The world’s biggest marketers of Scotch whisky are discovering to their chagrin that the superpremium appel is not going down Indian gullets to smoothly after all. Thirteen months and around a dozen brand launches later, Scotch accounts for a mere 0.2 per cent of the 32 million cease-a-year whisky market (one case is 12 bottles of 750 ml each). Marketers are now launching what they refer to as "local brands", priced on a par with Indian whiskers.
Seagram has launched Royal Stag at Rs 199, Oaken Glow at Rs 310, and Blender’s Pride at Rs 475. International Distillers & Gilbey range of whiskies period between Rs 130 and Rs 170. And these brands, helped by the Highland associations and attractive packaging – always a factor in the liquor market – are reportedly doing rather well for themselves.
The much-hyped and supposedly eagerly-awaited, Scotch brands at Rs 750 to 1,400 a bottle, that marketers have now come to accept, will be profit-earners only in the very long term – it at all
What exactly has gone wrong? Among other things:
* Of all the brands launched, only Teacher’s from Hiram Walker possibly had some a priori brand awareness among Indian consumers. And the core target audience – the deep-pocketed, foreign-travelled urban Indian – prefers to buy Scotch he can flaunt: brands like Chivas Regal, Johnnie Walker and J&B. The result: a repositioning of the brands available on Indidan shelves as second-rate.
The Scotch marketer’s problem is that under Indian law, he has to bottle his product in India; that is, he can import only the liquor concentrate, to which he adds water in India to get his final product. But it is the unadulterated Scottish heritage that forms the core appeal of the world’s strongest Scotch brands. Seagram, for instance, has never bottled Chivas Regal outside Scotland. International Distillers & Vintners has entered India, not with its strongest brand J&B but with Spey Royal.
The heffy price tags are a major deterrent to the growth of the Scothch market.
* Scotch marketers have not been able to make any significant dent in the bootlegging business. Admits Deepak Roy, managing director, IDI, "Legitimate Scotch trade has not even made a 10 per cent dent in the counterfeit market."
It’s no tired joke that more Scotch is consumed in India than is produced in Scotland. While the Scotch Whisky Association pegs total Scotch exports from Scotland at around 90,000 cases, the Indian official import figure is 1,60,000 cases. The point is, for a bottle of Teacher’s, available in Bombay’s retail outlets for Rs 750, the bootlegger charges Rs 550; and for Spey Royal – recommended price Rs 875 – around Rs 600.
In fact, to counter the parallel trade, retailers in Bombay are passing part of their dealer margins, between 5 and 15 per cent, on to customers. This, along with free gift schemes, is paying some dividends. "We used to sell between Rs 20 and 25 bottles a day earlier. Now we do 45 to 60 bottles," says Randeep Singh of Shah & Co, a major liquor retail outlet in south Bombay.
* Clearly, the hefty price tags are a majuor deterrent to the growth of the Scotch market and the 290 per cent duty on concentrate has marooned the Scotch marketer in a price bracket far above Indian brands. Most potential customers feel that the extra quality is not enough to justify the large price different between Scotch and premium Indian brands like Antiquity and Single Malt, which come in the Rs 500-Rs 550 range, and Royal Challenge and Peter Scot, which are around Rs 350 a bottle.
Hence the Scotch majors’ new strategy: launch a host of local brands and get a goodmarketshare, keep a token presence of international brands at the top end of the market, and wait for the Government to allow the import of bottled Scotch.
Of course, whatever the current state of sales, Scotchmakers are hardly ready to give up. "Foreign liquor companies are repeating a marketing strategy they’ve used across the world: sacrifice immediate benefits for long-term gains and ease out rivals through sheer financial muscle in the battle for the marketplace," says an industry veteran. Expect, therefore, a second wave of brand launches. And maybe even some takeovers.