India will be the consumer market of the next decade, says United Spirits MD

India is set to become the most important consumer market of the next decade, according to Praveen Someshwar, MD & CEO of United Spirits.

He said the country has the right fundamentals in place to support long-term growth. “India will be the consumer market of the next decade, as I see it. It has got its ducks in a row, in spite of everything going on around the world. Look at the demographics of the country. Look at how the middle class is growing, look at GDP growth, and that’s a great place to be running a business,” Someshwar told CNBC-TV18.

On Diageo India’s performance, he highlighted the company’s strong portfolio. “We have a powerful portfolio, three ₹1,000-crore brands, three ₹500-crore brands, four ₹100-crore brands — wow. This is scale. We are amongst the top 10 equity brands — we have five of them within Diageo. That’s a powerful space to be in,” he said.

Someshwar said the company’s strategy rests on three key pillars: shaping its portfolio for the future, embedding itself in society, and creating an organisation that is ready for the future. Innovation will play a big role, with investments being made in R&D and talent to build the next set of consumer offerings.

On financial goals, Someshwar said the focus will remain on double-digit revenue growth and premiumisation. “I constantly look at value, because the way I see it is: consumer in occasions, how do I get a share of the occasion, and how do you grow that share of the occasion? I would love to see volumes consistently grow, but more importantly, how do I keep premiumising and look at value,” he said.

United Spirits currently generates around $1.5 billion in revenue. At a double-digit CAGR, Someshwar believes this presents an “exciting proposition” over the next five years. He added, “What I’m very, very clear about is double-digit revenue growth in our P&A segment, so that we are consistently winning and our margins are improving further.”

Below is the excerpt of the interview:

Q: What is it about PepsiCo leaders that they make such a big impact in the world of consumers? I mean, there are so many right now. You have Varun Berry, Sunil D’Souza, Pratik Pota, all of them. What is in the water at PepsiCo?

Someshwar: PepsiCo as I say, it’s not only in India, it’s global. It’s a factory which brings out great talent. And what they do, I think, wonderfully well is they get talent in and shape them constantly, and reshape them, so that when you leave PepsiCo — and typically, most of these leaders would have spent 15-20 years within the organisation — they’ve gone through every phase and therefore built it out.

Q: Speaking about Diageo, if you look at the previous leader tenures — you had Anand Kripalu — at the time when he took over, you obviously had to move away from the legacy issues of Diageo, so there was a lot of course correction that took place during his tenure. Thereafter, there was Hina Nagarajan. And during that time, the margins improved, the policy environment was fairly benign as well. Now comes Praveen Someshwar. The question is, at a time when competition is high, the regulatory environment is uncertain, and at the same time there is this overall macro trend of people wanting to move away from alcohol, what is your strategy going to be over the next, say, 3-5 years?

Someshwar: You spoke about Anand and Hina — absolutely great lineage. I think they’ve done wonderfully well for the organisation. And you can see the momentum in the organisation. It just speaks volumes about how Diageo has embedded the business in India, and how these leaders have done phenomenally well. So that’s my first point. I think they made my task easier — that’s how I put it. And therefore, they have future-readied the organisation to embrace competition, to embrace the regulatory landscape.

The way I look at it is: there are three key pillars as you build out businesses. And if I were to look at Diageo India, it’s equally exciting. One is, how do you future-shape our portfolio so that we can win come what may with the consumer? That’s number one. Number two is, how do you embed Diageo in society and therefore win with society at large, versus winning only as Diageo? And three, how do you create an organisation of the future?

India will be the consumer market of the next decade, as I see it. It’s got its ducks in a row, in spite of everything going on around the world. Look at the demographics of the country. Look at how the middle class is growing, look at GDP growth, and that’s a great place to be running a business.

Second, look at the Diageo portfolio in the country: powerful portfolio, three ₹1,000-crore brands, three ₹500-crore brands, four ₹100-crore brands — wow. This is scale. We are amongst the top 10 equity brands — we have five of them within Diageo. That’s a powerful space to be in.

And finally, it’s about innovation. How are we embedding innovation within the organisation? You can see us investing in our R&D, investing in talent around it. So, it gives me a clear opportunity for us to unlock the future portfolio.

Q: So, five years from here, if you look at Diageo, what could some of the parameters be? I mean, how would you measure your success? Would it be the number of cases that you sell? Would it be revenue? Would it be margins? Would it be profitability?

Someshwar: Look, when you started speaking to me, you spoke about PepsiCo. The way you remembered PepsiCo — it’s not about the scale of brands, not about the growth engine, it’s about the people.

I think the core for us is: how do we embed ourselves in society and participate in Viksit Bharat? And if we are to participate there, you need to grow in double digits at minimum. You need to obviously do it in a profitable manner. You need to create a portfolio of the future which builds on the occasions Gen Zs as well as millennials are growing up on.

If I were to look at 2030 and look back, we’ll need to measure ourselves against each one of them. And we should be able to say: wow, there is more talent coming out of Diageo, there is more growth coming out of Diageo, there are more consumer occasions owned by Diageo. That’s what will make it exciting.

Q: Five years from now, you’re saying double-digit growth… I suppose, 64 million cases is what you did last year — if you go double-digit over the next five years, you’re not too far away from over 100 million cases. Would that be a goal? And your margins  —obviously, you spoke about high teens having been achieved. A large part of that is also capped because of the 10% BIO margins. So, I suppose around high teens, maybe touching 20-21%, would that be a goal for you?

Someshwar: The way I’d look at it is: I think premiumisation is real in India.

Q: So then, do you look at volume growth, or do you look at revenue growth?

Someshwar: I constantly look at value, because the way I see it is: consumer in occasions, how do I get a share of the occasion, and how do you grow that share of the occasion?

I would love to see volumes consistently grow, but more importantly, how do I keep premiumising and look at value. So, I would look at value growth constantly. That’s been my yardstick in whichever business I have been.

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So, I am looking at double-digit revenue growth — absolutely. And yes, as we grow margins ahead of revenue, you will see that inching upwards. I’m not going to say whether 20% is good, or 21% is good, or 19% is good. But what I’m very, very clear about is double-digit revenue growth in our P&A segment, so that we are consistently winning and our margins are improving further.

We are already roughly $1.5 billion in terms of revenue. At a double-digit CAGR in five years, that’s an exciting proposition.

Watch accompanying video for entire conversation.