Managing tensions and volatility in Diageo’s supply chain
Wilson Del Socorro, Global Director of Government Affairs at Diageo, sheds a light on alcoholic beverages supply chains for ICC United Kingdom’s Global Value Chains (GVCs) Series
Wilson, please could you outline what the supply chains look like in your industry sector?
Our products are sold in over 180 countries and we have multiple supply chain operations all over the world. They include the UK and Ireland, a number of countries across Africa, India, China and other parts of Asia, North America, and markets across Latin America including Brazil and Mexico.
We have a number of global brands like that are produced and exported globally. Our flagship Scotch whisky brand, Johnnie Walker, which celebrates its bicentennial this year, is a good example of our global reach. We source and manufacture in the UK and export around eight bottles per second to the four corners of the world. We also have brands that are local stars in the markets and regions they are produced. For instance, McDowell’s No.1 is India’s leading whisky brand with sales of over 50 million cases per year.
The regulatory environment is an important consideration of our supply chain and operations. For example, Scotch whisky must be produced and aged in Scotland, Tequila must be produced in Mexico and Cachaça produced in Brazil – all with specific requirements that give the quality and distinction these products are known for.
Have you been affected by growing trade tensions and geopolitical volatility in recent years?
We are not immune from an escalation in global trade tensions and political volatility. Our broad footprint, across markets and categories, makes us resilient and provides a natural hedge against instability in our operating environment.
Like many businesses, we are monitoring the external environment closely and actively engaging with industry, governments and other stakeholders to best navigate the changing landscape. With Brexit for example, while there is considerable uncertainty on the future UK-EU relationship, we are confident we have robust plans in place to cover all scenarios.
Moving away from geopolitics, what benefits do global value chains bring to the global economy?
Global value chains help drive social and economic development by generating local jobs and investment and promoting knowledge-sharing and capability-building across economies.
For this reason, we are proud of our local footprint in many parts of the world. For instance, our model in African markets is to source locally. We currently purchase over 82 percent of our materials locally and we partner with thousands of farmers and supplier across the region in our supply chain.
Delivering on the UN’s Sustainable Development Goals (SDGs) is becoming a top priority for many businesses. How is Diageo implementing sustainable considerations throughout its supply chains?
As stewards of some of the most iconic brands in the world, we are proud to support the SDGs. We have initiatives and programmes in place across our supply chain and in the communities within which we operate to help realise the SDGs including: promoting positive drinking, building thriving communities, reducing our environmental impact and creating a respectful and inclusive culture for our people.
To take one example, water stewardship is at the heart of our brewing operations across Africa. This about the provision of safe and clean water as well as reducing our consumption of it as we brew. Our Water of Life programme provides a pan-regional and effective water management programme helping to bring clean water to over 10 million people across Africa. Our Water Blueprint provides a framework to reduce our overall impact and improve efficiencies, as well as providing access to safe sanitation and hygiene facilities across the continent. Most recently, we have announced that we are committing £180 million to renewable energy infrastructure across 11 of our African brewing sites which will reduce water consumption and move to solar and biomass as sources of power helping to reduce our carbon emissions.