PRAVEEN SOMESHWAR flaunts a Guinness notebook as he chats with us in his 10th floor office at Bengaluru’s premium commercial address, UB Towers. “This is just to remind me, here’s a global powerhouse beer brand which we need to bring into this country,” says the MD & CEO of Diageo India (incorporated as United Spirits Ltd or USL in India). His favourite is Guinness 0.0, its zero-alcohol variant, which he zebra stripes (that is, alternates between non-alcoholic and alcoholic beverages) with Lagavulin 16, a single malt from the alcobev company’s global portfolio, whenever business takes him to London. “Anyone I meet, who knows about Guinness, asks me ‘why aren’t you bringing Guinness to India?’” he adds.

Just as one wonders if Someshwar is following his predecessor Hina Nagarajan’s premiumisation strategy, he clarifies, “When the overall business is doing well, I wouldn’t go and change anything dramatically just because I have come in afresh. But if I were to do the same thing, it’s kind of sad too. So, it was a great time to refresh.”

What is Someshwar — who took charge on April 1, 2025 — doing differently? While Nagarajan made Diageo India a high-margin, profitable business by vacating the low-margin, low-priced bottom-of-the-pyramid segment and a concerted focus on the premium space, Someshwar is democratising premium. He is making sure the average aspirational Indian consumer gets access to a Johnnie Walker Red Label whisky or Smirnoff vodka in smaller pack sizes. He is also looking at creating newer consumption opportunities. He plans to launch zero-alcohol beverages and ready-to-drink cocktails. He is also giving aspirational brands such as McDowell’s No. 1 a new lease of life by giving them a premium feel.

His definition of luxury is not about limited-edition packs or selling only in upmarket addresses, but making it available in affordable pack sizes across the country. “The beauty of India is that consumers constantly want to move up the ladder. Nobody is happy staying where they are. In developed countries, people are happy with their lifestyle, they don’t need upgrades. In India, even the affluent are constantly looking at upgrading.”

While Nagarajan came across as margin and profitability focussed, Someshwar — a chartered accountant by training — is a quintessential FMCG leader who firmly believes in the game of volumes. “Praveen brings the analytical number-driven approach, but he can also zoom out and see the forest without getting lost in the trees,” says Debabrata Mukherjee, MD, Lotte India Corp. (Havmor), who worked with Someshwar at HT Media.

If there is anything that Someshwar’s nearly 25-year stint in PepsiCo has taught him, it is to walk the streets and understand consumer sentiment. He shares an anecdote from a market visit within weeks of joining Diageo. He met a consumer who was consuming a 180-ml bottle of IMFL (Indian-made foreign liquor) whisky from a mass brand in a Chennai permit room. “The consumer asked me why I wasn’t selling a 20 cl (200 ml) Johnnie Walker Red Label. I looked at him and said, ‘What you’re drinking costs ₹250; a 20 cl Red Label would cost ₹600.’ He said, ‘I can at least drink it once a month if it is available in 20 cl.’ That’s premiumisation to me,” he says, adding that if you “make a price point which makes our premium products affordable”, there will be aspiration to have it.

A healthy balance sheet

Nagarajan’s firm focus on value-based growth enabled Someshwar to inherit a largely debt-free balance sheet. In FY26, the company recorded 7.6% growth with consolidated net sales at ₹12,448 crore. Profit after tax was 17.5% higher year-on-year at ₹1,830 crore, with PAT margin at 14.7%. The company has entered into an agreement to sell 100% of Royal Challengers Sports, a wholly owned subsidiary that owns IPL team Royal Challengers Bengaluru (RCB), for ₹16,663 crore. A debt-free balance sheet, says Someshwar, gives him the freedom to think big. “With our type of revenue and our type of profitability, I think we can invest in as big a business as we want to today. We will constantly look for propositions within the platform, within our core space. We also have global brands which need to come into India,” he says.

Was parting with RCB for a media-dark business (where direct public advertising is prohibited) like Diageo India a great idea? “We did what was good for the business,” says Someshwar. Former MD & CEO Anand Kripalu’s first reaction to the RCB sale was emotional. “I was sad. I was closely involved with the team for almost eight years,” he says, adding that Diageo inherited the team with the acquisition of USL.

Diageo’s global business has been under stress for the past five years. “There must have been huge pressure on the company to clean up the balance sheet and monetise non-core assets. Given this global context, I would say selling RCB was possibly the right thing to do,” explains Kripalu.

Alcoholic beverage industry expert and United Spirits (Diageo bought United Spirits in 2012) veteran Suresh Menon says RCB was started because in a media dark environment, it was a good option for promoting products. “I think RCB as a team and the company has done an excellent job in terms of the social media standing of the company. But I don’t know what the internal dynamics were,” he says.

Someshwar, for whom one of the major attractions for joining Diageo was RCB, explains, “RCB is bigger than brand Royal Challenge right now. Now that it’s become bigger than the core, it doesn’t really add back to the core.” Parting with RCB was not an easy decision, he says. “I love the business of sports. But then you have to allow me to invest. I want to have a team in every premier league across the world. Or, I want to own sports in Bengaluru. That will take serious investments, but I will make sure we get value out of it,” is what Someshwar told his shareholders. The return on capital from RCB was nowhere close to its core business. “My shareholders told me you can’t invest more, see what you can do with this. I said, from here, you will start seeing value deterioration if you don’t invest. If you are telling me that you don’t want to invest, then we should let go.”

It was a tough conversation, but eventually everyone (the board, shareholders and employees), says Someshwar, was on the same page that RCB was not their core business.

Meanwhile, the ₹5.3 lakh crore alcobev industry had been showing robust value growth. While the likes of USL, Pernod Ricard, or Bacardi were growing at 2-6%, challengers such as Radico Khaitan and Allied Blenders and Distillers (ABD), who were volume players, also started to premiumise and grew the ‘prestige and above’ volumes at a much faster pace. Someshwar realised that he needed to worry about not just Pernod Ricard or Bacardi, but Radico Khaitan, ABD or Tilaknagar Industries as well.

Volume play

Having ₹16,663 crore in the bank obviously gives Someshwar the freedom to experiment, and the past year has seen the company launch tequila in India with Don Julio. He is also keen to enter newer categories such as non-alcoholic beverages and ready-to-drink cocktails. But his major focus in the past year has been to give a new lease of life to some of Diageo India’s iconic brands such as McDowell’s No. 1, which was losing market share, and Smirnoff vodka which was stagnant.

Diageo India had started vacating the mass segment from 2020 onwards when it started selling some of its low-margin brands such as Old Tavern whisky, White-Mischief vodka, Honey Bee brandy, and Green Label whisky. Though the company was clear it would stay away from the bottom of the pyramid, this segment was also constantly upgrading itself. Competitors such as ABD started capturing this market with ICONiQ, and Radico Khaitan with Magic Moments. On the other hand, McDowell’s was consistently losing market share for the past seven to eight years.

The question staring at Someshwar was whether it was okay to grow at the top and lose share at the bottom. “I don’t think it’s a great thing to do, as it is the same consumer who ladders up over a period of time.” This led to his architecture of segmenting the country: India 1-2-3. “India-1 is my aspirational, future-looking middle class. Today, it’s at the lower end, but in the future, they will be middle class. They are constantly looking for aspirational products. They can’t afford it, but they aspire to consume it,” he explains.

Someshwar decided to re-engineer McDowell’s No.1 with 30% more Scotch, a new pack design and in a 180 ml PET format, all at the same price point. Even Royal Challenge 180 ml pocket packs were launched for this segment of consumers. The brand has crossed the milestone of 10 million cases in trailing 12 months’ sales, the company claims. “This is a significant milestone for us, especially because we are the challenger brand in the segment.”

India-2, says Someshwar, is the quintessential Indian middle class that is constantly pushing to lead a progressively better lifestyle. “My old company PepsiCo, Marico, Britannia, all of them have created their business around India-2—solid, consistently growing, premiumising slowly but clearly.” That’s where their blended Scotch whisky brands such as Black Dog, Black & White, and Signature (which has recently entered the ₹1,000-crore club along with Royal Challenge, McDowell’s No. 1 and Johnnie Walker) play. India 1-2 contributes a chunk of Diageo India’s revenue. India-3, Diageo’s luxury portfolio with brands such as Johnnie Walker Black Label, Godawan, etc., is what gives the company its high-margin, high-value growth.

United Spirits veteran Menon agrees that Diageo’s premiumisation focus has indeed led to the company losing clout with the trade. “One of the reasons why Diageo acquired USL was its sheer size. USL at that time did about 120 million cases, while Diageo in India was just about 1.25 million cases. The clout with the trade was substantially different. Diageo lost clout because of the absence of larger volumes and popular brands.”

“Even though a retailer may want to keep a Johnnie Walker in his shop, he is not necessarily dying to do so. He would prioritise brands such as Royal Challenge or McDowell’s No.1 which give him regular business and quick returns. I see the new [global] CEO of Diageo also talking about... having a larger and more broad-based portfolio. How much of that will filter down to India is as yet unclear,” says Menon. Diageo’s global CEO Dave Lewis is a former Unilever and Tesco executive, which explains his preference for a broad-based portfolio that is not too much inclined towards luxury.

Kripalu says the mandate for multinational subsidiaries is to follow global strategies and priorities — suitably adapted for local differences. “I made the final presentation to the board of directors of Diageo to divest the popular brands. Initially, I was hesitant. But over time I became convinced as the global mandate was to focus primarily on premium brands and premiumisation — and not waste management and other resources on the popular portfolio.”

Someshwar confirms that Diageo has put substantial feet on the street in the past six months. “When I joined this organisation, we were not really focussed on on-trade (on-premise trade). We have gotten back to it. Our brands are built on premise. They are built around bring your own booze or on-trade accounts or in-permit rooms in the south of India. They are built there and we need to invest in that.”

The 360° luxury play

When Someshwar talks about feet on the street, it is not just about making its entry level brands more visible. He is talking about democratising his premium and luxury portfolio as well. He cites the example of tequila brand Don Julio, which was launched last year and is already a `100-crore brand. Someshwar attributes a large part of this growth to trade activations. His feet on street strategy also includes on-premise availability and getting the go-to-market strategy right. “We are making sure we pour our luxury portfolio in the right kinds of weddings across the country. Even weddings in Tier II-III India pour the best of tequila, scotch, and single malts,” he says.

Luxury, says Someshwar, is a 360° play and not so much about being rare and expensive. “Luxury is about making sure that we are available in the right places and making sure we are playing to culture.” A 360° play also includes being available in affordable and accessible pack sizes. Not only does it have 90 ml, 180 ml, 360 ml and 380 ml packs across brands, even a top-end Scotch whisky like Johnnie Walker is also available in 20 cl packs now. That should make the consumer Someshwar met in Chennai happy!

“Somebody told me that our luxury portfolio doesn’t need small packs. I think they absolutely need a small pack because the occasion of the small pack is very different than the occasion of the large pack,” explains Someshwar.

Ruchira Jaitley, chief marketing officer, Diageo India, calls on-premise consumption as the ‘third space’. “Be it the India cocktail week or the Gin Explorers Club, consumers are going there to look for repertoire. They are actively paying for ticket prices to get in. Weddings are yet another third space for us. Wedding caterers are partnering with cocktail bars to pour the best of alcoholic beverages.”

Beyond whisky

The Gen Z play a crucial part of strategy. The younger generation doesn’t drink as often as their predecessors, but when they drink, they drink high-value beverages and binge as well. Zebra-striping is popular with Gen Z — they may start the evening with a zero-alcohol beverage and then move to a whisky, again go back to a zero-alcohol beverage and probably end the evening with a cocktail.

“Gen Z wants to participate in ways that are more about experiences. For instance, they’re entering on tequila, they’re entering on white spirits as much as they are entering on whisky,” explains Jaitley.

For Diageo India, largely a whisky company in the world’s largest whisky market — that consumes more than 250 million nine-litre cases each year — this is important. For Someshwar, the changing consumer behaviour of young Indians is an opportunity to reduce dependence on whisky and look into newer categories.

While he is looking at getting brands from the global portfolio into the country, he is also resurrecting existing brands like Smirnoff vodka. He can’t stop talking about Smirnoff Minty Jamun and Mirchi Mango. “I was told the category isn’t growing. However, competition (Magic Moments) in the last six-seven years had moved from zero to 8 million cases. I asked the team why Smirnoff wasn’t exploding? Why weren’t we doing flavours?” After the initial discomfort of realising that it was a missed opportunity, the company launched Smirnoff Minty Jamun. “Everyone said if we can get 30,000 cases per month, it is a huge success. I decided to double volumes.”

Someshwar’s bet paid off. Smirnoff delivered outstanding growth in FY26, growing over 50% and crossing 1 million cases of which Minty Jamun contributed around 300,000-plus cases. In Q1FY27 alone, Smirnoff clocked nearly ₹250 crore in revenue, with approximately 50% of the growth driven by smaller pack sizes.

Meanwhile, the company has fully acquired NAO Spirits, which owns gin brands Greater Than and Hapusa, and rum brand PIPA. It has also acquired a 10.08% stake at `2 crore in Nuvola Spirits, makers of Mikiamo Limoncello (a melon-based liqueur) and Seoulmate soju. “The whole idea of investing in startups is to look at authentic Indian provenance and craft-led products which can unlock the future,” explains Someshwar.

Though the consumer’s appetite to experiment with newer kinds of alcoholic beverages gives the beverage-maker unlimited opportunities, what remains constant are the rather unfriendly regulations that differ from state-to-state, making the business complex. Maharashtra emerged as the most significant near-term challenge. Significant excise duty increases (approximately 60%) resulted in 30-40% spikes in the MRP, with the company not passing on the full burden to consumers, it says. And the introduction of Maharashtra-made liquor created additional competitive complexity at the lower end of the portfolio. Not to mention the recent clampdown by the food safety regulator which has ordered a ban on sales of Diageo's popular brands such as Antiquity Blue Whisky and Royal Challenge Whisky, and McDowell’s No. 1 Rum. United Spirits, however, in an exchange filing said it is taking up the matter with the FSSAI, stating that the labels in question are “in compliance with applicable laws and regulations,” even as it has filed a court case challenging the order on its rum.

But there have been tailwinds as well. Uttar Pradesh effectively doubled its licensed retail outlets through progressive policy reform. Karnataka introduced one of the most significant excise policy frameworks, where it has moved to an ‘alcohol in beverage’ taxation policy. Taxes are levied directly on the pure alcohol content rather than the liquid volume or bottle size. Unlike most states, in Karnataka, the government no longer fixes prices. It allows manufacturers to set prices based on competition. It also helped that Karnataka halved the excise slab from 16% to 8% on the premium portfolio.

The governance ecosystem is far better than earlier, agrees Someshwar. The India-U.K. Free Trade Agreement (which seeks to reduce customs duties on U.K. whisky and gin from 150% to 75% immediately, with a further drop to 40% over 10 years) has also added a meaningful tailwind. “I am not uncomfortable with alcohol-linked taxation. What I want to ensure is simpler slabs. I keep urging policymakers not to complicate the slabs. Every second year, some state decides to do something new and it disrupts our business. Resetting the whole go-to-market is a process. So, just make sure that it is run efficiently and consistently as much as possible.”

So, where does he see his business in the next couple of years? Someshwar believes that it’s the best time to be a part of the Indian consumption story. The intent definitely is to be seen and be available everywhere possible. “But we are in a category where we need to be responsible. We need to be careful about overdoing stuff. So, just getting the right balance so that consumers consume us in a responsible manner would be the ideal space for us.” After all, the business is all about drinking better and drinking responsibly.