Mallya: Indian Consumers Spending on 'Upgrades'
NEW YORK, October 6, 2010 - An emerging class of young Indian consumers is driving a shift from a saving economy to a spending economy in India, said Vijay Mallya, CEO and Chairman of UB Group.
At a luncheon at Asia Society's New York headquarters on Wednesday, Mallya discussed his company’s success in the beverage and airline industries, and offered projections on future growth areas in India.
Since Mallya assumed the helm of the UB Group at age 28, its flagship company, United Spirits Limited, has grown to become the second largest spirits company in the world, with 50 percent market share in India. Kingfisher Airlines, launched in 2005, today is India’s largest airline.
Mallya told the event's moderator, Rebecca Blumenstein, Deputy Managing Editor of the Wall Street Journal, that his company’s success is due to its focus on branding.
“We believed in investing as much as we possibly could in building brand equity and appealing to this young, evolving consumer,” he said.
Mallya said young Indians “do not want to live like their parents or grandparents” and that overall, Indian consumers are increasingly interested in high-end products.
Instead of attracting customers with low fares, Kingfisher Airlines instead created a premium coach class, which features more legroom and in-flight entertainment consoles—a feature that its competitors later copied. He said young consumers especially responded to the seatback televisions.
“The Indian consumer is spending more, is going towards more ‘premiumization,’ and is upgrading,” he said.
“As long as you can appeal to [young consumers] and meet their aspirations, you will win.”
But Indian law is an obstacle to building brand recognition for United Spirits's liquor labels, he said. India's constitution discourages alcohol consumption and bans liquor advertising. To work around these restrictions, United Spirits promotes its brands in sports, music, and fashion.
He acknowledged that United Spirits has also benefited from tariffs that keep prices on imported liquors high in India. Mallya was unapologetic about protectionsim. “There is nothing wrong with a country protecting its own business.”
Reported by Mollie Kirk