President | 17 Jan 2004
“We have identified a set of power brands to focus on and maintain our leadership across flavors and price-points. This, along with continuous innovation, quality and our sales, marketing and distribution forte has helped us to maintain leadership.”
Vijay K Rekhi has over 35 years varied experience in both operational and policy-making positions within and outside the UB Group. Since April ‘96, he is President, UB Group Spirits Division and MD, McDowell. Rekhi’s experience within the UB group includes the positions of Regional Director, Jenson & Nicholson for North America and the Carribean; CEO, Phipson & Co., India; and Director – Marketing & Sales, Herbertsons.
Apart from being a Director on the Boards of several companies in the UB Group, Rekhi has also held the position of Chairman of several trade associations like the ‘Society for Alcohol-Related Social Policy Initiative’ (SASPI), ‘Association of Distillers, Brewers & Vintners of India’ (ADBVI), and the ‘Confederation of Indian Alcoholic Beverage Companies’ (CIABC).
In a candid conversation with Jasmeen Dugal at The Park, New Delhi, Vijay Rekhi discusses the group restructure, how the ban on advertising affects liquor companies and the RTD segment in India vis-à-vis global markets.
Q. Let’s begin with the size of the various segments in the Indian liquor market.
The IMFL industry in India is estimated at approximately 84 million cases and is growing at 8% per annum. Consumption is largely tilting towards whisky, which accounts for over 60% of the market. Brandy stands at 21%, rum at 14% and whites (Gin, Vodka, others) at 5%.
Q. What is UB Group Spirits Division’s (UBSPD) market share?
UBSPD, which comprises McDowell and Herbertsons, sold 30.8 million cases in 2002-03. Growing faster than the industry average, the division further consolidated its leadership and grew its market share to 37%. Along with 2 million cases through the acquisition of Triumph Distillers & Vintners, we rank the fifth largest beverage alcohol group in the world.
Q. What is the status on the restructuring of the UB Group?
The restructuring of UBSPD into four individual Regional Profit Centers, each looking after production, sales and distribution in each of the four zones, is complete. This has made us more focused in the market place.
Q. What is your strategy to combat mushrooming competition?
UBSPD has calculatedly followed a plan of being present at different price points across diverse flavors. However, a large portfolio has not meant lack of focus or the absence of leading brands; our focus on building brands has given us an enviable portfolio. We have identified a set of ‘power brands’ to focus on and maintain our leadership across flavors and price-points. This, along with continuous innovation, quality and our sales, marketing and distribution forte has facilitated us in maintaining leadership.
Q. How has the ban on advertising affected liquor companies?
We have been denied an effective tool in brand building.
Q. So how is McDowell reaching out to its target segment?
We are developing opportunities to interact directly with our target segment. However, there is no point in piggy backing on one genre of interests. While we have identified our audience as an ambitious, energetic, young group, it would be wrong to cast them as a homogeneous lot.
This called for a multi-directional approach to promotion, with the brand being seen simultaneously in golf clubs, theatres and conferences. Apart from golf championships, the brand is simultaneously backing several other lifestyle events including theatre and its Knowledge Series.
Q. McDowell has cruised into the Ready-To-Drink (RTD) segment with the launch of Vodka Cruiser. But is there a market for RTD low alcoholic beverages in India? How does it compare with the global market?
The entire Indian map is changing. There has been a huge explosion of disposable income among the young; moreover, social drinking has increased. And today users are looking for products that are aligned with global trends; the demand for new age flavors is increasing. The Indian market is ready for alcohol beverages with exotic fruit flavors.
RTD, being a low-alcohol beverage, will be a stepping-stone for SEC-A youngsters and women to enter the alcoholic beverages segment. Especially women, who are used to fruit juices and would readily make the transition to one with a low alcohol content.
Globally, the RTD segment is growing at 30% and is emerging as a category by itself. In fact, in Australia, UK, Germany, Japan and even Thailand, it has equal shelf space with beer, wine etc.
Q. Why did you launch only two flavors?
We were restricted to launching only two flavors because of the artificial barriers in New Delhi, manipulated by colleagues with vested interests. We have to demonstrate a sale of half million cases in Australia before we are allowed to launch the product here. Only Passionfruit and Raspberry touched this mark; the launch of the third flavor, Ice, has been delayed because it is yet to touch that mark.
Q. With competition from Bacardi Breezer, does McDowell have a plan for Cruiser?
You have got to treat this category like FMCGs, so one has to be very flexible. In order to maintain the excitement in the product, we have a refresh plan every year. This may include new packaging, new flavors or even new variants, that is, something on a new platform altogether.
Q. What is the distribution plan for Cruiser?
Any RTD product in India must carry premium trappings and so the best strategy will be to initially launch it only in upmarket on-premise locations, which includes pubs and nightclubs, where the action is.
Q. Are there any other RTD launches on the cards?
Though the RTD category is still nascent in India, it is a fast-growing market. So, McDowell may, apart from rolling out Vodka Cruiser, come out with other products from Independent's portfolio such as Havana Gold (white rum and coconut liqueur), Stinger (an alcoholic soda) or Woodstock (a bourbon cola drink). On the cards are mango and black current-flavored beverages. Other introductions are original brands, currently under various stages of development; this includes brands with a chocolate, chaat-masala and wine base.