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Food & Beverage

Suntory pours it on in India, the world's top whiskey market

Japanese distiller chases Diageo, aiming to sell more than 1m cases by 2022

Suntory hopes the strong brand image of Japanese spirits will translate to big sales for its new, locally blended Oaksmith brand to be offered exclusively in the Indian market.   © AFP/Jiji

TOKYO/MUMBAI -- Japanese beverage maker Suntory Holdings will roll out a whisky brand this week that will sell exclusively in India, the world's largest market, as it tries to gain ground on top distiller Diageo.

The new brand, Oaksmith, will be blended mixed with imported bourbon and scotch. The product is classified as an Indian-made foreign liquor that uses imported whisky and is blended in the country. Such products make up more than 90% of India's whiskey market.

Beam Suntory, the U.S.-based subsidiary of the Japanese parent, already sells Teacher's brand scotch in India from 1994. Oaksmith will be its first product sold only in India. Suntory acquired U.S. distiller Beam in 2014.

The Japanese company will start selling Oaksmith in Pune, in the western state of Maharashtra. Pune is a hub for India's information technology industry and has a young population. It plans to roll out the products in other areas later.

Oaksmith will have two products targeting middle- and upper-income drinkers and will be priced at up to 1,375 ($19) per 750ml bottle in Maharashtra. By next year Suntory hopes to sell 120,000 cases, rising to more than 1 million cases by 2022.

India, which was once a British colony, is a huge whiskey market, accounting for half of global demand. Suntory, the world's No. 3 spirits producer, faces fierce competition in India from rivals such as Diageo of the U.K. and France's Pernod Ricard. Both have locally blended import brands.

In August, Diageo announced it was increasing its stake in Indian distiller United Spirits to a controlling 55.2%. Diageo has enjoyed strong sales of high-end varieties in India such as scotch, which rose by double digits in the 2019 business year.

Its French rival also sees India as a must-win market. Pernod Ricard sells premium local brands in India, in addition to imported labels. In 2018 it logged strong results, with sales rising 23% and net profit climbing 28%.

Suntory hopes its skill in blending will translate well in bringing Japanese whisky to India.

The Tokyo-based beverage maker will also begin exporting its Roku gin to the country for the first time, as it aims to cash in on the growing popularity of Japanese spirits worldwide. "Roku" means "six" in Japanese and refers to the six Japanese botanicals, including cherry blossom, tea leaf and yuzu citrus peel, that go into its gin.

India's spirits market continues to expand as incomes rise and drinkers look beyond locally brewed beer to satisfy their thirst. According to London-based drinks market researcher IWSR, by 2017 India's whiskey market had risen 140% versus 10 years earlier by sales volume, and the trend is continuing.

One industry analyst at a domestic brokerage said there is further room for expansion, forecasting "high single digit growth in terms of volume and double digits in terms of overall sales. [That] won't change unless regulatory environment changes." Suntory sees India as a top producer of spirits in the future.

Unlisted Suntory Holdings' sales rose 4.3% on the year to 2.2 trillion yen in 2018, thanks to a strong showing by its Boss coffee brand and Suntory Tennensui mineral water. Its net profit fell 1.1% to 250.9 billion yen due to higher logistics costs. The company's alcoholic drinks business logged both higher sales and profit, led by Beam Suntory.

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