Diageo targets Indian growth

21 October 2011

NEW DELHI: Diageo, the spirits group, expects revenues to increase rapidly in India going forward, and is primarily taking a "top down" approach to category development, based on premiumisation.

The number of Indian consumers buying alcoholic drinks is rising by 19m people or so per year, largely due to improving levels of wealth, and Diageo is well placed to tap these trends.

"We have a very solid base. We think double-digit growth is there for the foreseeable future. We've ramped up our capability, sales and marketing, have great leadership on the ground," James Thompson, Diageo's APAC CMO, told Campaign Asia.

More specifically, the company's main emphasis will fall on Johnnie Walker, Smirnoff, Captain Morgan and Vat 69. "These are brands that are gaining consumer traction now," said Thompson.

As part of this process, Diageo is pursuing a "top down" model, positioning lines including Johnnie Walker as high-end brands at the top of the market.

Simultaneously, however, it is selling variants of products like Captain Morgan at a more accessible Rs600 ($12). While many offerings are cheaper than this, Diageo believes the best strategy lies away from chasing low-margin volume sales.

"It's capturing a trade-up from a local brand or a very different type of experience from other brands around the same price point," Thompson said.

"Premiumisation is going to continue as a trend, because typically one thinks it's something happening at the top end of the market, but actually the exciting thing in India is that it's happening everywhere."

To attract shoppers in the whisky category, the firm is launching Rowson's Reserve in India, also priced at Rs 600, having abandoned a prior attempt to compete at a similar level.

"We can now see how to participate profitably there," said Thompson. "In the last couple of years, we've built a very exciting business ... and it's giving us the confidence now to go into areas like that."

The company's local marketing activity covers a range of touchpoints, from leveraging its sponsorship of the McLaren Formula 1 racing team to an online gaming platform for VAT 69 and forming a tie-up with Tarun Tahiliani, the fashion designer.

It has also recently instituted an advisory council, featuring executives like Deepak Parekh, chairman of HDFC, the bank, Ashok Ganguly, former chairman of Hindustan Unilever, and Naresh Chandra, previously a cabinet secretary in the country.

Data sourced from Campaign Asia; additional content by Warc staff