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Diageo looks to buy Radico's stake in JV

Viveat Susan Pinto  |  Mumbai 

Premium spirits maker is looking to acquire half the stake of its Indian partner in its five-year-old (JV) Radico Distilleries. The JV distributes and markets premium whisky

But apart from Masterstroke, the JV has seen no new launches in the last few years. Diageo, instead, has been developing its own marketing and distribution machinery to strengthen its presence in the country.

The JV was formed to develop local brands.

The current move is being seen as an attempt by the world’s largest spirits maker to “wind down” its JV in India. A India spokesperson confirmed the company’s intention to buy Radico’s stake. “It will take a few months to achieve this. We are in discussions with them,” he said.

officials were not available for comments.

Diageo, in the last two years, has been refurbishing its largely international portfolio to cater to Indian needs. It relaunched Scotch whisky brand last year, and has now stepped into the competitive (Indian-made foreign liquor) market with a locally-developed brand called Rowson’s Reserve. The latter is positioned at the premium end of the whisky market at an average national price of Rs 660 for a quart. Challengers include Pernod’s Ricard Blenders Pride and United Spirits’ Royal Challenge, Antiquity and Signature.

All these brands are priced in the Rs 600-850 bracket. For Diageo, Rowson’s Reserve is the second brand after Smirnoff in its portfolio to be priced in this range. All its other brands including its scotch whisky portfolio, single malts etc are easily over Rs 1,000 for a quartz.

Abanti Sankaranarayanan, marketing and innovation director, Diageo India, said the company would steadily expand the footprint of Rowson’s, which had been initially launched in Maharashtra, Haryana, Punjab and Karnataka. “A full-blown communication exercise will begin in about three months,” she said.

The whisky market in India is the world’s largest at about 135 million cases. It is also the largest category, growing at about 20 per cent per annum. This is projected to grow at an accelerated pace of about 25 per cent in the next five years.

While the premium end of the whisky market is 6 million cases, the prestige and regular segments are 25 million and 90 million cases, respectively. Diageo has no presence in these categories at the moment.

First Published: Tue, October 04 2011. 00:14 IST