The deal allows Kyndal to expand its presence in urban areas to a much wider network without relying on expensive third party distribution networks. The focus will first be on rural areas in Karnataka and Andhra Pradesh.
"In the premium segment, rural markets have come to contribute to over 50 per cent of demand across the country. Tier 2 and Tier 3 towns have become growth engines and this is an effort to penetrate larger volumes in those towns through a larger number of outlets," says Siddharth Banerji, Founder, Kyndal India.
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Banerji said firms who have a large presence in urban markets were finding it difficult to penetrate rural areas, due to high transportation and distribution costs. The same problem is being faced by firms with a rural market presence when they try to enter urban areas. Kyndal India manufactures premium brandy in South India.
"The deal is mutually beneficial. Our partner, which has a strong rural presence could bring their brands to urban areas," Banerji said. Viva Dholen, a part of the JP Group, was established in 2003 to cater to the premium segment of distilled alcoholic beverages and sells brands like Round Robin & Copper Pot Whisky.
The group has two bottling plants in Karnataka and Andhra Pradesh, both also crucial test markets for Kyndal. "These are our core markets and we will start testing Terra's distribution capacities in these states, before moving on to markets like Delhi," he said.