A RESEARCH ON IMFL To start with, the industry has changed from being seller’s market to a buyer’s market. Consumer groups, which were earlier targeted as one large demographic island, have got fragmented into distinct psychographics’ groups. Brand and media roliferation, information boom and easy access to wide variety of brands have all had a significant impact on the buying behaviors of consumers, who are now clearly seeking “value” over “price”. In many ways this reflects branding of a co mmodities market which was dominated by heritage brands. Sociologically, the country has undergone a sea change. Lifestyles have changed drastically. Today, drinking in moderation is not looked upon as a social taboo. Youngsters today are often seen sharing a drink with their parents which was unheard of a decade ago except among a very few upper class families. Social drinking among women is also on the rise. Unlike a decade ago, the consumer today also has a number of options in terms of brands and segments. A fast emerging change is in terms of flavour substitution depending on consumption occasion. Earlier an average consumer would stick to a preferred flavour, say a whisky or rum but now the flavour basket has many more like whites, wine, RTD etc. Marketers need to understand the trigger for such switches and evolve the marketing initiative. The market is fiercely competitive and marketers are fighting for value share, value paradigms are being redefined, new fronts of customer engagements are being created. In the market, where the imperatives are neither PCC nor penetration driven, the fight is for market shares and a larger share of organic growth.
Some of the key drivers of the liquor Industry are Duty structures, Excise rules and regulations, product-pricing, marketing initiatives to promote the brand and to communicate with the customers, distribution and several regulatory issues like licenses to manufacture, labeling etc. On issues of excise and duties, these are fast coming to WTO levels. The industry does not have many entry barriers and with the opening up of the economy there are multiple ways of market entry; it could be Bottled in India (BII) or Bottled in origin (BIO) or Bulk import and locally bottled. While this will enable world class quality brands entering India, there is a fear that the stagnating markets overseas may trigger dumping of cheap liquor into the Indian market, which will not be b e a healthy trend for both the Indian consumer as well as the domestic liquor players.
A highly regulated environment and poor shopping infrastructure in the alco-bev industry is unfortunately diametrically opposite to the direction India is heading. Con sumer today is demanding more and more information on products and services and in absence of a communication platform the industry faces a major handicap. The industry body CIABC has proposed a Self Regulation Code, which has been drafted after a careful study of similar platforms across the globe, and being followed b oth in the western and the eastern economies
IMFL market growing at rapid pace : IMFL has grown at the rate of 9% in last decade. In last two years; the industry has grown at 12% and current growth momentum is expected to continue. Whisky is the most important segment. White spirits is the fastest
growing segment; however it is on the lower base. Similarly, other segments such as wine and bear are also growing at rapid pace.
Segm Se gmen ents ts Gr Grow owth th IM IMFL FL Ma Mark rket et Bre Break akup up
Whisky
8 .0 %
6 0%
Brandy
4 .0 %
1 8%
Ru m
1 .0 %
1 7%
4 5 .0 %
5%
White Spirits
Entry y barr barrie iers rs are are extr extrem emel ely y high high for for new new play player erss as no High Ent Entry ry Barrie Barriers: rs: Entr adver adverti tise seme ment nt is allo allowe wed. d. Thus Thus with with grow growin ing g dema demand nd;; exis existi ting ng bran brands ds have have the the opportunity to garner greater market share due to their distribution strengths. Also the consumers are highly addictive in terms of their brand preferences; hence any increase in prices does not drive down demand.
Players
Mn Cases Market Share
McDowell - UB
38
42.2%
Shaw Wallace - UB
16
17.8%
Herbetson - UB
4
4. 4 %
Radico Khaitan
10
11.1%
Mohan Meakins
7
7. 8 %
Jagatjit Industries
1
1. 1 %
Others
14
15.6%
Total
90
100.0%
Indian IMFL market comprises of many brands as the market leader is The UB group chaired by Dr. Vijay Mallaya. The IMFL industry in India is estimated at nearly 84 million cases a nd is growing at 8 per cent per annum. Consumption is largely skewed towards whisky, which accounts for over 60 per cent of the market. Brandy accounts for 21 per cent, rum for 14 per cent and whites (Gin, Vodka, others) for 5 per cent. ce nt. The total IMFL market is estimated to have grown at 18.5% in value terms over FY07, when it was valued at Rs 38,549 crore. In volume term, the market has grown 21% from 157.5 million cases in FY07.
The government garnered 54% of the revenues at Rs 24,786 crore through excise levies, Octroi and state taxes and value-added taxes. On the other hand, h and, industry realisation stood at Rs 10,459 crore, excluding levies, a share of 23%.
The majority of brands of IMFL are owned by the UB group, some of their popular brands are 1-McDowell’s No. 1 2-Bagpiper 3-Signature 4-Black Dog 5-Royal Challenge 6-Romanov
7-Alcazar 8-Blue Riband 9-White Mischief 10-Directors Special
The company offers more than 140 brands The United Spirits of The UB group is the 3 rd largest spirits marketer in the world with the sales of approx 60 million cases. Bagpiper whisky is the largest selling whisky of India with sales more then 10 million cases. McDowell’s whisky is one of the fastest growing brands of the world with sale of over 6.07 million cases. McDowell’s rum is one of the fastest growing brands of the world with sales of over 5.42 million cases. Bagpiper is the 4th largest selling whisky and largest selling non Scotch whisky of the world. The Groups spirit’s business sold around 60 million cases. The division has gone to the global heights and is the 3rd largest spirits marketer in the world. It offers 140 different brands at different price level for every type of customer and is combined with its unparallel reach of customers it has created envy among the competitors.
United Spirits has always powered ahead riding on the innovations. United Spirits occupies the pride place in the UB group contributing to a major chunk chu nk of the
groups turnover. Today its brand Bagpiper whisky and Honey Bee Brandy are the millionaire brands, Bagpiper is the 4th largest selling whisky and largest selling non scotch selling whisky in the world. It sells at 12 million cases per year.
Whyte & Mackay is a leading leading distiller of scotch whisky whisky and is in the undertaking of the USL. The brands offered by Whyte & Mackay are 1-The Dalmore 2-Ilse of Jura 3-Glayvya 4-Fettercairn 5-Vladivar vodka 6-Whyte & Mackay blended scotch
Shaw Wallace has established a legacy in India that drenched in the spirit of India for the past 120 years. The company came into existence at a time when the country is battling against the colonization against the British. In yet another historic development the UB group undertaken the Shaw Wallace as the 3rd largest manufacturer of the spirits in the world. The b rands of Shaw Wallace are 1-Antiquity 2-Director’s Special 3-Old Traven 4-Royal Challenge
5-White Mischief 6-Royal Mist 7-Mughal Monarch 8-Findlaters scotch 9-Valdiivar 10-Veba
United Spirits’ total sales stood at Rs 19,134 crore in FY08 aga inst the IMFL market’s sales worth Rs 45,665 crore. In volume terms, USL’s market share stood at nearly 40% through total sales of 73.8 million cases.
The IMFL market was estimated at 190 million cases during the last fiscal, including the 60 million cases sold in the cheap che ap liquor market.
USL, which has brands like McDowell’s No 1, Bagpiper Whisky, Royal Challenge and Signature, has over a 55% market share in volume terms and a 56% share by value in the IMFL market. Some other major players in the segment include Seagram, Diageo, Beam Global, and Radico Khaitan.
The development also showed USL commands a higher value share compared to the volume share in the domestic market. The liquor market, is around 130 million cases by volume and Rs.34,227 crore by value.
The UB Group Spirits Division (UBSPD), which comprises McDowell and Co Ltd and Herbert sons Ltd, is likely to cross 35 million cases in 20 03-04. Growing faster than the industry average of 6 per cent, the Division further consolidated its leadership and grew its market share to 37 per cent. c ent. UBSPD ranks as the fifth largest beverage-alcohol group in the world. Last year, registered a record growth of 14.5 per cent. UBSPD hope to grow in volumes this year too.
UBSPD is the dominant player in the spirits market in India with the other players at a distance. We dominate the market not n ot just in market shares but also in our manufacturing capacities, product ranges and distribution strengths.
Given the market realities, UBSPD has consciously followed a strategy of being present at different price points across different flavours. The focus on building brands has given them an enviable portfolio of as many as eight “millionaire” brands, the fourth biggest basket of brands in the world. UBSPD have identified a set of Power brands to p rovide a range of solutions to meet the mood, occasion, expectation and retain the consumer. Another significant advantage is trapping higher value as the consumer moves up the economic ladder. UBSPD is the leader and an d trendsetter in India, and we have no intention of reducing ourselves to a niche player
Radico Khaitan is one of India's oldest and largest liquor manufacturers. Formerly known as Rampur Distillery which was established in 1943. It was only in 1999, that Radico decided to launch and market its own brands, thereby
embarking on a period of phenomenal growth. To further boost its production capacity of bottled and branded products, the company has tied up with bottling units in various parts of the country.
Radico Khaitan Ltd today has three millionaire brands in its portfolio. Radico's flagship brand, 8 PM Whisky, launched in 1999, was a runaway success. In the first year alone, it sold one million cases - a record for any Indian or foreign brand operating op erating in India. This also made it the first brand in the liquor industry to make it to the Limca Book of Records. The other millionaire brands are: Contessa Rum has won the prestigious Monde Selection award for its overall quality for the past three execu tive years. It has a large market share in the defense market. Old Admiral Brandy has also won the Monde Selection award for its overall quality in 2008. Toda y, Radico Khaitan has brands that straddle almost every market segment - whisky, rum, brandy, vodka & gin - and price category
Radico Khaitan is not just a company of great brands, it is a company of great financials. The equity shares of the company are quoted on the Mumbai and National Stock Exchanges, and the company has more than 35,000 shareholders. It is the most profitable company in the domestic liquor industry.The brands o ffered by the Radico Khaitan group are as
1-8 PM
2-Whytehall
3-Contessa
4-Special Appointment
5-Old Admiral
6-Magic Moments vodka
7-Contessa vodka
SEAGRAM has emerged as the first multinational company to be in the list of top-five Indian Made Foreign Liquor (IMFL) companies in the country. With sales inching towards five million cases annually, the quiet rise of Seagram Manufacturing Pvt Ltd, part of Groupe Pernod Ricard, has resulted in more competition for the domestic liquor majors.
The available industry figures suggest that Seagram follows UB Spirits Division (UBSPD), Shaw Wallace, Mohan Meakins and Radico Khaitan in the pecking order of the Indian spirits companies. Seagram closed last calendar year with sales hovering around 4.5 million cases mainly powered by the growth of its whisky brands Royal Stag and Imperial Blue, both of which w hich sell over a million cases annually.
The other brands in its IMFL portfolio include Blenders' Pride, Seagram's Extra Dry Gin, the newly launched vodka Fling, Ron Amigoz rum and Three Kings brandy. This is apart from the locally bottled Scotch brands like 100 Pipers and imported premium brands such as Chivas Regal. Seagram did not comment on the projected sale for the current year. Analysts said the notable aspect of Seagram's growth has been its brand building abilities
to drive sales solely through the premium, `prestige' and `regular plus' segments of the liquor industry.
It must be mentioned that most IMFL companies derive a sizeable part of their sales from cheap to medium priced segments in a market estimated at over 85 million cases annually. In fact, Seagram's Imperial Blue and Royal Stag whiskies were the fastest growing brands in the domestic market during du ring 2002. Imperial Blue registered a 144 per cent rise in sales to touch 1.10 1 .10 million cases from 0.45 million in the previous year, while Royal Stag with 53 per cent rise in sales touched 1.75 million from 1.12 million cases in 2001.
Seagram's Indian operations went to Pernod Ricard's fold two years ago when the French company along with Diageo Plc split Seagram's worldwide assets following a joint acquisition. With Pernod Ricard open to inorganic growth through acquisitions in the country, Seagram is likely to remain the most closely tracked spirits entity in the domestic market
