ONE BIG THING
Premiumisation is providing tailwinds to Indian consumer brands
At a recent Sonder Connect event, a senior Diageo India team, comprising Shweta Jain, Chief Business Development Officer, Vikram Damodaran, Chief Innovation Officer and Pradeep Jain, Chief Financial Officer, gave some really useful advice for founders and brands. Here’s a summary, edited for brevity and clarity.
On being clear about your proposition and the size of your market
The most important thing is to know what is your unique proposition, whom you are developing it for and how big is that market. Of course, you can experiment and course correct, but make sure that these fundamentals are in place.
On driving efficiency
Continuously focus on the levers that you can influence.
In the alcohol industry, the influence on pricing is limited, but Diageo challenges itself to keep improving to neutralise the impact of inflation in three ways:
- Productivity across the value chain: There is always a better way to do things, be it in your operations or your marketing
- Disciplined approach to overheads: Even at that scale, Diageo optimises 2-2.5% of net sales every year.
- Getting consumers to upgrade: There is a big ‘premiumisation’ opportunity in India, which is providing tailwinds to consumer brands. Diageo looks for ways to upgrade consumers and move them higher in the overall product portfolio.
On the premiumisation opportunity
We are in the middle of a consumer revolution, where Indian audiences are becoming more discerning and valuing experiences over products. This is evident from the many emerging brands in the market – the craft gins coming out of Goa are one such example of great products at great prices with healthy margins.
From Apple to Balenciaga, big premium brands are opening up in India. These will influence the consumer and in turn, you will need to move fast to stay in touch with how consumer aspirations are evolving.
Be bold, don’t undersell. Today, people are willing to pay if they find your product and story worthwhile. Once you set price, it sticks and you may have permanently underpriced. This is hard to change.
Diageo’s innovative whisky Godawan is an example. A lot of thought went into every aspect of the product and it has been ‘priced it with pride.’
Walk the talk
Today, consumers have access to all kinds of information. Be transparent and authentic because they will see through you in the end.
On building a culture of innovation
- Prioritise: Life is full of bright shiny objects. Have a wide funnel, but learn to prioritise quickly and focus on the few things that matter
- People-first: People make the difference – and your culture. It is fine to start with a small team focused on innovation and showing the way.
- Pivot: Not every product needs to survive. Don’t flog a dead horse.
On building a repertoire
We live in a fluid world with fast-evolving consumer tastes.
In the alcohol industry, take the example of how the consumption of white spirits has changed. It has become more like whiskey, where consumers are demanding nuanced, well-crafted products.
People are experimenting across brands and formats and you should be prepared to keep your core intact, but extend into spaces of opportunity. Johnny Walker Blonde is an example of an innovation which offers a more accessible style of Scotch to new entrants in the category.
On spotting trends
As a creator, you need to be always on, listening and connecting dots.
While there are differences between different markets, today there is no time-lag between trends. A trend in the US could catch on immediately in India, or a trend could start here and cross-over.
For example, Diageo can see that people are becoming more health-conscious and more mindful of what they put in their bodies. This means thinking about healthier drink profiles and any-time drinks.
On using allyship
Speak about your learnings, share your journey and be helpful to others. Build a network of peers and mentors that you can reach out to when you need inputs for decision-making.