BENGALURU|NEW DELHI: Students at some of the country’s top engineering and research institutes are helping spirits maker United SpiritsBSE -0.69 % — no, not by consuming its products — but by looking to improve whisky ageing and packaging processes besides launching new flavours.
Indian Institute of Technology (IIT), Kharagpur, IIT-Madras, Indian Forest Research Institute (IFRI) and Central Food Technological Research Institute (CFTRI) are among the institutes that the country’s largest spirits company has approached to help drive innovation, following in the footsteps of parent Diageo.
A team of engineers at IFRI is helping USL replace American oak wood and instead use Indian wood for cask maturation to add new flavours. Some IIT Madras engineering students are modelling the maturation process to suit the Indian environment and CFTRI is helping the firm brainstorm ideas to launch traditional Indian fermented drinks.
“We collaborate with various institutes for long-term projects to get different perspectives and try out new innovations for our market,” said Shovan Ganguli, senior vice-president for research and development (R&D), at USL.
“For instance, it started with us asking IIT-Kharagpur to help stop deterioration of liquid in glass bottles. Then they introduced us to nanotechnology, which is being used in other food industries.”
When exposed to sunlight, the dissolved oxygen in the bottle reacts with liquid and changes the original flavour.
“The engineering students helped us build nanoparticles embedded (in) glass bottles which block the sunlight and eat up the oxygen inside the bottles,” Ganguli said. The concept is now in the lab experiment stage.
A pilot will be conducted in a year to test the application of the research being conducted by Master’s and PhD students at IIT-Kharagpur at its plasma and nanotechnology laboratories. IIT-Kharagpur professor Sudarsan Neogi said USL is funding the research in nanotechnology applications to increase the shelf life of beverages.
“This is the first-of-itskind research being done at any of the IITs.
This research will help the company to retain the taste, flavour and keep the beverage undisturbed for a very long time,” he said.
The maturation project with IIT Madras is to start next month. The institute had done a similar project with Tata Tea some time back, where the maturation process was accelerated.
“This project with USL is also about accelerating the maturation process by bringing down the time taken which is currently 24 hours to as low as six hours without compromising the quality of the product,” said S Pushpavanam, professor of chemical engineering at the institute. “We are trying to find the operating conditions for this, like optimal temperature and pH level, to suit the Indian environment. This will take a couple of years.”
These innovations are part of a long list that the maker of Johnnie Walker whisky and Smirnoff vodka has prepared to drive its Indian business. Diageo’s global sales of its innovation portfolio more than doubled to £1.5 billion, or about .`12,150 crore, in 2015 from £700 million in 2010.
The British liquor giant has more than 180 people dedicated to innovation roles with 15 executives stationed in India.
USL aims to get about 20% of its sales from new product launches and another 30% by renovating existing brands by 2020. Six months ago, it launched McDowell’s Silk, a honey-flavoured whiskey, at a premium, and Captain Morgan original, a chocolate and vanilla flavoured rum.
The company also relaunched core brands McDowell’s No 1, Bagpiper and Signature, which compete with Pernod Ricard’s Royal Stag, Imperial Blue and Blenders Pride.
The results have started showing. United Spirits grew faster than market leader Pernod Ricard in the premium and above category in the past two quarters. Pernod has a market share of 48% in this category against USL’s 37% share.
“The relaunch of their (USL) core brands has helped them against Pernod,” said Abneesh Roy, senior vice-president of Edelweiss Financial ServicesBSE -2.25 %.
“Brands in the liquor industry have realised that only innovations will help them gain market share, which is how typical FMCG companies work. But consumers have to see innovation inside the bottle and not just cosmetic changes.”
USL recently franchised out some brands to maintain gross margins in the premium category, which contribute to 60% of overall business. After the relaunch, McDowell’s No.1 whiskey grew at 19% while Signature grew by almost 30%. Royal Challenge’s net sales grew 23% after its relaunch.
This came at a time when the country’s overall spirits market has been slowing. The premium segment, however, is growing at 15-20% year on year. India is among the most important top-line growth drivers for both Diageo and Pernod Ricard, projected to contribute close to 25-35% of total growth for these firms in the next three years.