India: Diageo positive about opportunities in India

Spirits maker Diageo India is "positive" about the opportunity in India and advocated for an inflation-indexed price increase and a harmonised tax structure for the liquor sector in the country, the Business Standard reported on June 11.

Diageo India MD & CEO Hina Nagarajan said there are frequent changes at the policy level by the state governments.

"Our desired state would be if we could get inflation-indexed price increases. Even an industry which is quite regulated like pharmaceuticals gets that, so our request to the government is please look at some of these models," said Nagarajan.

She is "optimistic" about this and said "hopefully" it will come as they are working along with the governments on this proposal.

The British spirits maker is "positive" about the opportunity as a whole in India and advocated for placing alcohol under the GST regime, which would have collateral benefits of shutting down the illicit liquor trade, making it a far more controlled industry even for the state governments.

She said route-to-market changes are quite frequent in India. "It's kind of a matter of routine for us to cope with route-to-market changes in three states but build the business in other states," she said adding "We have just got used to dealing with this change in policies."

On changes in the liquor policy in Delhi, she said, "Delhi has changed our business shape and for various reasons, the business has gone down."

Besides Delhi, there were also changes in the policies of some other states such as Jharkhand and Chhattisgarh, she added.

"But we then tried to pick up business from all the other states in the country and there are so many of them that we can," she said.

On home delivery of spirits in India, she said the concept is at a nascent stage and is evolving with e-commerce.

"We are working with key stakeholders for retailers, the government, etc to see what's the best way to evolve these models. We are experimenting where we are allowed," she said.

Nagarajan expects Diageo to be a top-performing CPG company in India delivering a "sustained double-digit, profitable topline growth."

Diageo India is giving a special focus on premiumisation and innovations, as the company expects a "younger, richer and optimistic" India would lead to significant premiumisation.

"Consumer landscape is changing so much that innovation renovation is going to continue to play a pretty transformative role on our portfolio," she said.

In terms of consumption, India is still one of the lowest countries in the world. "Our penetration level, especially if you look at the luxury end, at scotch, for instance, is 3 per cent.

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