It is known in luxury circles that while the Indian luxury alcohol market is small in size, the growth is fairly good. Recently however, Euromonitor International published an interesting report on the luxury alcohol market focusing on the BRIC. The report shows that for the luxury alcohol industry, three BRIC countries will be the runner-ups after the US in terms of absolute value growth in luxury alcohol, and India and China are predicted to have the highest Compounded Annual Growth Rate (CAGR) during 2012-2017. The graph below shows how lucrative Indian market is going to be for luxury alcohol brands.
Although India stands out in terms of growth, with a forecast of 25 per cent CAGR, sales are expected to grow by less than US$44 million, as the consumer base remains relatively small and has lower purchasing power. By 2016, the richest 10 per cent of households in India are expected to have an average annual disposable income of US$26,329 (in constant terms, compared to S$59,378 in China and US$124,543 in Brazil). Hence, India provides a phenomenal opportunity to penetrate and later on lead this ever growing market.
The question for many managers marketing luxury alcohol brands in markets like India will then be: what marketing strategies to adopt to capture this rapidly growing market?
Getting the right positioning in consumer minds in a fast growing, large market like India can have significant future benefits for luxury brand managers. One of my research studies specifically focusing on Indian luxury alcohol market sheds light on some useful strategies. Originally published in ‘International Marketing Review’ in 2010, I shall highlight some of the important points here.
The study looked at several important psychological variables which help consumers in buying luxury alcohol brands’. The specific variables include:
(a) Social gains – using luxury goods to gain social mileage
(b) Esteem indication – signalling overall worth, value and importance of oneself in social setting
(c) Ostentation behaviour – showing off possessions including wealth
From the study findings, it was realised that Indian consumers largely consume luxury alcohol brands with an aim to show off. The showing off may carry subtle signals of esteem which in turn may result in social gains. I believe this is due to the collectivist nature of the society wherein the consumers focus on what others think about themselves (others self-concept) than how they feel about themselves (actual self-concept). Using these ostentatious signals through alcoholic drinks, the consumers may signal status subtly (or in some cases not so subtly).
Secondly, the study also found that consumption of luxury alcoholic brands in India is highly situation specific unlike developed western markets like Britain. This is also corroborating with the Indian market size pattern observed by Euromonitor study. This, I believe, is again due to the overall collectivist nature of the Indian society where households, which spend money on societal events, generate many tangible rewards including higher social status. Hence, consuming ostentatious products such as luxury alcohol brands at special occasions can alleviate an individual’s intra-group and inter-group social identity. Special occasions like birthdays, anniversaries, and other important gatherings also offer an opportunity for the ostentatious consumers to show off their possessions and entertain their guests with luxury alcohol brands.
To engage Indian consumers, managers should position their brand on ostentation. The marketing strategy should also focus on situation speciï¬city. If managers can develop a brand message around occasions and ostentatious behaviour, they will have a higher chance of success in the Indian market. Furthermore, branding efforts will not yield as effective a response in the Indian market because of low awareness of many global brands. Therefore, managers will have to use ingenious ways to engage the Indian customers. For example, alcohol players Diageo and United Breweries are focusing on the upwardly mobile population in the metros and mini-metros of India by opening lounges, while Absolut and Brown-Forman are associating with art and music scene. Diageo plans to open Johnnie Walker Club & Lounge and Smirnoff Cafes in metros such as Mumbai, Delhi and Bangalore and wishes to expand to ten other cities in near future.
While surrogate advertising through promoting mineral and carbonated water is a regular way or communicating in Indian market, luxury brands may have to use even further subtlety and creativity in their marketing campaigns. This will depend mostly on what positioning the luxury alcohol brand aspires in the Indian marketplace. The significant rise of specialist magazines as well as point of sale promotions may help luxury alcohol marketers carve a niche for themselves. For instance, Glenfiddich hosted an event in India to honour five Indians who have pioneered their fields while Remy Cointreau partners with influential Indian people to promote their brands through lavish parties.
Thus, challenge for managers lies in creating a ‘glocalized’ strategic action plan which incorporates a balanced mix of standardized as well as customized response to the Indian marketplace to reap the rewards of this rapidly growing market.
Dr Paurav Shukla is an academic, researcher, consultant and trainer in the field of strategic luxury marketing and branding. With his extensive experience in teaching and training participants from more than 60 countries, his researches have been published in many top-ranked academic and business journals and magazines. He can be contacted via email on [email protected].
