In high spirits: Grain-based 8PM attracts consumers

Sells about 2 million cases within six months of launch

Radico Khaitan’s attempts to make its flagship 8PM whiskey “contemporary” seem to be paying off. Within six month of launch, the grain-based variant of the whiskey has sold about 2 million cases. This move is expected to take 8PM volumes to 5 million cases by the end of 2009-10. All told, the Indian whiskey market is estimated at 160 million cases.

The whiskey market is highly competitive. There are several brands at various price points, companies cannot advertise and liquor shops offer little scope for point-of-sale promotion. The shopkeeper often hands out the bottle closest to him, though things have begun to change in modern retail outlets in the metros.

To make an impact, Radico Khaitan (the company derives its name from its distillery at Rampur in Uttar Pradesh and the family which controls it) came out with grain-based 8PM whiskey some six months back. Worldwide, whiskey is made out of grain. But in India, distillers use molasses, a byproduct obtained from sugarcane when it is crushed to make sugar, possibly because of its easy availability. Liquor lobbies abroad have therefore resisted all moves by Indian companies to sell their stuff abroad — it’s not whiskey, they argue, and should be called Indian spirit.

But, with rising incomes, Indian consumers want proper whiskey. The lead was taken by rivals like Bagpiper and McDowel’ No 1 which launched grain-based whiskies some time back. 8PM was the third to do so. To begin with, Radico Khiatan test-marketed it in Haryana and Punjab, the top whiskey markets in the country. Based on the response, it recently launched it pan-India. “We have seen good volume growth in 8PM sales in the last six months as compared to the corresponding period previous year,” a company executive says.

The company did research in five areas for the grain-based 8PM: Blending, positioning, packaging, consumer and price. Grain-based whiskey is more mellow and smooth than molasses whiskey. This calls for new package and price. So, Raidco Khaitan worked out a new pack for the new offering — it sports a younger and vibrant look with a prominent grain picture — but it is priced the same as regular 8PM whiskey. Some analysts say that this is a cosmetic change which may not register with consumers. OC&C Strategy Consultants Director Sridhar Venkiteswaran says: “An ordinary consumer would rarely bother to check if it’s mollasses or grain. But 8PM has a strong franchisee and that has worked for it.”

Radico Khaitan has set up a separate plant in Rampur, with an investment of more than Rs 150 crores, to make grain-based whiskey a year back which has the capacity to produce 27 million litres of grain-based alcohol. There could be another reason for the switch. In the last several months, molasses prices have skyrocketed by almost 125 per cent, thanks to the small sugarcane crop. The prices are expected to remain high for at least one more year. Gain prices too have risen during this period, but by a modest 5 to 10 per cent. This should help Radico Khaitan keep a lid on its prices.

8PM is among the top whiskey brands in India, Bagpiper of United Spirits and Officer’s Choice of Herbertsons being the leaders. Radico Khaitan had been adding fizz to the 8PM brand in various ways. In 2003, it had extended 8PM to rum with 8PM Bermuda which is doing very good in Andhra Pradesh. In 2004, it extended it to brandy also with 8PM Excellency Brandy, which is doing very well in Kerala.

Radico Khaitan had launched 8PM whiskey in the 1990s. It has overtaken Contessa rum to become the company’s flagship brand. In the initial years, the company had supported it with some innovative advertising which played on friends getting together for a drink at 8 pm. The advertisements of course were surrogate but they helped the brand immensely. But, rivals from the industry say, Radico Khaitan has not been able to build a brand after 8PM. The focus clearly is on 8PM.