Vodka maker Stoli banks on India's growing incomes, premiumization for growth
3 min read . Updated: 18 Feb 2023, 12:17 PM IST
Premium- Indians now have high disposable incomes coupled with a younger demographic that the company is targeting
NEW DELHI: Premiumization in the alcobev sector is a ray of hope for international vodka maker Stoli Group, which started to sell its white spirits here about a decade ago. The company is looking at India as one of its key markets in Asia, as more people are migrating towards premium brands.
“We’re very interested in the potential for India and are very happy with the progress that we've been making in the market," Graeme Harlow, managing director, Asia Pacific and global travel retail for the Latvian firm Stoli Group, told Mint.
While it had Stoli Premium available in the market, last year the company introduced its Gold variant in India, sensing market need. Its products are being sold in about 20 markets in the country, he said.
“Globally, being locked down during Covid changed people's perceptions about spirits and now premium spirits are much more likely to become part of people’s drinking repertoire. Many more people are likely to learn about different kinds of spirits and what to do with them. I think now the trend that we're seeing is people want to become more healthy, more balanced and they are essentially drinking less but better so they'd rather choose a premium spirit and have a few nice drinks, rather than necessarily overconsuming," he added.
Indians, he said, now have high disposable incomes, coupled with a younger demographic, that the company is targeting.
Alcohol consumption in India is dominated by brown spirits like whisky, but vodka is a dominating white spirit and experts say that the premium vodka portfolio is expected to grow on the back of higher disposable income and the premiumisation trend which began during the pandemic.
Its products in India are distributed by its local partner VBev.
But according to industry estimates, vodka as a segment in the country is about 2% of the total spirits market with approximately 6.2 million cases being sold in 2021. However, imported vodka currently captures only a 5% share with about 3 lakh cases and is expected to grow based on the increased disposable income.
The company, which also retails in China has seen a halving of its business there due to pandemic-related lockdowns. "India on the other hand has rebounded very strongly now and our business is significantly bigger than it was in 2019. India is more poised for growth, and that's why we're starting to shift into these significant consumer activations like a partnership with Maserati MSG Racing for the ninth season of the ABB FIA Formula E World Championship in Hyderabad," he added.
The brand, the company said, has shown a 35% growth in the last five years. While they did not share exact figures of revenue, Vbev's parent company Vinspri Distributors Private Limited reported a total revenue of ₹9.2 crore in FY22 versus ₹6 crore in the previous fiscal. Its PAT was reported at ₹96 lakh in FY22, recovering from a loss of ₹1.8 crore in the previous fiscal. This was accessed from its annual filings made to the Ministry of Corporate Affairs via the business intelligence platform Tofler.
He said globally, the image of vodka took a big hit when Russia invaded Ukraine last year. "There was an initial backlash against that. People in many countries started to target brands like ours and poured bottles of them down the drains. We had to clarify who we were and where we were produced. We had a Russian heritage but we haven't been produced there for more than 20 years," he added.