Memoirs.....Musings of a sales guy at heart.....

Episode 20....

IDV----journey continues....

Meanwhile, other markets barring AP started consolidating...there was not much of growth on Green Label but we were getting some volumes. Kerala started off very well for GL with 15000 cases hitting the market and also getting sold from the depots....but somehow the consumers of Kerala were not ready to change their preferences...still going after brandy and rum....but with Men's club brandy and whiskey, Louis XI brandy we were still a small force to reckon with...Sebastian and team were clued on which made our job simpler..We got Sathish in to our Trivandrum office to manage our accounts and coordination with the manufacturing units and promoter....Sathish is an asset....very committed, focused and absolutely brilliant in his job....He was in HL Secunderabad and wanted to get back to his native and thats how we got him in to IDV and moved him to Trivandrum....Our equations with UDPL Calicut was very good but the last minute-11th hour rush for dispatches, literally, was something we had to live with. The team members kept changing in Kerala. I thoroughly enjoyed working there-I covered almost the entire Kerala-and Mahe used to be a regular stop with NFLS-Jayaram being our distributor. This is another market we enjoyed great sales. Ironically, Green Label was consistently delivering volumes with other brands too chipping in. Pondy was also delivering. Our guy in Pondy, Sabapathy, a very creative guy managed the business well....we initially appointed RR as our distributors with Ravi and Rammurthy managing the business but that partnership went in to some spin and our KGR went there to pacify them but since that was not to be, he kind of brokered peace with them splitting the distribution of brands. Ramamurthy got KF beer and our Old Gold and Ravi got the rest of our brands....

Karnataka was still a struggle due to its market dynamics but my team, delivered every month and SMV was growing. We got JKK transferred to Goa, Shankar Iyer  and Uthappa to Bombay. While Shankar enjoyed his new place and job in Bombay but Uthappa due to some personal issues could not continue and resigned. We recruited George, Vipin and Kannan. New team in Blr. One major loss for us in Karnataka was Paramashivappa who was based at Mysore. He came to us from Khodays and such a great guy to work with. He succumbed to some illness....

Raghu was transferred from Kerala to MP to head MP operations. It was a great move for him and he settled down well in MP. It was a tough market for us due to its dynamics but he managed it well. It was undivided MP then.

IDV in its launch spree and also to get a share of the "Premium" whiskey segment, developed 'Heritage' premium whiskey cross line with Royal Challenge. The presentation was good and as always the marketing believed that Gilbey's prefix would pull the consumers to the brand and we launched it in Bombay first. The sales force went after the brand. (the problem is that when a new brand gets launched all the focus gets shifted to the launch and related activities and the existing brands take a hit)...I think I mentioned it earlier too, that Bombay market is different. There are only 500 retail vends right from the inception and the government froze the retail vends (god knows the logic behind) but were issuing licenses for bar and restaurants and pubs. So Bombay had around 500 retail and around 1500+ on trade...that includes, clubs, hotels, bars and eating joints. But getting an entry in the bar and restaurant segment was a big task. Out of the 500 retail vends, around 25 to 30, spread across Bombay were key to supplies to the on trade. The small bars for whatever reasons, didnt want to buy from the WS but were okay to buy from these powerful retailers. The retailers also were happy selling to them by just keeping a thin margin. It was win:win for both. But the problem for the new brands was the initial placement. The bars would go for replenishments with the retails only after the initial placement from the distributor with the excise permit-this is to ensure that as and when the excise authorities check, there would be proof that the stocks were bought from a WS. And bars used to keep only popular brands demanded by their clientele. It's quite tough to change consumers from their favourite to a new brand in spirits especially in established 'pull' based open markets like Bombay/Maharashtra/Karnataka/Hyderabad/ WB et al. And a new brand from a relatively small company is quite difficult. Though many bars in Bombay started keeping Smirnoff and to some extent Green Label, premium whiskey was tough. While our team could place the products in the clubs (give 2+1 free, the clubs would keep any ####) and some premium on trade, the standard bars where the commoners go to have a drink-we call them nip joints, its tough to crack as they only buy when there is traction. The consumption at the clubs and premium on trade for regular segment of whiskies like Green Label was almost a zilch. But we used our relationship with these big retailers and got some placements but on a large scale it was still elusive. I used my past experience of Kamatipura of Bagpiper and made some inroads there too. And Heritage struggled and struggled and struggled.

But the blow for Green Label came from within. 

Disclaimer:

"I am writing this as happened and absolutely no intent to doubt the intent of DR and Ravi Jain..."

Subodh Kumar was the commissioner of excise then and he came with a very innovative way of excise duty calculation by which you start working backwards from the MRP and arrive at your basic price and based on the MRP the excise duties would be applicable. Suppose your MRP is 100, the manufacturer would get 25 out of it, the retailer would get 12% and the WS would get 7%. The rest goes to the government. It was such fool proof system and no one could tweak it and get any benefits. The manufacturers association should have taken it up and stalled it but they failed in this and it became a GO. The retailers who were getting anything between 15 to 20% and WS around 12 to 15% earlier were made to work with lesser margins and the manufacturers were made to break their heads to arrive at their MRPs and the resultant basic price. Absolutely fool proof.

Our bosses all met and worked out the pricing strategy. The consensus was to increase the regular range price to McD No1 level and McD No1 to move up to the next price band. When myself and Sanjit were told about this by our boss, we felt a jolt as taking the MRP up to McD No1, we felt would be suicidal as we strongly felt consumers would downgrade and the segment would be finished. Ravi Jain was heading Shaw Wallace then, the makers of DSP, RC, Haywards, Band Masters Blend et al. DR and Ravi were good friends and it was their idea to move up the price. And based on the dialog and despite our opposition to moving up the price (for a change self and Sanjit were on the same page but DR didnt heed to our arguments and we were just torn in to pieces for not looking at the brand contributions), Shaw Wallace and IDV submitted the revised price for their brands. After a few days, Herbertsons and McD submitted their prices but to our utter dismay and disbelief HL stuck to their old MRP and McD No1 too stuck to the old price. So at the retail level, DSP, OC and Green Label were at the same price point of McD No1 whiskey. Till then Green and DSP were lower than McD No1 Whiskey. Herbertsons smartly kept Bagpiper at the old MRP and registered. I had mentioned in my earlier posts how difficult it was to sell Bagpiper in Bombay/Maharastra except in the Vidharba region. This price strategy paid HL big time and overnight consumers shifted to BP from DSP, OC, McD Diplomat and Green Label. In Bombay BP was struggling to sell 3 to 4k p.m but after this it went up to 30 to 40k per month. In rest of Maharashtra and U'nagar alone BP started doing around 100000 cases p.m. We were all left with red faces. Our sales plummeted as consumers didnt think that Green/DSP/OC were McD No 1 range, and didnt want to pay the new MRP. Shekar Bharadwaj, who joined us from Colgate, (Debasish recommended him) tried his level best to lower the prices but DR was not interested at all. Shekar B was a great guy and great analytical mind but lacked that street smartness required and always in an angry mood. We had, for some time, had our Regional sales office right below the HO in the second floor. Once Shekar wanted to present the market dynamics to DR and I requested DR to come down and hear out Shekar....he came down reluctantly as he felt Shekar was more of an analyst than deliverer....Shekar wanted to convey the importance of reducing the MRP to that of BPW to arrest the fall and also some analysis he did from his market visit....the meeting started off well but at one point DR got irritated and asked Shekar something and Shekar got provoked and completely lost it....'what the fuck you are saying' he pushed his chair saying this looking at DR....every one got stunned....total silence...so awkward....and no one, I repeat, no one, knew how to react....Gaurav and Ashu who were the two ASMs managing Bombay and Nagpur were awestruck....Shekar realised his blunder and just sat down holding his head....I looked at DR and signalled him to leave and would see him in his cabin....DR was quite upset, called Debasish who was the head of HR then and gave a piece of his mind...after a long discussion we felt we should allow things to cool off and not precipitate by asking Shekar to quit....Debasish was asked to counsel Shekar and he made him to speak to Deepak and apologise. Shekar resigned after a few days....Shekar was very intelligent and supported his team and was quite articulate...but the problem was too analytical and probably felt that he was the only intelligent guy in the organisation and knew all and others were just passing time....Green label slide was consistent...and BP was gaining momentum in every single market in Maharashtra including areas where it was zilch earlier...unstoppable...this proved that in that price segment consumers were okay to pay some premium but not so much and downgraded when they saw that the price increase was not in line with the products offerings....a great lesson....Sudhir Chopra who was heading ABD then also got very frustrated as OC lost all their big markets to BP....so I have to exert lots of presser on DR and finally made him to concede it was a blunder and we decided to drop the prices....its not easy to drop the prices as we have to give a revised price and cost card to excise and the moment you submit, it becomes public knowledge resulting in 1) the retailers stop buying and 2) for the stocks with WS and retail you had to compensate as excise wont return the duties they collected earlier....so price drop reduced not only our bottom line but also huge loses against compensations on the stocks stuck with WS and big retailers....this gave some reprieve to Green Label but the brand could not gain back its original consumer base....same thing happened to DSP and OC....Ravi Jain and DR had to take all the brunt of the distributors and their respective team....HL went all the way laughing to their bank....Nagappa was the happiest guy....NRR who was heading SW West then, was also totally against this move by his boss but we were all made to just on lookers.....We replaced Shekar with Nitin Pitale....a veteran in the industry...he was my predecessor at HL Hyderabad and my distributor in Bombay and Pune for IDV representing H Parson....(rumour was that Ravi Jain had a share in HP)....Sanjit quit with in few months and joined Heinz food products....and we got Sunil Lulla in his place as head of marketing. He bought so much of raw energy and fun in the work place. The whole atmosphere got changed. And he handled DR very well. The marketing team also started thinking differently....

Will write in my next blog more on Sunil and his WOW.....till then...enjoy life but stay safe and secured....god bless!!!