Diageo India, the domestic arm of global drinks giant Diageo Plc, plans to re-enter the Indian made foreign liquor market as part of a market consolidation plan in India.
The company, which is a significant player in the country's premium spirits market with two major brands - Johnnie Walker whisky and Smirnoff vodka - would tie up with leading local companies for bottling and distribution to explore the IMFL market with its global brand portfolio.
Diageo's other brands, like Guinness, Cuervo, Tanqueray, Baileys, *J&B and Captain Morgan are the other major brands in its international portfolio and the company may look at the potential of launching these brands as well in the country later on.
Asif Adil, the new managing director of Diageo India, said the company was also toying with the idea of getting into the fast-growing beer and wine markets in India to tap the emerging opportunities.
"We will explore all these new segments with our own products from the international portfolio using the bottling and distribution networks of local partners with whom we are in talks now," Adil added.
These manufacturing, distribution and marketing arrangements will be with leading local players in the respective segments through joint ventures and strategic alliances, he said.
Diageo has already tied up with a large bottling unit in Chennai for its IMFL foray and a few marketing and distribution tie-ups are likely to be signed soon.
"Since our main focus would remain in the premium whisky and vodka segments, the current specific strategy for India also includes substantial investments for the market expansion in these segments. For this, the company would spend about 12 to 15 per cent of its revenue in this calendar year. The fresh market expansion plan includes experiential marketing endeavours in pacts with high-profile celebrations, sports and music events, celebrity campaigns, extension into two- and three-tier cities, tapping the marriage and festival markets apart from strengthening the base in those high-potential markets," Adil said.
The company would spend about Rs 35 crore to 100 crore (Rs 350 million to Rs 1 billion) in this calendar year in the proposed market expansion plan and it would double its field force from the current 110 to over 200 by the end of the year.
"Our target is to touch Rs 1,000 crore (Rs 10 billion) revenue in the next four to five years. For which, we will follow the pattern that the company adopted in China, which contributes substantial revenue to its Asian business," he said.
Diageo India, which exited from its IMFL business some time ago, had been focused on building its portfolio of international brands led by Smirnoff vodka and Johnnie Walker whisky in India.
However, the re-entry plan into IMFL and the wine and beer markets is at a time when the market for international spirits brands in the country is expanding faster with whisky consumption pegged at 700,000 to 800,000 cases annually, reporting between 10 and 12 per cent growth and the other two segments are poised to grow multifold with the proposed opening up of the markets by state governments.
Diageo currently enjoys about 90 per cent of the country's 2 million cases premium vodka market and about 80 per cent of the scotch whisky market in India.
