A recent report in the Indian business press suggested that local spirits force United Spirits, part of the UB Group, had abandoned plans to develop RTDs for the Indian market. However, other companies appear to be keeping more of an open mind on the subject. Ben Cooper reports.

The rather imaginative Indian business media does throw up the occasional oddity, and no more so than early last week when Indian Business Insight reported that UB Group had ditched plans to join forces with New Zealand-based drinks group Independent Liquor to launch RTDs on the Indian market. The report further stated that UB Group had taken this course of action because it saw no value in this category.

The story had a strange ring to it on two counts. First, the suggested link between UB Group and Independent Liquor, which does indeed specialise in RTDs, looked to have been rather overstated. The two companies were linked last year when UB was thought to be interested in acquiring Independent, and some form of presence for Independent's style of products in India may have formed part of UB's plans.

However, the company was eventually sold to two private equity groups, CCMP and Pacific Equity Partners (PEP), at the turn of the year. Since then, there had been no suggestion that anything discussed in connection with the Indian market was still on the table.

Sure enough, when contacted by just-drinks, Independent's executive chairman Doug McKay firmly refuted that any such plans were being discussed. "There may have been some contact before our ownership but during our due diligence we have never come across it," he said. "We've never seen anything about it, and never been contacted about it.  It's just not on our radar."

So that part of the story appeared to be inaccurate, but the report also stated that UB had abandoned any interest in marketing RTDs in India because it viewed the segment as offering little value. This also appeared rather curious.

RTDs may not be top of the agenda for spirits brands in India, but it seemed a little surprising that they were being dismissed out of hand. It is true that UB had made an abortive move into RTDs with the Romanov Shotz and Cruiser brands, both now withdrawn. It could be that this experience has discouraged UB from attempting any further move into RTDs for now, but a number of companies have shown more than a passing interest in the idea, and such products would appear to have something to offer.

In a market where international companies are looking to attract new, young and aspirational consumers, RTDs offer a lower-priced entry point for a major spirits brand, a chance to begin to build a relationship with young adult consumers as their spending power starts to increase, but arguably before they are at the stage where they can afford full-strength international spirits brands on a regular basis, or in some cases before they have developed a taste for them.

The two most prominent international examples of RTDs working in harmony with a mother brand are Smirnoff Ice and Bacardi Breezer. The latter is already marketed in India - thought to have case sales in the region of 400,000 cases - and at the moment it has the RTD market more or less to itself. Moreover, Economic Times reported in May that Bacardi-Martini was planning a US$4m marketing push for its core brands in India, and Bacardi Breezer was one of the brands to receive increased investment.

So far, Diageo has concentrated on building the core Smirnoff brand, the top-selling locally-produced "international" spirits brand on the market, with no sign as yet of Smirnoff Ice. However, another a report earlier this year, also in the Economic Times, suggested that the company was planning to introduce the well established Smirnoff RTD variant in India soon.

This too appears to have been rather overstated, but a spokesperson for Diageo India did not dismiss the idea out of hand. While suggesting that the report had been far-fetched and any such reports would be "pure speculation", the spokesperson acknowledged that the RTD market offered potential.

"We will explore opportunities in RTDs as and when it makes business sense to do so," the spokesperson told just-drinks. "It is something that we would consider but as far as plans to do so at present, that is pure speculation. There is certainly potential in the market it is just a question of when you want to go ahead with that opportunity."

And what of Independent Liquor? While the company appeared a week or so ago to have lost the potential joint-venture partner that it never actually had, could the RTD specialist be considering India as a possible market for the future?

"We do think there is some exciting international potential for RTDs and we feel we are the best RTD company in the world. It's not an add-on for us, it's a core part of our business," McKay said, but he added that he did not yet know whether India might feature among Independent's target markets. "Whether India is one of them I don't know. We haven't got to India in any way, shape or form yet."

So for now, the future of the RTD in India is unclear. But there is growth potential in the Indian spirits market and there is a thirst among young consumers for international brand names, so the idea of further activity on the RTD front in the medium term can surely not be ruled out.