The race is on to secure new Spirits consumers in emerging markets
As the Spirits industry in developed markets becomes more mature, major players in the industry are pinning their growth ambitions on accessing a new tranche of middle class consumers in emerging markets. Take a quick glance at the financial statements of Pernod Ricard and the trend is clear: last quarter growth of over 18% in major emerging markets China and India, vs. an 8% decline in France. The last few years has seen the industry rapidly expand its presence and innovate its offerings in an attempt to secure a foothold in these high potential markets.
The big question for the major internationals is how to access a set of emerging consumers who have more disposable income but can’t yet afford an international product offer. United Spirits, in which Diageo took a major stake in 2012, have succeeded in bridging the gap by offering aspirational ‘status’ products at an affordable price, unlocking significant volumes with an emerging set of Indian consumers. In Whisky, their most successful brands are a mix of local liquid and imported Scotch (termed ‘Admix’), which allows them to provide a higher quality, international feeling proposition that has cheaper COGs and duties therefore a lower retail price. Marked at a price points that are around 50% cheaper than a standard entry level international brand, United Spirits have been able to access a huge new consumer base resulting in surging growth.
For the big international Spirits players, the race is on to innovate new products that help access an emerging mass of aspirational new consumers in India, Africa, LATAM and China. Those that bridge the gap first and provide access to status at an affordable price will secure strong volume growth for decades to come…
David Cowser
comments powered by Disqus
