We are gearing for the consumer market of the decade: Diageo India CEO

In the best of times, India is among the most difficult liquor markets to be in. Excise duties vary across states coupled with restrictions on advertising and less than 80,000 retail outlets, only complicates things. None of that seems to deter the big players.

At a media meet in Bengaluru, Praveen Someshwar, Diageo India’s Managing Director & CEO, said it was gearing up for what he termed, “the consumer market of the decade.” From a market size point of view, India, whisky accounts for close to two-thirds of total volumes.

“It is the largest whisky market in the world and half of global consumption comes from India.” The acquisition of United Spirits in 2014 gave Diageo a significant foothold in India. The portfolio today consists of brands like McDowell’s, Royal Challenge, Johnnie Walker, Signature, Black Dog and Black & White. 

In September 2022, it sold 32 brands in the popular segment to InBrew Beverages. It included Haywards, Old Tavern, Honey Bee, White Mischief and Romanov. In the liquor industry, popular, prestige, premium and luxury categories are derived from price points.

The existing portfolio, with a clear focus on premiumisation, he explained, serves “Three Indias.” Apart from premiumisation, the thrust will be on LDA (legally drinking age, a key consumer base) and a growing repertoire. For FY25, the company had a total income of Rs 27,612 crore and a net profit of Rs 1,582 crore – significantly, volumes were up 3.5 million cases. 

In terms of net sales value, the luxury and premium category was 33% of the net sales value in FY25 compared to 22% in FY21. Meanwhile, the popular segment stood at 33% against 41%. Spirits penetration in India is at 40% compared to 62% for the US.

According to Someshwar, the period between 2015-21 was one of “muted innovation.” In the recent past, Diageo has launched McDowell’s Double Oak Barrel whisky, McDowell’s Single Malt whisky and the X series premium rum, in addition to American Pride whisky. In the white spirits segment, Smirnoff brought to the market variants, among which were minty jamun, mirchi mango and zesty lime. 

“Our diverse portfolio has three Rs 1,000 crore brands, three Rs 500 crore brands and four Rs 100 crore brands,” added Someshwar.  

A report put out by Motilal Oswal Financial Services in August right after the company’s Q1 FY26 results, said its EPS (earnings per share) estimates were largely unchanged for FY26 and FY27.

“The improvement in margins is supported by a favorable shift toward premium products and effective cost-control measures. We model approximately 18% EBITDA margin in FY26 and FY27,” it stated. Specifically, on premiumisation, it highlighted the part on the company selling a large part of its popular portfolio to focus on its global strategy for the premium portfolio. “The liquor industry is currently witnessing an upgrading trend, which aligns well with the company’s renewed emphasis on P&A (prestige and above), supporting the long-term liquor upgrading narrative in India.”