Subcontinent Offers New Horizons For Diageo And Pernod Ricard

(MENAFN- The Arabian Post) Arabian Post -

Arabian Post Staff -Dubai

With alcohol sales in both the U.S. and China experiencing a decline, global spirits giants Diageo and Pernod Ricard are shifting their focus to the South Asian market, specifically targeting a new generation of drinkers. Both companies, recognized for their premium brands such as Johnnie Walker, Guinness, and Chivas Regal, have identified India and neighboring countries as pivotal in their plans for growth. This region, with its expanding middle class and evolving consumer behavior, presents an untapped opportunity to offset the challenges they face in more established markets.

In the U.S., consumption of alcohol has been on a downward trajectory for years, as changing social attitudes and concerns about health have altered traditional drinking habits. A similar trend is observed in China, where alcohol consumption has slowed amid an economic downturn and increasing government pressure against excessive drinking. The shift in consumer preferences in these regions has led Diageo and Pernod Ricard to recalibrate their strategies and focus more heavily on markets with burgeoning potential.

India, in particular, stands out as a key market for these companies, with its large, young population and rising disposable income. A growing number of millennials and Generation Z consumers are becoming more interested in Western-style alcoholic beverages, which has spurred the development of tailored marketing campaigns. Diageo and Pernod Ricard are not only aiming to introduce their premium brands but also creating a cultural shift toward drinking in social settings and a higher acceptance of international alcoholic beverages.

While the alcohol market in India is still highly regulated, with state-level restrictions and varying taxes across regions, the demand for spirits, especially whisky, is substantial. Whisky remains the preferred alcoholic drink in the country, and international brands have found a niche within this preference. Both Diageo and Pernod Ricard have been ramping up their investments in the subcontinent, focusing on establishing a foothold in India's rapidly growing urban centers.

Pernod Ricard, for example, has introduced a wide range of products tailored to local tastes while maintaining the global appeal of its brands. The company's strategy has been to offer products at different price points, allowing them to target both the premium and mass markets. Similarly, Diageo's Johnnie Walker has launched region-specific campaigns that cater to India's burgeoning demand for luxury spirits while also targeting younger drinkers through social media platforms.

One of the biggest advantages for both companies is the growing number of young consumers who are eager to experiment with new tastes and experiences. This demographic is highly active on digital platforms, where global trends in fashion, food, and drink have a quicker impact. Social media marketing has proven effective in India, with influencers and brand ambassadors reaching millions of consumers daily. Diageo and Pernod Ricard have capitalized on this trend, using digital media to promote their products and tap into the aspirational mindset of Indian youth.

In addition to traditional retail outlets, the rise of e-commerce in India has provided another channel for alcohol sales. Platforms such as Amazon and local players like BigBasket now offer alcohol delivery in select regions, expanding the accessibility of international spirits. The availability of premium alcohol through these channels aligns with a shift in consumption patterns, where convenience is as important as quality. With more consumers preferring to shop online, Diageo and Pernod Ricard are ensuring their products are visible and accessible in the digital marketplace.

While the potential in India is significant, it comes with its challenges. Cultural norms around drinking vary widely across the country, and alcohol consumption is still taboo in some communities. Moreover, navigating the labyrinth of state-imposed regulations presents an ongoing hurdle for both Diageo and Pernod Ricard. The two companies have had to collaborate with local distributors and build relationships with regional governments to ensure that their products meet regulatory standards and can be sold across the diverse Indian market.

Beyond India, the broader South Asian market, which includes countries like Pakistan, Bangladesh, and Sri Lanka, also holds promise for growth. However, these nations present their own unique set of challenges. In Pakistan, for instance, where alcohol is heavily restricted, the market for foreign spirits is limited to the non-Muslim population and expatriates. Nevertheless, these markets are still considered important in the long-term strategy of Diageo and Pernod Ricard as they seek to diversify their consumer base.

To further boost their presence, both companies are also exploring opportunities in the craft beverage sector. Craft spirits have been gaining traction in urban areas in India and other parts of South Asia, where consumers are looking for unique and locally inspired flavors. Diageo's push into craft gin and local distillery partnerships is part of a broader strategy to cater to the growing interest in premium and artisanal drinks. Pernod Ricard has followed suit by promoting craft options and expanding its portfolio to include Indian-made liquors, creating products that blend traditional flavors with modern drinking preferences.

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