Alcobev majors Diageo India, Pernod Ricard to drive growth via ‘diversity’

From launching beverages that would suit the taste profile of women consumers, having a diverse representation of gender and millennials in their workforce that would represent their target consumers, to renovating their existing spirits portfolio keeping in mind the tastes and preferences of 100-million Indians who would enter the legal drinking age in the next five years, alcobev companies such as Diageo India and Pernod Ricard are working over-time to come out of their male-dominated bastion they have been known for.

While Diageo India, today, has a 50% representation of women in its executive committee and has been aggressively hiring women in roles such as supply-chain, Pernod Ricard India in the recent past has also hired women in leadership roles. The most recent being the hiring of Zainab Patel, a transgender woman as Pernod Ricard India’s head of diversity and inclusion. It was barely a few years ago when alcobev companies shied away from hiring women.

“While Anand (Anand Kripalu, former MD, Diageo India) steered in a culture which took us from being USL to Diageo India, my mandate is to take Diageo India from an organisation which is present forward to an organisation which is future-ready, which is digitally focused, which has the capabilities for luxury selling and retail transformation,” says Hina Nagarajan, MD, Diageo India.

A large part of Nagarajan’s future-ready strategy is based on product innovation and renovation as well as focusing on spirits such as gin, which appeals a lot more to women consumers as well as the millennials. The company last year launched a made-in-India limited edition craft whisky (100% rice whisky), Epitome Reserve.

“Almost 100 million people will be entering the legal drinking age and this cohort is very much into craft and experiential and that has led us to our entry into craft whiskey. We sold out 2,000 bottles almost immediately and then we launched the second limited edition,” says Nagarajan.

Gone are the days when Indians preferred strong whiskies. With women driving the narrative to a great extent, the preference clearly is for lighter drinks. Not only has the company been investing heavily on its various gin brands such as Gordon, it has also launched a variant of the classic Royal Challenge, Royal Challenge American Pride, which is a combination of American bourbon and Indian malt. “It’s a versatile liquid, and can be had at brunch or at night with barbecue,” explains Nagarajan.

Pernod Ricard on the other hand, plans to bring to India a host of differentiated products. “Consumers are expecting different offerings and this is the best time to bring new products. We want to expand palettes and experiences. We will launch flavoured whiskies, ready-to-drink beverages and much more,” says Thibault Cuny, MD and CEO South Asia, Pernod Ricard.

The French alcohol major is also looking at launching variants targeted at women consumers. “There is a strong trend of openness among women towards alcoholic beverages and we see that as an important pillar of our growth. Women prefer less strong drinks, sweeter and softer whiskies. Jameson for instance is suited for women, it is sweeter and easier to drink. We have Jameson Ginger & Ale, Jameson & Apple and plenty of drinks that we can leverage with Indian women,” says Cuny.

The head honchos of the two alcohol majors are also beginning to see a few positive moves from the regulator's end which gives them hope for profitable growth in India. Delhi for instance has started privatising the government-owned retail stores, while West Bengal has allowed duty rationalisation (the Government of West Bengal during the first Covid-19 lockdown had imposed massive taxes which had led the industry to decline by 40%) which has helped in bringing down costs by 35%-40%.

“In many states we have not seen price increase for 4-5 years. Rajasthan has allowed us to increase prices for IMFL and bottled-in-India scotches, they have reduced bottling fees, reduced taxes, that has improved demand and premiumisation. Madhya Pradesh is making separate outlets for country liquor and foreign liquor, which increases accessibility for consumers. They have also dropped taxes which will also help drop consumer prices,” explains Nagarajan.

While these moves will surely help in yielding higher margins and improving profitability, Nagarajan is worried that not being allowed to increase prices in most states is impacting the sustainability of the industry. “We are working with the regulators,” she says. Taxation and duties (which vary in every state) in India is on an average between 50% and 60%, the highest in the world.