Diageo Unveils X Series To Tap Into Premium Spirit Demand

Diageo has introduced the X Series by McDowell’s & Co, expanding its portfolio to include white spirits and dark rum. The new lineup features Vodka, Dry Gin, Citron Rum and Dark Rum, showcasing the brand's venture into diverse categories.

While addressing whether Diageo's premiumisation strategy is driven by inflation and regulation, Vikram Damodaran, Chief Innovation Officer, Diageo India said, “Premiumisation fundamentally stems from changes in core consumer behaviour. India's disposable income has been growing over the years, particularly among the youngest drinking population. These new consumers are seeking a repertoire that spans multiple categories. The only way to address this demand is through premiumisation in value, offerings, and variety. As disposable incomes rise, especially among the young, there is a growing demand for premium, diverse and bespoke alcoholic experiences.”

He noted that smart cities in India like Indore and Nagpur are witnessing lifestyle trends akin to those in major metropolitan areas. “Consumers in these cities are well-versed in global trends and demand similar experiences and products.”

"India is witnessing significant entrepreneurial value creation, closely trailing China. There is notable economic activity and affluence emerging from smaller cities due to shifts like those seen in "Shark Tank."

While speaking about Diageo's focus on two kinds of consumers - affluent and young, Damodaran says that affluent consumers desire unique products and personalised experiences, such as limited edition bottles while younger consumers are embracing cocktail culture, seeking a wide variety in terms of flavours and categories.

Premiumisation is fundamentally driven by shifts in core consumer behaviour. In India, disposable income has been on the rise, especially among the younger drinking demographic. These emerging consumers are looking for a diverse selection that covers various categories. The best way to meet this demand is by enhancing value, offerings, and variety through premiumisation.

An increasing trend towards abstinence and sobriety is emerging among certain consumer segments. Over the past decade, the Indian market has experienced substantial growth in craft spirits and microbreweries, fostering a dynamic startup ecosystem in the alcobev sector. Diageo's investment in local spirit companies and products, including Gin and Agave spirit, underscores its commitment to incorporating Indian flavours into its global spirit portfolio.

"Four years ago, as we started our journey with craft spirits as a large company in India, we interestingly observed a vibrant startup system for alcobev. What used to be 10 microbreweries in India 13 years ago has grown to 1,000 now, and what was once just 1 gin company 9 years ago has expanded to 90 today. We continue to focus on our core brown spirits while also investing in white spirits like gin and rum, with investments in Nao Spirits and Pistola, as well as the Indian agave spirit, offering products that complement the global portfolio, including Don Julio. The idea is to create native Indian offerings that enhance our global portfolio," he concludes.