Bacardi scouting for brands to tap growth in tier II, III markets

Bacardi scouting for brands to tap growth in tier II, III markets
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First Published: Mon, Feb 16 2009. 11 17 PM IST

Establishing presence: Mahesh Madhavan, president and CEO of Bacardi-Martini India, says the firm has already set up a good distribution network in the country and the next thing is to expand the bran
Establishing presence: Mahesh Madhavan, president and CEO of Bacardi-Martini India, says the firm has already set up a good distribution network in the country and the next thing is to expand the bran
Updated: Mon, Feb 16 2009. 11 16 PM IST
Mumbai: The world’s largest privately held liquor maker, Bacardi Ltd, is scouting for potential brand acquisitions in India and expanding its sales and marketing team to tap anticipated growth in the local spirits market.
“We have already set up a good distribution network in the country, and the next thing that we are keen (on) is to expand the brand portfolio here,” said Mahesh Madhavan, president and chief executive of Bacardi-Martini India Ltd.
Establishing presence: Mahesh Madhavan, president and CEO of Bacardi-Martini India, says the firm has already set up a good distribution network in the country and the next thing is to expand the brand portfolio. Abhijit Bhatlekar / Mint
“For this, the company will launch most of its global products in the next one or two years, and we will acquire brands, especially in the whisky segment that will fit into our premium market strategy,” he added.
Currently, almost two-thirds of the 140 people employed by Bacardi-Martini India are in the sales and marketing team, which the company plans to double in size over the next one or two years.
The company, which entered the local drinks market with a solitary premium brand, Carta Blanca white rum, a decade ago and has one distillery in Nanjangode near Mysore and a co-packing unit in Goa, also plans to establish new bottling plants in north and North-East India, said Madhavan.
Bacardi-Martini India is looking to establish a presence in small cities that he estimates contribute 70% of liquor sales in the country.
“We will now heavily invest in marketing and promotion of existing brands to establish them in the tier II and III cities as well,” said Madhavan. “Our promotional activities and advertisements will now focus mainly in these cities targeting the youth.”
The Indian entity, a 74:26 joint venture between Bermuda-based Bacardi and Karnataka-based Gemini Distilleries Pvt. Ltd, is aiming to break into the top three spots in the imported spirits market, Madhavan said. Diageo Plc., Pernod Ricard SA and Beam Global Spirits and Wine Inc. now dominate this segment.
The firm currently sells Bacardi rum—the only white rum in the country—as well asEristoff vodka, Bacardi Breezer flavoured rum and Grey Goose vodka. It also sells imported brands such as 42Belowvodka, Martini wines, and Dewar’s whisky in the premium segment.
“Currently our sales across these brands are growing 12-13% a year, and we hope this growth will continue as the potential in the domestic market is huge,” Madhavan said. “The company’s priority segments will be the existing white spirits and scotch whisky in the niche, as well as semi-premium space, as these segments hold high market potential in the long term.”
Still, there are obstacles to the expansion plans, primarily in the form of high import duties and state taxes. Over time, however, said Madhavan, the tariff barriers may be lowered, increasing the size of the market for imported premium spirits.
“The Indian spirits market would see a key transformation in drinking culture and there will be a major shift of Indian consumers to the imported premium brands,” he said. This segment, which sells about 2.4 million cases a year, makes up less than 2% of India’s 144 million cases a year liquor market. One case is 12 bottles of 750ml each.
India’s spirits market is currently estimated to be worth $6 billion, or Rs28,000 crore, led by Vijay Mallya’s United Spirits Ltd and United Breweries Ltd, Delhi-based Radico Khaitan Ltd and the local units of Diageo and Pernod Ricard.
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First Published: Mon, Feb 16 2009. 11 17 PM IST