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Please let the good times roll

The 2009 tallies in the Brand Champions League make for grim reading as the global economic downturn took a big bite out of all the major brands – no category was immune to the downturn. Patience Gould reports

The Brand Champions League for 2009 tells its own story with virtually all the big international lines taking a hit as the global recession took its toll. As a result local and value-for-money brands came to the fore as down-trading was widespread, particularly in the US, where the big categories like vodka are far more fragmented than they are in Europe. Tempting as it is in these trying times to lower prices, many companies opted to cling to their premium and super-premium positioning believing it harder to increase prices when the going gets better than to go for the short term volume gain option.

On a category basis it’s interesting to note that vodka has 33 players in the big-time league, but just seven are in fact global and of these only one, Bacardi’s Eristoff, turned in an increase, 6% for 2009, but price-wise it is in the lower orders. The likes of Pernod Ricard’s Absolut was down 7% as was SPI’s Stolichnaya, while brand leader and the world’s number one Smirnoff dipped by 6% – that given Smirnoff’s price position is somewhat surprising, but at least the ultra-premium Ketel One, which it markets and distributes internationally, managed a 3% upturn in spite of its higher price point. Overall the top sellers in the vodka category shed almost 12.25 million cases in 2009 against 2008 levels – and that’s quite a hit.

Over in the Scotch whisky camp, which boasts 15m-plus annual case brands, 11 of which are global, six notables were clearly affected by the economic downturn. There were double-digit declines for category leader Johnnie Walker, which along with Ballantine’s was down by 11%, while Diageo’s J&B Rare and Pernod’s Chivas Regal fell by 15%.

To a great extent these falls can be written down to the slump in airline passenger traffic – particularly in the Far East, which had a significant and adverse impact on duty free. This particularly affected Chivas and the Ballantine’s aged range of Scotch whiskies as both brands have a very good showing in the region and notably in China as well as South Korea.

Rum-wise a category that boasts just four global players out of 14, namely Bacardi, Captain Morgan, Havana Club and Appleton, only two, Captain Morgan and Appleton posted growth of 4% apiece. Meantime Bacardi fell by 5% and erstwhile rival Havana Club also went off the boil to the tune of 4%.

All the categories were affected – that is, except Indian whisky and Indian brandy – where it seems business was as usual. This performance, driven by the giant Indian concern United Spirits, gives the colossus a total annual spirits volume that is second only to Diageo – but then its business is entirely confined to India rather than export.

It was back in April that United Spirits announced that it has crossed the milestone of clocking a sales volume of 100m cases for the fiscal year ended 31 March 31 2010.

This significant volume growth makes United Spirits the world’s second-largest spirits company by volumes, dislodging Paris-headquartered Pernod Ricard and celebrating the achievement UB Group’s chairman, Dr Vijay Mallya, went on record to say that the company is all set to become the number one global player. “The Indian spirits industry today is pegged at 236m cases and USL has a 59% market share in India in the segments it operates in. We are certain that our additional sales in the next financial year will take us to the number one position globally.”

Fighting talk indeed and it just shows the rich pickings to be had in India if – and it’s a big if – the market was a level playing field for the international industry. That said UB Group may have the volume, but the company most certainly does not have the international clout that both Diageo and Pernod Ricard can muster.

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