Even as Diageo is engaged in protracted discussions to pick up strategic stake in Vijay Mallya owned United Spirits, "which may or may not culminate in a deal", Diageo is putting in place a strong infrastructure to expand its operations in India. The company, known for marquee brands such as Johnnie Walker scotch and Smirnoff vodka, is looking to expand its offerings in the Indian Made Foreign Liquor (IMFL) segment.
"We are participating in price points of $10 and above, and this is where the introduction of Rowson's Reserve is. The only difference between today and one year ago in India is that now we have developed the confidence to start participating in the premium IMFL category, and this is what we learned as part of our experience with the Radico Khaitan JV. So our learnings over the last three years gave us more confidence in our ability to participate at the premium end of IMFL. The introduction of Rowson's Reserve is our first attempt, and our first play in this category, and we will have one or two other innovation opportunities to launch next fiscal year in the premium IMFL category in India too," a senior management official of Diageo told investors recently.
It has been nearly an year since Diageo entered this segment with Rowson's Reserve, which has been relying on its range of global brands. Diageo despite its presence with renowned brands has not been able to make a strong mark in India with its volumes and hence has been in discussions with United Spirits to expand its presence. "United Spirits has a fabulous network in India across various states which have various legislations. With deep understanding and indepth coverage of the Indian market, United Spirits offers a perfect platform for Diageo to ride on," an analyst with a Indian brokerage said.
According to Diageo, they have around 600 commercial people supporting various of their brands in India and based on this platform of network to reach out to Tier I cities in India, they will widen their presence in the Tier 2 cities. "And we believe that now we have 83 per cent direct coverage to the accounts that service beverage alcohol in India, which is also a huge milestone from where we were three years ago," the official added.
Diageo which recently announced its global revenues said there was weakness in the vodka category in India. Diageo with its Smirnoff brand of vodka controls as much as 80 per cent of the vodka market in India, which is growing at around 12 per cent.
