Any fitness trainer worth their salt will tell you that pumping iron to build your vanity muscles without focussing on core strength is just a vanity project. You will look good, but you won’t have functional fitness. Bacardi India’s strategy has been to strengthen its core.

The maker of white, dark, and flavoured rums came to India—which loves its whisky—in 1998, but it was only a few years ago that it launched its global whisky brands in the country. “It was part of our strategy... We needed to build our core businesses first,” says Sanjit Randhawa, MD, Bacardi India and Southeast Asia.

Now that the business (which also sells Grey Goose vodka, Bombay Sapphire gin, and Breezer ready-to-drink) is in a strong position, Randhawa says it’s time Bacardi made a serious push in the largest-selling category in India—whisky. The results have been gratifying, for the portfolio comprising William Lawson and Dewar’s has exceeded the company’s expectations, he says.

In an interview with Fortune India, Randhawa and Anshuman Goenka, head of marketing, Bacardi India, spoke about the company’s growth strategy leveraging premiumisation, its recent launch of the Reserva Ocho rum, and other whisky brands that the company plans to bring to the market this year. Edited excerpts:

How has the last financial year been?

Randhawa: Last year was good. We had two reasons for that. The industry had a great year, as compared to the year before when there was volatility from the highway ban and the GST (Goods and Services Tax). All those things were put behind and we have seen stability when it comes to regulations, which is a good thing for the industry. There is a stable environment that has helped growth. Our businesses grew better than the industry. We ended the year with a 23% growth in revenue. We have seen double digit growth in the past three years.

You have seen losses narrowing and revenues rising. What do you attribute that to?

Randhawa: Our brands are growing. Our portfolio has expanded. While we as Bacardi are known for our rums, we have a large portfolio which cuts across all categories. Our rums have been growing—the Carta Blanca, the flavoured ones and the Bacardi black rum. We have had fantastic news with our big bold bet of whisky. We began two years ago with the entry level scotch William Lawson. We have seen 60% growth last year. Dewar’s is the other whisky portfolio that we introduced. We have a whole range of it now comprising Dewar’s 12-, 15-, 18- and 25-year-olds. We have made a foray into single malts—Aberfeldy 12- and 21-year-olds. Two more single malts, Aultmore and Craigellachie, will be introduced this year. There was also growth in our white spirits such as vodka and gin. We have introduced Patrón tequila, which Bacardi acquired globally last year. It is small for us in India, but it is a great addition to the portfolio.

How do you see that coming up?

Randhawa: It will be good. It will take some time, because, tequila, and that too super premium, will be a slow burn. Prices vary from state to state. It will be upwards of ₹5,000—₹10,000 in some markets. And that’s really super premium. That’s changing definitions of tequila in the consumer’s minds, for it was considered cheap shots.

You have been in India for more than 20 years. Why was it that you launched your whisky brands just two years ago, given that whisky is the largest-selling category in India?

Randhawa: That was part of our strategy. That was planned. We needed to establish our core first—our premium white spirits. That being done, it was the right time for expanding into the largest category in India. We are here for the long term. And if we have to be a long-term, sustainable and profitable business then we have to win in whisky.

What is your strategy for growth in India?

Goenka: India has been [for us] in investment mode for the longest while. Globally, it is looked upon as a high priority, must-win emerging market. So we are investing quite heavily in building our brands. And as we progress to grow at this healthy sort of double digits, we are going to be profitable, but it won’t be at the cost of cutting investment, because we are here for the long term.

Randhawa: We have been in India for 21 years. We have shied away from the mass market, from being a low-priced, low value kind of product. And if you have to make money from alcohol in India, you need large scale. That’s why it took us 21 years to get there.

What is the revenue break-up like?

Randhawa: The biggest sales value comes from rum portfolio, then the ready-to-drink (RTD) portfolio—the Bacardi Breezer. The whisky business has exceeded our expectations. It is also growing the fastest. Both William Lawson and Dewar’s have grown 60%.

What is your target demographic?

Goenka: There are millions of consumers in the country. We segment them in terms of who they are, and what they drink. Today we have the luxury of a large portfolio and each one of them has a defined target audience. For example, for a brand like Bacardi, it’s a young legal drinking audience that we try and recruit. For a brand like Grey Goose, which is far more premium, it is going to be those in their late twenties and thirties and in a very different stage in their lives. For a company like ours, the good news is that four million new consumers which are part of the socio-economic group that we target enter legal drinking age every year.

Anshuman Goenka, head of marketing, Bacardi India.
Anshuman Goenka, head of marketing, Bacardi India.
Image : Bacardi India

Could you tell us a bit about your premiumisation drive?

Randhawa: There is a premiumisation trend across the country. Consumers are moving up the ladder. They want to drink better. The number of occasions when people celebrate with a drink has gone up. Alcohol is no more as taboo as it was 20 years ago. Home consumption is still big, but out-of-home consumption at pubs and bars too is rising. These are positive trends for the industry and for us because we are a premium brand, and consumers want to get into more premium brands.

[And so] we are premiumising our rums. We are taking rums beyond our premium Carta Blanca white rum to a super-premium level. We recently launched the Reserva Ocho, an eight-year-matured rum (ocho is eight in Spanish). It’s dark rum—the youngest rum in this blend is at least eight years old. It will be priced between ₹4,000- ₹5,000 depending on which state it is sold. So that’s our move to premiumising. We will follow this with a four-year-matured—the Bacardi Anejo Cuatro—and then the Gran Reserva Diez, aged for 10 years. In India, rum and dark rum are perceived as harsh, that big boys drink rum, and [when you have had some] you wake up the next morning with a severe hangover. This (the Ocho) is completely the opposite. You can have it on the rocks—it is smooth, easy to drink, you can sip it all night and it makes great cocktails.

Any policy hurdles that you have faced lately?

Randhawa: Not recently. In the past one year, the industry has had a good run—it is in a stable environment. There are still constantly some route-to-market changes. It (the alcohol industry) is regulated by the government. It is a state subject. Every state has its own revenue targets and ambitions. And so there are changes that happen yearly in routes-to-market. Uttar Pradesh used to be a monopoly state. It has opened up. It is good for business. Bengal a few years ago became a corporation market. In some markets the retail is with the government. There is the hybrid model in Delhi. It varies according to states. That’s the environment we have to work in, and we do our best. But it’s been stable and as long as it is stable, it is good for the industry.

Which regions give you most sales?

Randhawa: South. South is also the largest industry. Tamil Nadu, Telangana, Karnataka, Andhra Pradesh—these are big states for alcohol consumption.

Follow us on Facebook, Twitter & YouTube to never miss an update from Fortune India. To buy a copy, visit Amazon.