Diageo India, a leading spirits manufacturer, has expressed optimism regarding the opportunities in the Indian market. They strongly advocate for implementing an inflation-indexed price increase and establishing a harmonized tax structure for the liquor industry in the country.
According to Hina Nagarajan, Managing Director and CEO of Diageo India, there is a constant flux of policy changes initiated by state governments.
“Our desired state would be if we could get inflation-indexed price increases. Even an industry which is quite regulated like pharmaceuticals gets that, so our request to the government is please look at some of these models,” said Nagarajan.
She is “optimistic” about this and said “hopefully” it will come as they are working along with the governments on this proposal.
The British spirits maker displays a positive outlook on the overall opportunity in India and strongly advocates for including alcohol under the GST regime. They believe that this move would not only have the collateral benefit of eradicating the illicit liquor trade but also result in a more regulated industry, benefiting both the state governments and the stakeholders involved.
She said route-to-market changes are quite frequent in India. “It’s kind of a matter of routine for us to cope with route-to-market changes in three states but build the business in other states,” she said adding “We have just got used to dealing with this change in policies.”
On changes in the liquor policy in Delhi, she said, “Delhi has changed our business shape and for various reasons, the business has gone down.”
Besides Delhi, there were also changes in the policies of some other states such as Jharkhand and Chhattisgarh, she added.
“But we then tried to pick up business from all the other states in the country and there are so many of them that we can,” she said.
Regarding the home delivery of spirits in India, she mentioned that the concept is in its early stages and is gradually evolving alongside the e-commerce industry.
“We are working with key stakeholders for retailers, the government, etc to see what’s the best way to evolve these models. We are experimenting where we are allowed,” she said.
Nagarajan expects Diageo to be a top-performing CPG company in India delivering a “sustained double-digit, profitable topline growth.”
Diageo India is placing special emphasis on premiumization and innovation, driven by their expectation of a younger, wealthier, and more optimistic India. They anticipate that these factors will contribute to a substantial increase in premiumization within the market.
“Consumer landscape is changing so much that innovation renovation is going to continue to play a pretty transformative role on our portfolio,” she said.
In terms of consumption, India is still one of the lowest countries in the world. “Our penetration level, especially if you look at the luxury end, at scotch, for instance, is 3 per cent.
