Post-recession customer is going to be infinitely more demanding

Post-recession customer is going to be infinitely more demanding
The Financial Express, Brand Wagon, November 17, 2009, Page 4

Radhika Sachdev

As President and CEO of the world’s fourth largest premium spirits companies, Beam Global Spirits & Wine, Matthew Shattock’s task is well cut out for him. Since the third quarter sale of premium whisky remained flat in the West, the beverage arm of the US consumer goods group Fortune Brands, is now training its interest and investment on the developing markets. India, therefore, is a focus market for the company. Shattock is responsible for a portfolio of eight of the world’s top-100 premium spirits brands that bring in $2.5 billion in revenue. In India, the company is known more for its Teachers’ Scotch Whisky and the recently launched DYC, the liquor maker’s first domestic product in the premium malt whisky segment, developed at the company’s plant in Rajasthan. In an interview with FE’s Radhika Sachdev, Shattock says his company plans to export this brand to other countries from India. Edited excerpts:

Your market share is just around 1% in the estimated $6 billon liquor market in India…

Yes, but in the premium segment that we operate in, we have a share of 40%. Our compound annual growth rate in this segment is 20% (annual turnover $40 million) that is higher than the industry average of 11%.

What is your view of the restrictions on advertising of liquor brands?

It limits our ability to use all media vehicles creatively, but we are a responsible brand and we have to abide by the country norms while driving responsible consumption patterns in our consumers, especially youth consumers. It’s to do both with integrity and credibility.

In view of the restrictions, how do you plan your media spends?

Below-the-line activations account for about 70% of our marketing budget and it would continue to remain so. Teacher’s Achievement Awards that honours individual achievements in fields of business communication, entertainment and sports has entered into its 9th edition now and it’s a wonderful property that our team here has built for us. We will continue to invest in this property.

You did large-scale restructuring at other offices and laid off a few employees. Were the India operations also impacted by those cost-trimming measures?

On the contrary, since India is one of the top 10 markets for us, we have been empowering our workers here to create new products here. Teacher’s Original, a fine blended Scotch Whisky is one outcome of that, that’s very appealing to the connoisseurs in this market.

What’s the way forward that you see in India?

We have already consolidated our position in tier-1 cities. Our next port of call is the tier-2 cities. We feel that the post-recession consumer in India and the West is going to be very value-conscious. He would not be swayed by the image factor. He would look for real value in a brand.

You have put in long stints at Cadbury and Unilever. How has been the transition from consumer goods to liquor brands?

It’s a wonderful experience handling these heritage brands where each brand has a story to tell. But the challenge is dealing with the many regulations of this market. The tax rates in India, for instance, are at least 30% higher than the rest of the world, that’s nearly two-thirds the price of the product. Nonetheless, surviving and profiting in this kind of a market is exciting.