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United Spirits aims to double share of business from new offerings

New products and variants contribute around 5% to Diageo’s overall business in India. Photo: Ramesh Pathania/Mint

Bengaluru: United Spirits Ltd (USL), India’s largest liquor maker, aims to double the share of business from new products and variants over the next three to four years in line with other markets where its parent Diageo Plc. operates. New products and variants contribute about 17%, 10%, and 24% of Diageo’s overall business in regions such as the US, Europe and Africa respectively. The share in India is just about 5%.

“We’ve got a lot of room to grow in terms of innovation in India because we started only a few years ago. We haven’t landed on an exact number yet but we should be looking to double it over the next 3-4 years,” said Julie Bramham, India marketing head, Diageo-USL. Bramham was the general manager for innovation for Europe at Diageo before she took on her new role in August.

In the past couple of years, Diageo-USL has launched three major product variants, including Captain Morgan original rum, McDowell’s No 1 Luxury, and Black & White 12-year old whisky.

It was only a few years after Diageo bought a majority stake in USL that the combined entity began to focus on ways to expand the business. As a result, building up innovation muscle took some time.

However, the company has said in the past that it has managed to improve the turnaround time on new products. Earlier, product innovation used to take 2.5-3 years. This has been reduced to 18 months, Diageo-USL’s India CEO Anand Kripalu said in March 2017. Kripalu also said the company had a cross-functional innovation team consisting of marketers, those with technical knowledge, brand creators, and sales, finance and legal personnel.

“We’re really proud of the success we’ve had (with innovation) and we will continue in India with brands such as Captain Morgan and more recently McDowell’s Platinum. Over time, these will make a bigger contribution to our profit and loss and we will introduce more,” said Bramham. Innovating in terms of products and variants is a huge part of Diageo’s business globally. In India, it has to be a priority not just to get new consumers and retain existing ones, but also to compete better with its biggest rival, Pernod Ricard SA, the maker of Seagram’s whisky and Absolut vodka.

Product innovations are more fitting for the premium product segment, an area where Diageo-USL has slightly lagged Pernod in growth, said an analyst. “Ideally the growth rate of the challenger brand should have been higher because it’s USL that has increased innovation over the last 3 years and can put in more money in terms of advertising. So the innovation funnel has to go up for USL,” said Abneesh Roy, senior vice-president at Edelweiss Securities.