Has inflation impacted premium spirits segment in India? Know what Brown-Forman thinks

The premium spirits segment has not been impacted by high inflation while affordability has improved in some states due to changes in the excise policy, said an official of American spirits major Brown-Forman, the maker of many popular brands including Jack Daniel's.

The company is seeing buoyancy in the on-trade segment with faster than expected recovery post pandemic and a "massive shift" in the upgradation and modernisation of the retail stores in many cities, including Tier 2, which also augurs well for premium spirits, said Siddharth Wadia - General Manager - India, Middle East & North Africa (IMENA) at Brown Forman.

India is a "strategic emerging market" for Brown-Forman, where it is strengthening its presence in tier II cities and actively investing in brand building and marketing initiatives through increased retail presence.

Brown-Forman, which had some launches in the recent past with the RTD (ready to drink) offerings and some other variants, has plans to bring more innovation-based products to the Indian market. Besides Jack Daniel's official merchandise has seen encouraging responses here, he said.

"We continue to evaluate innovation opportunities in RTDs, flavoured whiskeys as well as in the overall premium spirits category," he said.

"In the premium spirits category, we are not seeing any impact on discretionary spending. From what we have seen so far, inflation has not really impacted the premium-end of the albo-bev segment and therefore it continues to experience high growth rates."

The company believes that even despite this inflation, consumers will continue to enjoy their aspirational or favourite drinks because it is witnessing a fundamental shift in quite a few of the markets towards premium spirits.

"Not to say that inflation is not hurting, but just that we feel that the net result of that inflation is still not as impactful on the imported spirits segment," Wadia added.

It is seeing buoyancy in the on-trade segment with faster than expected recovery post the pandemic. There is no dearth of travel that is happening and that is a "positive sign".

"The other thing is that the reservations of in-home consumption will continue to get lowered as an outcome of the pandemic from a long-term perspective because it has just opened up the comfort around the consumption of liquor while staying at home," he added.

While talking about the trends of the Indian market, Wadia said here consumers are not only upgrading to international spirits but are also looking for newer whiskey and brands.

"Millennials, are totally clued into the latest trends and brands across the world. And with increasing aspirations, disposable incomes, and exposure to global brands, I believe they are more open to experimenting and trying out newer things and different whiskeys from around the globe," he added.

Over the online sales and delivery of liquor in some states here, Wadia said the channel is still very small but "we believe that it definitely holds promise for the future of our category".

"Some states have been progressive and allowed e-commerce and online aggregators to deliver alcohol to consumers. It drives accessibility and reach, apart from also allowing consumers to make purchases in a safe and convenient environment," he said.

Jack Daniel's competes with brands such as Jim beam of Beam Suntory and Royal Challenge American Pride bourbon whiskey, recently launched by Diageo, through its Indian subsidiary United Spirits Ltd.

"We see competition as a positive development and welcome it. Given the fact that we have a heavy Scotch drinking legacy culture, with more brands coming into the American Whiskey space, not only speeds up the awareness around American Whiskeys but also helps consumers to see multiple brands playing in this category which continues to enhance the salience of the segment," Wadia said.

Over the Jack Daniel's merchandise business, Wadia said it needed a bigger push and has launched its own online store in collaboration with its licensee in India.

"The merchandise helps us leverage the powerful equity of our globally iconic Jack Daniel's trademark by creating additional revenue streams and to connect with our consumers at a deeper level.

And the response has been fairly positive and we continue to focus on expanding that," he said.

Globally, officially licensed Jack Daniel's merchandise is a huge draw among consumers. Jack Daniel's T-shirt is globally the second highest selling item after Jack Daniel's Old No. 7 whiskey and Jack Daniel's licensed products are sold across six continents and over 20,000 retailers worldwide, he added.