After making a classic pitch in the fast changing Indian liquor market by rolling out an array of its iconic spirit brands a couple of years ago, Diageo India Pvt. Ltd, the Indian arm of the world’s largest liquor company Diageo Plc., is in an aggressive growth mode now, trying out all the segments ranging from the once-discarded Indian-made foreign liquor (IMFL) portfolio to the classic reserve brands from the global portfolio in the country. The company, which has already made a mark in the local market with a very competitive brand positioning route, wants to create a niche in the premium spirits as well as wine segments, and its strategy is going to be different from others, says managing director Asif Adil in an exclusive interview. Edited excerpts:
How confident are you in this very price-sensitive liquor market with high-cost brands? Or will you depend on local brands to get a critical mass?
Making a long-term success in the liquor market is not only about gaining a critical mass but also building brands by creating a drinking culture in the market with a much more sophisticated fashion. Diageo believes in this strategy. We have several iconic brands of the world in our basket, and we have a trifocal plan — involving products and promotions for today, tomorrow and a long-sustainment
(products for the current market scenario, the near future and for the longer term) — in place...on brands to be launched here. From the experience so far, we have learnt that the market here is changing... The changing lifestyle driven by the high disposable income and, certainly, the exposure of the people to modern drinking culture — the brand choices in the market is now largely led by the statement of prestige. Diageo is trying to blend this emerging culture with its brand reputation to make a successful business sense... We had recently introduced a high-profile, Armani-clad marketing team that will focus on the ultra-premium reserve brands portfolio, to support higher-end variants of Johnnie Walker Scotch whiskies, namely Gold and Blue Labels... This kind of a push would also reflect in a more aggressive promotion behind the company’s single malts collection consisting of Dalwhinnie, Lagavulin, Talisker, Cragganmore, Oban and Glenkinchie, which will be in the market soon.
Trifocal plan: Diageo India managing director Asif Adil.
Since most of your brands in India are imported directly from the parent, do you find the country’s tax environment supportive?
The import duty is still higher in India. It should ideally come... It will also encourage Indian consumers upgrading to superior products rather than sticking to poor-quality drinks. The recent import duty cut announced by the Centre had, in fact, very significantly reflected in our sales. Another area of concern is the widely varied state taxation policies.
The tiny but high-value market for imported liquor in India has been growing, but hasn’t the competition is growing much faster?
The competition is growing, but the sheer size of India’s market can accommodate everyone... I believe Diageo has already created a niche for its brands globally and this heritage will help the company grow in any new markets. The wine market in India is also witnessing a rapid growth with many new brands entering the mart and the government is also committed to open it up. Our plan to explore this opportunity is solid now. Our first domestic brand, Nilaya, which was launched last year, has been a big hit in the selected markets, and it’s going national now with launches in Bengal, Rajasthan, Uttar Pradesh and Uttarakhand soon. We are also rolling out our global reserve brands, which include B&G, Blossom Hill and Sterling Vineyards range, in India. We are fashioning our wine portfolio from these three wine groups. Currently, Diageo has a $1 billion (Rs4,000 crore) wine business worldwide and we want to layer it with Indian wines because we see a big opportunity taking Indian wines through the Diageo global network as well.
Since you have strong plans for IMFL as well as wines, will you look for having own distilleries and wineries in India?
Not now. Currently we are operating through joint ventures and strategic alliances with local players for both these segments. Since the group’s policy does not envisage to set up own distilleries or wineries here, this strategy will be continued.