Even as Diageo is engaged in protracted discussions to pick up a strategic stake in Vijay Mallya-owned United Spirits, the former is putting in place a strong infrastructure to expand its operations here. 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 (whisky) is. The only difference between today and a year ago is now we have developed the confidence to start participating in the premium IMFL category, and this is what we learnt as part of our experience with the Radico Khaitan joint venture (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 first play in this category. And, we will have one or two other innovation opportunities to launch next financial year in this category," 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 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 across various states, which have various legislations. With deep understanding and in-depth coverage of the Indian market, United Spirits offers a perfect platform for Diageo to ride on," an analyst with an Indian brokerage said.
According to Diageo, they have 600 commercial people supporting their brands, and based on this network to reach out to tier I cities, they would widen their presence in tier II cities.
"We believe, 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 said.
Diageo, which recently announced its global revenues, said there was weakness in the vodka category in India. The company controls as much as 80 per cent of the market, which is growing at 12 per cent.
