diageo: Diageo India records double-digit growth thanks to scotches; accelerates premiumization
The company is working on a premiumization strategy and reshaping its portfolio with renovations and innovations from brands such as Signature and Royal Challenge and stepping it up after gaining momentum.
The move is intended to bolster Diageo’s stake in prestige and accelerate growth rates that are visible in earnings, she said.
“We have a very good presence in scotches. And with the activations we’ve done around Johny Walker, the renovation of the Black Dog scotch and the launch of Talisker and Singleton, which are malt brands, we’re seeing a very high double-digit growth in scotches and that massively helps our premiumization journey,” Nagarajan told PTI.
Diageo India will focus on accelerating the luxury and premium Scotch Whiskey portfolio, increasing participation in higher prestige.
The company manufactures, sells and distributes an exceptional portfolio of premium brands such as Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No. 1, Smirnoff and Captain Morgan.
Additionally, it has also introduced Royal Challenge American Pride, an American bourbon whiskey, which helps the company reach out to younger customers who want accessible drinks.
“It brings more women into the fold. It’s a really inclusive launch. It reinforces our participation in higher prestige,” she said.
Diageo India aspires to be the “best performing” consumer products company with double-digit revenue growth in the country.
“Our mission is to be the premier CPG business in India, with sustained double-digit revenue growth with mid to high teenage margins and also delivering long-term value to our stakeholders,” Nagarajan said.
The company also works towards ESG (environmental, social and governance) objectives and its brands participate in sustainability initiatives.
Diageo India, a unit of British spirits maker Diageo Plc, also aims to be a water positive company and works on conservation projects and tries to replenish more water than it uses.
“Under Extended Producer Responsibility (EPR), we collected 41,000 tonnes of plastic waste in March and recycled it. By the end of June, we will be plastic waste positive. We will collect and recycle more plastic than we put out,” she says.
It is also working towards net zero carbon by 2025 on Scope I and II operations and 2030 on Scope III operations.
“Greenhouse gas emissions from our own operations have been reduced from 26,000 to 6,000 metric tons…We continue to go zero fossil fuels in our distilleries,” she said, adding that the company also works on reforestation and doubles solar capacity from 1.3 to 2.6 MW
Diageo India is taking packaging initiatives on the sustainability side. The company introduced the Hipster format, a pocket-sized portable scotch whiskey in a PET bottle.
“Now Black & White uses a 100% biodegradable and recyclable Hipster pack and all other brands that are in the Hipster format will switch to this 100% biodegradable and recyclable pack over the next few months,” she added.
Diageo India has also revamped Signature, which is a flagship premium brand, with sustainability proposals.
“We have renovated it with sustainability proposals. The glass bottles in which it is sold are made of 40% recycled glass. The cardboard, which is on the bottle, is made from sustainably sourced paper, certified by the Forest Stewardship Council. It is 100% natural ingredients,” she said, adding that it was well received by consumers.
Diageo is now on a “strong upward trajectory” on stock growth in the market, where it has revived. It also revamped its popular Royal Challenge brand in three states and is on a roll, and would continue to roll out across the country now, Nagarajan added.
Last month, USL announced the sale and franchise of more than 30 popular brands to Singapore-based Inbrew Beverages for an estimated consideration of Rs 820 crore.
USL’s popular portfolio comprised around 30 low-cost entry-level liquor brands, with an average price below Rs 400 for a 750ml bottle, and straddling whisky, rum, brandy, vodka and gin.
The company expects to complete the transaction, which includes brands such as Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label and Romanov, by the end of the September quarter.