Cream liqueur, though not a new concept, has not really been able to gain much popularity in India. This is mainly due to the very high prices that these are available in. Some of the popular brands in this segment are Bailey’s and Amarula. All the players in this segment are foreign brands and the products are imported. This results in the steep pricing that these companies have had to adopt. However, how is this market affected by the entry of a domestic manufacturer? Brandworms caught up with Mr. Ranjan Shetty, Officer with Nouveau Group.
Management students are often taught to notice market opportunities and step in to take full advantage of it. However, very few actually implement this learning. Mr. Ranjan Shetty, an alumnus of IFIM B-School, sets an example of implementing these classroom sessions in real life. No doubt experience has also been a teacher. So, let’s get the full picture in his own words.
Q) Could you throw some light on liqueur industry – What is it? What is its growth rate in the country? How is it different from other alcoholic beverages?
A) Liqueur Industry is very Niche & new to India, Education is required on Liqueurs to understand the products. Roughly about 0.5% of total Alco-beverage industry in India & 3% of world Alco-bev market. This year the growth rate of liqueurs stand at 25-30%, for example brown spirits (Whisky / Rum/ Brandy) are growing at 10 – 12% where as white spirits (vodka/white rum) have slowed their growth this year to 8-10%
Q) We have a lot of options to start our business with, numerous attractive industry segments coming in, what made you choose liqueur industry?
A) There are three reasons 1. No Domestic Competitors, 2. Changing lifestyle & Increase in purchasing power of consumers, 2. Young Demography who are ready to experiment new stuff.
Q) Did you have a plan of becoming an entrepreneur and starting your own business someday or did you think of working in an organization with a handsome salary? What inspired you to be an Entrepreneur?
A) Being an Entrepreneur was always in me, but the right spark or idea was missing, until I met my childhood friend and Business partner Mr. Harish Reddy, after 14 years which eventually inspired me and the Brand VOODOO Classique Cream liqueur was born.
Q) Liqueur being a niche segment, what is the target market for it and who are your competitors? How attractive is this market?
A) Target market would be youngsters, a new trend has started with lot of people travelling abroad and getting familiarize with various liqueurs. All our products are priced at entry level. Our main competitors are imported brands because there is no Indian company which produces Liqueurs in whole of India, which is why this market is very attractive. Imported brand have a burden of 151% customs duty so they are very expensive for the market we target.
Q) Liqueur currently is being sold either directly to consumers or sold to bars and hotels for cocktail preparation. What channels of distribution are being used by your organization?
A) Liqueurs in general are sold like any other alco-bev products. The ratio is 25% at retail & almost 75% at bars for cocktails, and we are changing this scenario. The basic reason with liqueurs not being attractive to consumers is because they were expensive and available in only one size. We have broken this jinx by introducing our products which are available in different sizes and the price are very economical. Voodoo Classique cream liqueur is price at 1450/- for 750ml & 377/- for 200ml in Karnataka whereas Bailey’s Irish cream at 2750/- for 750ml & Amarula cream at 3450/- for 750ml.
Q) Would you like to share your story about the branding of Voodoo, Cabo and other drinks? The names and the packaging look quite attractive.
A) We choose to be attractive on our Brand names and packaging for instance we connect with real life incidents for our brand names and the packaging is an aspect we take due care about, right from the material we use to the shape it presents.
Q) What is the value proposition being offered by Nouveau Group that makes you stand out in the market?
A) Exclusive range of Products with International quality production methods at Indian prices.
Q) How do you think India is an attractive market for cream liqueur? Why would consumers go for cream liqueur instead of wine?
A) We Indians have sweet tooth and Indian cow cream is termed as the best tasting cream in the world, so these two were the basic catalyst to our idea.
Wine has become a status symbol rather than a beverage, while cream liqueur is considered a passion drink, because of the varieties of flavor, full bodied aroma & after taste.
Q) What were the challenges you faced in this journey?
A) The biggest challenge in this industry is the Government policies each state is as challenging as different country to enter, and the huge working capital requirement. Our industry is the biggest contributor of revenue to the government. In Karnataka it is 18% of annual state budget & in Tamil Nadu 22%. But there is no support by the government to this industry. Just look at UK trade 10% of all their exports are contributed by Scotch for which government is assisting, unlike here.
Q) We all know the cons of surrogate advertising. Would you say there are pros as well?
A) The biggest advantage of surrogate advertising is the need to have an innovate Idea; to promote your brand.
For an Example: No other company would have tried this as we did. To start off we have created VOODOO Chocolate truffles a liqueur filled truffles which can be advertised, and sold in outlets other than liquor stores this increases the brand presence and the perfect gateway for surrogate advertising.
Q) What advice would you like to give to other entrepreneurs and marketing students based on your experience?
“Never there is a better time to start a business and never the ideas of entrepreneurial spark have been more vibrant. Find something you are really passionate about, create a vision and execute them until you reach your goals”