Diageo hopes to capture premium rum segment

Diageo hopes to capture premium rum segment
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First Published: Fri, Apr 13 2007. 12 55 AM IST
Updated: Fri, Apr 13 2007. 12 55 AM IST
Mumbai: With the world’s second-largest liquor company Diageo Plc introducing its Captain Morgan dark rum brand, domestic brands are scrambling to plug gaps in the premium segment in the country’s 26 million cases a year market.
Diageo is launching the world’s largest selling premium rum for Rs550 for a bottle of 750 ml. It is an attempt at “building a niche for premium dark rum in India, something that even the existing premium brands have not been able to do,” says Joey Bergstien, senior vice-president, Diageo Rums.
The main rival to Diageo will be Bacardi Reserva of Bacardi Martini India Ltd, which has a near 100% share of that segment with Bacardi Superior (a premium white rum), which sells 2.6 lakh cases, and Bacardi Reserva with sales of about 1.6 lakh cases.
The bulk of the market is taken up by three local brands: Old Monk of Mohan Meakins Ltd, Celebration of United Spirits Ltd, and Contessa Rum of Radico Khaitan. Collectively, the three brands have a 78% share of the dark rum market.
Old Monk is the leading local dark rum brand. It sells about 5.7 million cases, followed by, United Spirits (the spirit company of the Indian liquor major UB Group), which sells about 4.9 million cases of Celebration.
Contessa, which sells largely in the defence market, has a 22% share.
However, none of the domestic brands have taken a serious look at the premium segment as the Indian market had been very price-sensitive and mainly focused on low and medium-priced brands. Southern India has among the biggest markets for rum with Tamil Nadu, Karnataka, Andhra Pradesh being large consumers, along with West Bengal.
With the premium rum market growing at 10% to 12% every year, Diageo has set itself a growth target of about 29% in the country.
“Diageo is going to push the brand very aggressively in India with promotion schemes attached with premium drinking occasions,” says Santosh Kanekar, director (marketing), Diageo India Ltd. One reason for the company’s optimism is that it expects to take away market share from whisky and vodka.
The domestic players are catching on though. “There is room for growth in the premium segment and we are in the process of introducing premium rum in the country,” says Vijay Rekki, president of United Spirits.
“We have already test-launched our premium dark rum Aruba in Bangalore and another brand in the premium segment is expected to hit the market soon,” says Rekki. “Though the entry of global premium brands will not lead to direct competition with the low-end brands, it will definitely boost the overall market growth, which will be advantageous to every player. Still it may change the market, especially in the premium segment, so we are readying for it.”
Abhishek Khaitan, managing director, Radico Khaitan, echoes Rekki’s views. “At Radico, we aim to be present in each and every segment of the liquor industry where we are not present. We are looking at the rum market with an expanded brand portfolio.”
Over at Bacardi, Jayant Kapoor, managing director, Bacardi Martini, says there is enough room in the Indian premium rum market due to an overall growth in the consumption of premium liquor. “Our key focus now is to grow Bacardi Reserva with more aggressive promotions to make it a market leader,” he says.
Diageo India, which has a distillery in Aurangabad, will be importing the flavours and mixing it with molasses-based extra-neutral alcohol locally. The import of these components attracts about 159% duty and other taxes in India. Captain Morgan is being launched in Mumbai and Goa and will then be rolled out in Pune, Delhi, Bangalore and Kolkata, the company said. Captain Morgan was first launched in 1944. Diageo bought the brand in 2001 and is the seventh-largest selling spirits brand by volume worldwide.
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First Published: Fri, Apr 13 2007. 12 55 AM IST
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