INDIA: Diageo avoids 30 years of work with United Spirits deal - report
The deal is expected to complete by March
Diageo has circumnavigated many years of work building up a spirits distribution network in India by buying a majority stake in United Spirits, according to a senior executive from one of the Indian group’s sister companies.
In an interview with the Economic Times, Samar Singh Sheikhawat, senior marketing VP at United Breweries, said that, for Diageo to accumulate the distribution network that United Spirits has in India “would take 30 years”. The UK firm is due to complete on its INR111.7bn (US$2.05bn) deal to take a 53.4% controlling stake in United Spirits by March, subject to regulatory approval.
Sheikhawat also said that Diageo’s Johhnie Walker brand could halve in price in India, if the Scotch whisky is produced and bottled in the country.
He added: “Say, the prices of its brands like J&B or Smirnoff and Baileys fall and distribution is increased 10-fold, can you imagine what happens to bootleggers?”
Meanwhile, Sheikhawat appeared to dismiss the idea of the UK firm bringing Guinness to India. “My theory is that it will not work in India,” he said. “First, it is served at room temperature. Second, it is black. Third, it has a fruity coffee kind of taste. Indians like their beer cold.”
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