Importance of Local Sourcing to Diageo

Importance of Local Sourcing to Diageo

Diageo is an alcoholic producing company based in the UK. It specializes in the production of gin, vodka, whisky, and beer; the most notable brands are Smirnoff, Johnnie Walker, Tanqueray, Captain Morgan, Baileys, and Guinness. Its production amenities are spread worldwide that consist of malting operations, breweries, maturation warehouses, distilleries, packaging operations, and distribution warehouses. Diageo’s products are conventional in North America, Europe, Russia, Turkey, Africa, Latin America, the Caribbean, and Asia Pacific markets.

Other than Sierra Leon that had its first Guinness shipment in 1827, the firm serves the following countries; Ireland, Italy, Turkey, the United States, and Canada. Others are; Brazil, Mexico, Australia; Singapore, India, Nigeria, South Africa, Uganda, Kenya, Tanzania, Ethiopia, Cameroon, and Seychelles. In 2012, Diageo acquired Meta Abo Brewery Company; a second largest brewery in Ethiopia from the Ethiopian government in a bid to expand its business. That said, the purpose of this paper is to discuss the benefits that would accrue to Diageo for sourcing local raw materials in its production of beer in Ethiopia.

Since the acquisition of Meta Abo Brewery, the focus of Diageo is to provide a sustainable way of getting the supply of raw materials majorly barley from the local market up-to 70 per cent as opposed to importation. The organization’s management agrees that apart from climate change, challenges that the globe face needs the involvement of all the stakeholders to achieve set goals. Furthermore, the CEO affirms that a business that expects success should emphasize sustainability as a core function of their deliverables. In line with this principle, Walsh, the CEO signed an initiative of supporting the launch of G8’s New Alliance for Food Security and Nutrition in 2012.

The purpose New Alliance for Food Security and Nutrition was to spearhead the commitment of 10 African countries towards sustainable agricultural-oriented growth. The goals of this strategy would be achieved by; bringing the African leadership to an agreement in pledging effective policies that strengthen food security and, in the end, have more than 50 million people come out of poverty in 10 years. Secondly, by combining efforts with the private sector partners to increase investment where the conditions are favourable, and lastly, the assurance of the G8 to expanding Africa’s agricultural potential for sustainability and growth.

That said, the alliance between Diageo and the Ethiopian government in acquiring Meta Abo Brewery should have the following impact; first, it should lead to growth and development. Investing in new ideas and methods of production should inspire different approaches that promote a change of status towards a more robust economy. Secondly, investing in local production is a way of increasing food production that, in turn, helps food security and in the long-run sustainability and community resilience.

Furthermore, increased production encourages income generation that improves access to funds which elevates the living conditions of the community members. Similarly, using local raw materials attracts other agricultural stakeholders who jointly increase investment in farming, leading to the upgrading of infrastructure, and access to finance. Lastly, having more investors in the country surges trade and trade relationships that expand demand and supply of local products and lessen the reliance on imports. Finally, Diageo’s choice to use local materials promotes a healthy agricultural culture that would invest in research that would ensure that farmers use enhanced seeds, fertilizers, food production procedure, pesticides, and farming tools.