Diageo, which recently introduced a new campaign to forego or limit packaging for some of its beverage brands in Asia (appropriately called ‘Step Out of the Box’), says it plans to reduce its carbon footprint by reducing packaging and increasing recycled content.
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The goal is to deliver a 10 percent reduction in packaging weight and increase its use of recycled content to 60 percent by the year 2030, joining a wider push from companies not only in the beverage industry, but across sectors, to make good on promises to accelerate sustainable progress.
Retail in Asia sits down with Lyndon Govender, marketing director for Diageo Southeast Asia, on Diageo’s action plan and ongoing campaigns in Asia-Pacific.
RiA: Let’s unpack Diageo’s campaign for greener packaging.
Govender: In our business, packaging can range from 50-litre stainless steel kegs containing freshly brewed Guinness to a case of Smirnoff in glass bottles, or even crystal decanters containing rare Johnnie Walker.
Packaging is a significant part of our yearly spending. The choices we make have both considerable commercial and environmental impacts.
To share wider context, Diageo’s Society 2030: Spirit of Progress (SOP) is our 10-year action plan to help make a positive impact towards creating a more inclusive and sustainable world. One key pillar is our focus on pioneering grain to glass sustainability.
To that end, we are focused on innovations that improve circularity and reduce waste – for our business and the planet.
RiA: Tell us about Diageo’s programme to remove cardboard gift boxes. Which Asian markets will be the first to witness this campaign?
Govender: In 2022, we announced a programme to phase out the use of 183 million cardboard gift boxes from our premium Scotch portfolio around the world. The ‘Step Out of the Box’ campaign is an iteration of this global effort.
Live in Singapore and Thailand now, the campaign aims to reduce cardboard packaging for our alcoholic brands, including Johnnie Walker Red Label, Johnnie Walker Black Label and Johnnie Walker Double Black.
In Thailand, we aim to reduce pollution from the production process of one million card boxes and reduce the waste caused by one million boxes used in socialising activities within one year. With the campaign, we aim to reduce 2.5 million kilograms of carbon dioxide within 10 years through a forestation collaboration with EcoMatcher, where our employees can join tree-planting activities.
Other sustainability projects we have done in Thailand include the collaboration between Diageo Moët Hennessy Thailand (DMHT) and Bangkok Flower Centre to reuse Johnnie Walker bottles for orchid cultures. We also teamed up with Air-Ink to produce exclusive Johnnie Walker bottles that showcase intricately printed illustrations with ink made from air pollution by recycling carbon emissions.
RiA: What packaging trends in the alco-bev industry in APAC are you currently seeing?
Govender: There is a growing demand for sustainable packaging solutions.
Diageo has introduced a number of sustainable packaging solutions as we rethink the materials we use to craft and package our products. Most recently in April 2022, Diageo collaborated with EcoSpirits to pilot an innovative closed-loop packaging and distribution method in Southeast Asia.
The project aims to introduce a more sustainable approach to bottling, storing, and dispensing spirits at selected on-premise locations, featuring two of our leading spirit brands, Smirnoff Vodka and Captain Morgan Rum. The programme is expected to eliminate more than 95 percent of our packaging waste.
We see green shoots in appetite for products that are produced sustainably. To accelerate this trend in Asia, three key elements must be considered.
First, understanding consumer behaviour is critical. In a region as diverse as Asia, we need to examine pain points for the myriad consumers at a granular level and avoid a one-size-fits-all approach.
Second is to take an incremental, thoughtful approach to bring consumers on the journey with us. For example, we have adopted a phased approach to removing cardboard boxes from our products as it enables us to assess customer and consumer responses and concerns.
Third, collaborating with the wider ecosystem is essential. We know we do not have all the answers in an area as complex and technically challenging as packaging. Diageo Sustainable Solutions is an initiative that invests in new technologies and partnerships with start-ups, welcoming innovators to share and develop their ideas.
RiA: How are these sustainability engagements impacting the customer experience?
Govender: Our studies found that presenting products without packaging could improve the customer experience and reduce the time spent on purchasing decisions.
Moreover, product engagement also increased 2.6 times when shopping without boxes.
The studies show that only 1 in 10 consumers noticed that the products did not come in card boxes, which means the boxes were not a key factor in the consumer’s decision-making. Those who did notice associated it with improved organisation and variety on the shelf.
Our retailers are in step with our sustainability agenda and understand the impact of the removal of cardboard gift boxes on the climate. We have also established clear lines of communication with consumers and customers to address questions about product care.
RiA: What other consumer demands in APAC do you hope to address in 2023?
Govender: With the emergence of the affluent, social-connected middle-class population, we see increased openness and vibrancy towards international spirits in Asia Pacific.
In essence, APAC consumers are increasingly more discerning – drinking better, not more.
This opens up opportunities to develop our premium and super deluxe segments to further tap into the tastes of the middle class. Consumers seek new, aspirational experiences. From a product portfolio point of view, we have the breadth, and we have the depth. We are confident in our diverse and high-quality product portfolio being able to cater to every occasion and consumer – from Baijiu to Scotch to premium beer.
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For example, in September 2022, Diageo acquired Mr Black, an Australian premium cold brew coffee liqueur brand, the fastest-growing brand in the global coffee liqueur category. The acquisition aligns with our strategy to acquire brands in new, exciting categories to attract the next generation of consumers.
The acquisition of Don Papa rum [from the Philippines] is in line with our strategy to help consumers drink better, not more. We want to add value to our rum portfolio further and boost our presence in the super-premium-plus segment.