Diageo aims to be top consumer product company in India, expands play in premium segment

Last Updated 31 May 2022, 17:26 IST

Spirits major Diageo India, which controls United Spirits Ltd, aspires to be the "top-performing" consumer products company with a double-digit topline growth in the country, its Managing Director & CEO Hina Nagarajan said on Tuesday.

The company is working on a premiumisation strategy and is also reshaping its portfolio to strengthen its play in prestige and the upper segment with renovations and innovations. It is also reshaping the value proposition in the lower and mid prestige.

As part of that USL last week announced the sale and franchising of over 30 popular brands to Singapore-based Inbrew Beverages for an estimated consideration of Rs 820 crore.

"Our mission is to be the top CPG company in India delivering a sustained double-digit topline growth with mid to high teen margins and also giving a long term value to our stakeholders," Nagarajan told PTI.

This strategy is based on three pillars - portfolio reshaping, building an organisation of the future and enhancing Diageo's role in the society through Environmental, social, and governance (ESG) initiatives, she added.

While talking about portfolio reshaping, Nagarajan said the company is accelerating its offering in the luxury and premium portfolio through scotches, which are bottled in India and at the origin in Scotland.

Besides, the company is also "dialling up growth through new engines, which are future opportunities, that are gaining traction in India where we will like to participate," she added.

Over the portfolio review, Nagarajan said it was done considering the "future profit pools" of the industry in the next few years.

"Our assessment is that the popular side is not a profit pool. The market is premiumising and is moving to Prestige and above very rapidly, as we have seen growth rates in the last few quarters " she said.

If we look at the demographics of India, it will have the third-largest number of upper-income households in the world in the next 4-5 years.

"We will have 100 million households in the mid and upper-income group. Given that the future profit pools of the industry going in the upper end, in the Prestige area," she said adding "on Popular, we do not have rights to win as we do have in Prestige with the powerful brands which we have."

USL's popular portfolio comprised around 30 entry-level lower-priced liquor brands, with an average price of less than Rs 400 for a 750 ml bottle, and straddle whisky, rum, brandy, vodka and gin.

The company expects to complete the transaction, which includes brands as Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label and Romanov, by the end of the September quarter.

"This actually helps us to put more management focus and resource allocation for delivering growth in Prestige and above and the future profit pools," Nagarajan added.

The company has a good presence in the scotch segment and with the activations done around iconic brand Johnny Walker, renovations of Black Dog scotch and the launch of single malt brands Talisker and Singleton, USL is now seeing high double-digit growth in the segment.

"We have renovated our Signature brand, which is our core brand in upper Prestige with sustainability," she added.

Headquartered in Bengaluru, USL, which is Diageo India, is the country’s leading beverage alcohol company and a subsidiary of global leader Diageo PLC.

The company manufactures, sells and distributes an outstanding portfolio of premium brands such as Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No1, Smirnoff and Captain Morgan.

(Published 31 May 2022, 17:26 IST)

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