The
UB USP
Vijay
K Rekhi, in conversation with Latika Sakhuja, elaborates on the UB Group
Spirits Division’s outlook and reflects on the company’s strategy
for growth
The
alcoholic beverage industry in India is undergoing a sea change at the
moment. Consumers are demanding more variety, new players and new products
are foraying into the market and companies are entering into joint ventures
to increase production. In the midst of all this, UB Spirits Divisions,
one of the key players in this segment, has grown from being an importer
of scotch whisky to the fourth largest manufacturer of spirits in the
world. The company has an unmatched portfolio of over 63 brands, bottled
in 78 varieties of bottles and is constantly updating the same. We take
a peek into the company’s portfolio and focus on its strategy of
growth, in conversation with Mr Rekhi, President, UB Group Spirits Division.
In the recent years, there has been an increase
in the demand for alcoholic beverages. What is the market share of the
UB group beverages in the country?
The UB Group Spirits Division (UBSpD), comprising McDowell and Herbertsons,
is the largest alcoholic beverage company in India and the fourth largest
marketer in the world. The Group dominates the Indian market with an
impressive 37 per cent market share and a production of 35 million cases
per year. We have registered an impressive 16 per cent growth in production
over last year, which is way above the industry average of 8 per cent.
What prompted the company to introduce new vodka
flavours, like Romanov Tropical Thrill and Romanov Apple Thrill? What
has the market response been for these products?
Innovation is clearly one of UBSpD’s strengths. Romanov is the
largest selling vodka in India and its consumers are typically youngsters.
They are people who have had global exposure in terms of trends, and
demand only the best. The company conducted a preliminary research and
with these research findings in mind, we decided to launch these two
flavours, which we thought would be appreciated by this segment. The
initial response to the product has been enthusiastic, especially from
the youth who are more adventurous in their tastes.
Also, how has the market responded to the recent
introduction of McDowell’s No 1 Celebration Summer Lime Rum? What
are the other new products that the company intends to launch?
McDowell’s No1 Celebration Summer Lime Rum is one of the first
flavoured rums to be introduced in India. Traditionally, rum is a winter
drink. Sales figures reflect that this rum has been well received in
the market. The response has been particularly good in West Bengal,
Maharashtra and Madhya Pradesh.
Bagpiper Whisky was recently re-launched with
new packaging. Does the company intend to revamp the look of other products
on its portfolio as well? What is the reason for this? How has the new
look affected the demand for the product?
In the alcoholic beverage industry, packaging is one of the most critical
tools for communicating with the consumer. Packaging changes are a constant
endeavour at UBSpD. UK-based design house, Claessens, has redesigned
the Bagpiper Whisky pack. The new pack is comparatively difficult to
duplicate or tamper with. This ensures safety and protects our consumers.
How would the imposition of VAT from the year
2005, affect alcohol prices and demand?
It is a little too early to comment on this as it would be presumptuous
of me. The liquor industry attracts a range of taxes across states.
Sales tax in some states is as high as 90 per cent. It is imperative
that one must first discuss the implications of VAT on the alcoholic
beverage industry before commenting on this.
What kind of infrastructure backup does the company have in order to
deal with the increasing demand and competition?
Thanks to the company’s foresight, today UBSpD is one of the best
equipped alcoholic beverage companies in the country. With alcoholic
beverages being a state subject, the duties and taxes payable by manufacturing
companies vary from state to state to such an extent that India is as
good as 29 different countries within one country. The UB Group, thus,
enjoys a clear and distinct advantage over the competition. The Spirits
Division has 48 manufacturing facilities, both owned and contracted,
which are spread across the length and breadth of the country. These
supply UBSpD’s products to key markets, effecting substantial cost
savings by way of transportation, wastage in terms of breakages and
payment of inter-state taxes and levies. The Spirits Division’s
distribution network consists of approximately 1,600 wholesalers, over
30,000 retailers, 16,000 bars and 614 clubs across the country. While
the southern regions in India lead with a market presence of over 22,000
sales and distribution points, western and northern regions have significant
presence, followed by the eastern region
What efforts are being made to improve the production
process for better efficiency and quality? What are the international
quality standards that the company adheres to and how are these uniformly
maintained across the large portfolio?
All UBSpD-owned manufacturing units are ISO 9002 certified. With 63
brands being bottled in 78 varieties of bottles in three to four sizes,
the manufacturing department exercises strict controls from the stage
of procurement of raw materials, through the manufacturing process and
up to the delivery of the final product to the end consumer. Vital ingredients
like extra neutral alcohol, malt spirit, rum spirit and grape spirits
are internally produced to ensure consistency in products. The company
also imports scotch and concentrates for producing blends. These measures
help us to ensure consistency and quality of products across all our...
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