Founded in 1988 on the back of a single brand, Officer’s Choice, a whisky that has become a powerhouse in the market and is the third-largest selling whisky in the world, Allied Blenders & Distillers (ABD’s) portfolio has now expanded across multiple market segments including brandy, rum, vodka and bottled water, with its products available in 22 countries. Shekhar Ramamurthy, Executive Deputy Chairman, Allied Blenders & Distillers, in an exclusive interview with Bizz Buzz, says: “We have consciously developed our product portfolio to provide consumers with winning, high-quality brands at various price points. While staying invested in mass-premium whisky which is at the core of our business, we will build on the success of Sterling Reserve with launches of ICONiQ White, Srishti, X&O – all whiskies which will be margin accretive”
How is the consumer alcobev consumption pattern changing in India and how at ABD you are addressing this change? Is ABD paying special attention to the consuming habits of Gen Z by way of new products?
The alcohol market in India continues to grow and evolve. It is important to keep in mind that the socio-economic landscape of our country is very complex. There is growth and change at every level. Greater social acceptance for consumption of alcohol is being seen across social strata. In the more affluent cities, there is also the visible emergence of speciality spirits and super premium offerings.
ABD’s approach to keeping the consumer first is at the core of organisation thinking. ABD has and will stay invested in the mass-premium segment while building a premium portfolio. We understand that consumers aspire at every economic level, and we strive to give great brands of good and consistent quality. We have recently introduced Sterling Reserve Cola Classic Mix – an innovative offering of a full-strength whisky with a cola flavour. We have used the consumer insight that many young consumers add cola to whisky. We have an exciting new product development pipeline and are looking to add more exciting brands to our portfolio.
Being the third largest IMFL player in the country, do you have any plans to acquire brands outside whiskey to increase your portfolio and boost growth? Can the market expect a slew of mid-market, premium categories and above whisky new brand introductions in the next eighteen months?
In a whisky consuming market predominantly, ABD has an edge as its understanding of whiskey is deep because it is in majority a whiskey-focussed company. The Indian spirits market is largely dominated by whiskies. ABD’s traditional strength has been in this category. However, as a part of our growth agenda we are looking at other flavours too. We are focussed on building our own brands, however, if any interesting inorganic opportunities come our way, we shall critically evaluate them. Recently, the company launched a clutch of new whisky products across price segments:
♦ X&O Barrel Premium Whisky is a premium blend of best Scotch malts matured in American bourbon barrels and finest Indian grain spirits.
♦ ICONiQ White is a delightful blend of imported Scotch malts aged in bourbon oak casks, blended with select matured malt and finest Indian grain spirits.
♦ Srishti Premium Whisky is a blend of rare Scotch Malts paired with select Indian grain spirits; its unique expression is rounded off with curcumin.
♦ Sterling Reserve B7 Whisky Cola Mix where the award-winning Sterling Reserve B7 has been infused with cola to add a flavour to fun drinking occasions.
Your only distillery is located in Telangana. How does Telangana and the entire South India hold importance for ABD’s business revenue?
We own and operate our distillery located in Rangapur, Telangana that is spread over 74.95 acres with a built-up area of over 25,000 square meters. Our in-house distillation capacity of Extra Neutral Alcohol (ENA), the key material used in the manufacture of our products, is 54.75 million litres per year. The Indian IMFL market is dominated by five Southern States in India contributing more than 50 per cent of total consumption by volume. Karnataka and Tamil Nadu are the top two markets in the country contributing more than 30 per cent of overall consumption of IMFL by volume in India in fiscal year 2020.
ABD has embarked on a journey of institutionalisation. How are you steering this journey? Early days, but what’s it like to steer a 100 per cent family company with its own peculiarities?
I think the important thing is to be constantly vigilant for the opportunities of tomorrow while meeting the challenges of today. I am very mindful that a successful organisation does both equally well because you are judged on today’s performance, but you are evaluated on your preparedness for the challenges of tomorrow.
We are working towards a portfolio that meets the aspirations of every emerging segment. And we will approach it with quality, speed and excellence, and make our brands desirable. We have a deep commitment to quality. Behind the scenes, a solid infrastructure is in place to support our consumer-facing products. We have production facilities across the country, a strong sales organisation and a lot of intellectual capital. We also have a robust network of high-quality suppliers and vendor partners. Right now, the company is 100 per cent privately owned, but the management is almost entirely professional. The promoters of the company have fostered a culture of independence and empowerment that runs across all levels in the company. I personally encourage people in the company to express themselves since the best decisions happen when ideas flow from different sources.
ABD is also aiming to reduce its carbon footprint through introduction of solar power at their bottling plants. Elaborate on plans to make ABD a cleaner and a greener company and the targets to make ABD a green company?
Our sustainability initiatives are aimed at zero harm, zero waste and zero discharge. To achieve this vision, quality and compliance controls are being established and revamped right from the supply chain to the value chain. We intend to reduce our consumption of fossil fuels and increase use of aseptic packaging, implementation of solar energy to power manufacturing operations and reduction in the use of water as part of our distilling and IMFL bottling operations.
We aim to replace 70 per cent of the power with renewable solar power in our owned units in the next financial year (FY24). To achieve this ABD is installing solar power plants in seven of its units. Total installed capacity of these plants will be 1400KW. We have instilled Environmental, Social and Governance (ESG) at the heart of our operations and are taking steps towards a model that will deliver cleaner energy and sustainable value.
How has been revenue growth in the first half of the current fiscal? What factors have helped you drive this growth? Post-Diwali, are you seeing any change in alcohol sales across the country?
The company has been growing at 22 per cent during the current fiscal. India’s economic growth is uplifting millions of people to higher socio-economic strata. And that brings more people into branded categories of whisky. Positioned in the mass premium segment Officer’s Choice is ABD’s entry-level branded whisky. It’s at that sweet spot where people coming into the branded segment have a product that offers quality, is aspirational and widely available.
For the urban elite with a higher disposable income, Sterling Reserve is ABD’s more premium offering, with two labels: Blend 7 and Blend 10. We launched it five years ago and it has the rare distinction of selling more than a million cases in the very first year of launch. The alcobev market, in general, starts to pick up Diwali onwards and the momentum continues till Feb/March. A combination of factors including festivals and weather lead to the uptick in sales over this period. This year too, we are witnessing a similar trend.
How are you leveraging digital marketing to create brand awareness and expand your reach to different geographies?
With near-universal mobile phone penetration in the country, digital and social media are hotspots to connect with consumers. Digital and social media deliver higher efficiency on account of ability to target basis geography and audience profiles. We will want to evolve to a digital-first company and continuously engage with our consumers through a mix of relevant content and appropriate targeting. We have made our foray into the metaverse in the form of ‘ABD Metabar’ – an immersive virtual reality space housing digital displays of our lead offerings. We are the first alcohol beverage company in India to build a metaverse presence and launch new products therein, ahead of their physical launches. With its futuristic designs the ABD MetaBar, optimized for both mobile and desktop usage, taps into the growing interest in the metaverse amongst consumers and their willingness to experiment with novel digital activations.
How does a whiskey company create stickiness among its consumers in the teeth of increasing competition from deep pockets?
In a strongly regulated industry where we cannot advertise product benefits or offer better value and price discovery on media, it is important that we work on consumer insights and build brand communication and positioning. There are many successful stories, even in recent times of brands having achieved that, as evidenced by our own success with Sterling Reserve, making it the fastest growing spirits brand globally in 2019. Innovation is key to disruptive growth. We have worked very hard on this in recent years and have now introduced some unique, first-time products in the category.
Take Srishti Premium Blended Whisky – it is sensory-neutral despite having a natural ingredient like curcumin infused in the blend. Curcumin is the active ingredient with benefits of turmeric or haldi. The product has the aroma, taste, and palate of a good whisky and the addition of natural ingredients does not change any of the sensorial profiles of the product. In a world which seeks natural and organic products, this has its benefits.
Innovation at ABD has not been limited to product but has been extended to interesting packaging formats. We now have a hip-shaped flask bottle in PET called the Sterling Reserve ‘Hippy’ for the young and trendy consumer. We have consciously developed our product portfolio to provide consumers with winning, high-quality brands at various price points. While staying invested in mass-premium whisky which is at the core of our business, we will build on the success of Sterling Reserve with launches of ICONiQ White, Srishti, X&O – all whiskies which will be margin accretive.