European lifestyle drinks conglomerates Gruppo Campari and Remy Cointreau are seeking joint venture partners to give a push to their India strategy. They are currently fringe players in India's rapidly expanding market for alcoholic beverages - vaulting in robust digits annually - making it one of the few growth sweet-spots for the industry globally.
Remy Cointreau, an international cognac and liqueur maker, recently decided to set up a fully-owned domestic subsidiary and has been engaged in exploratory discussions for a joint venture with local distilleries. A source familiar with Remy's plans said, the French drinks major was open to 50:50 joint venture for bottling of mid-priced brandys.
India's brandy consumption is growing at 20% and set to surpass rum as the second largest flavour category by 2011. Brandy sold 36 milion cases compared to 43 million cases of rum, which is ramping up in single digits, in FY09. Remy is keen on capturing the growth of brandy in the domestic mid-market, which is potentially the biggest market globally.
Similarly, Italian specialty drinks maker Davide Campari Milano SpA, the holding company of Gruppo Campari, wants to scale up. Campari officials have been visiting the country regularly to bottle up new joint venture alliances for its whisky and rum trademark Old Smuggler. The Italian company believes that Old Smuggler, restricted to select pockets globally, has bigger potential in India.
Campari holds 25% stake in New Delhi-based marketing firm Focus Brands, which is majority owned by Jubilant Group.
Remy and Campari could be eyeing business with fast growing Indian spirits firms like John Distillers Ltd (JDL) and Allied Blenders & Distillers (ABD), which are hoping for quicker ramp-ups in a market where Vijay Mallya-led UB Group control over 50% share of spirits and beer consumption. Deals with firms like Campari and Remy could help in adding to the premium quotient of their portfolios that currently centres around Indian made whiskies.
E-mails to Gruppo Campari and Remy's India office remained unanswered.
Campari acquired Old Smuggler from Pernod Ricard after European Commission asked the latter to give up brands following the buyout of Allied Domeceq Plc in 2006.
At present, Old Smuggler is bottled at the distillery of Jubilant Group, a majority partner in Focus Brands, which essentially undertakes marketing of imported alcoholic beverages. Campari may be restructuring its interests in India, and would not rock the existing relationship with Focus Brands and Jubilant, explained an industry source.
A top official at ABD confirmed an initial approach from Campari but added it has not been taken forward as yet. A JDL official also confirmed holding informal discussions with Remy even though these talks are still tentative.
While India's spirits consumption estimated closer to 200 million cases is dominated by whisky, its young demographic skew and changing lifestyle throws up opportunities for international players like Remy, Campari, Constellation Brands, or for Bacardi's white spirits dominated portfolio.
"The game now will be interesting niche, both in terms of product and price, that will be substantially big in the next few years. So while the domestic heavyweights like UB Group have a distribution stranglehold over mainstream products and consumers, there are niche constituencies emerging beckoning firms like Remy or Campari," argued a top industry honcho who did not wish to be identified.