Diageo India Seizes the Growth Potential in Agave Spirits and Rum

Diageo India has focused on expanding its portfolio by betting on emerging spirit categories like agave and craft rum. In 2024, Diageo’s United Spirits acquired stakes in Indian brands Maya Pistola, an agave spirit producer, and coffee liqueur brand Quaffine.

This move aligns with their strategy to reshape their portfolio, aiming for increased profitability and consumer reach by investing in the Indian craft spirits market.

Earlier in 2022, Diageo India took steps to refine its brand lineup, selling 32 brands in the Popular division, including Indian staples like Haywards whisky and White Mischief vodka. This shift enabled them to invest more heavily in artisanal spirits, such as the Indian gins Greater Than and Hapusa, through their 22.5% stake in Nao Spirits.

The Growth Potential for Agave and Craft Spirits

Chief Innovation Officer Vikram Damodaran sees exciting growth potential for Diageo’s recent investments.

According to The Spirit Business Magazine, he notes that India’s rich and diverse geography offers the ideal terroir for cultivating unique ingredients like coffee and agave. Maya Pistola, for instance, sources its agave Americana from the Deccan Plateau, where the volcanic soil fosters high-quality plants for an authentic agave spirit.

Damodaran emphasizes Diageo’s responsibility to spotlight India’s artisanal spirit brands. Through Diageo Ventures, they provide support to startup brands, helping them elevate their products to the global stage. Diageo’s resources offer smaller brands the platform they need to compete, and Damodaran envisions their investment as a way to foster a robust ecosystem for quality Indian craft spirits.

Building a Craft Culture: The Good Craft Company

Launched two years ago, The Good Craft Company serves as Diageo’s experiential platform for promoting Indian craft spirits. Recently, Diageo opened The Flavour Lab in Bangalore as a sensory space to introduce consumers to these craft products. Located in Goa, their Ponda craft distillery also fuels the production of innovations from The Good Craft Company, including Godawan, an Indian single malt.

Through The Good Craft Co., Diageo supports startups by providing resources like mentorship, product quality insights, and manufacturing guidance. This initiative not only benefits new brands but also creates a community dedicated to advancing craft culture and quality standards in India.

Shifting Consumer Trends in India’s Spirit Market

Damodaran notes that while whisky still dominates the Indian market, consumer preferences are shifting. Whisky claims about 90% of the spirit market share in India, leaving 10% to other categories like gin, vodka, rum, and tequila. However, as younger consumers explore new options, Diageo sees significant growth in gin and tequila. He points to the “massive growth” of gin, which has paved the way for rum’s emergence.

The rise of craft spirits, particularly gin, has fueled this trend. Damodaran recalls that India’s craft culture began with microbreweries, which started booming over a decade ago. Today, Bangalore alone boasts around 100 microbreweries, and the country has around 1,000 in total. This surge in craft beer encouraged Indian consumers to embrace other craft options, with gin leading the charge.

Rum on the Rise: The Next Big Trend

As the gin wave hits its peak, Damodaran believes rum will be the next major trend. He notes that India now has around 10 craft rum brands, with consumers showing increasing interest in the terroir and ingredients that go into quality rum. Damodaran expects rum to follow the same trajectory as gin, with an initial surge of popularity that will likely stabilize, allowing for new styles and offerings.

He remains optimistic that India’s craft spirit waves will continue, with each category building momentum as new consumers enter the market. Damodaran’s vision aligns with Diageo’s mission: to nurture India’s emerging craft spirits scene, one innovative spirit at a time.

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Source of information

The Spirit Business’ Article: Diageo India bets on agave spirits and rum

The image of the article is courtesy of © Glavo via Canva.com