Whisky brands to boost growth
India’s largest liquor company United Spirits Ltd is betting on re-launches of its top whisky brands and brand extensions to drive growth in a market that has been sluggish for more than five years.
United Spirits CEO Anand Kripalu said in an interview that the company, owned by Diageo Plc., has “renovated” most of its important old brands. In addition, he said “there’s innovation—when you bring something new to the market. When we started this (innovation) journey it took 2.5-3 years to turnaround a product innovation. Today we can do it in 18 months. There is a need to innovate even faster, stay nimble-footed and agile”.
Over the past 18 months, the company, which owns more than 140 brands, has re-designed the look of Mcdowell’s No.1, Royal Challenge and Signature and backed the re-launches with extensive advertising. This year United Spirits has done the same with Captain Morgan rum and will do it with a few more brands. The company has also introduced a honey variant of Mcdowell’s No 1 whisky and an espresso-flavoured Royal Challenge whisky.
The Indian liquor market, which consistently grew by more than 10% a year in the 2000s, has seen growth slowing for at least five successive years now, primarily because of rising state liquor taxes and a regulatory clampdown. In terms of sales volumes, growth has tapered to 1-3%.
United Spirits has been the worst-hit so far by the slowdown. It has lost market share to Pernod Ricard India Pvt Ltd and Allied Blenders & Distillers Pvt Ltd over most of this decade. Kripalu, however, suggested that the company is starting to win back share, aided by recent whisky re-launches. Whisky is the single largest product category in liquor, accounting for 55-65% of liquor sales in India.
Kripalu, 58, said industry growth is unlikely to drop further though it will still be a few years before it starts accelerating rap idly again. “It’s very hard to say when growth rates will increase again but I think it will take a cou ple of years for the industry to get into a state of equilibrium.”
Kripalu joined United Spirits as Ceo-designate in October 2013, months after Diageo acquired it from the UB group Since then, United Spirits has been battered by corporate gov ernance scandals. In April 2015, a probe suggested financial irregu larities at the company for sev eral years when it was run by Vijay Mallya and his team. After a 10-month-long boardroom bat tle, Mallya quit as non-executive chairman in February 2016 after Diageo agreed to drop all charges of irregularities and pay him $75 million over five years.
The company has now insti tuted strong corporate govern ance practices, adopted sound operating procedures, hired quality talent and diversified its leadership team at the senior and middle levels, Kripalu added.