Diageo targets Rs 4,155-cr sales in India

Diageo India, the wholly-owned Indian subsidiary of world's largest liquor maker Diageo, targets sales of £500 million (Rs 4,154.9 crore) in three years.

The company has set this ambitious target keeping in mind the rising income of Indians and their changing perception towards drinking.

Diageo expects most of its sales to come from premium brands in the scotch, whiskey and malts segment. Two of its strongest brands in Indian market are Johnnie Walker and Smirnoff, which have nearly 90 per cent share in the premium scotch and vodka market.

Last year, Diageo India's sales rose 40 per cent, which is 2.5 times higher than its growth in the previous years, Asif Adil, managing director, Diageo India, said.

Diageo's sales in Asia Pacific account for 11 per cent of its £9.9 billion global sales achieved in the financial year ending June 2007.

Diageo is banking on rising income and changing drinking habits of Indians to boost sales of its premium brands, including Talisker, Baileys, Ciroc and Shark Tooth. The Indian liquor market, estimated at 400 million cases in volume, is valued at just $5 billion, which is one-sixth of that of the United States.

Diageo is seeing new opportunities in India in the form of women's drinking, out-of-home liquor consumption and formation of new segments like wine, malts and super premium products.

Still, Diageo India faces competition from international players like Seagrams India, which markets Chivas Regal, Sab Miller, which is also focusing on building a mix of mainstream and premium brands, and Vijay Mallya's United Spirits, which is deploying the malt and scotch whiskey portfolio of Whyte & Mackay that it acquired last year.

Adil, who came on board of Diageo in July 2006, has introduced nearly eight brands a year in the Indian market. Many of the brands that Adil introduced are from Diageo's global portfolio like Ciroc vodka, Talisker scotch and Bailey's liqueur.

Since the company, has been introducing new products for the past two years, its investments would now be lined up for marketing those brands. In fact, marketing premium products is a bit difficult due to high custom duty of 150 per cent on foreign liquor.

Even as Diageo is seeking customs and excise duty relief from the government, it has identified travel retailing and duty-free shops as an important channel for retailing its brands. Travel retailing contributes to as high as 50 per cent of Diageo India's turnover here.

It has tie-ups with all the big duty-free shops, in which Diageo brands occupy 60 per cent of shelf-space. The company is also in the process of rolling out Johnnie Walker Select outlets to showcase its premium brands in Indian cities.