Rivals are, however, unimpressed
MUMBAI: Everyone’s chasing volumes these days, even international liquor majors like Diageo India. Targeting 35-plus males, the company recently launched a whiskey, Haig Gold Label, in the approximately Rs 485 plus taxes “premium” priced segment. Competing with brands like Blenders Pride and Royal Challenge, it promises to be the cheapest “real Scotch” in the 71-million-cases whiskey market, which makes up 65% of the total alcohol market.
While whiskies are growing at a spirited 11-12% per annum, the “premium” market is small at about a million cases per annum but holds out huge growth potential.
Scotch, which is priced at Rs 880-plus here and sells 250,000 cases per annum here, sits at the peak of the whiskey hierarchy. Below this are super premium whiskies, priced at about Rs 620 and selling 1,00,000 cases per annum. The one-million case premium segment underlays this with a bottle tag of Rs 480, followed by the lowermost, 10-million-case prestige layer priced at Rs 320 per unit.
Asif Adil, managing director, Diageo South Asia, believes that the price point and the “smooth” taste of its new whiskey will be its unique selling point.
He says, “Priced at Rs 600, we are looking to bridge the gap between premium whiskies and other Scotch brands for the aspiring consumer wanting Scotch on a more regular basis.” While Adil hopes to see sales of 1 million cases of Haig, the larger Indian whiskey market will obviously compete with foreign entrants at low price points.
Diageo launched the Haig brand after doing consumer research across five cities 10 months before the launch. Deepak Roy, expert in the spirits business, questions whether Diageo will be able to sustain its Rs 600 pricing over time. “With 150% import duty and 75% surcharge, while this may be a penetrative pricing, they will have to bank on the government lowering duties to make money in the long run.”
Roy believes that Diageo made a big blunder exiting the IMFL (Indian Made Foreign Liquor) business in 2002, since close to 95% of profit from the Indian market comes from whiskey priced under Rs 250, a segment comprising 10 million cases. Now, Diageo’s re-entry into IMFL with its recent tie-up with Radico Khaitan, and their plans to launch lower-priced vodkas, rum and whiskey will help sustain their overheads while pushing brands like Haig.
Santosh Kanekar, marketing director, Diageo India adds that their plan to launch a Rs 300 vodka in coming weeks creates a ladder for both the brands from which to penetrate the market.
The key for any international brand entering the market is to create a credible brand presence. Teachers, the flagship brand for Beam Global Spirits has been present in India since the early 1990’s and its brand building has made Teachers grow at a CAGR of 22% and capture more then 45% of the 250,000 cases high-end Scotch whiskey market.
Harish Moolchandani, CEO, India and Indian sub-continent, Beam Global Spirits believes that with brands like Haig, it’s time to wait and watch. “The key factor here would be to generate great recall for a brand.”
Since lower priced international whiskies like Highland Queen and Long John did not manage to survive in the Indian market, Roy feels that Diageo’s Haig has to crack the clique using its brand image. Haig has a three-pronged brand-building strategy for India.
Kanekar of Diageo says, “There will be Scottish heritage nights, consumer contests where people will be featured in local newspapers, and finally the grand contests which will take consumers to the Haig distillery in Scotland to see how Haig is distilled.” The brand has also tied up with the 2000 Guineas horse races to gain further visibility.
However, even though Adil hopes to see sales of a million cases, industry expert Ravi Jain believes the Rs 600 premium whiskey market Haig is targeting is very small; this segment sees the production of only 1 million cases at the premium whiskey level which already includes well established brands like Royal Challenge and Blenders Pride.
“In spite of the lower pricing, international whiskies will not make a big dent unless they are able to create ‘brand impact’ upon the consumer.” Well known whiskies like Haig have to now concentrate on their brand position to create a lasting impression, feels Jain.
Even though foreign whiskies like Haig claim their USP as being ‘real grain-based whiskey rather then molasses-based, the gap is fast narrowing in India.
According to Roy, “Due to ethanol being added to gasoline, there are pressures on the supply of molasses for alcohol. So companies are experimenting with grain, and prices between grain and molasses-based spirits are narrowing with only a 10-15% difference.”