Blenders Pride, the leader in the whisky market for a long time, can’t leave the glass half full right now.
1995 started many things in India, like Airtel, the Delhi Metro, and whisky Blenders Pride. That brand was the first whisky that a whole generation of whisky fans in the country tried.
After 25 years, there may be a renaissance of gin in the country, but whisky, rum, and brandy are still the most popular drinks. Bigwigs in the global alcohol and beverage industry know that India loves its brown spirits, and India is the largest whisky market in the world.
“My dad likes whisky, single malts, and IMFL (foreign liquor made in India), but he always returns to Royal Stag. I guess it’s how the brand tastes and how often they drink it. “That has been the case for more than 20 years,” says Akriti Agrawal, a Bengaluru-based professional who is 29 years old.
Popular brands include Royal Stag and Imperial Blue whisky from Pernod Ricard and McDowell’s and Royal Challenge from Diageo. A 750ml bottle of these brands costs less than INR1,000 (price for Karnataka). But in the last two years, the price of a 750 ml bottle that costs between INR1,100 and INR1,800 has gone up. Blenders Pride has been the leader of this band for many years.
Pernod Ricard became the market leader in that category because of its brand. But now, after keeping its place on India’s whisky leader board for 25 years, Blenders Pride is seeing a change. Many brands are claiming their place in the value category, thanks to new products, lower prices, and changes in consumer tastes. From Oaken Glow and Oaksmith to a refreshed Signature, this price range has seen a lot of new competition in the past few years. Will the value category grow to include these new brands, or will Blenders Pride whisky and other older brands lose market share?
A liquor store owner in Bengaluru says, “Blenders whisky is moving like it always has.” But will that continue?
How prices and positions are set
India has four types of whisky: popular, prestige, premium, and luxury. According to a draught red-herring prospectus of Allied Blenders, the popular segment sold 67 million cases in FY21, which was 37 percent of the market’s volume. This segment catered to price-conscious consumers, and in FY25, it is expected to reach 83 million cases.
In FY21, half of the market’s volume, or 91 million cases, came from the prestige segment. It has grown steadily over the years, and by FY25, it is expected to reach 135 million cases, making up 53 percent of the market. The luxury segment is made up of high-end imported whisky that is bottled in India (BII) or in the country where it was made (bottled in origin) (BIO). This market segment is substantial in on-trade, such as the hospitality segment.
But the premium segment is expected to grow the most quickly. One of the strong themes of the market is the premiumization of the value category, which comprises the popular and prestige segments. In FY20, this category made up about 87% of the market’s total volume.
“When it came out, the price of Blenders Pride was just right for both manufacturers and customers, and it was one of the brands that made the most money back then. Back then and even now, the profit margins could be as high as 70–75% per case, says Siddharth Banerji, managing director of Kyndal Group.
Banerji says that when it first came out, there was a significant price difference between the popular or mass brands of whisky and the best brands. “That meant that the middle price range between popular and high-end was up for grabs, which manufacturers quickly realized and took advantage of. From a consumer’s point of view, people who wanted to drink something better than McDowell’s were introduced to a better drink that didn’t make them go broke.
Euromonitor International, a market research company, says that whisky will make up 62% of the sales of alcoholic drinks in India in 2022. Most people buy whiskies that cost less than INR500 per 750ml bottle, but there are now more ways to switch to a high-end brand.
One of the main reasons this category is getting more crowded is that manufacturers can make more money from it, and consumers don’t have to pay much more to switch to a better liquid. Manufacturers are taking advantage of this trend by ensuring they have products in all price ranges. With all this going on, Blenders Pride suddenly has to deal with competition from many places.
Vikram Achanta, the consulting editor of Brews & Spirits magazine, thinks that the value segment is getting more crowded because it is an excellent place to grow from a business point of view. “This market segment has grown by 10% to 15% over the past few years. “These products are more profitable for the companies that make them than the brands at the bottom of the range,” he says. “Products at the low end of the market are working with limited working capital and raw materials that are getting increasingly expensive. So, in the end, the manufacturers get squeezed from both ends. This is also why Diageo sold 32 of its brands to Inbrew.”
Pernod Ricard is best known for its high-end products like Chivas Regal, Royal Salute, and Glenlivet. However, thanks to Blenders Pride, the French company has always been the market leader in the value category. Pernod Ricard makes popular brands like Royal Stag, Imperial Blue, Passport, 100 Pipers, Something Special, and Oaken Glow, in addition to the three types of Blenders Pride (Rare Premium, Ultra-Premium, and Reserve).
But there is a lot of competition.
It is getting harder to win.
Diageo, which owns McDowell’s Royal Challenge, Antiquity, Signature, and many other brands, is Pernod Ricard’s biggest competitor in India. Diageo India’s sales increased by 13% in FY21, and IMFL was responsible for 5% of those sales. According to the company’s FY21 annual report, its prestige and above segments grew by 12%. McDowell’s No. 1, McDowell’s No. 1 Luxury, and Haywards Fine Whisky were the main contributors to this growth.
McDowell’s Royal Challenge whisky, which came out in the 1980s, is one of the best-selling whiskies in the country. McDowell’s is well-known and easy to remember because it sells rum, brandy, soda, and water.
In FY 21, Diageo had more sales than its competitor Pernod Ricard. Diageo agreed to sell and franchise 32 brands to Inbrew Beverages in a deal worth INR820 crore in May.
In a press release, Diageo’s managing director and CEO of USL, Hina Nagarajan, said that the deal would help the company focus on the prestige-and-above category. This category, which has relatively higher profit margins, is expected to make up more than two-thirds of the company’s sales.
On the list of 32 brands are Old Tavern, Green Label, Honey Bee, and Romanov whiskies. This list does not have McDowell’s or Director’s Special on it.
Beam Suntory, a Japanese company, is the other player in the whisky game. “Two years ago, Beam Suntory released Oaksmith Gold and Oasksmith International. “It was a big move because, despite being a big international player, it didn’t have anything in its portfolio at this price range in the IMFL whisky category,” says Achanta.
He said that the company spent a lot of money on this and hired a master blender to help with the recipe and learn how Indians drink and what they eat with their food. “They also added some bourbon to the mix, and the brand did well,” he says.
Even though the pandemic helped increase sales in the off-trade channels, there will be more activity in the on-trade media now that restrictions on the food and drink industry have been lifted. Brands will also be found by people who go out to get a drink.
Since these brands are also cheap, even their on-trade prices won’t break the bank for people who want to try something new. “The price range is based on what the customer thinks and how much money they have. Banerji of Kyndal Group says, “People will drink no matter how much money they have.”
Banerji also points out that the prices of products that are bottled where they are made have gone down in north India and some other parts of the country. He says the IMFL business is going through many changes and is no longer a category to strive for. “Manufacturers are trying to lower prices, which means that the category as a whole will start to change. If you sold 100,000 cases for INR1,000 and then dropped the price to INR800, you would sell 150,000 more cases. It’s not the price range changing; it’s where things are placed. Because of this, the brands with competitive prices are growing much faster,” he says.
Blender’s Pride’s history
Blender’s Pride is the most prestigious brand of whisky in India. It was first sold in the country in 1995, almost 30 years ago. Even though most millennials were probably too young to drink back then, the brand introduced an entire generation of whisky lovers in the country to the drink. Back then, it was competing with Royal Challenge, which was also the market leader. In 2005, Vijay Mallya’s United Breweries bought Royal Challenge from Shaw Wallace. By 2008, Blender’s Pride had taken over Mallya’s Royal Challenge.
Younger consumers might wonder why Blender’s Pride is such a big deal for Indian whisky lovers. For one thing, when it came out, Blender’s Pride was thought to be one of the best whiskies ever made in India. The brand is made by Seagram, a Canadian multinational drinks company. In 2001, its current owner, Pernod Ricard, took over the brand’s operations in India. In a deal worth USD8.15 billion, Diageo PLC and Pernod Ricard SA bought Seagram together. Pernod Ricard bought the rest of the company from Diageo PLC for USD3.15 billion. Diageo PLC paid USD5 billion for 61.4% of the company’s shares.
From then until now, the French alcohol and beverage company has stayed true to its spirit of premiumization. The Blender’s Pride brand has the most extensive premium spirits portfolio in the country, with brands like Royal Salute, Chivas Regal, Glenlivet, and many more. As the price of alcoholic drinks went up over the years and more foreign brands entered the country, the company came out with Blender’s Pride Reserve in 2011.
Premiumization and the way customers act
India drinks a lot of whiskies, but most of it comes from the popular segment. On the other hand, the prestige segment is increasing, and it’s a trend that is also shown by what the manufacturers do.
“Policy changes have caused a lot of changes in alcohol prices over the last few years, and these changes are being felt in Delhi and nearby states. Even high-end brands want to sell at one-plus-one deals, says Ankur Chawla, founder of the spring water brand Responsible What and an alcoholic beverage consultant. “Why wouldn’t someone switch from Blenders Pride or 100 Pipers to Red Label if it only costs a few hundred dollars more?”
Chawla agrees that the gaps between prices have gotten very small. “Pricing bands are shifting because premiums are increasing, and policies are changing. A regular drinker is willing to spend between INR1,200 and INR1,400, but they want a better brand. “They know that these (better brands) are now on the market,” he says. “In every category, buyers and sellers prefer the higher price range.”
Also, consumers are eager to try new things. Before, someone who bought a bottle for less than INR1,000 could not easily switch to the INR2,000 band. The second one was a goal. But now, if someone spends INR1,000 on a bottle, they wouldn’t mind spending INR1,500 on a better brand. Also, people are getting more money to spend.
Pernod Ricard, which has the country’s most extensive collection of high-end spirits, has kept Blenders Pride at the top of the market and in the lead for the brand. Over the years, prices went up, and more foreign brands entered the country. In 2011, the company came out with Blenders Pride Reserve. In Karnataka, where a 750ml bottle costs INR1,900, there isn’t much price difference between the regular and reserve versions.
Even though it will be hard for a new brand to match Blenders Pride’s national sales in the next couple of years, Indian shoppers, especially millennials and Gen Z, are becoming more open to trying new things when they shop. If there are new things to try, they will. Also, the fact that customers stayed home during the pandemic has significantly boosted premiumization.
That’s important because it’s against the law in India to advertise alcoholic drinks.
Since alcohol and beer can’t be advertised in the mass media, they are primarily marketed through third parties. The essential type of surrogate marketing is a push and promotion at the point of sale in the food services industry. In addition to brand extensions in products like mineral water and soda and merchandise, sports, music, and fashion events are often used as platforms.
Recently, digital media has helped the alcohol industry reach more consumers, and campaigns led by influencers have become a vital part of the marketing mix. Alco-Bev companies’ marketing plans have also included promoting responsible drinking and making people aware of how dangerous it is to drive while drunk.
Even though India has a law against advertising, Pernod Ricard has kept Blenders Pride’s position as a high-end brand for the last 30 years.
Blenders Pride has worked on its surrogate advertising over the years, with aspiration always the main focus. Alia Bhatt, a well-known actress, became a brand ambassador for the company in January 2022. The brand has also worked with actress Priyanka Chopra over the years.
The brand has held the Blenders Pride Fashion Tour for the last 15 years, and designers like Manish Malhotra, Anamika Khanna, Abu Jani, and Sandeep Khosla have shown their work there.
Think about these groups of data. The World Bank predicts that by 2031, 550 million more people will be in the “middle class and above” income bracket. IWSR says that by the end of 2022, whisky sales in India will be higher than before the pandemic, which means that sales will be higher than in 2019. When you put these two things together, you can assume that premiumization is here to stay and that manufacturers will continue to push the mid-to-high-end price range with new products.
Even though popular brands bring in a lot of money for the companies, experts in the field say that aspiration is no longer based on price band and has moved toward exploring different types of products.
On the one hand, consumers are more likely to try new things because whisky is getting more expensive. On the other hand, the whisky market is changing because people are less loyal, and whisky is getting better value for money.
Blenders Pride is firmly in the top spot, with sales of millions of cases across India, which is no small feat. But people are becoming different and no longer drink the same brand just because they have for a long time. If the gap between popular, prestige, and premium whiskies keeps getting smaller and there are more options, they are more likely to switch to a better whisky.
edited and proofread by nikita sharma