New Delhi/Bangalore: American liquor company Beam Suntory Inc.’s Indian arm is expanding its range of Jim Beam bourbon with new launches to counter a drop in the market share of its flagship whisky brand Teacher’s.
In next 12-18 months, the company will push new variants of Jim Beam into the market to diversify its portfolio, close to 80% of which is dependent on Teacher’s, varieites of which retail for between Rs.1,200 and Rs.27,000 per bottle.
“We will do a market study for brands such as Devil’s Cut, multiple flavours of Jim Beam such as Honey and Jim Beam Red Stag and look at launching them in the domestic market. The idea is to become more diverse in our portfolio which is, right now, heavily skewed towards Teacher’s,” said Neeraj Kumar, head of sales and marketing.
The company also plans to expand its ready-to-drink or pre-mixed drinks portfolio—a relatively small market in India right now with companies like Bacardi India selling products like flavoured Breezers.
“We have a hugely popular ready-to-drink product—Jim Beam and Coke—in international markets such as Australia; we could look at bringing that in and locally bottling it,” said Kumar, adding that the company is expected to introduce it in India next year. To make the brand more accessible, the company has started bottling Jim Beam white bourbon locally. The move is expected to bring the prices down by 15-20%.
The product has been introduced at the new price point in Gurgaon and Kolkata. It will be sold in other markets including Bangalore, Goa, Hyderabad and other large cities too.
“The idea is to map, match and bring the prices closer to Teacher’s and other standard Scotch brands,” said Kumar.
The company will also look at adding more variants to its existing portfolio of Teacher’s whisky as part of its global emerging markets strategy.
Japanese brewing and distillery company Suntory Holdings Ltd acquired Beam Inc. for $16 billion in January 2014, making it the third largest spirits company globally.
The move to diversify its portfolio in India comes months after the company was rattled by a bribery scandal in India that prompted top-level exits.
Beam began an internal investigation in late 2012 of its Indian unit’s financial dealings and suspended its management. It temporarily stopped making products in India, leading to a significant loss of market share, especially for Teacher’s.
Last year, Pernod Ricard’s 100 Pipers saw a 33% jump in sales volumes, generating more than twice the volumes of Teacher’s Highland Cream in the “bottled in India” liquors segment.
Diageo’s Vat 69 also overtook Teacher’s Highland Cream, which reported a slump in volumes of 41%, according to data from International Wine and Spirits Research (IWSR), a liquor industry research organization.
Even United Spirits’ Black Dog, which was selling less than a third of Teacher’s Highland Cream’s volumes two years ago, was neck and neck with Beam’s brand last year.
Just two years ago, Teacher’s Highland Cream was by far the largest selling “bottled in India” blended Scotch.
To be sure, the overall sales of Teacher’s, including all its variants and imports, are still higher than those of Vat 69 although lower than 100 Pipers, according to IWSR data.
Analysts tracking the spirits market say India is a challenging market.
Growth in the liquor industry slipped to a low of 2.4% in the previous financial year, down from an average of 6% over the years, owing to multiple price hikes across states, which dented the sales of brands at the mass end of the market, according to a quarterly report by Rabobank released in June.
The report suggested that premium brands continued to perform well, with Scotch whisky witnessing the fastest rate of growth in the spirits category.
“Although alcoholic beverage segment will grow with rising incomes, the challenge for liquor companies looking at local bottling remains, since it’s largely a state government issue,” said Anand Ramanathan, associate director at KPMG in India.