Racing Towards a Remedy for

Covid-19: New Product

Development

Submitted by:
Avinash Bhat (B19011)
Hari Sankar S (B19018)
Soham Ghosh (B19052)
 Diageo’s worldwide presence and extensive consumer base in the Pre-COVID era has taken a hit. But,
Diageo has been very efficient in adapting to the new normal and utilised its resources to target new
customer segments with its hand sanitisers

Target Customers – Pre and Post COVID

Pre-COVID Era Post-COVID Era

Operations in 180 countries across 5 continents

Region Social Class Products • Alco-Bev operations were gravely affected across the
world. Apart from regular operations , Diageo quickly
Worldwide Affluent Cîroc Vodkas
saw an opportunity to revamp their production lines to
Latin America Middle Class Haig Whiskey use alcohol to produce hand sanitisers.
US , Europe , Asia All Scotch Whiskey, Vodka: • Diageo produced 300,000 Litres of hand sanitisers in
Smirnoff, Beer , Rum India alone, mainly to support HealthCare sector.
Worldwide figures were approximated to be 5 million
litres of alcohol for producing hand sanitisers.
Worldwide All , Particularly Baileys Biscotti , Smirnoff
Females Marshmallow flavours • These sanitisers also cover restaurants, bars and pub
owners.
Diageo, being new in the hand sanitiser segment, has significant competition from major players like RB
and Unilever. However, with sanitisers expected to grow at a CAGR of 10% across the world over the
next 5 years, Diageo has a very good opportunity to establish its presence owing to its strong supply
chain network.
Competitive Environment of Diageo – Hand Sanitisers

Threat of New Entrants - HIGH Threat of Substitutes- MEDIUM

COVID has seen many firms coming up with hand sanitisers Substitute Products like soap, hand wipes, antiseptic sprays
owing to increased health consciousness. Fragmented market are being utilised by many people across the world in place of
due to low barriers of entry. 152 new players entered the Indian sanitisers . But , the threat is medium as alcohol based hand
market during the period of March-May sanitisers have been shown to be more effective.
Rivalry- Very High
Diageo is faced with lot of competition
from existing players like RB, Unilever,
Bargaining Power of Suppliers - HIGH 3M , Gojo
Bargaining Power of Buyers - HIGH

Diageo, with its strong global supply chain, has an advantage
in this segment as they can use the raw material(alcohol) to
produce sanitisers. Hence firms with raw materials have a high
bargaining power owing to familiarity in running operations
and can easily modify supply chains.
Owing to low switching cost and familiarity of brands like
Unilever , RB (Dettol) & Dabur for consumer health and
hygiene products , buyers have a high bargaining power to
switch. Diageo, being in the spirits industry , might not be the
number one choice for most consumers.
 Diageo has received accolades from governments across the world for utilising its core competence to
support the people during the global pandemic. But, certain regulations have resulted in them not being
able to perform as well as their alcohol segments.

Regulations and Limitations

• Regulations - especially surrounding requirement of drug license for stock and sale ; scope of price control are becoming roadblocks for
businesses from scaling-up operations

• Manufacturers of hand sanitizers are thus forced to explore alternatives such as manufacturing sanitizers as a cosmetic or ayurvedic
formulation to overcome these regulatory challenges

• Many local players have come up with sanitizers without the minimum 70% alcohol content , thereby eating up market share of Diageo.

• Diageo has only been involved in alcohol and spirits since its inception and a new product development in the form of sanitizers, is still
being contemplated for use by many , against established players in the health and hygiene market like RB, Unilever , Dabur and Himalaya.