Mumbai: Foreign liquor firms that include Bacardi and Co. Ltd and Diageo Plc. plan to acquire low-priced brands after venturing into the Indian market a few years ago with premium offerings.
Sale push: A liquor shop in New Delhi’s Connaught Place. Imported spirits make up for 1.25 million cases consumed in India every year. Rajeev Dabral / Mint
This strategy contrasts with local brewers entering the premium segment and is expected to support the multinationals in driving volumes, essential in a mixed economy market like India, say experts.
“We are looking at opportunities to acquire one or two local brands to be added to our India basket to support our growth in the mainly focused premium spirit business,” Bacardi-Martini India Ltd’s president and chief executive officer Mahesh Madhavan said. Bacardi-Martini India is a joint venture between Bermuda-based Bacardi and domestic distiller Gemini Distillers Ltd.
Diageo India Ltd, India arm of the world’s largest brewer by sales, has already launched one local brand each in the whisky, vodka and wine segments. Diageo India, a joint venture with the country’s second largest liquor firm Radico Khaitan Ltd, had launched a low-end whisky called Master Stroke in early 2007, as well as brands such as Shark Tooth and Nilaya in the vodka and wine categories, respectively.
“Our business strategy is clearly focused on the luxury segment where our premium brands are well positioned,” said Asif Adil, managing director, Diageo India.
However, “the low-end business will help companies keep revenues flowing as there is a large profit pool in a market like India,” Adil said.
Diageo India had also launched its global whisky brand Haig Gold with an India-specific price tag two years ago by bottling it in the country.
The world’s second largest liquor company Pernod Ricard SA, too, has an India strategy, though it positions itself in the premium and luxury market.
“One reason is clearly the revenue support ensuring that operational profits are maintained through a volume game till the premium market is established,” said a sector analyst with a foreign brokerage, requesting anonymity.
Liquor consumption in India is estimated at 230 million cases a year, of which 116 million cases are beer followed by the so-called India made foreign liquor, or IMFL, which accounts for about 112 million cases.
Imported spirits, largely premium and reserve brands, make up for about 1.25 million cases, and the remaining are accounted for wine and other categories.
Diageo’s premium brands in India include Johnnie Walker whisky and Smirnoff vodka, while Bacardi sells its premium rum and vodka brands in the country. Bacardi is also considering importing more brands in the premium white spirits segment, Madhavan said.