Embracing the Experience Economy

Anand Kripalu, Managing Director and CEO, Diageo India, mulls over how Today’s consumer is more experimental than ever.

[dropcap]T[/dropcap]he beverage alcohol industry is witnessing better volume and revenue growth in the last one year, compared to earlier. Anand Kripalu speaks to us about what is driving this growth:

The industry is seeing good growth – it varies across price segments, with the Prestige & Above (P&A) segment growing faster. This is reflective of the continued consumer trend towards premiumisation. While there might be short term challenges in our industry from time to time, over the medium to long term we are confident that faster growth of premium segments is here to stay. Growing affluence, globalized outlook, urbanization, transforming lifestyles, and acceptability of alcohol are all leading to faster adoption as well as trading up to premium brands.

From the societal point of view, we are also championing consumers to drink better, not more.

The last year has seen a relatively stable regulatory environment, which has contributed to the above consumer dynamics and subsequent market growth. We believe India will continue to be among the most attractive opportunities for the beverage alcohol market in the world.

With the advent of newer technologies and digital information flows, consumption patterns are reflecting trends from around the globe. Global access and awareness is fueling an ‘Experience Economy’ where occasions have become better defined and aspirational, driving demand. Today’s consumer is willing to experiment with new brands, different palates and experiences.

We continue to invest in marketing campaigns and in our brands to ensure we delight consumers. We have a strong portfolio and are further broadening our offerings through renovation and innovation. Our world class R&D centre based here in India is developing liquids to appeal to diverse palates and cater to different tastes. These liquids have been well received in the market.

As a result, we are seeing a strong premiumisation trend with consumers upgrading their preferences, resulting in faster growth of our Prestige & Above portfolio, led by our Luxury and Premium brands.

He also tells us about, what Indian consumers are asking for in the new Experience Economy:

Indian consumers are evolving, and they frequently move across categories depending on when, what and where they drink. Modern consumers are buying into experiences rather than material possessions, making consumption an integral part of their personal expression. While earlier people chose to drink in traditional spaces such as restaurants and bars or consumed at home, today there is a rise of a new space or “third premise’, where experience sits at the heart of the occasion.  An emerging global food culture in India, such as pop-up restaurants, food fairs as well as events such as concerts, literature festivals, and other experience-based occasions are getting popular. Consumers are also veering towards natural, craft and other more holistic preferences in taste.

Lastly, he told us about the trends and outlook in the Scotch Whisky category:

The last year has seen strong growth in global scotch whisky exports as per the UK based Scotch Whisky Association. India continues to be among the top export markets for Scotch Whisky, along with countries such as the United States, France, Germany, and Singapore, witnessing 34% growth by value and a 26% growth by volume in 2018.

Indian consumers are evolving from top-end IMFL (Indian Made Foreign Liquor) whiskies to Bottled in India (BII) Scotch brands like Black & White and Black Dog; and in turn to drinking Bottled in Origin (BIO) Scotch such as Johnnie Walker and Talisker.  As India’s economy continues to grow, Scotch will become more important as consumers upgrade. We are seeing a secular and growing consumer led demand, with Scotch whisky remaining aspirational.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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