COVID-19 effect: It will take more time for normalcy to return, says Diageo India head

COVID-19 pandemic has hit consumer-facing businesses across the country, and Diageo, the maker of flagship liquor brands like Johnnie Walker, Smirnoff, McDowell's No.1, Black Label and White Mischief is no exception. However, Diageo India head Anand Kripalu is hopeful that the company will be able to tide over the downturn.

“Let me put it this way, the worst is behind us but the best is yet to come,” he told CNBC-TV18.

“During the lockdown nothing happened; every state is

“Today almost every factory that we have in India is functioning close to pre-COVID capacity. We are ready to service demand as it gets close to pre-COVID demand,” he added.

But as things stand it is difficult to say when things can get better, said Kripalu.

“There are too many factors at play, both negative and positive. In the western world, people have announced dates of when they will open up which sectors. We don't have that clarity in India.

“Another factor at play is that we don't know if people will be okay to go to bars, pubs and restaurants even when they open. There should be some tax and price increases also.

“On the costing side, there are home deliveries and e-commerce models that are beginning to pick up in a small way. We are hoping that we can make the most of that. That can be a long term game changer for the industry. Once travel opens up more, we expect duty free sales to bounce back,” he added.

The big boom for most consumer-facing businesses especially in the liquor segment are festive sales but this year the boom won't be the same with festivities expected to be muted.

“We do expect some recovery in September-December period due to festive sales but it will be different. Big weddings and banquet parties may not happen. It will take some more quarters for us to return to complete normalcy that we had during the pre-COVID period,” said Kripalu.

On being asked about the bestselling brands from the Diageo stable during the lockdown, Kripalu said that few people downtrade their preferences for liquor.

“There could be only some downtrading. So segments

Diageo has also been hiking its stake in United Spirits. It currently holds 55.9 percent stake in the company. On the importance of the USL portfolio, Kripalu said that Diagoe doesn’t see the two businesses as different.

“India is a critical market for Diageo and we are committed to investing here in the long term,” he said. However, he called talks of delisting USL from India “pure speculation.”