Close Menu

A Young India Will Drive Policy Changes

Kalyan Ganguly was the President and Managing Director of United Breweries till 2015. An alumnus of Harvard Business School, he joined the Spirits Division of the UB Group in 1979, and since then has been associated with all the major new introductions and successful brands. The Spirits Division of the UB Group is the 7th largest Distiller in the world, and his extremely prolific experience and knowledge in the brewery industry stems from the decades he has spent as heading various functions of the UB group.

In India, licences to produce and distribute alcohol are issued by the state government,which is why the brewery and distillery industry has evolved from a states specific market just a few decades ago. As commercial breweries and distilleries came up in different parts of the country, local brands were created, that had the highest market play in their regions, Kalyani Black Label in West Bengal and The London Pilsner Mumbai being the best examples.

It was United Breweries who made the first attempt to market their product brand Kingfisher, beyond the state boundaries and developed it into a national brand.

United Breweries realised that the demographics in India were rapidly changing in favour of the youth segment, so the fun young lifestyle that was more aspirational than the earlier generation, was the norm of the day. Media focus too was changing rapidly in the late nineties, when television and cable was bringing to Indian living rooms the exposure to foreign lifestyles. In this setting, the entire social scenario in India was open to a new paradigm.

The younger generation was increasingly looking beyond what the earlier generation aspired for, and they needed something new, something more.

At this point, Kingfisher was positioned very strategically as an icon of an emerging lifestyle-with all brand communication extremely aspirational -it was all about fashion, music or tournament sports. However, a forerunner cannot be exclusive for very long and soon other brands were also doing the same,changing the entire beer industry focus in the country. This, in my opinion was the turning point in beer industry in India.

Since it was not (and still isn’t) possible to advertise alcohol directly, we could not do what maybe a Colgate could do, and there was the need to look for roles and brand personalities in this environment. That is how we managed to create ambassadors for these brands.

The Kingfisher’s sound track, which is now very easily identifiable; had started when we associated with the cricket team in the 1996 Cricket World Cup hosted in India. Sourav Ganguly was identified as a brand ambassador in 1997, mostly because he represented a completely different generation, and was a strong youth icon.

Another landmark was when market studies showed that beer with a high percentage of alcohol was getting popular with the youth market. We strategized to draw on the strength of the Kingfisher brand, and created Kingfisher Strong. There were some other contemporary brands that also had good quality and great marketing, like Hayward’s 5000, which gave us competition early on. But then our strategies worked with the market intelligence and now, Kingfisher Strong is the market leader in the segment.

But the important thing is, while brands were being built and messaging was being directed, UB continued to invest in brand quality and manufacturing processes as well, ensuring the quality of the product. This has kept them in the market leader’s position all these years, This also supported our marketing and positioning strategy.

Today, the significant thing is that beer consumption in India is pitiably low-a little over a litre per capita annually. Given the rapidly changing demographics, there is a huge potential for the market to grow. But only if the regulation and policies do not interfere, restricting normal market dynamics, and slowing down the beer industry, it could actually have a healthy growth.

But of course, lawmakers have political and fiscal compulsions too. However I strongly believe that if the consumer pressures mount, they will change. India is a very young country, with very young preferences; it is not possible that the government can continue to create impediments to this change, especially when the demographics are in favour of it. Societal changes that are brought about by globalisation, lifestyle and fashion have created the right time for changing the acceptance levels and bringing out beer as a product that meets some of their aspirations. I am hoping, that with industrial development and incomes on the rise, these interruptions will recede and the beer market will again see healthy growth.

One positive factor is that all international brands are now available in India. With these brands coming, there is a possibility of a favourable environment. The market will expand so there is enough play for all brands. This should add to the consumption, and push the demand upwards.

Another thing I can foresee that will create a new dynamics is, companies will need to reinvent themselves by various strategies-maybe introduce a new brand or restructure market messaging. This is constantly required for brands to grow and even survive, because the profile of the customer has changed drastically over the last decade.

So, over the next few years, a couple of things will happen.

  • As income levels increase, and they certainly will, dispensable income of young people will increase. So their consumption habits will also change, and in favour of beer, which will ensure that regulatory authorities will not be a closed minded as they are today. In the next 5 years I see beer as a very progressive, even sunrise industry in India
  • Consumers will have greater choices, so to survive; the industrial brewers will also try to cater to emerging tastes of consumers, so there will be a much greater variety of beer in the market, including flavoured beer and various other new styles
  • Craft breweries, though rowing, are too small a category to be called a trend, so I do not see them making too much of an impact on the overall market

The UB team is looking at now making the brand more relevant for 2020, to reinvent and stay market leaders. There should not be any dramatic change in the industry over the next five years, except perhaps some mergers and re-alignments that will create different brand and business entities.

But one thing is certain, Kingfisher is way ahead of the others, there is no reason why it will lose its position as the number one brand.

02 February 2017
Editorial-Brewer World