Drinking the World

Foreign brews are filling up our cellars, uncorking a new drinking culture and giving the industry a peg up

Foreign brews are filling up our cellars, uncorking a new drinking culture and giving the industry a peg up

Not so long ago, you could have any beer in India so long as it was Kingfisher. Not any more. The choice for Indian tipplers has exploded. In 2008 alone, over 200 new international brands of alcoholic beverages came to India. These include the finest Scotch whiskeys like Johnnie Walker Blue Label, beers from Belgium like the premium Stella Artois, wines from France and Italy, and ales from Ireland.

It’s almost as if Indians are suddenly drinking the world.

Vikram Achanta, CEO of Tulleeho.com, an industry consultancy, says, “Growth in the Indian alcoholic beverages industry has come at a rapid clip. Most segments are growing fast. Premium vodka is growing at 40 per cent, wine is growing at 40 per cent and beer is growing at 15 per cent.”

The new brews are also looking for the novel Indian drinker. Unlike Britain, which has a deep and ingrained pub culture, or Japan where drinking after work among male colleagues is a ritual that often decides office promotion, or Europe where wine with food is a given, India has no distinct drinking culture.

The focus today is not on the businessman downing a couple of whiskeys after work, but on expanding the current market into new categories. Here, vodka brands like Smirnoff and Bacardi—both have introduced half-a-dozen flavoured vodkas last year—are the leaders.

Globalisation has uncorked a new drinking culture among youth at leisure—easily spotted at night clubs and bars across the country. Visit, if you will, bars like Morrison in Delhi, Pico’s in Bangalore or Sixer’s Bar in Chandigarh. The spirited younger lot increasingly includes women in black enjoying their wine in red. Noticeably, young drinkers are going big time for the deal on the rocks. Despite the recent attacks on pub-
going women in Mangalore, there is no let-up. So much so that a Delhi-based popular bar Turquoise Cottage had organised a night for ladies’ right to drink. They innovatively employed Facebook, the social networking site, and the night saw some 300 women turn up to say cheers.

Subhash Arora, who runs the Delhi Wine Club, which has more than 150 members, says, “The new drinking culture and choice of wine in the market feed off each other. The newer Indian consumer is not drinking just to get drunk or to de-stress. For the first time we are learning to enjoy tradition and the taste that comes with it.”

Time was when business was done over coffee. Now, it’s not unusual to have a dinner to celebrate a deal at the Zodiac Grill in Mumbai with bottles of French champagne thrown in at Rs 15,000 per bottle. Business drinking is the biggest segment by revenue in India’s alcohol industry.

To meet this growth, firms are importing beverages and some, like the world’s largest alcohol firm InBev, and Cobra Beer are setting up breweries in India. They are also hooking up with Indian farmers to produce the right kind of barley and wheat that can go with their worldwide reputation. Not an easy job, obviously, with a couple of top beer brands having to postpone indigenisation for want of the right local ingredients.

The market has expanded; however, it remains price-sensitive. A bottle of imported beer at high street restaurants typically retails for over Rs 250. In five-star establishments prices have dipped a bit after the reform of import licence rules. Even then, at the Ricks Bar at Delhi’s Taj Mahal hotel a pint of beer costs about Rs 300.

Draught beer is also heavily taxed in India. A 15-litre keg at wholesale price is about Rs 600, but by the time it reaches a bar in Chandigarh or Chennai, the same will retail between Rs 1,500 and Rs 1,800.

States across India tax alcohol differently. A bottle of Blenders Pride in Delhi may cost Rs 500 but in Jammu it retails at Rs 1,100. Aman Dhal, CEO of Brindco International, a leading wine importer that introduced over 60 wine brands last year in India, says, “Price sensitivity is a major issue. The tax burden on this industry is very high. There should be harmonisation of excise and state duties to ensure fair pricing.”

Another major wine importer, Mumbai-based Dharti Desai of Finewinesnmore, has introduced 40 brands from seven countries over the past one year. She says, “India is a very price-sensitive market and it’s therefore difficult to establish premium brands. Since all superior brands come at a certain price tag, it is very important to market the brand correctly, and create brand visibility and affinity that keep the consumer’s needs in mind. One cannot blindly cater to the international hype of these brands alone.”

A major bottleneck for new brands is lack of awareness among consumers. Often consumers cannot differentiate an entry-level wine from a premium one. India has amongst the world’s strictest controls on direct alcohol advertising. This makes marketing the brands that much more difficult. However, companies have found innovative ways to keep the spirit flowing.

The leader of the pack here is the UB Group. To extend its current domination, the group is introducing
premium beers, South African wines and a couple of top-end Scotch brands this year. Through a high-profile campaign that cleverly uses its Chairman Vijay Mallya’s lifestyle, glitzy calendars, fashion sponsorship and event marketing, the group has positioned its beer, Kingfisher, as one instantly recalled for all ‘good
times’, comparable to FMCG products and media brands. And now with Royal Challenge, its other flagship, sponsoring a Formula 1 team, the firm is the highest brand spender in India.

To familiarise consumers with all these 200-plus new brands, alcoholic beverage firms are sponsoring events in a big way. Chivas Regal has a presence in the fashion circuit, while Foster’s beer is into developing pub-based communities.

Ashish Ahuja, partner at Pebble Street Pub in Delhi’s upmarket New Friend’s Colony, says, “We have teamed up with beer firms and developed an active community with over 600 members around Formula 1 racing. What began as a fad is now an established grid with a lot of younger people who have a passionate commitment.”

Besides high-spending events by brands like Chivas, there are also subtler avenues for new brands in India to take, in marketing themselves. One such unlikely development is the brand ambassador—literally, in the case of Silva Navarro, Chile’s ambassador in India who has hosted several wine dinners to showcase Chilean Wine.

The local wine stall is set to get even busier. Industry sources say that at least 70-odd wine labels from 15 countries will enter India in 2009. Besides rums from Cuba, liquors from France, sweet wines from Italy, at least 20 brands of local wines are likely to fight for shelf space.

So the next time you raise a toast, say cheers with something new!

About The Author

Ninad D. Sheth