Opportunities For Glendalough Distillery In Emerging Indian Essay.

Whiskey consumption in India

Discuss about the International Marketing for Glendalough.

Glendalough is a famous Irish whiskey and Glendalough has gained considerable success in the domestic market (Glendaloughdistillery.com 2018). Glendalough wants to find a new opportunity in emerging markets globally. In the year 2017, India is ranked among the top 10 host economies for FDI and India experienced high FDI inflows of US$ 60.1 billion in 2016-17 (Agarwal 2018). India has a well-developed administration along with vast geography. Indian population has unparalleled educated, skilled and workers for conducting the business. Moreover, India is the world's largest whiskey seller in the world as Indians consumed almost 1.5 billion litres of whiskey in the year 2015 (Gupta 2018).

India consumes almost 48% of the world’s whiskey and India is considered as the fast-growing market with largest producer and consumers of the whiskey (Erevik et al. 2017). India consumes almost half of the whiskey produced in the world and Indians drink different variant of whiskey. 90% of the whiskey sold in India is India-made foreign liquor (IMFL). In India, alcoholic beverage industry has been growing steadily for the last decade. As stated in the report by Esser et al. (2017), each year 19 million new customers enter the legal drinking age in India and increasing economic prosperity in India makes maximum numbers of customers make able to buy whiskey. Whiskey accounts almost 62% of India’s total alcohol market and sale of whiskey has been increased by 3.7% in India between 2012 and 2017 (Gupta 2018).

Table 1: Whiskey consumption in India

(Source: Livemint.com 2018)

In case of Indian whiskey brand, Bangalore Malt Whiskey took the top spot in the year 2017. In India, Allied Blenders and United Spirits are in the top as the owners of numbers of whiskey brands. Allied Blenders and Distiller is one of the leading IMFL Company which is engaged in manufacturing and sales of the alcoholic beverages in India. ABD is the third largest spirit company in India. United Spirits is another alcoholic beverage company which is India's largest selling alcohol company. Apart from the Indian made whiskey; the Indian market has plenty of numbers of foreign whiskey also. Johnny Walker is Scotch whiskey owned by Diageo. Chivas Regal is another foreign whiskey brand in India owned by Chivas Brothers. Teachers’ is another largest selling whiskey brand in India which is owned by Beam Suntory, in Scotland.

Indian whiskey brands and market share

Table 2: Sales volume in Million nine-litre cases

(Source: Statista.com 2018)

Government of India is increasingly relying on revenue of alcohol to pay their bills and in India one-fifth of the state, government budgets are funded by the alcohol. The whiskey producers make large profit and the business owners have to pay a large amount of taxes to business in India. In India, Gujarat, Mizoram, Manipur and Nagaland are some of the officially alcohol prohibited states. Doing business in India with liquor is profitable as USL made profit of 290 Cr in 2017 and Allied Blenders Distillers increased its profit by 12% in the year 2016 (Gupta 2018).

In India, alcohol companies have to provide large tariff as liquor provides 20% of the share of the government’s own revenue in most of the states. There are mainly three slabs in the GST while liquor companies have to provide 18% GST to government (Boutabba 2017). In some parts of India liquor is cheaper despite being paid high excise duties to the government. The Indian government has increased the investment in improving the infrastructure so that the companies can do business with ease.

India has abundant resources of skills personnel as 28% of the graduated is unemployed. India is the land of agriculture and technologies have been improving. Raw materials of whiskey are malt, corn, rye, barley, water and yeast. Each of the materials is available in India. In India, the labour force is large as India is the second largest populated country in the world. In each stage of whiskey preparation like malting, mashing, fermentation, pot stills and distillation; technologies are used.

Indian government started the initiative of ‘Make in India’ where the government has made retrospective amendment of the policies. The government has focused on the airports, road, seaports and power to provide the foreign companies best support with competitive pricing so that the companies can invest in the manufacturing process. India provides clearance facility of 12 new ports and 14 more seaports for both export and import. In case of starting a business in India; foreign companies can choose Bangalore, Mumbai, Gurgaon, Hyderabad, Pune or Kolkata for starting of the business (Kumar and Sethi 2016).

Political risks: Indian constitutional set up is like federal and this political aspect has a high degree of devolution to the states. There are total 29 states and 6 union territories with one quasi-state (Delhi). There are two large political parties in India; however, of late. Indian politics becomes fragmented in the last decade with emerging regional and caste-based parties. In India, there is a conflict between Hindus and Muslim (Dzever and Jaussaud 2016). This conflict will create a riot attack in India. Sometimes, political parties support one religion which influx the agitation of the people that can lead to the asset destruction. In India, most of the labour unrests are caused due to the rising prices and insufficient pay, poor working condition and inter-union rivalry. India is trying to move the status of cooperative federalism.

Political, economic, competitive, and operational risks in the Indian market

Economic risks: Indian GDP reached $2.848 trillion by the end of 2018 and GDP rank was 6^th. GDP growth is 7.7% n 2017-2018 (Malhotra 2018). The inflation rate was 4.28% in 2018 and the population below poverty line is 21.2% people. India's fiscal deficit in the last quarter of 2017 was INR 5.25 trillion due to the lower revenue realisation with the debt to GDP ratio is also high (67%). In addition, India is lagging behind in the per-capita income of the people and 30% of the youth generation in India are not in employment, education or training (Agarwal 2018). In India, 1% of the population holds almost 53% of the country’s wealth. The exchange rate of INR to Pound Sterling is 0.011 in 2018. When the crude price goes down; it will lead to fall of the Indian rupee.

Competitive risks: Rivalry in the whiskey market is high in India as there are many whiskey brands in India. The internal rivalry is strong as the price war is high along with investment in innovation and new product is strong. In the whiskey market in India, foreign and domestic whiskey brands compete with large size along with broad assortment. Indian alcohol market has observed the booming of whiskey sell and it is projected to grow almost 10% (Nayak 2017). In addition, threat of new entrant in the whiskey market is also high as large foreign brands can enter the Indian market easily. The initial investment in the liquor business in India is very high as the distribution has high failure rate.   

Operational risks: New international business in India face the issue of regulation as the companies have to adjust with the adequate framework, far-reaching changes and widespread market structure. Operational risk is associated with outsourcing that spurred by a clear message from regulations (Gupta 2018). In whiskey business, the companies can face geopolitical risks as the world has become more intertwined to rapid advances in communications and emerge of the globalisation. In India, most of the places are tropical regions along with high in temperature; therefore, companies in India have to protect the distillery.

India allows almost 100% FDI for brewing and distillation of potable alcohol and many of the investors can turn up due to the restrictions and taxes at the state level. Glendalough can opt foreign direct investment in India and the firm can start brewing whiskey in India to sell the whiskey in the Indian market. Glendalough will get help from the Indian government as the Indian government has been promoting the Make in India movement. FDI will allow Glendalough to have world’s largest market for manufactured products.

Strategies for Glendalough's success in the Indian market

Product: Glendalough Distillery has a large set of expensive whiskey in its store in Ireland; Glendalough Distillery may come up with Double Barrel, 7-Year-Old Single Malt, 13-Year-Old Single Malt and Triple Barrel. Glendalough can take the strategy of product quality as it is the powerful ingredient in successful competitive strategy. As stated by Anderson and Celik (2015), the product line is expanding strategy where the new products are launched in the same product line but beyond the current product. In the Indian market, Glendalough can start with its journey with a distinct product line along with good quality.

Price: Glendalough will be competing with Teachers' and Johnnie Walker in whiskey segment. These whiskeys are costly in the Indian market. Glendalough will fall into this premium whiskey category and Glendalough can take the strategy of lower pricing strategy. The lower pricing strategy will enable the firm to grab maximum customers and large market share within less time (Cai et al. 2015). Indian customers will spend fewer amounts to have premium whiskey. Lower pricing strategy let the organisation control the competition by preventing losing market and customers.

Place: Glendalough started its journey from Glendalough, Ireland by a group of friends. It has strong market hold in Ireland and Glendalough needs to have a strong distribution channel which will make its product available in different states of India. Glendalough will produce the whiskey in India and it will sell through F.L shops in India. The string distribution channel will help Glendalough to reach large numbers of open stores.

Promotions: In India, more than 370 million users are currently using the internet. Therefore, Glendalough can start with internet advertising like PPC and SEO. Glendalough can advertise through social media marketing through Facebook, Twitter and Instagram. Glendalough can also take the strategy of public relations and sponsorships. Glendalough can start to make public relations through sponsoring the local football or cricket teams in India and it can lead good promotion to Glendalough.

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