Mint Luxury Conference | Keeping spirits up2 min read . Updated: 01 Nov 2014, 01:55 PM IST
Diageo India MD Abanti Sankaranarayanan on scaling luxury brands in India without breaking the bank
Mumbai: At the seventh edition of the Mint Luxury Conference this afternoon, Abanti Sankaranarayanan, managing director of Diageo India, spoke about the challenges of scaling luxury brands in India and presented a set of measures global P&Ls could adopt to make breakthroughs in emerging markets.
Sankaranarayanan began the session by highlighting the key reasons India remains an underpenetrated market for luxury goods. Given the country’s cultural and historical context, many buyers continue to shy away from conspicuous consumption, she said. She added that customers in India are also largely badge-driven and that infrastructure comes at a high cost and poses its own set of constraints on the growth of a brand. By way of example, Sankaranarayanan spoke about how unaccounted income and cash purchases as well as high import duties pose structural challenges to brands and open the floodgates to the parallel grey markets and counterfeits.
Relying on the brand pull model used by luxury brands globally is necessary but not sufficient to tackle the challenges of consumer access, Sankaranarayanan said, before presenting a handful of measures companies can use to bypass the long haul to efficient business growth. The first, she said, is to enter the market with a complete and desirable portfolio that allows the brand to emotionally engage consumers. The next important step is continuous recruitment of new consumers. “In India, consumers of luxury are not just sitting in the metros and even in the metros, you won’t find them in a couple of nice clusters. They are geographically disparate," Sankaranarayanan explained. “In this case, a brand needs to keep at it with transformational thinking to expand its customer base efficiently."
The third, Sankaranarayanan said, is to function using a push-and-pull strategy because the global model of brand pull can be a long haul for scaling up. “India is a difficult market to crack on scale and it requires long term commitment," she said. “As a multinational, there is always a choice to invest in other markets and many brands that came to India eight to ten years ago now feel their money is better spent on other emerging markets like Russia, Turkey and Indonesia. But that’s why brands need to become more aggressive in pushing customers towards buying their products." Another important move is to lead category development to make a strong customer proposition. “By hosting world class bartenders and the Diageo World Class property we make sure our customers see value in the sector," said Sankaranarayanan.
Finally, brands must invest in capability ahead of anticipating returns. “Luxury is about telling a story and knowing how and where to show up so it is important to train your people so they can play their part in the luxury experience," said Sankaranarayanan.
Before wrapping up the session, Sankaranarayanan said that Diageo’s recent investment of $3 billion in United Spirits Ltd demonstrates the company’s “huge commitment" to India.