How has the Indian market delivered for Diageo?
The Indian market, not just for Diageo, but for any player operating in this segment is a very promising market, given both the demographic as well as the economic dividend. The market provides opportunity in any category if one is here to play and invest for the long term. I think Diageo in a similar manner is experiencing first hand, the opportunity that this market has to offer through a sustained programme that we are implementing on our brands. We are seeing the benefits of our investments.
It’s a win-win. The Indian consumer has access, through the Diageo portfolio, to a range of international premium brands that possibly were not available in the country earlier but now are.
India currently does not factor among the top five markets for Diageo globally. What are Diageo’s plans to build India as a market?
When you compare it with the rest of businesses that exist globally, India is a relatively small player and understandably so. Because our journey has been a very recent one in the market. So 10 to 15 years appear to be small or very recent compared to the kind of presence we’ve had in other markets. As a consequence, its contribution is relatively small.
But if we look at Diageo’s commitment to India, us picking up stake in United Spirits is proof of the fact that the organisation is committed to increasing its footprint in India. We have been witnessing very healthy growth, consistently, since the last three to four years since we’ve turned our attention towards investing behind our core brand portfolio.
India, not only for Diageo, but for any good international player, is a market for the long term. The idea is not to get cowed down by that fact that today it is small and not as significant. It is really the future potential that is driving the investments, focus and attention.
Does surrogate advertising make it difficult to approach the Indian market?
I would say no because it isn’t as if India is a unique example in the Diageo world of a market which has challenges with respect to direct product advertising. There are lots of other markets in the world which are equally challenging or more challenging than India and we are operating in those markets successfully.
What it does is it throws up a different challenge with respect to what it is that you have in your hand to create a brand positioning and bring your brand alive for consumers in a unique and differentiated manner. Ultimately, as an organisation we respect the local rules that are applicable in every country we’re present in and we ensure we’re playing within those rules. Within that space, Diageo is definitely a very creative organisation where we can craft different growth-driving marketing strategies and approaches to be able to build that relationship and communicate with its respective consumers. That’s where our marketing muscle is strengthened.
Because every market offers its unique set of challenges and need to play within the rules of that particular market, the onus is on the business and the marketing team to find ways in which we can reach out to consumers at scale to be able to drive growth on our brands. It is not about following a conventional path of campaign building and advertising. As long as you’re reaching out to the consumer, the channel, whether advertising or experiential or direct communication, is inconsequential.
What is Diageo trying to deliver in India – product, brand or an experience?
It is an amalgamation of everything. Diageo and this category offers us so many touch points that you can activate and build your brand in. It is about being able to optimise those touch points in a manner which sustainably builds your brands over a long term. ‘On-trade’ (restaurants, bars, pubs) or off-trade (point of purchase) or retail outlets become a media vehicle for us. We’ve started to treat them as media vehicles where we can sustainably start to address the customer with messages depending on the ‘motivation state’ or the mood in which the consumer is. When a customer is stepping into an on-trade outlet to celebrate with friends who are meeting after a long time, what brand we pitch there, the brand experience that we bring alive which fits that mood and occasion is so much more critical than advertising or a mass media campaign. Mass media advertising has its own place in building salience but the consumer touch points are equally important for us to build our campaigns. We don’t classify them as ATL or BTL campaigns. They’re really brand platforms which need to have a 360-degree approach.
Diageo is the world’s largest premium drinks company. Our portfolio strength in the premium segment is unmatched in a manner of speaking. The comprehensiveness of our portfolio is our strength. Having said that, Indian consumers are repertoire consumers. They drink a variety of brands and a variety of categories so it isn’t like there are distinctive whisky or rum or vodka or brandy drinkers. One consumer moves effortlessly across the portfolio depending upon the occasion and mood. Given that you cannot really anchor a consumer in a particular category is in fact advantageous as we have a wide portfolio. The idea is to be able to build our brands in a sustained fashion.
How has your target audience evolved over a period of time?
There are certain things that remain common across audiences depending on the category that a company plays in; specifically for the alcobev category there are certain trends that we always keep an eye on. These trends, depending upon whether they are evolving or nascent, help us understand the new age customer better and premium experiences that a customer now seeks. Individualism as a trend is what we’ve seen as emerging in India. People are seeking brands that endorse their own definitions or brands that speak their language. Customers are seeking more and more customisation.
Our ‘un-fake it’ campaign is a result of the individualism trend that we’ve observed: ‘real people have real fun’.
The consumer is growing within the environment that exists in India. More and more genY consumers are happy about who they are and where they come from and celebrate roots.
How different is it operating in markets that allow direct advertising?
The only difference is that India does not allow product advertising i.e. does not allow you to show the product per se. The avenues then that are open for us are the on-trade and off-trade channels or by creating signature experiential events.
I don’t think that just because you have a leeway of advertising your product, it becomes any easier. Ultimately, you have to look at it within the country context rather than the compare it with other markets. Within the country, it becomes a level playing field for all alcobev players as everyone is subject to the same market conditions.
Which are the best regions for Diageo in India?
Tier I and Tier II cities is where we have a strong footprint.
There’s always a task for any organisation for expanding into Tier III, IV or V. But somewhere you need to strike a balance because beyond a certain point when you know that the incremental cost of going into a new city far exceeds the incremental benefit that you can draw from that city.
Just like any other industry, there will be both, a direct and an indirect mode of distribution. There will always be our brands or products that will be reaching a certain strata of cities that we might not be able to go to directly today.
The beauty of the natural system of distribution is that once those markets reach a certain potential and they reach a certain level of business, there is no harm in building your own capability in increasing our own sales force and commercial muscle to be able to cater to those markets.
How important is digital as a medium for Diageo?
The reason why digital becomes an important arm for our strategies is that, it is a place where we can have a conversation with our consumers and understand their preferences depending on which we can craft content and engagement platforms. Over the last three years, our marketing and promotion budgets have definitely shifted in favour of digital more and more. The entire focus is on building capabilities to get into the space of earned and owned media rather than only paid media.
Which are the agencies for Diageo in India?
We work with McCann for Smirnoff, with BBH India for Vat69 and Johnnie Walker, and Alok Nanda and Company for Ciroc and The Singleton.
Apart from this, we have an agency roster for our digital programs, Ogilvy One. Our media agency is Mindshare. Our research agencies include TNS and Nielsen.
(This article appeared in the 12 December issue of Campaign India)