Diageo to build R&D centre in Shanghai to strengthen innovations for Chinese market

CHINA – British multinational alcoholic beverages giant Diageo has announced plans to build a  new research and development (R&D) center in Shanghai, China, as it aims to create new products for the Chinese market based on local consumer insights and trends. 

According to Diageo, the new site will primarily support the China market and is expected to strengthen Diageo’s ability to innovate and develop products that fit Chinese consumer tastes. 

“Today’s announcement is another key step in our transformational journey to invest and deliver growth in a fast-moving and highly competitive market,” said Sam Fischer, president, Asia-Pacific, and global travel. 

China’s total beverage alcohol market is the largest in the world in both value and volume terms and is expected to grow over the next five years.  

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The white spirits and Scotch segments are both key areas for Diageo across Greater China: posting 53% and 21% growth respectively in FY20. 

Much of the market’s future growth is however expected to be driven by strong premiumisation trends that are accelerating as new channels and occasions emerge for international spirits, beer, and new-to-world innovations. 

A key area for Diageo is the super premium and luxury Scotch whiskies: with a portfolio including Johnnie Walker (Greater China’s biggest Scotch brand by volume and retail sales value), Mortlach, Talisker, and The Singleton (Greater China’s largest single malt brand by volume).  

Recent innovations include a Forbidden City Edition and a limited edition Chinese New Year bottle for Johnnie Walker Blue Label. 

Diageo described it as an innovation that ‘combined Chinese consumers’ deep pride in their culture with their demand for unique products that suit gifting and business entertainment occasions as well as triggering a desire to explore and learn about Scotch whisky’. 

The London-based company will begin construction of the new R&D center this year and expects it to be fully operational by mid-2022. 

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“Together with the recent opening of our major logistics hub in Shenzhen, this facility sets Diageo up for continued success and reinforces our strategic commitment to our business across China, ” Fischer added. 

Earlier, Diageo had its 2030 Greenhouse Gas (GHG) emission targets approved by the Science Based Targets initiative (SBTi) as meeting the criteria for the 1.5oC pathway. 

The move makes the maker of Guinness beer brand one of the top 1000 companies in the world taking action to address climate change in a data-led and systemic way.  

Its goal to achieve net-zero in direct operations by 2030 (Scope 1 and 2 emissions), and a 50% emission reduction in scope 3, have been calculated in accordance with the principles of Science Based Targets initiative and have been validated. 

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