“It is about testing Indian craftsmanship and our innovation muscle and developing products which are different from other mass innovations,” said Deepika Warrier, chief marketing officer at Diageo-owned USL. “With the new brand, we are entering a new category, which will cater to the premium needs of consumers. Affluent consumers are becoming increasingly discerning and they are looking at experimentation and new taste.”
Craft spirits are essentially handcrafted and produced by a small distillery, which often uses locally sourced ingredients and materials. USL’s new product will be India’s first small batch and artisanal 100% rice whisky, which has been distilled in Punjaband matured in Goa. Despite being an Indian made foreign liquor, the brand has been priced similar to the high-end scotch segment and sold at a few outlets in top cities such as Mumbai, Delhi, Goa and Bengaluru.
Globally, small, independent distillers are slowly taking market share in the premium end and niche market. Both Diageo and Pernod Ricard have been present in the artisanal nature of craft spirits mainly through single malt scotch or vodka, which are being distilled, blended and hand bottled in micro-distilleries.
“The new product is not one-off and is about launching a journey in craft. Going forward, the craft segment is set to grow and contribute to both top-line and bottomline across categories,” Warrieradded.
Earlier this year, USL said it is reviewing select mass-priced products in its portfolio as part of a strategy to drive higher profit by focusing on premium brands. Diageo’sprestige-and-above (P&A) business now accounts for over two-thirds of its overall sales, up from less than half five years ago, indicating a strong focus on premium segments.
Over the past four years, USL has moved towards the franchisee model in the popular segment with fixed-fee arrangements in more than a dozen states and this has helped expand margins. The popular segment accounts for almost half of its annual volumes and about a third of net sales, although it has been shrinking after it shifted focus to pricier products. Margins are low in the economy segment, where distillers have little pricing power and branding capability.