India’s spirits journey

10 April, 2024

With soaring investments and expanding footprints, spirits brands from across the globe are tapping into India’s vibrant market, while homegrown labels leverage innovation.

The Indian arm of the global liquor major Pernod Ricard last month signed an MOU (memorandum of understanding) with the Maharashtra government to build India’s largest malt distillery with an investment up to €200m. This was with the sole intention to reduce dependency on Scotch imports for the Indian market. With two of its domestic blended whisky brands (Royal Stag and Blender’s Pride) already produced in a distillery in Maharashtra, the new malt facility will not only be the largest in Asia, it may also make Pernod Ricard the market leader in the domestic whisky segment in the coming years.

Considering the remarkable quantity of single malts, blended whiskies, and other craft spirits launched in the past few months, it’s anticipated that multinational companies will be revisiting their investment and expansion strategies in the Indian market.

Ruchira Jaitly, chief marketing officer at Diageo India, emphasises the importance of catering to Indian consumers' evolving tastes, stating: “Indian consumers are looking for new products and experiences, and experimenting in the way they consume our brands."

Diageo introduced the third expression of its locally produced single malt brand Godawan (Godawan Century) recently, after rolling out the first two variants in 2022. “Godawan, our artisanal single malt whisky that defies traditional norms while keeping tradition at its core, will be entering Punjab, Chandigarh, and Madhya Pradesh – a move that strengthens its national presence across seven markets in India,” says Jaitly.

Speaking about alterations in the company’s marketing strategy and expansion plans, she adds: “Indian consumers are looking for new products and experiences, and experimenting in the way they consume our brands. They are making more and more premium choices and we are only catering to their demand.”

Diageo also recently introduced Don Julio tequila in India to tap into the growing interest in the agave spirit segment. With launches in Gurgaon and Mumbai, Don Julio is expanding its availability to key markets across the country.

However, the international companies have one big challenge. They have to work under compliance rules which restrict them from working within the strict framework of product marketing, advertising guidelines and marketing. This has pushed them to balance compliance with new and engaging ways of taking the brand narrative and experiences to consumers.

Besides the regular marketing channels, social media has emerged as a significant tool for promotion. Jaitly further adds, “We associated with the Backstreet Boys concert in May last year which delivered 30 million-plus impressions on social media and helped to connect with 22,000-plus consumers at the concert itself. We have an overarching vision of progressive marketing in Diageo to depict an aspirational and inclusive view of society, break stereotypes and reflect the amazing diversity in society in all our work, and I believe that our team has done a tremendous industry-leading job over the past few years.”

Domestic success

While some of the challenges remain the same for the domestic spirits producers, the movement which began with Amrut and Paul John single malts some 15 years ago is now gathering momentum.

At the moment Indian brands are holding about 53% of the domestic single malt sales according to a 2023 report released by the industry body Confederation of Indian Alcoholic Beverage Companies (CIABC). The report also suggests that local brands experienced growth of around 23% last year, while imported ones grew at 11%. Of the total sales of around 675,000 cases of single malts in India in 2023, domestic producers sold around 345,000 cases, while Scotch and other international brands sold the remainder.

Kunal Madan, VP of international sales & business development at Radico Khaitan, producer of Rampur single malt, sees an increasing willingness from Indian consumers to spend on premium brands and experiences which go beyond the functional social benefits of alcohol. Two years ago, Radico Khaitan expanded its capacities to meet the future demand for its premium brands through strategic capital expenditure investments.

“We have invested in augmentation of the grain ENA [extra neutral alcohol] production at the Rampur distillery and have also decided to set up a 330kl per day greenfield grain-based distillery in Sitapur, in Uttar Pradesh. This will enable us to move into the next phase of growth,” says Madan. “Expecting a growth in demand for Indian single malts, we had expanded the malt distillation as well as maturation capacities a few years ago.”

Radico has also tripled its gin distillation capacity to cater to the growing demand for Jaisalmer Indian Craft gin, confirming the company’s future expansion focus on both malt and other premium and luxury brands.

Siddhartha Sharma, founder of Piccadilly Distilleries, echoes this sentiment, highlighting its focus on product quality and consumer education.

“At Piccadilly, we’ve made substantial investments in expanding our production capacity and refining our production techniques,” says Sharma. “This strategic move is driven by the soaring demand for our flagship product, Indri, which has firmly established itself as the preferred single malt brand both domestically and internationally.”

The growing interest in craft spirits among Indian consumers, with a rising number seeking out artisanal and small-batch products, is driving the overall craft spirits categories, including rum, vodka, and gin.

Rohan Nihlani is director of the wine and spirits importing firm Morgan Beverages and co-founder of Cartel & Bros, the new company importing, launching, and distributing some interesting brands from around the globe. For Nihlani, there’s seemingly no end to this growth in craft spirits.

“From our humble beginnings as importers to our current role as producers of domestic craft spirits, the journey has been nothing short of exhilarating,” he says. “We’ve embraced the changing tides of consumer preferences and market dynamics, positioning ourselves at the forefront of India’s craft spirits movement.

“Take, for instance, our brands: Soci gin and The Glenwalk whisky. Soci, crafted in Goa, has carved out a unique niche for itself in a market that’s traditionally been dominated by imported gins. Despite being relatively new to the scene, Soci has captured the hearts of consumers with its distinct flavour profile, appealing to those who appreciate sipping and savouring gin at its fi nest. On the other hand, The Glenwalk Whisky has quickly risen to prominence as one of the fastest-selling brands in the market, despite competing with established giants in the industry,” he adds. For context, Glenwalk sold 9,739 cases in the first five months of its launch last year.

Within the total craft spirits market in India, homegrown labels currently hold a majority share, with local brands experiencing significant growth compared to imported ones. Local gin brands in India, such as Stranger & Sons and Greater Than, and rum brands such as Maka Zai, Earth, Pitbull, Two Indies and Camikara, are all showing innovation in marketing and promotion strategies.

From collaborations with local festivals, artists and musicians to developing packaging designs inspired by Indian culture, telling the stories of provenance and mostly engaging social media activations, these brands are taking advantage of the growing domestic interest in craft spirits.

The Indian liquor market presents immense opportunities for growth and innovation. With consumers seeking premium experiences and diverse product offerings, spirits companies must adapt to changing preferences and invest in quality and innovation. By leveraging strategic partnerships and embracing consumer trends, both international and domestic brands can navigate the dynamic landscape of the Indian market and unlock new avenues for success. As the market continues to evolve, the spirits industry in India is poised for a spirited journey of growth and innovation.

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