Diageo India banking on premiumisation and Baileys for double-digit growth

Diageo India has set its sights on a remarkable decade-long double-digit growth trajectory, fuelled by a focus on premiumisation and a strategic entry into India's burgeoning organised desserts market with its iconic brand, Baileys.

Diageo stands as a worldwide frontrunner in the beverage alcohol industry, in it's portfolio the company has brands such as Johnnie Walker, Crown Royal, Smirnoff, Ketel One vodka, Captain Morgan, Baileys, Don Julio, Tanqueray, and Guinness.

Established in India under the name United Spirits Limited (USL), the corporation is publicly traded on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Hina Nagarajan, MD & CEO of Diageo India, told CNBC-TV18 that the sector is poised to witness a deceleration in volume expansion but a rise in value expansion.

According to her, the trend of premiumisation is here to stay, and similar to the trend observed in other fast-moving consumer goods (FMCG) companies, the liquor industry is witnessing this shift.

“We are delighted because we do want people to drink better, not more. So that is why you see the industry looking slower on volume growth, but value looks much better. And that is where the future profit pool is going to lie.” she said.

Diageo India's strategy involves focus  into India's organised desserts market, which is valued at Rs 27,000 crore. The brand at the centre of this venture is Baileys, known for its indulgent and creamy Irish cream liqueur.

Recognising the synergy between Baileys and the desserts market, Diageo India sees an opportunity to offer consumers a unique and indulgent experience. As per Nagarajan, Baileys' versatility lends itself perfectly to dessert pairings and culinary creations.

“We have brought more variants in there and I do think that five years later we would be saying that it is one of the leading brands in our portfolio,” Nagarajan said.

Nagarajan stated that the heightened concentration is on consumer preferences, contemplating the next offerings. The company is actively exploring captivating novel product categories. For instance, assessing the reception of Guinness, which is progressively gaining popularity. Given the significant number of Indians exposed to Guinness during their travels to the UK, we are introducing it with encouraging outcomes.

Another emerging category is Tequila, which is in its nascent stage in India but gaining momentum, especially in metropolitan areas. This category holds the potential to replicate the success story of gin. We are enthusiastic about introducing a host of exciting innovations and revamps to the Indian market.

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