Diageo poised for major Indian expansion effort

At present, the US$4 million media business is split between Lodestar Universal and MEC.

Interpublic Group’s Lodestar handles Smirnoff, Shark Tooth and Captain Morgan rum, while GroupM agency MEC oversees Johnnie Walker and Haig.

In addition to the two incumbents, it is believed that Initiative and ZenithOptimedia are involved in the pitch.

Prior to the last review in 2006, the consolidated business was handled by Carat. The separate joint venture business between Diageo and Indian spirits player Radico, which is handled by Starcom, is not part of the current review.

In a separate development, Diageo Asia regional brand director Ajay Asrani is leaving the company for a new role at British American Tobacco in London.

Last year, Diageo’s sales in India surged by 40 per cent, more than twice the growth rate in 2006. The company has set itself the ambitious sales target of US$7.6 billion within three years.

It hopes to reach this figure by capitalising on rising income levels and changing drinking habits. The Indian liquor market is valued at $5 billion, one-sixth the size of the US market. Diageo is aiming to drive sales by expanding its premium brand portfolio. This includes Johnnie Walker and Smirnoff, each of which accounts for 90 per cent share in the premium scotch and vodka market, respectively. The company is also planning to launch single malt brand Singleton of Glen Ord in India, along with super-premium vodka Ketel One.

Other brands expected to roll out in India include Johnnie Walker Blue Label and Gold Label, and single malt Lagavulin. Diageo is expecting to face more competition. Seagrams India, which distributes Chivas Regal, is eyeing the market, while United Spirits is expected to launch the Whyte & Mackay malt and scotch whisky portfolio it acquired last year.