Diageo returns to Indian market

13th September, 2011 by Alan Lodge

Diageo is set to return to the Indian whiskey market after registering a new locally-made whiskey called Rowson’s Reserve.

The move comes as India’s alcohol market continues to grow at a rate of 19 million new consumers a year.

It represents something of a u-turn from the UK-based company, which sold a portfolio of Indian whiskeys, including Gilbey’s Green Label, in 2002.

The company instead chose to drive growth in the market through its international brands – led by the likes of Johnnie Walker, VAT 69 and Black & White, as well as Smirnoff vodka.

Its return to the local market could be viewed as an admission that this strategy did not quite pay off as hoped.

Though the company is the leader in the country’s small but rapidly expanding Scotch market, it got increasingly sidelined as a marginal player in the larger domestic market and trails behind main international rival Pernod Ricard, which became India’s second largest spirits maker on the strength of its local whiskeys.

Diageo’s volume sales are estimated to be below two million nine-litre cases in a national market of closer to 240m cases annually, giving it a market share of under 1%.

The company’s new strategy for Indian whiskeys is expected to be selective and limited to the premium segments of the mainstream market.

“We will look at innovation opportunities around the sweet spot of Rs600 as that is where we see the market evolving,” Gilbert Ghostine, president of Diageo Asia Pacific, said recently.

Rowson’s Reserve, a local whiskey blended with aged Scotch, will be priced at Rs865 for 750ml in Mumbai.

The average national pricing would be lower at around Rs550-600. Maharashtra state hiked excise duties earlier this year leading to steep increase in spirits and beer prices.

Diageo’s return to Indian whiskey market on its own signals the end of a failed joint venture with Radico Khaitan, which was formed as a vehicle for building local brands.

Diageo, which has already sought approval to snap up the joint venture, does not require the erstwhile partner’s approval to get back into local whiskeys.

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