brewers and manufactures operate in is changing—fast. “We always want to learn and get better, so for us this is also about challenging our assumptions and ideas. It will help us learn about new ways of working too,” Lickfett added. A perfect mix The first 13-week Fusion program is accepting applications through November and will start in January 2024. Diageo will identify 15 companies for the first cohort. which will be themed around transforming how people celebrate at home, according to Lickfett. The participants chosen will explore new ways and technologies that can help people “unwind, experiment and entertain” in their own spaces. “We wanted to make sure it’s really consumer-led and occasion-led,” said Lickfett. “Post-Covid, the way people live, connect and share their home has changed,” he added, observing how customers were “upskilling” their hosting capabilities and working, gaming and entertaining more regularly within their homes. Startup participants will gain access to Diageo’s industry expertise, brand building know-how and consumer insights, alongside external speakers and coaching, to help develop scalable, consumer-focused digital concepts. “We need these startups as much as they need us,” Lickfett said. “We hope they can help us reframe problems, see a new vision and learn more about experimentation at speed.” Chosen startups will have already launched digital products in market and have secured sufficient financial runway via venture funding or alternative means. “They also need to have a compelling vision and narrative that understands the problems consumers are facing. We’re not just looking at beverage and alcohol startups—we’re looking for companies that can operate within the broader definition of changing how people socialize in their homes,” he said. Fusion startups will explore new ways and technologies that can help people “unwind, experiment and entertain” in their own spaces. He continued: “Home is a place of connection and celebration. A lot of our brands, from Johnny Walker to Guinness, already show up there in different ways.” AI success Lickfett sits within Diageo’s Innovation team, which has already tested ways of using AI to speed up packaging design. He didn’t rule out digital startup acquisition as part of Fusion, saying he could see an “evolution” of the incubator where some of the startups selected would be scooped up by Diageo. However, he stressed that, for now, the project was about building new partnerships with exciting emerging talent. Diageo has already planted its flag in the tech acquisition space with the 2022 purchase of Vivanda, an AI-powered tool that analyzes and maps what customers like to drink via an online questionnaire. Based on the findings, the company can recommend the exact flavors and brands that might appeal to someone. The brand has used this to build What’s Your Whisky, a program that’s now live in 26 countries and 90 languages. The ecommerce experience incorporates brands like Johnny Walker to make personalized product recommendations to buyers based on their palate. “It’s showed us that we can use that technology to deliver personalization to consumers,” Lickfett said. “With Fusion, we want to replicate these stories in a more systematic way across the business.” The Tech Driving Diageo’s $3 Billion Marketing Spend The digital leader said AI and personalization were among the two key trends transforming Diageo’s approach to marketing its 200-plus suite of brands. “AI can create really personalized products and offers,” he explained. “We’re also seeing that customers have a desire for more personalized [brand] offerings. It’s really changing from this old world of neatly tied consumer segments to an exciting, more vibrant one where customers have more control. At the same time, they want more accessibility and more transparency too.”

Technology

Diageo's Startup Incubator Could Shape Future of Drinking

Fusion by Diageo launch follows success of AI-powered What’s Your Whisky tool

Rebecca Stewart

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Rebecca Stewart