Indian spirits manufacturer, Kyndal Group, is in the process of building a global brand. What’s encouraging is that the brand has seen over 300 per cent revenue growth since 2006 and is currently in a consolidation phase. This augurs well for Kyndal as it prepares to take the fight to foreign brands
POORNIMA KAVLEKAR
“I have been lucky as I have been at the right place at the right time,” states Siddharth Banerji, managing director, Kyndal Group, while commenting on his transformation from a professional to an entrepreneur. Banerji, with over 30 years of domestic and international market experience, led the management buyout of Kyndal Group, an alcoholic beverages (alcobev) company in 2006. His rich experience with Indian domestic liquor brands and the fact that he was a part of the team which successfully launched brands like Officers Choice Prestige Whisky, Teacher’s Scotch and famous imported brands such as Absolut Vodka and Jim Beam Bourbon in India, has helped him rise to popularity in this sector.
The business of alcohol is not a business for people who do not have deep pockets.
In his previous stints, Banerji served as, sales director for Whyte & MacKay (India) Ltd, country manager for Jim Bean Brands U.S., South-Asia regional director, Whyte & MacKay PLC; and with this buyout he turned entrepreneur. He believes that when you are working for someone, no matter what position are in, you follow a blinkered path and are just doing the job. But, when you turn into an entrepreneur, the biggest thing you have to get into is the mindset of managing everything, both external and internal. With such an attitude, this economics post graduate from Delhi School of Economics set out to build Kyndal into a global manufacturing company; a significant growth path from distributing alcobevs to manufacturing them. “I think it was much easier to do business 30 years back. All you needed to do was to get in, have ideas about the market and develop your product. In 2001, things started to change as foreign brands started entering the market,” opines Banerji. Strategic changes have also happened since then. From selling alcohol, a company now sells brands. “One is now talking about brands, distribution and competition. The competition is much more intense,” he says.
Kyndal’s transition from a distribution company to a manufacturer was thanks to the joint venture it forged in 2009, with Lucas BOLS Distillers of Amsterdam called BOLS Kyndal India. As a part of the JV, it introduced BOLS super premium brandy in Bengaluru, which is bottled in distilleries across the four southern states through partnerships with small, regional manufacturers.
Rounding up its portfolio
Kyndal Group is an alcobev company that manufactures and distributes premium brands in the Indian sub-continent, Far East and the Middle East. It employs over 100 people in India and has sales offices in 12 cities in India and warehouses in five cities across the country. While the company is known for launching and building successful brands such as Absolut Vodka, Remy Martin Cognac and Jim Beam amongst others, in the Indian subcontinent and the Middle East, it is now known as one of the leading spirits companies with a high-end luxury brand portfolio such as BOLS Brandy, BOLS Premier Xo Excellence, Bootz Authentic Dutch Grape Brandy, Bowmore Islay Single Malt Whisky, McClelland’s Single Malt and more. Brandy is its main revenue spinner and the company plans to launch rum in the near future. From 2006 to now, its annual turnover has grown by 300 per cent. The moment it got into manufacturing, its sales volumes also jumped. According to data collated by IWSR (International Wine & Spirit Research) BOLS Kyndal India, which currently operates in 15 countries, including the Indian sub-continent, West Asia, and Africa, sold 7.10 lakh nine litre cases in 2013 as against 90,000 nine litre cases in 2009.
“Brand management and development has helped us carve a niche for ourselves in the market,” recall Banerji. The company spends around 8 per cent to 10 per cent of its sales value on marketing. It comes out with a calendar on an annual basis and presents awards for achievements. Commenting about promotional events, Banerji says, “Typically, alcohol is best promoted through events. You need to get into an environment where one picks up a drink and samples it. But, more importantly, it is word-of-mouth that is important as alcohol is about bonding.” When a brand gets people to have a good time, it creates a bond with them.
Forging the right partnerships
Banerji believes that global brands are the future for his company. “There is no point in investing and creating local Indian brands,” says Banerji. Kyndal forges relationships with prominent brands which need to enter India. “It’s a model wherein we provide the technology and build distribution strengths for them,” he says. As all its brands are in the premium segment, its competition is mostly from the global brands.
Currently, Kyndal has five tie-ups with various organisations. For example, it has a joint venture with John Fergus & Co Ltd, promoted by Ian Palmer, to set-up a new malt distillery and bonded warehouse in Glenrothes, Fife. The company wants to focus on exporting to markets in India, Africa and Far East. “For Kyndal Group, any development towards rationalisation in import duty structures would open up a large market for scotch whisky. Kyndal, in partnership with John Fergus & Co, would like to maximise on this opportunity,” says Banerji. The new distillery is expected to be operational by 2015 and will be a source for premium Scotch whisky.
The company, along with Bangalore- based JP group has formed a 50:50 joint venture, called Terra Inc., to market its premium portfolio of spirits. The joint venture will be responsible for in-depth marketing and distributing activities for Kyndal India’s spirits and Viva Dholen Spirits.
Dealing with the changing market dynamics
“The business of alcohol is not a business for people who do not have deep pockets,” says Banerji. It is full of challenges as it is a state driven industry. There is no control over politicians, taxation and judiciary (under article 14 you are not allowed to go to court) system. Despite this environment, India is the third largest alcohol market in the world, as the country has a growing, young and more informed population that prefers brands that promise quality. “The real change is in the demographic situation of India,” says Banerji. Nearly 10 million people are getting into this bracket of 20 years to 35 years annually. The younger the population, the higher the demand for alcohol.
Another change that is happening is that in the metropolitans, there is a very large population, including women, that has taken to drinking And, this has propelled the demand for alcobevs in the country.
Operating in this environment, the company is currently in a consolidation phase. “We are not going to invest in more brands, we would like build our business in the next three to five years and create a solid base,” says Banerji. The company is now competing only with MNCs as there are hardly any Indian companies in the segment in which it operates. “Instead of adding on more brands, we are choosing to build and bank on what we have,” concludes Banerji.
Snapshot
Kyndal Group
Managing Director: Siddharth Banerji
Year: Management buyout of Kyndal Group in 2006
City: Gurgaon
Sales volume: 7.10 lakh nine litre cases by BOLS Kyndal India
WHAT NEXT?
Build a stronger base
Expand its business in the next three to five years
Forge partnerships with global brands
Launch rum in the near future
CRITICAL FACTORS YOU NEED TO SUCCEED IN THIS BUSINESS
Working capital
Brand
Distribution
