“Generic positioning platforms will not work any more”
— Alok Gupta

Can you chart the evolution of liquor industry during the last 10 years?
The alcoholic beverage segment represents a vastly different scenario today in comparison to a decade ago.

Since last 10 years, the Indian liquor industry has evolved at every stage. 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 behaviours of consumers, who are now clearly seeking “value” over “price”. In many ways this reflects branding of a commodities 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.

What forces drive the liquor industry in India?
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 a healthy trend for both the Indian consumer as well as the domestic liquor players.

How many segments, branded or unbranded, exist in the liquor industry and in what proportion are they growing? How are the brands of UB groups performing vis-à-vis the competitor’s brands?
The IMFL industry in India is estimated at nearly 84 million cases and 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.
The UB Group Spirits Division (UBSPD), which comprises McDowell and Co Ltd and Herbert sons Ltd, is likely to cross 35 million cases in 2003-04. 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. UBSPD ranks as the fifth largest beverage-alcohol group in the world. Last year, we registered a record growth of 14.5 per cent. We 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 just in market shares but also in our manufacturing capacities, product ranges and distribution strengths.

What are the marketing challenges that a liquor company faces (with specific reference to India - constraints on mass advertising, social responsibility and consumer preferences)? How is UB group dealing with these challenges?
A highly regulated environment and poor shopping infrastructure in the alco-bev industry is unfortunately diametrically opposite to the direction India is heading. Consumer 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 both in the western and the eastern economies. We are hopeful that one day such a code will become a reality.
We are a firm believer in investing in social-awareness programmes and have in past run campaigns on “Responsible Drinking.” As a policy, we do not sponsor or organise events at college level. In addition, we take all necessary precautions to ensure that we do not hurt anybody’s social or religious sentiments.

What, according to you are the key performance metrics against which a firm must excel in order to be the leader in your industry? How does a firm set benchmark against each of these performance metrics?
The Indian consumers have come of age today. The entry of international players has increased the consumer expectations. As the leader, UBSPD remains aligned with the evolving consumer expectations and the market realities.
1. Marketers today need to look at the industry with new lenses and break away from the traditional price-value equation and start creating value for which the consumer will happily pay the right price; this will considerably enhance profitability also.
2. Focus on brand building, create unique and relevant proposition to command a larger market share. This will reduce dependence on the highly regulated trade and bring down the cost of sales.
3. Balance the short-term with the long-term; while one must focus on today, it is imperative for the marketer to plan for tomorrow, especially in view of the opening of the market, as duty trade barriers will slowly disappear.
4. Adopt and customise global benchmarks, both for products and the overall product experience. To sum it up, the company that aligns it’s thinking to global levels but connects with the consumer at a local level will thrive.

What are the value propositions that a firm in this industry can draw on, to create a distinctive positioning in the minds of the target customer groups? How does possession of a number of power brands help in building market share and obtain price premium?
Business model and strategy are not independent of the social and economic milieu we operate in. Value proposition would obviously depend on the target consumer group. One thing is however sure: generic positioning platforms will not work any more; proposition will have to be based on consumer insight and marketers that commit themselves to this process are more likely to succeed.
Though McDowell’s Signature is positioned on the platform of “Success” the communication strategy is based on the consumer insight that in today’s context, success goes beyond material wealth and its apparent symbols and trappings. Success today is all about new rules - it is about new ideas - and this forms the backbone of the “The new sign of Success” campaign in which real life individuals, who stand for such success, have been showcased as “Signature success icons”. The campaign inspires and produces an emotional connect and more importantly, is relevant to the target consumer leading to brand adoption and loyalty and, to some extent, even word-of-mouth.
Given the market realities, UBSPD has consciously followed a strategy of being present at different price points across different flavours. Our focus on building brands has given us an enviable portfolio of as many as eight “millionaire” brands, the fourth biggest basket of brands in the world. We have identified a set of Power brands to provide 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 trendsetter in India, and we have no intention of reducing ourselves to a niche player.

Finally, what are the core value propositions of the UB Group and how are they different from competitors?
Our core value is to continuously adapt to the changing consumer and therefore to stay relevant, in a unique way, in the fast changing socio economic and cultural context. We believe in offering a wide range of products to be able to meet the demands of all types of consumer groups. Innovation has always been our thrust area and as market leaders we are focused on challenging the paradigm. This allows us to stay in the lead all the time. As of now, we are close to being the fourth largest liquor marketer in the world. Quality delivery has always been recognised as the most important imperative. Efficient and friendly servicing of the market ensures that we have the nest support of the retail and the on-premise network.