Diageo India entered the ready-to-drink alcohol market with its Smirnoff brand, offering flavors like peach and jamun. The company aims to attract younger consumers who want convenient options. "I still think we are very early," said Praveen Someshwar. However, state-level taxation and distribution issues may still impact future growth.
Diageo India is entering the ready-to-drink alcohol market with its Smirnoff brand and various flavors. The company aims to attract younger legal-age consumers who prefer convenient drinking options. While Bacardi has been a major player in this segment, Diageo anticipates the growth of the category as new brands emerge. Challenges such as state-level taxation and distribution issues may impact growth rates.
Diageo India is entering the ready-to-drink (RTD) alcohol market with its Smirnoff portfolio, adding competition to a segment that has been largely dominated by Bacardi as younger legal-age consumers seek more flavours and convenient drinking formats.
The move comes as alcohol companies look beyond traditional spirits and beer for new consumption occasions, although India's RTD market remains relatively small and faces challenges including state-level taxation and distribution.
Diageo has launched Smirnoff Ice in different alcohol strengths, including 4% and 8%, with flavours such as peach and jamun.
"RTDs globally are growing at 10%. Smirnoff RTD globally at 12%," said Ruchira Jaitly, chief marketing officer at Diageo India. The company is the world's second-largest RTD player, she added. "For the last five to six years, we're seeing in India a tremendous appetite for repertoire consumption, especially amongst younger LDA consumers. We're seeing tremendous appetite for different flavour experiences," she said.
Diageo's entry follows what USL managing director Praveen Someshwar described as a change in consumption patterns among younger legal-age consumers, who are experimenting with flavours and different formats. The company said it expects more companies to enter as the format develops.
"I still think we are very early. The category is nascent. This format is going to get needs to be nurtured. I genuinely think a lot of brands will come into play," he told ET.
The company is also considering RTD extensions for other brands in its portfolio. It said the format could allow consumers to pay a premium for convenience and a pre-mixed serve. In addition, it would also be open to partnerships with other companies, citing its global experience with Captain Morgan.
"Globally we've done Captain Morgan with Pepsi and so the way I look at it is, we should be open to every any form of partnership," Someshwar added.
In India, RTDs face route-to-market challenges and unfavourable excise rates in several states, factors that could determine how quickly the category expands in India. The company sees RTDs as a format that can extend existing spirits brands into occasions where consumers may not want to mix drinks themselves.
Diageo's entry puts it against Bacardi, which has dominated India's RTD market for years through its Breezer brand. While RTDs remain popular with younger legal-age consumers, Goa and southern states are important markets.
Diageo does not expect the arrival of a major global spirits company to immediately transform the category. Instead, it expects the format to develop as more brands enter and consumers become familiar with RTDs, but stopped short of giving a timeline for when Diageo expects to become a leading player in India's segment.