1

SUMMER TRAINING PROJECT REPORT

ON

Blander Pride vs. Royal Challange

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE MASTERS DEGREE IN BUSINESS ADMINISTRATION
OF

UTTARAKHAND TECHNICAL UNIVERSITY, DEHRADUN

SUBMITTED TO: INTERNAL GUIDE Name Designation IMS Dehradun SUBMITTED BY: BHUPENDRA SINGH (MB11B55) EXTERNAL GUIDE Name- Sudershan Joshi Designation-Marketing Company Name Location

INSTITUTE OF MANAGEMENT STUDIES, DEHRADUN

BATCH 2011-13

ACKNOWLEDGEMENT
It is said, the most important single word is we and the zero important Single word is I. This is true even in todays modern era. It is absolutely impossible for a single individual to complete the assigned job without help and assistance from others. It is my greatest pleasure to acknowledge sincere gratitude towards Mr. Sudersan Joshi (Sales Manager) United Spirits limited, for the completion of the project work. I would also like to acknowledge to my sincere gratitude to the Director of my institute Dr. Pawan Aggarwal and my project guide Prof. Ashulekha Gupta for helping me in this project work. I am thankful to all of my friends and batch mates for their help in completing this project work. Finally, I am thankful to my entire family members for their great support and encouragement.

Bhupendra Singh

OBJECTIVES OF STUDY
Determine The Future Of Premium Segment Of Whisky To find out the market leader in premium range of whisky. To determine the future of USL in premium segment. To understand the actual market size of the industry especially in the particular segment and growth factor. To know the major marketing efforts including the operation along with 4ps strategy i.e. Product, price, place and promotion.

INTRODUCTION OF THE TOPIC

Indian Liquor industries share common characteristics arising from a similar policy framework. Country liquor, Indian made Foreign Liquor (IMFL) and beer are state subject, with each state controlling the duty structure and distribution. Incidence of import and export duties results in high cost of interstate movements which has resulted in each state having attributes of a separate market. This Market research has been done for comparative analysis of two premium segment brands of different- different companies as the company is facing neck to neck competition in its semi premium range. For that I have study the Market size of semi premium whisky and the marketing strategy of the leaders in that segment and what are the customers response with respect to the particular brand. For this purpose the market of Haldwani has been covered for differentiating the behavior of consumers in this market and the role of retailers in promoting the brand. Survey has been conducted through questionnaires and responses of consumers and retailers have been recorded. The results may not be in accordance to the actual situation in the market because of small sample size and the limitation of area, but serious efforts have been put into get the best results.

AREA OF STUDY
The main area of study is the marketing segment of the organization. As the market area of the organization is very vast so it was a great learning experience.

NEED OF THE STUDY

This modern era of liberalization and globalization has opened a broad scope for conducting marketing of products in business. To -day; marketing management has become more challenging and exciting than ever before. Generally a group customer who heavily shares a common a group of customers who heavily share a common need constitute the market. Now days, market has turned from sellers market to buyers market. Turing of this concept generate a need to study marketing strategy of wine company for that I took two brands of different company and compare them with their marketing activities.

SCOPE OF PRESENT STUDY

The topic is very significant, as it gives a unique chance to study and know the different strategies adopted by the organization to compete and increase its market share and overcome its rivals. It also helps to understand the importance and need of marketing in wine industry.

COMPANY PROFILE

UNITED SPIRITS LIMITED AT A GLANCE

United Spirits Limited (USL) is the largest Alcohol Company in the world by volume and the Rs. 9103 crores spirits arm of the UB Group. USL was earlier McDowell and Company Limited. USL is headquartered in Bangalore with a global footprint and has 7500 employees across various locations. USL has a portfolio of more than 140 brands, of which 22 are millionaire brands and has over 84 manufacturing and bottling units at locations across the country. USL represents the merged entities of erstwhile McDowell & Co. Limited, Phipson Distillery Limited, United Spirits Limited, Herbertsons Limited, Triumph Distillers and Vintners Private Limited, Baramati Grape Industries Limited, United Distillers India Limited, McDowell International Brands Limited and Shaw Wallace Distilleries Limited and Shaw Wallace & Co. Limited. With the acquisition of Bouvet Ladubay in 2006, the UB Group has made a strategic entry into of the wines category. Bouvet-Ladubay, located in the Loire valley of the Saumur region in France, has a heritage of over 156 years. The company currently has a capacity of 8 million bottles per annum, with further scope for expansion whenever required. Bouvet Ladubay is sold across the world in over 38 countries. In 2007, United Spirits acquired the Glasgow-based Whyte and Mackay and ramped up its premium scotch and single malts portfolio significantly. Whyte & Mackay also owns four malt whisky distilleries in Scotland and a state-of-the-art bottling facility in Grangemouth with a capacity of 12 million cases per annum. In the late Nineteenth Century, Angus McDowell set out from the scenic Northern lands of Gaelic Britannica. The purpose was to make available the products of the industrial revolution to

thousands of expatriate Britons serving the Empire in various parts of the globe. It was this spirit of adventure that launched McDowell & Company in India. It had its origins in a warehouse near Fort St.George in Madras (now Chennai), which in those days were a major trading centre of the British empire. In 1951, McDowell became the prime acquisition of the United Breweries Group. Under the able guidance of the founder of the UB Group, Late Mr. Vitthal Mallya the company became the first to Manufacture Indian substitutes to foreign liquor. A new term - IMFL (Indian Made Foreign Liquor) was coined. Since then, McDowell has been the indisputable market leader as one of the largest fast moving consumer goods companies in the country.

The Name
The name McDowell originally came from the Gaelic word Macdougall. Dubh gall, meaning dark stranger, possibly to distinguish the dark haired Danes from the fair haired Norwegians. Angus McDowell, after whose name McDowell and Company Limited came into being, was a squire of the Dougall ancestary. He started a firm- McDowell, on the northern islands of Gaelic Britannica, Which was marketing the finer products of the Industrial Revolution to the Britons staying in various corners of the empire. In India, McDowell has its warehouses situated about a mile to the north of the Fort St. George in Chennai. From being one of the first names to be associated with the import of wines and spirits into India as early as in 1898, McDowell has now grown to become the countrys undisputed leader in spirits market.

USL CORPORATE BACKGROUND

Vijay Mallya-owned United Spirits Ltd (USL), is among the top three spirits companies in the world. United Spirits Ltd (United Spirits) was established in 1898 as McDowell & Co Ltd. Later in 1995, Mcdowell & Co Ltd merged with Carew Phipson Ltd and Consolidated Distilleries Ltd. 2005; it acquired Shaw Wallace and Co Ltd. United Spirits products include whisky, brandy, rum, gin, and vodka. United Spirits' brands have won the most prestigious of national and international awards across flavors, ranging from the Mondial to International Wine and Spirit Competition (IWSC) to International Taste and Quality Institute (ITQI). The Company is known to be an innovator in the industry and has several firsts to its credit like the first pre-mixed gin, the first Tetra pack in the spirits industry in India, first single malt manufactured in Asia and the first diet versions of whisky and vodka in India. The company recently acquired Tern Distilleries in Andhra Pradesh and set up a Greenfield malt spirit plant in Nasik in Maharashtra. These are the various companies which are coming under UB group.

United Spirits Limited (USL) the INR 4000 crore (USD 1 billion) spirits arm of the UB Group is Indias largest and worlds third largest spirits company. USL was earlier McDowell and Company Limited. Besides Whyte and Mackay and Bouvet Ladubay being 100 % subsidiaries of USL, the company has a portfolio of more than 104 brands, of which 16 are millionaire brands* (selling more than a million cases a year) and enjoys a strong 59% market share for its first line brands in India. United Spirits brands have won the most prestigious of awards across flavors, ranging from The Mondial to International Wine and Spirit Competition (IWSC) to International Taste and Quality Institute (ITQI); a total of 84 awards and certificates (as of December 2007). The Company is known to be an innovator in the industry and has several firsts to its credit such as the first premixed gin, the first Tetra pack in the spirits industry in India, first single malt manufactured in Asia and the first diet versions of luxury whisky and vodka in India. USL has a global footprint with exports to over 18 countries. It has manufacturing and Bottling units in 67 locations across the country and in Nepal and supported by a robust Distribution network to deliver its products to customers located anywhere in India. USL has a committed 6000 strong workforce spread across its offices and distilleries in the country. USL represents the merged entities of erstwhile McDowell & Co. Limited, Phipson Distillery Limited, United Spirits Limited, Herbertsons Limited.

MISSION STATEMENT

Fig. 2 To be the most admired global leader in the spirits industry by creating unique high quality brands for consumers, driven by highly motivated employees and supported by best-in-class 9

processes and continued innovations. United Spirits is and will continue to be responsible towards its stakeholders and the society

BUSINESS INTEREST OF UB GROUP

Beverage Alcohol: The UB group is 2nd largest spirits marketer in the world, with overall sales of 90 million cases. The company offers 140 brands at varying price points. Some of the famous brands of UB group are bagpiper whisky, McDowells No.1 whisky, director special whisky, McDowells No.1 Brandy and McDowells celebration rum. Pharmaceuticals: The groups company Aventis Pharma Ltd is the second largest

pharmaceutical multinational in India. It develops and markets branded prescription drugs and vaccines. Media: The UB group also has a share holding in Asian Age Holdings Ltd, the company that owns and manages daily newspapers, The Asian Age. International trading: the groups company UB group global ltd is recognized export house engaged in the export of beer, spirits, leather footwear and processed food the company also exports pharmaceutical products and customized perfumes. Fertilizers: Mangalore chemicals & fertilizers ltd is under UB group management. It has a manufacturing capacity of 2,23,700 MT of ammonia and 4.30,000 MT of urea. Research and development: Vijay Mallaya Scientific Research Foundation (VMSRF) was established in 1987 with the objective of developing newer and novel technologies that will have substantial application in industry and health care. The foundation is recognized by the

departments of Scientific & Industrial Research (DSIR) Department of Biotechnology (DPT),

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Council for Scientific and Industrial Research (CSIR) and the Ministry of Finance, Govt. of India. Aviation: UB group entered Aviation sector in 2005 with launch of Kingfisher Airlines Ltd. Kingfisher Airline has captured an impressive identity for itself. Market Share and has established a Niche

ORGANIZATIONAL STRUCTURE

Dr. Vijay Mallya, (Chairman) Dr. Vijay Mallya is the face of the $2 billion UB Group. 52 year-old Dr. Mallya took over the Reins of the United Breweries Group in 1983.....

S. R. Gupta, (Vice Chairman) Mr. Subhash Raghunath Gupte, aged 68 years, is a Chartered Accountant. Mr. Gupte has worked with Caltex India Limited for 5 years.

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Mr. Vijay K. Rekhi, (President & M. D.) Mr. Vijay K. Rekhi is the President and Managing Director of United Spirits Limited, India's Largest and the world's third largest alcohol beverage company.

M. R. D. Iyenger Mr. M. R. Doraiswamy Iyengar. aged 66 Years is a Graduate in Commerce and a Chartered Accountant. He is also a post Graduate in Law, holding a B.L. degree.

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OUR DISTILLERS
UNITED SPIRITS LIMITED, ROSA UNITED SPIRITS LIMITED, ALWAR UNITED SPIRITS LIMITED, UDAIPUR UNITED SPIRITS LIMITED, PATHANKOT UNITED SPIRITS LIMITED, PALWAL UNITED SPIRITS LIMITED, BADDI UNITED SPIRITS LIMITED, MEERUT UNITED SPIRITS LIMITED, HATHIDAH UNITED SPIRITS LIMITED, ASANSOL UNITED SPIRITS LIMITED, SERAMPORE UNITED SPIRITS LIMITED, KHURDA UNITED SPIRITS LIMITED, BHADRAKALI UNITED SPIRITS LIMITED, NARAYANPUR UNITED SPIRITS LIMITED, BETHORA-PONDA UNITED SPIRITS LIMITED, NASIK UNITED SPIRITS LIMITED, BARAMATI UNITED SPIRITS LIMITED, BHOPAL UNITED SPIRITS LIMITED, AURANGABAD UNITED SPIRITS LIMITED, CHERTALA UNITED SPIRITS LIMITED, NACHARAM- HYDERABAD UNITED SPIRITS LIMITED, MALKAJGIRI- HYDERABAD

CONTRACT AND ASSOCIATE UNITS

Chandigarh Distillers & Bottles Ltd 13

 Batra Breweries & Distilleries Pvt Ltd Saraya Industries Ltd Sir Shadilal Distillery & Chemical Works A B Sugars Ltd Trishul Bottlers Gemini Distilleries (Tripura) Pvt Ltd North East Distilleries Pvt Ltd Ajantha Bottlers & Blenders Pvt Ltd Centenary Distilleries Pvt Ltd M T M Wines & Bottlers Pvt Ltd Milestone Beverages (P) Ltd Surma Distillery Pvt Ltd Mount Distillery Sikkim Himalayan Distillery Pvt Ltd Salson Liquors Pvt Ltd Ambient Liquors Pvt Ltd Chitwan Blenders & Bottlers Pvt Ltd Aegis Beverages (P) Ltd Bilaspur

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BRANDS

USL BRANDS
Whisky Whyte and Mackay Dalmore Jura Black Dog Antiquity Signature Royal Challenge McDowells No-1 Directors Special Bagpiper McDowells No-1 Platinum Green Lable

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Vodka Pinky Red Romanov Premium Romanov White Mischief

Rum McDowells No-1 Celebration Rum Old Cask Rum

PRODUCT OF UNITED SPIRITS LTD. IN PREMIUM SEGMENT:

Generally the spirits products in the premium segment are the perfect blend of aged scotch whiskies. These are popular among its customers for there finest Blend of rare scotches and selected grains.

The products which are floating in the premium segment spirits are as follows: Antiquity Blue Antiquity Rare Royal Challenge Signature Rare Black & White Blenders pride

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PROFILE OF CAMPARITIVE COMPANY

SEAGRAMS INDIA
Seagram Company Ltd.

Industry Fate Successor(s) Founded Defunct

Alcoholic drinks Broken-up, assets sold Vivendi, Pernod Ricard, Diageo 1857 2000 Joseph E. Seagram, Bronfman family Beverages Private (18571972); Vivendi Universal (2000) PolyGram Music Corporation of America

Headquarters Montreal, Quebec Key people Products Parent Subsidiaries

The Seagram Company Ltd. was a large corporation headquartered in Montreal, Quebec, Canada that was the largest distiller of alcoholic beverages in the world. Toward the end of its independent existence it also controlled various entertainment and other business ventures. The Seagram assets have since been acquired by other companies, notably The Coca-Cola Company, Diageo, Pernod Ricard. The Seagram Building, the company's American headquarters office tower at 375 Park Avenue in New York City, was designed by architect Ludwig Mies van der Rohe with Philip Johnson. The former Seagram headquarters in Montreal now belongs to McGill University, under the name Martlet House. 17

Seagram India, a Pernod Ricard Group Company, the world's second largest wine and spirits conglomerate, the name that's synonymous with world renowned wine brands such as Jacob's Creek ( Australia), Montana (New Zealand) & Mumms Champagne, and the finest spirit brands like Royal Salute, Chivas Regal, The Glenlivet & 100 Pipers. Seagram India Pvt. Ltd. engages in the spirits business in India. It offers Scotch whiskey, wines, gin, and brandy. The company was founded in 1994 and is headquartered in Gurgaon, India. Seagram India Pvt. Ltd. is a subsidiary of Pernod-Ricard SA. In the 2001, group Pernod Ricard acquired part of Seagrams worldwide, after the divestment of the spirits and wine business by Vivendi Universal. The acquired part of the Seagrams business catapulted group Pernod Ricard into the top three of the global wine & spirits players. The acquisition also brought Seagrams India into its fold, making group Pernod Ricard, headquartered in Paris, the biggest MNC in the spirits business in India. Seagrams India has shown an average growth rate of 69% per annum since 95-96 and is today the most profitable company in the spirits business in India. The main competitor during this study to be targeted is Seagrams India, and the product to be targeted is Royal Stag Whisky.

HISTORY
In 1857, a distillery was founded in Waterloo, Ontario. Joseph E. Seagram became a partner in 1869 and sole owner in 1883, and the company became known as Joseph E. Seagram & Sons. Many decades later, Samuel Bronfman founded Distillers Corporation Limited, in Montreal, which enjoyed substantial growth in the 1920s, in part due to Prohibition in the United States. In 1928, a few years after the death of Joseph E. Seagram (1919), the Distillers Corporation acquired Joseph E. Seagram & Sons, and took over the Seagram name. The company was well prepared for the end of Prohibition in 1933 with an ample stock of aged whiskeys ready to sell to the newly opened American market, and it prospered accordingly. Thus despite its earlier Waterloo history, the Seagram name is most closely associated with the Bronfman family.

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However, it is not correct to say, as is often done, that Samuel Bronfman founded Seagram, since the Seagram name itself pre-dated the company he founded. Although he was never convicted of criminal activity, Samuel Bronfman's alleged dealings with bootleggers during the (US) Prohibition-era have been researched by various historians and are documented in various peer-vetted chronicles. After the death of Samuel Bronfman in 1971, Edgar M. Bronfman was named Chairman and Chief Executive Officer (CEO) until June 1994 when his son, Edgar Bronfman, Jr., was appointed CEO. In 1981, cash rich and wanting to diversify, Seagram Company Ltd. engineered a takeover of Conoco Inc., a major American oil and gas producing company. Although Seagram acquired a 32.2% stake in Conoco, DuPont was brought in as a white knight by the oil company and entered the bidding war. In the end, Seagram lost out in the Conoco bidding war. But in exchange for its stake in Conoco Inc, it became a 24.3% owner of DuPont. By 1995 Seagram was DuPont's largest single shareholder with four seats on the board of directors. In 1986, the company started a memorable TV commercial campaign advertising its Golden Wine Cooler products. With rising star Bruce Willis as pitchman, Seagram rose from fifth place among distillers to first in just two years. In 1987, Seagrams engineered a $1.2 billion takeover of important French cognac maker Martell & Cie. On April 6, 1995, after being approached by Edgar Bronfman, Jr., DuPont announced a deal whereby the company would buy back its shares from the Seagram company for the amount of $9 billion. Seagram's was heavily criticized by the investment communitythe 24.3% stake in DuPont accounted for 70% of Seagram's earnings. Standard & Poor's took the unusual step of stating that the sale of the DuPont interest could result in a downgrade of Seagram's more than $4.2 billion of long-term debt. The rationale for this divestiture was that Edgar Bronfman, Jr., grandson of Samuel Bronfman, wanted Seagram to branch out into the entertainment business. Bronfman, Jr., used the proceeds 19

of the sale to help acquire Universal Studios, MCA, PolyGram, and Deutsche Grammophon. Seagram also gained control of a number of Universal theme parks. In 1997, the Seagram Museum, formerly the original Seagram distillery in Waterloo, was forced to close due to lack of funds. The building is now the home of the Centre for International Governance Innovation. The two original barrel houses are now the Seagrams Lofts condominiums. There are also almost 5 acres (2.0 ha) of land that will be the home of the future Balsillie School of International Affairs. In 2000, controlling interest in Seagram's entertainment division was acquired by the Vivendi Group, and the beverage division by Pernod Ricard. By the time Vivendi auctioned off Seagram's drink business, beyond its original high-profile brand names the once renowned operation consisted of around two hundred and fifty drinks brands and brand extensions. In 2002, The Coca-Cola Company acquired the line of Seagram's mixers (ginger ale, tonic water, club soda and seltzer water) from Pernod Ricard and Diageo, as well as signing a long term agreement to use the Seagram's name from Pernod Ricard. Seagram's Ginger Ale was named the winner at the 2009 World Cup of Ginger Ale in Chicago. On April 19, 2006, Pernod Ricard announced that they would be closing the Seagram Lawrenceburg Distillery located in Lawrenceburg, Indiana. However, the distillery was instead sold in 2007 to CL Financial, a holding company based in Trinidad and Tobago which then collapsed and required government intervention. In October 2011, MGP Ingredients announced that it had reached an agreement (subject to further approval requirements) to purchase the distillery.

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INDUSTRY PROFILE
INTRODUCTION TO LIQUOR INDUSTRY THE LIQUOR INDUSTRY IN INDIA
In India, drinking has remained a bad word, clubbed with the other vices. While the beer and liquor market continues to grow at an impressive rate even against an economic recession, the social stigma remains in place, which manifests itself in anti-growth state policies.

Domestic Industry
However, the Rs. 60.0 Billion organized beer and liquor industry has been growing at an impressive rate. In sharp contrast to the trend the world over, beer is losing ground to hard liquor in India. Amidst beers, the current trend is that lager beer is giving way to strong beer. Even as the liquor manufacturers could hope to garner the people who are shifting from beer to liquor, there is a vast country liquor market and a sizable grey market to contend with. United Breweries (UB), Shaw Wallace and McDowell (part of the UB Group) presently dominate the liquor and beer market. The market on its part is set to undergo a sea change with the arrival of MNCs. The removal of quantitative restrictions (QRs) on the import of bottled alcoholic beverages only makes the competition tougher.

The MNCs looked forward to good business after the removal of QRs but the Government nullified it by slapping new taxes. The foreign bottle, therefore, remains as costly as ever.

Latest Trends
To survive in the highly competitive environment, the MNCs as well as the domestic majors are coming up with various strategies. Acquisitions and alliances appear to be the order of the day. 21

Several such deals are already underway while more are in the offing. The domestic majors are also reorganizing their operations so that they can forge a deal with an MNC if the need arises. For instance, UB, which recently took up a major revamp, has said it is willing to offer a 25.0 percent stake to multinational liquor major. Another trend that seem to be catching up is the consumption of Coolers by the discerning connoisseurs. Coolers is typically a cold drink (or cocktail), which is often a mixture of white wine and fruit juice. As of now there is no definitive data available on the consumption front for coolers either globally or locally. But the fact that this finds mention in most of the wine and recipe related sites helps us to arrive at the conclusion that the trend of consuming coolers in its various combinations is indeed catching up.

Problem Areas
What plagues the industry most is a very complicated set of laws and taxes. Each state has a different excise duty structure, import and export levies and other regulations regarding licensing fees and sales of new brands. This puts tremendous pressure on the industry players. They cannot transport their products from a market that has excess capacity to one where there is a short supply. The taxes on alcoholic beverages are some of the highest in the world. In some states it works out to as high as 200%. The brewers argue that subjecting beer to the same level of taxing, as hard liquor is uncalled for, since the alcohol content in beer is very low. They are lobbying to have beer delinked from Imfl so that the taxes will fall, prices will plunge and consumption rise.

Crystal Gazing
Amidst all the competition and tough laws, the industry sees vast potential in the market. Consumption is set to rise with higher disposable incomes and standard of living. While the beer market is expected to expand rapidly, hard liquor is not seen losing much market share, either.

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The alcohol industry is very important for the government. It generates an estimated Rs. 16,000 crore per annum in spite of the fact that the per capita consumption of liquor in India is the lowest in the world. The total liquor industry is worth Rs. 2,000 crore. IMFL accounts for only a third of the total liquor consumption in India. Most IMFLs are cheap and are priced below Rs. 200 per bottle. Alcohol sales proceeds account for 45% of the total revenue collection in the country. Whiskey accounts for 60% of the liquor sales while rum; brandy any vodka account for 17% 18% and 6% respectively. MNCs share is only 10% and they have been successful only in the premium and super premium ranges. Post WTO the government may have opened India to foreign distilleries, but the duty has been increased from 222% to 464-706%. This is due to the fact that there is a 100% customs duty, 150% contravening duty, local taxes, distributors margin, retailers margin and publicity charges. The cost is finally borne by the consumer. The government claims that this is being done to protect the domestic liquor industry, the domestic industry accounts for 99% of the market share. This protectionist policy could prove to be counterproductive and lead to smuggling. As of now, only 45% of the sales are through legal channels and only 25% of this is duty paid for. Within India itself, the policy of alcohol retail differs form state to state. While some states like Maharashtra. Uttar Pradesh, and Tamil-Nadu have a liberal policy, come states like Haryana and Andhra Pradesh have had very bitter experience in trying to make these states dry and have eventually had to withdraw the policy.

Whisky History - The beginning of Whisky

What a lot of people do not know is probably that alcohol was first invented in the 10th Century by Arab alchemists. This technique was found when trying to make cosmetics and perfume as Arabs do not really have the need to drink alcohol. But soon the techniques where taken to Spain and then spread throughout Europe. Two Century later farmers, monks and university scholars where making alcohol from grape and grain or really any produced that were available to them with ease. Over in Ireland at this time monks really became the first to distil what we know as

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whisky when they used fermented barley. The timing of this was very vague and is believed to be around the middle of the 11th Century. Over this time with the travellers going between Ireland and Scotland this process spread quickly and whisky was starting to be produced by all the local farmers. This is when I would say whisky finally came to Scotland.

Other facts regarding the history of whisky

People will always argue about where whisky was invented. Scotland or Ireland? Well distilling was brought to Ireland by St. Patrick in 432AD, but the first written recording of it being sold was in Scotland 1494 and it soon became widespread as knowledge spread on how to distil whisky and soon afterwards nearly every farmer in Scotland became a maker of whisky. As you can see there is a lot of time between the two dates. The Celts could be the first to produced whisky as they named their liquid usquebaugh which means water of life and the word whisky also comes from the gaelic word 'Uisga'. In the early years of whisky there was no period of ageing and after the whisky was distilled it was consumed. So the whisky had a raw taste. It was then discovered by accident when a cask was forgotten about in the mid 18th century and when the owner of the cask tasted the whisky he found that the whisky mellowed after ageing thus the process of ageing began and why we have whisky maturing now for years just to have the correct taste that we all love. At the start of the 17th Century whisky distilling in the Scottish Highlands was massive with nearly every farmer joining in with the making of whisky. This was because the crop was easy to produce (barley and oats). These were when whisky became massive in Scotland, but really were only sold to local people in each of the farming communities. But then came the Act of Union. In 1707 and the Act of Union, Scotland and England join parliaments and soon after taxes were introduced on distilleries and malts. Of course this did not go down well and a lot of illegal whisky was beginning to be produced. But more penalties were brought in to reduce this illegal

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trade and smuggling of whisky. The penalties where very steep and in a very short space of time this practice nearly disappeared. It was not until the late 1700s when whisky became very profitable because of the improving farming methods. So with all the distilleries at this time present in the Highlands of Scotland and the main population in Scotland being in the Glasgow and Edinburgh area, distilleries began to be built within this area. This would help get the whisky to the marker quicker as the transport network was very poor in these days. But with taxes very high still and so many costs involved it was hard to keep this as a profitable business. So illegal distilling was still happening and with the government really cracking down on this production the smugglers tended to move all there distilling production to small islands around Scotland where they were very unlikely to be discovered. It was not until excise act of 1823 when taxes fell with the reducing of duty was reduced by 50%. This cut down massively the operations by smugglers and the whisky industry became legal once again. Generally whisky was really only sold within Britain, but as time when on it spread around the world and is sold in most countries. Also with it being sold worldwide other countries producing their own whisky. Hence why this website is about all the whiskies in the world and not just relating to whisky in Scotland and Ireland. With the history of whisky very vague it really has been adopted by Scotland and is one of Scotland biggest export with it being comsumed in nearly every country in the world. Over the coming years the whisky industry will keep growing and the making of this site all help the process. With regards to Irish whisky they have some amazing brands and deserve so much credit. There exports are always growing, and the merging of certain distilleries this will keep growing also. There is such a large market place for whisky that there is enough room for everyone to take a slice of the action. My own thoughts are Scotland and Ireland are both massive within the whisky industry and both have to keep growing

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Indian whisky and Scotch whisky

The drinking of Scotch whisky was introduced into India during the nineteenth century, during the period of the British Raj. Scotch style whisky is the most popular sort of distilled alcoholic beverage in India, though India has traditionally been thought to lack a domestic drinking culture. Whisky, however, has become fashionable for wealthier Indians, and as such the market for whisky among affluent Indians is one of the largest in the world. 90% of the "whisky" consumed in India is molasses based, although India has begun to distil whisky from malt and other grains. Brand names of Indian molasses whisky, including "Bagpiper", "McDowell's No. 1", and the partially malt based "MaQintosh" suggest that the inspiration behind the Indian whiskies is Scotch whisky, despite these products being chiefly made from molasses.

Indian Whisky Brands

Mcdowell's No.1 Signature Bagpiper Seagrams Blender's Pride Royal Stag Imperial Blue Royal Challenge Director's special Colonel's Special Officer's Choice Solan No. 1 Black Knight 26

Red Knight Aristocrat Binnie's Fine Whisky Green Label Senate Diplomat Delight Fine Whisky Malabar Malt Whisky Cosmopolitan

THE INDUSTRY STRUCTURE

With a size of over 159million cases in fiscal year 2009(each case has 12 bottles, each containing 750 ml of liquor), the IMFL industry can be broadly classified into products based on Extra Neutral Alcohol (ENA) and Rectified Spirit (RS). ENA-based products, which are of better quality and have a longer shelf life, are the focus of main players like the UB Group and Shaw Wallace. The low-priced RS segment is quite price-sensitive and characterized by the presence of a number of small players. The IMFL market is categorized primarily into whisky, brandy, rum, vodka and gin, with market share heavily skewed towards whisky. DIFFERENT LIQUOR WHISKY BRANDY RUM WHITE SPIRIT PERCENTAGE% 58 17 20 5 27

PERCENTAGE

WHISKY BRANDY RUM WHITE SPIRIT

The industry has been witnessing an annual growth rate of around 10-12% over the past five years. Last year (2009), the market grew at the rate of 10-12%

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Key drivers for growth of liquor consumption in India

Economic expansion and increasing urbanization is driving the emergence of a larger middle class that increasingly appreciates premium goods and services, including high end spirits, and is willing to pay for it.

INCOME GROWTH
India is one of the fastest growing economies in the world with GDP growth of 9% & 6.8% over the last two years. Per capita income has increased from US$ 450 in FY01 to an estimated US$ 781 in FY09 Growth in per capita income to drive discretionary income growth at much higher pace than the GDP growth, boosting demand for lifestyle products including alcoholic beverages Rural economy is likely to see big upsurge in income levels due to various government initiative
120 100 80 low (<$1000) 60 40 20 0 1989-90 2001-02 2009-10 lower middle (#1000) Middle High (>$2000)

INCOME DISTRIBUTION MILLION HOUSEHOLD

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YOUNG DEMOGRAPHICS
More than 60% of Indias population is in the age group of 15-64 Nearly 485 million people in the drinking age Another 150 million are likely to be added to this target population in the next 5 years Following these favorable demographics, demand for alcoholic beverages is set to rise

% of population in age group 15-60

67 66 65 64 63 62 61 60 59 58 2001 2011 2021 2031 2041 2051

% of population in age group 15-60

30

UNDERPENETRATED POTENTIAL

MARKET

SPELLING

HUGE

GROWTH

Indias per capita consumption of alcoholic beverages is among the lowest in the world A small increase in per capita consumption to significantly alter industry growth, given the large population base

PER CAPITA CONSUMPTION-LITRE PER ANNUM (LPA)

10 8 6 4 2 0 PER CAPITA CONSUMPTION-LITRE PER ANNUM (LPA)

REGION WISE CAGR ALCOHOL SALES GROWTH FOR LAST 10 YEARS

14 12 10 8 6 4 2 0 -2 -4 VOLUME VALUE

31

India is the fastest growing liquor consuming market in the world and offers tremendous growth potential in future

32

GROWTH IN IMFL CATEGORIES

PERCENTAGE GROWTH

WHISKY BRANDY RUM GIN VODKA

The whisky market is further classified into categories like medium (cheap), regular, prestige, premium, super deluxe whiskies, and Scotch whisky. The regular segment is the largest, constituting nearly half the volume of the total whisky market.

33

The Indian liquor industry can be analyzed by segmenting into 3 parts:

1. Country Spirit 2. Indian Made foreign liquor 3. Foreign Liquor 1. COUNTRY SPIRIT: This is the unorganized sector occupying about 70% of the liquor market. Country spirits are distilled spirits mixed or unmixed with spices or other ingredients in small quantities to import taste and aroma. This spirit is most common among the lower class; it is manufactured by local methods and has local names the most common being Tharra. 2. INDIAN MADE FOREIGN LIQUOR: This liquor is not the contemporary Indian liquor. In these category products like whisky, rum, brandy and vodka are there. Britishs had brought in this liquor to India later they set up distilleries and brewery to manufacturer it in India. In post independence period there were 28 distilleries and 5-6 breweries. Today there are 233 distilleries and 75 breweries in India. This shows the tremendous growth and acceptance of IMFL brands in India. 3. FOREIGN LIQUOR: This is the imported liquor includes Beer and IMFL brands but the most common is scotch. Imported scotch is in great demand in India but the Indian. Govt. bans the import of bottled scotch whisky, though a limited quantity can be brought in for duty free shops, five stars hotels and in bulk for local bottling by joint ventures. SUBCATEGORIES WITHIN WHISKY MEDIUM 46 HAYWARDS WHISKY GROWTH RATE KEY BRAND

34

REGULAR

-3

DIRECTORS SPECIAL,GILBEYS GREEN/WHITE,BAGPIPER

PRESTIGE

11

McDOWELL

No.1,ROYAL

STAG WHISKY,BAGPIPER GOLD WHISKY PREMIUM 18 PETER SCOT, ROYAL

CHALLENGE DELUX 65 ANTIQUITY,SINGLE MALT SCOTCH -15 BLACK DOG, 100 PIPERS, LONG JOHN, JOHNIEE

WALKER The Scotch segment consists of two categories - Bottled in India (BI) and Bottled in place of Origin (BO). Bottled imports of Scotch are still not permitted, but bulk imports are allowed, at import duties of approximately 240%. The official figure of the number of BO Scotch sold is 85,000 cases per annum. While estimates for the BO Scotch sold through legal channels stood at 110,000, smuggled imports have been estimated at between 300,000 and 500,000 cases per annum. Having signed the WTO agreement, India will have to allow bottled imports of Scotch and reduce duties to around 150%, in a couple of years.

The liquor industry in India is constrained by a multitude of factors:

Capacity Restrictions The industry is not allowed to expand without the prior approval of the Central government, as it among the few industries still under the licensing policy. In a liberalized scenario, when molasses have been decontrolled and for the brewery sector too, there is no shortage of domestically available hops, restrictions on new capacities make little sense. State governments have a part to play as well, since companies have to get their approval too before commissioning 35

a unit. However, the situation has changed with the Supreme Court ruling designating alcohol as a State subject. It is expected that companies will no longer face problems on fresh capacity creation. High Duty Structure The manufacture of IMFL is subject to government licensing, while levies on sales are a State subject. The States earn a significant portion of the revenues from liquor. In some States, the duty is as high as 200%. The duty structure varies so much with each State that for a company operating at the national level, it is like dealing with 28 countries. Such duties (including special levies on inter-State sales) have resulted in a distributed manufacturing base and unique market characteristics for each State. Market sources feel that since States are strapped for funds, adverse changes in policies for the alcohol industry are unlikely to happen. Prohibition Another problem that the industry faces is that of prohibition. Being a major vote-catching weapon, prohibition has played havoc with the profitability of many breweries and distilleries. Examples of States clamping prohibition in the past are Andhra Pradesh and Haryana. Gujarat is another total dry State. Ban on Advertising One major restriction throttling the industry is the ban on advertising. Some States have banned even surrogate advertising of, say, sodas and lemonades. With none of the State-run television and radio networks accepting liquor advertisements, advertising is done through private TV channels. Other media have been sponsorship of sports events, and contests. Recently, advertising on private/cable television channels has also been banned. The Black Market In any industry where there are restrictions, prohibitions and controls, a black market thrives. So too, in the liquor business.

36

Fragmented Structure One fallout of the various restrictions is that, except for a few brands, the liquor market is fragmented. Nearly 40% of it is serviced largely by regional players. In the case of beer industry, where volume matters more than price, a mere regional presence is a disadvantage. Regional presence and the consumer aversion to new brands have resulted in most companies avoiding the risk of introducing new brands. Instead, they concentrate on brand extension, trying to build upon existing brand values. Brand extensions in the Shaw Wallace stable include Haywards, Haywards 2000 and 5000 beer. Similar are the brands Kalyani Black Label and Kalyani Strong in the UB Groups stable. Beer sales are also affected by seasonality, with the offtake being generally higher in summer. Also, the restrictions on production capacity and inter-State movement usually cause supply to fall short of demand. Distribution and Trading Restrictions The distribution of liquor is controlled in many States, except in Maharashtra, West Bengal and Assam, where companies can sell their products freely in the open market. Distribution controls take various forms like auctions, open-market system, government--controlled markets and the Armys Canteen Stores Department. Under the auction system, the government fixes a floor price for the shops and the bidders have to quote prices. The licence would go to the highest bidder, and the bid price would have to be paid in equated monthly installments. This system operates in Punjab, Rajasthan, Bihar, Orissa, Uttar Pradesh and Madhya Pradesh. States following the open-market mode gives substantial leverage to the IMFL marketing company to choose its distributor and to determine pricing and discounts. In the case of distribution through government channels and distribution rights through the auction mechanism, strong distributors exert influence on the margins of the IMFL manufacturer. In the government-controlled system, the distribution of liquor is done through State agencies such as TASMAC in Tamil Nadu, BEVCO in Kerala, the Andhra Pradesh Beverage Corporation in AP, the DSIDC In Delhi, and so on. Since these agencies are sole wholesalers, they also have

37

the ultimate say in deciding on the entry of a brand into the State. These restrictions seriously limit the free availability and marketability of a company's products.

IMFL sales in different States, classified on the basis of the distribution channel accessible to the manufacturer, are given below:

OPEN MARKET

MAHARASTRA,WEST BENGAL,J&K,GOA,ASSAM,MEGHALYA,TRIPURA,ARUNACHAL PRADESH

AUCTION MARKET GOVERNMENT CONTROL PROHIBITION STATES

UP,RAJASTHAN,MP,BIHAR,PUNJAB,CHANDIGARH,HARYANA

TAMILNADU,DELHI,KERALA,ANDHRA PRADESH

GUJARAT,MANIPUR,MIZORAM,NAGALAND

South India is the largest consumer in the Indian liquor market, with Andhra Pradesh showing the highest consumption, at 15 mn cases, and a growth rate of 100%. In Kerala too, the consumption of liquor is high. Consumption in South India has been growing at a very high rate, compared to North India, which grew at 2% last year. The respective growth rates for different regions are:

38

REGION-WISE GROWTH RATE

EAST SOUTH WEST NORTH

The State-wise consumption of liquor is : Andhra Pradesh (15 mn cases), Bengal (1.7 mn), Assam (1.5 mn), Bihar (2 mn), Mumbai (2 mn), Maharashtra (2 mn), Delhi (2 mn), Haryana (2 mn), Punjab (2 mn) and Rajasthan (3 mn). Retailers' Grip There are an estimated 25-27,000 licensed retail sales outlets in the country for alcoholic beverages. Retailers have a major role in popularizing and making available a brand, as they have a virtual monopoly over the distribution of liquor in each State. The absence of self-service counters also limits customer choice. There are also restrictions on the business hours of these outlets as also their location vis--vis schools, colleges and so on, apart from where they can procure their requirements. There are restrictions in selling through restaurants and hotels too. RECENT TRENDS Of the few industries that have seen a no-holds-barred entry of MNCs, the alcoholic beverages industry perhaps tops the list. Most global liquor majors have set up shop in India, over the past five years, and have actively pursued market opportunities, despite debilitating constraints. This is because the liquor industry, witnessing a declining trend worldwide, has shown robust growth in India, bucking the recessionary trends in the economy and the anti-growth liquor industry policy. Another advantage is that India offers enough raw materials like molasses, barley, maize, potatoes, grapes, yeast and hops.

39

MNCs face numerous hurdles. They have been hampered by the regulatory framework and distribution hurdles. Most of the MNCs are confined to the premium segment and denied a level playing field. The Foreign Investment Promotion Board (FIPB) subjects the MNCs to a capacity ceiling of 10,000 kl (kilolitres). Some companies, like the International Distillers India (IDI), have cleverly sidestepped this, by contract manufacture, since there is no ban on outsourcing. MNCs also face the problem of unfulfilled export obligations arising from the imposition of the foreign exchange neutrality norm at the time of the FIPB approval. They are lobbying to get the condition relaxed. The WTO-mandated removal of import restrictions by April 2001 will permit easy availability of premium brands. Further, custom duties on alcoholic beverages have come down rapidly in the last few years, from 400% to 230%. As per the WTO commitments, duties have to be phased out to 150% by 2003. This is likely to open the floodgates for alcoholic beverages produced in other countries, particularly so in case of Scotch whiskies, the consumption of which has decreased substantially globally due to a growing apathy to hard liquor. The Scotch MNCs are anxious to locate new markets for their surplus whiskies, and they seem to be eyeing the only positive growth market, India. But India's custom duties are still quite high and would ensure that the MNC products are priced out of the market. India is seeing an increasing trend of white spirits being adopted over brown spirits. Though key brands in the white spirits segment have been growing at a healthy rate of 20-30%, their total size is small, compared to the overall liquor market. Exports have been minimal because of the vast market potential within the country. Shaw Wallace accounts for the largest share in the liquor export market (around 50%). Companies have been trying to boost exports through technological tie-ups.

PLAYERS IN THE LIQUOR MARKET The UB group, operating through McDowell & Co. and Herbertsons, are the leaders in the IMFL market, followed by Shaw Wallace. Mohan Meakin and Jagatjit Industries (both located in the

40

North) are the other important domestic companies, though both are considered to be relatively passive. COMPANY MARKET CASES) HERBERTSONS Mc DOWELL & CO. 8 17 BAGPIPERS Mc DOWELL No. 1, SIZE (MN BRANDS

DIPLOMAT SHAW WALLACE UDV BACARDI SEAGRAM 9 3 0.8 4 DIRECTORS SPECIAL GREEN LABEL, SMRINOFF BACARDI RUM ROYAL STAG

COMMON TERMS IN ALCOHOL Ageing Process where a whisky spends time in oak barrels to become the whisky flavour we know. Very important part of the whisky making process. The whisky stays in the barrels till it has reached the correct age the distillery requires to receive the best taste. Time in the bottle does not count to the age of the whisky. Alcohol The amount of ethyl alcohol obtained by fermentation. The strength of the alcohol changes depending how long the it has been distilled. Normally distilled spirits are sold with an alcoholic strength of 40 percent alcohol. Blended Whisky Mixing different grains to produce the whisky taste. Cask A barrel which is usually made of oak, used for the ageing of whisky.

41

Charring Charring(firing the barrel) the inside of a new barrel to give the whisky flavour as the whisky ages. This can also be called "toasting". Distillation This is done under heat where the alcohol can be collecting after vaporizing because water will vaporize at a higher temperature when heat is used. The alcohol is then condensed back to liquid form. Fermentation Yeast consuming sugars and converting them into alcohol & carbon dioxide. Grist Ground grains used for whisky making. Malt The name given to a grain which is usually barley germinate by steeping it in cold water. In the end more alcohol will be producted because the grain is high in sugar. Marrying Allowing a blended whisky time in large containers which can be oak or stainless steel. This happens before the bottle of the Whisky Mashing Cooking grains to release the starch content. Mouth Feel The effect that a whisky has on the palate of the mouth. Lingering is just one effect whisky can have when your are tasting Neat A whisky served neat is when no water or other liquid is added and that includes no ice. Nose The aroma of the whisky 42

Oak The wood used to make barrels for ageing whisky. This is how the whickey receive it's flavours and develops it's smoothness, finesse, colour and tannin. Pot Still The traditional style of still used for distilling whisky. The Pot Still operates in a batch distillation process. Rocks A whisky served "on the rocks" is not diluted, and served over ice cubes. Tails This is low in alcohol and is the "tail end" of the distillation. Can be known as feints. Yeast This is a living organism that is vital for the fermentation process. It feeds on sugar, and produces alcohol and carbon dioxide as by-products, but is so important to the whisky making process.

DIFFERENT ALCOHOLIC DRINKS

1. WHISKY Whisky is amongst the most popular distilled liquor known all over the world. It is made of malt and molasses spirit, which is obtained by distillation of mash or cereal grains like maize, rice barley malt. Better the malt better the whisky. Large quantities of IMFL are manufactured in India and is the maximum sold alcohol. The content is whisky is 42.8%. 2. RUM Rum is a distillate from the fermented juice of sugarcane of molasses. RUM is characterized with its taste and aroma. Best rums are known to come from Jamaica, West Indies etc. The alcohol content of Rum is 42.8%. 43

3. BRANDY Brandy is generally obtained from fruits, thought the most commonly used fruit is grapes. The best quality of brandy is cognac, which is made in France. 4. VODKA Vodka is a sprit resulting out of distillation at very high proof. This results in virtual NPN existence of flavor in the resulting sprit,. This is neutral, even after dilution required for palpability. The traditional source of making vodka has been potatoes. 5. BEER Beer is not a distillate like the drinks mentioned above but it is a beverage made by fermentation of malt obtained form carbohydrate rich material barley. Hops are used to add taste while yeast is used to ferment the beer. Beer is to two types: 1. Pilsner or Lager 2. Draught Draught Beer is served chilled in mugs and is generally available in Pubs only. It can be stored for 72 hours only and does not have any brand name. Mohan Meakins supports Draught Beer.

6. GIN: It is sweetened or unsweetened grain spirit flavored with essential oil juniper berries and some other product including angelica roots, orange peel, cardamom, bitter almonds give it a kick and taste. 44

RESEARCH METHODOLOGY
VARIOUS PARAMETER USED IN RESEARCH Research Design Data Source Research Instrument Types of Questionnaire Sample Extent Sample Size Sampling methodDescriptive Primary & Secondary data Questionnaire Structure and non-disguised Haldwani 84 Personal survey method through questionnaire

45

COMPARISION OF SEAGRAMS INDIA V/S UNITED SPIRITS LIMITED

SEAGRAMS INDIA

Seagram India, a Pernod Ricard Group Company, the world's second largest wine and spirits conglomerate, the name that's synonymous with world renowned wine brands such as Jacob's Creek ( Australia), Montana (New Zealand) & Mumms Champagne, and the finest spirit brands like Royal Salute, Chivas Regal, The Glenlivet & 100 Pipers. Seagram India Pvt. Ltd. engages in the spirits business in India. It offers Scotch whiskey, wines, gin, and brandy. The company was founded in 1994 and is headquartered in Gurgaon, India. Seagram India Pvt. Ltd. is a subsidiary of Pernod-Ricard SA. In the 2001, group Pernod Ricard acquired part of Seagrams worldwide, after the divestment of the spirits and wine business by Vivendi Universal. The acquired part of the Seagrams business catapulted group Pernod Ricard into the top three of the global wine & spirits players. The acquisition also brought Seagrams India into its fold, making group Pernod Ricard, headquartered in Paris, the biggest MNC in the spirits business in India. Seagrams India has shown an average growth rate of 69% per annum since 95-96 and is today the most profitable company in the spirits business in India. The main competitor during this study to be targeted is Seagrams India, and the product to be targeted is Royal Stag Whisky.

46

UNITED SPIRITS LIMITED (USL)

United Spirits Limited (USL) - the Company is known to be an innovator in the industry and has several firsts to its credit like the first pre-mixed gin, the first Tetrapack in the spirits industry in India, first single malt manufactured in Asia and the first diet versions of whisky and vodka in India. USL has a global footprint with exports to over 18 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfillment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole country.

47

ROYAL CHALLENGE VS. BLENDERS PRIDE

Royal Stag has become its largest selling brand across the globe. The Indian brand sold close to 12.3 mn cases in 2011 contributing to more than half of Pernod Ricard Indias volume sales that were close to 24 mn cases. Royal stag triumphed over Absolut Vodka which has global sales of 11.3 mn cases to be Pernod Ricards No 1 brand. With this Royal Stag becomes one of the only brands to topple the MNCs global offerings. That speaks volumes of PRIs steady nurturing and growth of the brand after taking over form Seagrams. It also provides a stark difference between the other MNC giant Diageo which has till now struggled to find its foothold in the Indian Market. Rowsons reserve is a step towards grabbing more share. If Vijay Mallya's outburst against the Bangalore Royal Challengers has anything to do with the impact of the team's rout on his most profitable whisky brand, here's the bad news. Royal Challenge, the iconic Indian premium whisky and the presenting sponsor of the Bangalore IPL team, appears to be losing steam in a fast-evolving marketplace. The brand that came to Mr Mallya as part of a $300 million acquisition of Shaw Wallace & Co in 2005, which in many ways turned around his fortunes, is no longer the undisputed leader at 48

the premium end of the whisky market. French drinks giant Pernod Ricard's local whisky Blender's Pride is staking claim to the pole position that clearly belonged to Royal Challenge for about two decades. Industry figures for FY08 suggests that Blender's Pride closed the year with 1.10-million cases in volume depletion, which some sector analysts believe is just ahead of Royal Challenge's 1.08 million. Blender's Pride, with a 30% rise in volume, stormed past the million-cases mark for the first time on its way to the top. An official of United Spirits, the flagship of Mr Mallya's spirits empire, told ET that Royal Challenge sold 1.17-million cases and was still marginally ahead of the rival. Nevertheless, there's a compelling argument that Royal Challenge's reign as leader is under threat. The UKbased industry digest The Spirits Business, in its 2007 listing of top brands, put Blender's Pride ahead of Royal Challenge both by volume and value. Industry experts believe Mr Mallya's statements reflected his concern about a possible erosion in brand value linked to the IPL debacle. "It is entirely expected of Mr Mallya to have a hawk's eye on his brand's fundamentals. By hitching the brand to IPL, Royal Challenge has extended itself to real-life experience from just a product. And the public at large draw their own conclusions on the brand from the experience," argued Brand Finance, a UK-headquartered brand valuation firm, MD Unni Krishnan. Blender's Pride sold about 1.86-lakh cases in 2002-03, way behind Royal Challenge's estimated volume of around 6.5-7 lakh-cases during the same period. Shaw Wallace, during 2004-05, just before its sell-out to Mr Mallya, claimed Royal Challenge sales has touched a million cases, but the recent set of numbers indicate that the brand has not been accelerating enough. In contrast, Blender's Pride, with a price premium and an evolving equity linked to fashion and music, has reported a five-year CAGR of 25-30%. For the record, United Spirits has claimed that previous Shaw Wallace management had inflated the brand figures ahead of sale, and Royal Challenge was not exactly a million cases in depletion when it was acquired. Mr Mallya's move to link Royal Challenge, which one controlled 65% of the domestic premium whisky market, to a hugely popular sport like cricket was aimed at keeping the brand ahead of the competition. 49

"The original strategy behind it was a masterstroke. But associating with IPL had its own risks which is getting apparent now. He knows it is unrealistic to believe that the brand's sales and the team's performance are unrelated even though value erosion may not be overnight," Mr Krishnan added. The Vijay Mallya-led United Spirits Ltd (USL), the largest spirits company in the world in terms of numbers, has initiated a total overhaul of its business structure, with a strategic shift in focus from mass selling brands to premium brands. The focus has shifted to premium brands that would bring in a larger profit margin per case, almost 3.3 times more than the regular segment. The new approach to the business appears to be a leaf taken from the manufacturer of Royal Stag and Blender's Pride whisky, French spirit behemoth Pernod Ricard, USL's nearest rival. For USL, the alarm bell rang in FY11 when Pernod Ricard, whose sales were around one fifth of USL's, made a profit of about Rs 500 crore when the United Spirits Ltd's profit figure hovered around Rs 400 crore. Pernod Ricard India has led the way for the industry by generating handsome profits, from small volumes. The primary focus of Pernod's business strategy is to focus on premium brands such as Royal Stag and Blender's pride whiskies. The French company's market share is less than onefifth of USL, which controls 55% of the 250-million cases Indian spirit market. An industry source said the French company generates profit of nearly Rs 350 per case while the USL's average profit per case is around Rs 200 per case. "USL's premium brands share of the company's overall contribution pie is at 55% today and expected to be up by another 5% by the end of this year. This is a significant increase from just 9% in 2005 and is an outcome of sustained premiumisation focus. Specifically, we have brands cross-lined to Pernod's brands pricing of Signature is at par with Blender's Pride nationally while McDowell's No.1 Platinum is cross-lined with Royal Stag," a senior USL official said.

50

It is the competitor's success in generating larger profits from smaller volumes that had triggered off a new thought process within the top management of the USL. The focus has shifted to striking a fine balance between volume and margin. The strategy, christened "premiumisastion", has been changing the face of the group from one identified with its mass selling brands such as Bagpiper, the largest selling spirit brand in the world until recently, to premium brands such as Mcdowell No. 1 Reserve, Mcdowell No. 1 Platinum whisky, Mcdowell Celebration rum, Mcdowell No. 1 Caribou rum , Mcdowell No. 1, Royal Challenge, Signature Premier, Antiquity etc.

DATA ANALYSIS A. IS THE PRICE OF THE PREMIUM SEGMENT AFFORDABLE OR NOT

Price range No. of customers

Low 12

Medium High 58 14

58

12

14

Low

Medium

High

51

B. WHAT INFLUENCE A CUSTOMER TO DRINK A PARTICULAR BRAND

INFLUENCING FACTORS NO. OF CUSTOMERS

FRIEND ADVERTISMENT TASTE

STATUS SYMBOL

PRICE

16

36

17

36 16 9 6 17

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C. WHAT FACTORS SHOULD BE ENCOUNTERED

REASONABLE FACTOR NO. OF CUSTOMERS

ENVIRONMENT OCCASION

PURCHASING POWER

ENJOYMENT

16

36

46

19 12 7 PURCHASING POWER ENJOYMENT

ENVIRONMENT

OCCASION

53

D. THE CONSUMPTION FREQUENCY OF THE CUSTOMER TO THE WHISKIES

CONSUMPTION ONCE A 3 TO 4 TIMES FRQUENCY No. of customers WEEK 9 IN A WEEK 63 EVERYDAY/FREQUENTLY 12

63 9 12

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E. WHETHER THEY AGREE WITH ADVERTISING PROGRAMME AND PROMOTION AFFECTS THE SALE OR NOT?

AD PROGRAMME CONVENTION NO.OF CUSTOMER

Yes 65

No 19

65

19

Yes

No

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F. CUSTOMER RATING FOR WINE (PACKGINGWISE)

Brands

Blander Pride

Royal Challenge

Any Other 34

No. of Customers

24

26

Any Other 40%

Blander Pride 29%

Royal Challenge 31%

56

G. CUSTOMER RATING OF WINE (AVAILABILITY WISE)

Brands

Blander Pride

Royal Challenge

Any Other 28

No. of Customers

28

28

Any Other 33%

Blander Pride 34%

Royal Challenge 33%

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H. CUSTOMERS PREFERENCE OF WINE WITH RESPECT TO TASTE & COMFORT

Brands

Blander Pride

Royal Challenge

Any Other 21

No. of Customers

34

29

Any Other 25% Blander Pride 40%

Royal Challenge 35%

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I. CUSTOMERS PREFERENCE OF WINE WITH RESPECT TO GOOD VALUE OF MONEY

Brands No. of Customers

Blander Pride

Royal Challenge 35

Any Other 24

25

Any Other 28%

Blander Pride 30%

Royal Challenge 42%

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FINDINGS
As per packaging concern Blander Profe and Oyal Challenge got near about same ranking form the customers As per good value of money concern Royal challenge get good raning with respect to the other brand its just because of excellent promotional strategy of USL. On account of taste and Comfert Blander pride and Royal Challenge has neck to neck cooptation but Blander Pride still lead Royal Challenge. As per availability of particular brand in baar, restaurant and shop customer easily get their choice or we can say that availability is not a big issue in wine market retailer usely hold all demanding brand at their ready stock. USL has excellent marketing and service network that play a major role in between customer to buy its products. Only on account of test and comfort Seagrams product Royal Stage get weatage on Royal Challange at the time of purchasing the product by customers. In a country like India, where direct advertisement of liquor is banned, every alcoholic beverages maker is going in a roundabout way to advertise for their brand Add to that the complication of a spoof, and the message becomes ever more indirect and confusing. It is going to be especially confusing for a layman, who does not really connect the Harbhajan Singh lookalike to the Royal Stag advertisement. They can only see this ad as an independent, humorous clip, nothing more. I believe that a) people who are working in the alcoholic beverages industry, and b) people who are marketing enthusiasts and watch ads with interest are the only ones who would realize the significance of the ad, and define it as a spoof on Royal Stags campaign. And thats the reason I think the ad is merely a strong statement made internally from McDowells to Royal Stag. The customer doesnt really seem to be the target audience of the ad

60

CONCLUSION
Here during my survey I found that USL Company is undoutely a market leader in wine industry especially in whisky segment. Its services along with resal value and taste of its product a major role to mould the custmers towards USL wine. But in case of Royal Challenge USL is in back foot against Royal Stage and here is a point where Seagram Company capture customers for its wine but Seagram has to a lot of efforts to make loyal its customer because Seagram is not in good condition regarding its service, availability and promotional activates. In short I would like to sum up my research with below mention conclusion: On the basis of research data and the personal interview of the respondents, the following Conclusions have been drawn: Brand loyalty of regular liquor users is high when compared with occasional drinkers. Hence brand loyalty is strongest for heavy users. Taste and Price are the two important attributes. Brand loyalty is affected by the consumer expenditure, which in turn affects his choice of quantity of liquor. Brand loyalty has a direct relationship with the availability of brand. The respondent tends to shift if they dont find their regular brand Advertisement has the minimum influence on purchase decision of the respondent in purchase of liquor

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LIMITATIONS OF THE STUDY

During the process of a research a person comes across certain restrictions certain limitations. Some of these limitations are overcome while come have to be overlooked for the smooth conducting of the research. Some of these restrictions are: Liquor is such a product that the wholesaler, retailers and consumer fear to come out with information. Due to the wide area of the markets, it was impossible to cover each and every retail shop, hence only few shops were covered. The project has to be completed in 8-10 weeks, which is not enough time to cover the market. So time was the major constraints in conducting the study. In this study it is not possible to collect the opinion of all customers owing to personal constraints. So the assumptions are drawn on the basis of the information given by the respondents. The study needs to complete within a specified time and in restricted areas. So the findings cannot be generalized as a whole.

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RECOMMENDATIONS

For Royal Challenge: The ad should work well with local small town for rural guys In case of TVS.. Company should promote local bar of B class city for particular brand Royal Challnge and provide some after sale services. Company should make some effective marketing plan for rural areas customers especially for its Royal challenge product.

For Royal Stage: The concept of ad is very old, so concept of ad should modify in case of Royal Stage. Company should properly setup its marketing network in small town also. Company should launch some new (in mid premium segment) product to cover remote market who either belong to the B class city or small town.

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SUGGESTIONS
Publications: Companies rely extensively on published materials to reach and influence target markets, including annual reports, brochures, articles, printed and on-line newsletters and magazines, and audiovisual materials. Events: Companies can draw attention to new products or other company activities by arranging special events like news conferences, on-line chats, contests and competitions, and sport and cultural sponsorships that will reach the target publics. News: One of the major tasks of PR professionals is to find or create favorable news about the company, its products, and its people. The next step is getting the media to accept press releases and attend press conferences. Websites: Website is a major tool of advertising as it is free from any kind of restriction in posting ads and any type of content. A company can post its ad in any website for promotion. A massive group uses internet and by posting ads on website company can easily communicate with the customer and can promote a new brand. On premise advertising: On premise advertising is also a good mode of promoting a brand, as all the customers purchase liquor from the retail outlet only, so company can post there hoardings and banners in the retail outlets.

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REFERENCE

1. MARKETING MANAGEMENT by PHILP KOTLER. 2. RESEARCH METHODOLOGY by C.R.KOTHARI 3. MARKETING WAR-FARE by AL RIES and JACK TROUT 4. THE ART OF WAR - SUN TZU 5. WWW.MCDOWELL.COM 6. WWW.GOOGLE.COM 7. WWW.UNITEDSPIRITS.COM

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