Ask Mallya how all this will affect his flagship brand, and he is sanguine as ever. “Kingfisher has been the key to UB group’s beer business, [which] has grown by 20 percent this year to 30 million cases,” he says. “The brand is the most recognized beer in India and will continue to remain that way, at least [while] I hold the reins.”
Kingfisher is a very solid brand, at least in South and West India, the two major areas of beer consumption. And much of the credit does go to Mallya, who cut his teeth in business at the young age of 18, having inherited a vast business empire straddling liquor, pharmaceuticals and engineering. But some are suggesting the flamboyant businessman is in danger of losing his position against fierce rivals.
The street-fighter businessman, budding politician (he is a member of the Upper House of the Indian parliament) and diehard party animal is larger than life. He owns a personal Boeing, luxurious apartments in London, New Jersey and Dubai, in addition to his domestic homes in India, and a yacht that once belonged to Elizabeth Taylor.
He has used his high-profile image and shrewd business mind to transform Kingfisher into the best-known beer brand in India. Since liquor advertising is banned in Indian print and electronic media, Mallya gained visibility instead by putting his flagship beer’s logo on everything ranging from cars to couture. Already, the Kingfisher Derby in the south Indian city of Bangalore every July is the highpoint of the city’s social calendar, and last year, UB kicked off its Kingfisher Fashion Awards, presenting Indian designer Ritu Beri’s show in Paris. Mallya now wants to extend the brand to a sports car and a full-fledged clothing line.
The end result of all this strategic promotion is that Kingfisher is available all over the globe and leads rivals back home in both the strong and mild categories (Kingfisher commands 25 percent share of the Indian beer market). Parent company United Breweries has started focusing on strong beer (while the overall Indian beer market grew by five per cent last year, the strong beer market grew at nine percent) and has formed a new subsidiary, Millennium Alcobev, to develop strong regional markets for its beer brands.
But the strength of the man may not be enough to guarantee UB’s continued success in the face of fierce rivals. “For decades, the beer industry in India had been dominated by two local giants, UB Group and Shaw Wallace Distilleries. And then came SABMiller,” says equity analyst Sudeshna Majumdar, referring to the second largest brewery in the world.
SABMiller gained a presence in India in just two years by buying out a half dozen local breweries. Says Richard Rushton, managing director of SABMiller India, “We are developing a quality portfolio of local and international brands to suit the preferences and lifestyles of the Indian consumers.” It seems to be going well; within a short period, SABMiller carved out an eight percent share of the Indian market. (UB continued to dominate over 42 percent of the market; Shaw Wallace Breweries held at 35 percent while the remaining 15 percent carved up between regional players like Mohan Meakin and Chowgule.)
Then, in May 2003, SABMiller made its boldest move by picking up 50 percent of Shaw Wallace for US$ 132.8 million. “SABMiller and Shaw Wallace thus effectively control 35 percent of the Indian market and this could give nightmares to Mallya about the future of his brands like Kingfisher,” says Mumbai-based liquor wholesaler Paresh Khatwani.
Other analysts also point out that it's high time Mallya does some rethinking of his idea to extend the Kingfisher brand from beer to areas like fashion. “The problem is Mallya himself,” says advertising executive M.S. Varughese. “He has such a large persona that it steals away from the brand. He looms large over all events organized by his company. After you come back from a Kingfisher fashion show, for example, you remember not the beer brand but Mallya’s colorful turban and his diamond earrings.”
Mallya has succeeded in the first phase of brand positioning – making his brand a memorable name. Now it is time for him to switch gears and allow the product to sell on its attributes. “[V]ery rarely is it pointed out in interviews by senior UB officials that Kingfisher is sold in 60 countries around the world,” observes Varughese.
Foreign competition in the form of SABMiller is going to make life more difficult for Mallya in the days to come. He needs to think up more tricks in order to ensure that UB continues to grow and that Kingfisher remains in the top slot.