Diageo eyes blockchain tech to check pilferage
NEW DELHI: Spirits maker Diageo is turning to technology to check pilferage of liquor and counterfeits as it focuses on premiumisation to drive growth. Hina Nagarajan, MD and CEO at Diageo India, the maker of brands such as Johnnie Walker, Black Dog and Smirnoff, told TOI that the company is set to launch a blockchain-based track-and-trace system for its bottles later this year that will not only help reduce counterfeiting but is also expected to boost the company’s sustainability practices.
In a blockchain and internet of things (IoT)-based traceability situation, smart tamper-proof labels replace manual records and track each transaction as a product moves through the supply chain, usually allowing even the end consumer to scan codes on the label to check authenticity and origin of the product.
Nagarajan’s comments come close on the heels of the UK-based spirits maker’s subsidiary United Spirits (USL) announcing the sale and franchising of over 30 of its entry-level brands to Singapore-based Inbrew for Rs 820 crore. When asked about incidents of pilferage in the company’s premium range such as Johnnie Walker, Nagarajan said,
“We have seen some levels of pilfering in different categories but we have taken very strong measures to counter that. We have a very strong anti-counterfeiting programme and team. We have also invested substantively in technology. ”
While liquor counterfeiting remains a widespread threat across Indian consumers and manufacturers, it was mainly limited to entrylevel brands earlier. Consumers, however, have recently started complaining about increasing instances of counterfeits in up-market brands as companies step on the premiumisation accelerator to rake in fatter margins.
After the divestiture, for instance, “prestige and above” brands account for 85% of Diageo’s portfolio compared to 75% last year. In addition, the company expects a high double-digit growth from its Scotch whisky portfolio.