While most significant players in the industry have started focusing on premiumisation, Allied Blenders & Distilleries (ABD) believes that high-volume mass-premium brands like its Officer’s Choice whisky have carved out a niche for themselves in the industry. In an interview with BusinessLine, ABD’s Executive Deputy Chairman, Shekhar Ramamurthy, who previously headed United Breweries, shares his insight into ABD’s growth plans. Excerpts:
After you took over as the head of ABD a year ago, what vision did you set for the company?
We decided to set a growth agenda at the base level and to fuel the same, we set out to do two things — we are not a commodity or a service; we are in the business of brands. Hence, the focus is entirely on growing the brands. Another thing was clarity on where we wanted to go. In India, margins may be less or high in particular States, but we don’t know what they will be later. So, the direction we set was that we should be a genuine national player rather than pick and choose where we wanted to be. We want to revive the brands and put better energies into the existing ones while driving a solid efficiency agenda.
Today, Officer’s Choice is not just a whisky brand but also a rum and brandy brand. So, will ABD reposition it so that there is a clear distinction among the brands?
We discontinued the rum variant because we felt the category is very competitive and was not getting the responses we sought. Brandy is there primarily because of the Kerala market. So, we would instead put our energies behind the whisky brand. We have another rum brand called Jolly Roger which we are trying to revive. As far as repositioning goes, we want to make the brand seem more premium without making it more expensive.
How does that work?
We want it to be value affordable, not cheap, but affordable premium. That is why we call it mass premium. It is a premium product but mass in terms of access and affordability. The price will remain the same. We sell around 20-25 million cases per annum. It is more significant than most brands. So, we have Sterling for the affluent and Officer’s Choice for the mass premium.
What happens to the rest of the portfolio?
Sterling Reserve is one of the fastest-growing brands, with a lot of focus. It competes with brands like Royal Stag and Royal Challenge. We will soon unveil a new campaign for the brand. We are putting the focus on the portfolio. We expect the industry to grow in single digits, and we see ourselves growing much ahead.
While most major players have started focusing on premiumisation and putting more capital, ABD is banking on mass premium brands. How will it play out for you?
When discussing premiumisation in India, you must see the whole spectrum, not a few bottles or pieces of the super-premium category. ABD’s portfolio of Officer’s Choice is our leading brand that operates at the entry level of the aspiring classes. But today, the fashionable thing is to talk about premiumisation. Each company has to focus on one essential brand. Operating in the high-volume mass premium category is not easy. One has to be highly efficient in managing such a brand. We make decisions here and not from London or anywhere else. Hence, we are close to the market and can take quick decisions, which helps us sustain and grow our market.
Despite the presence of major foreign brands in India, some domestic brands continue to do well and grow faster. What are the reasons for this trend?
Indian consumers, unlike other Asian countries, are not enamoured by foreign brands. We are merely the custodians of the brand and need to keep pace with the dynamic of the consumer’s taste. For example, during the last few years, actors on screen are seen showing consuming alcohol and hence it has become a routine now. You need to constantly invest in the relationship with consumers and never take them for granted. We must also remember that some of the most successful liquor brands across companies are all brands made in India.
Post-Covid, will the dynamics of the industry change? During the pandemic, several States leaned on liquor companies to raise duties to prop up their revenues. Will it lead to some rethink on policies making it easier for companies to carry out businesses?
Most of the States have removed the Covid cess. Politically, there will always be a pressure on the conditions. Socio-economic politics dictate their decisions. There is some difference now. Bureaucrats are more willing to listen now and are receptive. Whether or not they are eager to make changes will depend on their political bosses.