Gen-Zs are consuming less, but very premium, says Diageo India MD & CEO, Praveen Someshwar

The Gen-Z in India is zebra-stripping, say Diageo India’s senior management. What does zebra-stripping mean? It is all about starting an evening with a tumbler of single malt and when it is time for a refill, they would moderate with a zero alcohol beverage and probably end the evening with an interesting cocktail. This, says, Praveen Someshwar, MD & CEO, Diageo India, gives them immense scope to innovate newer formats of liquids.

At a time when the younger generation in matured markets like the US is known to be shying away from alcoholic beverages, in the world’s largest whisky consuming nation, the trend is more towards moderation. “In India they are consuming different formats. They are consuming ready-to-drink, consuming cocktails, they are consuming different formats. Also, they are consuming premium beverages. They are consuming less but very premium. Therefore, the value of consumption in a particular occasion is high,” explains Someshwar.

“There are Gen-Zs and there are people across who are not consuming alcoholic beverages. They are looking for zero alcohol (the company has acquired a stake in non-alcoholic brand Ritual Zero-Proof). Each of this is playing out slowly and very clearly. The confidence we have is we are solving for it before we see scale. So, you will see some solutions coming out,” he adds. Though 70% of its portfolio still comprises whisky, the Rs 25,389 crore alcobev major has made significant investments in categories such as vodka, gin and premium tequila. In June this year, it fully acquired Nao Spirits & Beverages, the makers of craft gin brands Hapusa and Greater Than. Early last year, it also acquired a minority stake in Maya Pistola Agavepura.

Someshwar, says that the company’s focus would be on premiumisation and innovation. In FY25, premium and luxury part of its portfolio (Godawan, Jhonny Walker, Singleton Tanqueray, Smirnoff, Black Dog etc) comprised 33% of its net sales value. “Last five years we have grown at a CAGR of 13-14% and margins have expanded from 12%-18%. We have become cash positive and we are looking for investment opportunities. If I look at next five years, I see our margins expanding and we invest back in the business. We will continue to generate cash, we will get into new spaces. Innovation is a big area for us in terms of how do we make in India for India.”

The Diageo India head honcho is particularly excited about the way India’s consumption story has been shaping. Though the recent GST reductions don’t impact Diageo, Someshwar says, “When the overall consumption basket grows, indulgences grow faster. Rural growth is clearly ahead of urban and what delights us is that premiumisation (even for Diageo) is as much happening in rural markets as it is in urban markets.” Just as two-thirds of sales of its ‘prestige’ brand, McDowells No. 1, comes from 180 ml bottles, Someshwar is hoping that 180 ml bottles would also drive consumption of its premium liquids, especially in tier 2-3 India.

The FMCG mantra in the last few years has been to democratise premium. Someshwar, who has spent a large part of his career selling aerated beverages at Pepsico, is looking at democratising premium and luxury in alcobev too.