Saturday, May 27, 2006
THE HIGH FLYER
Like the Kingfisher bird,Vijay Mallya is flying high.Liquour continues to remain his core business. In the last decade he has consolidated his position in the domestic liquour industry and has successfully steered his company United Breweries as the leader of the pack.He has acquired some international brewery and distillery brands and even pubs in the UK .Recently he acquired controlling interest in Shaw Wallace & Co and is the no 1 in the beer and whisky business in India. These businesses are very profitable and he has used his earnings intelligently to build a huge pile of cash for acquisitions,expansions and diversification.
Almost 20 years ago he setup an electronics unit in Orissa which failed.He went into software and acquired an American company and if I am right it is still listed in the Nasdaq.He acquired Berger Paints' South African unit and has a presence in that country. He has very recently bid for the French distillery Tattlinger and is looking at China seriously.Tattlinger will give UB a strong foothold in Europe by bringing world famous brands under its umbrella. China has at the low end home made country liquour and at the high end imported scotch whisky.There is in between a huge market waiting to be tapped.
Vijay Mallya's noteworty diversification and extension of the Kingfisher brand has been his foray into the aviation industry. Kingfisher Airlines which he started about a year ago is riding the economic boom in India as more and more people have resorted to travelling by air. 25 million seats growing at 20% per annum is a big market. In fact, encouraged by the economic growth and the rise in per capita income and disposable surplus in the hands of the middle class population, many new companies like Air Deccan,Go,Spice etc have ventured into this field based on market forecast for the next decade. And most of them have adopted the budget traveller business model. Price the ticket as cheap as possible and therefore affordable to more and more people. It has become a volume game. Have ticket,will travel.
Vijay Mallya did some solid homework. He commissioned IMRB to assess a possible niche in the flyer market .IMRB interviewed about 2500 frequent flyers aged 21 to 45 years in the top 15 metros.The findings? Very interesting. People wanted a young,trendy,fun and yet a premium product. He decided to capitalise on the tremendous brand equity of Kingfisher and do two things: 1) extend Kingfisher brand into aviation and 2) focus on young business travellers.
Vijay Mallya has chosen to take the premium route. His tickets are competitive but not cheap.But he promises superior service and an experience to remember. In a short period he has captured the imagination of those who look for alternatives to Indian Airlines and Jet Airways. A la Richard Branson, the flamboyant and charismatic Vijay Mallya wants to make Kingfisher Airlines the numero uno in the Indian Aviation industry. He has also set up a company in the USA and plans to have regular flights to India. To meet his ambitious plans he has ordered a huge number of aircrafts and has even recently ordered and procured the latest Airbus A380.
Vijay Mallya has cleverly leveraged on the brand equity of Kingfisher beer by using the same name and logo for his airlines. Marketing gurus would call this approach as brand extension. ITC and Brittania are examples of companies who have ridden on their exixsting brands to create new businesses successfully. Of course there are many more examples.
Very recently he had a big bash in Mumbai for the inauguration of the Romanovo brand of vodka from the UB stable. He introduced actor Shilpa Shetty as Romanovo's new ambassador.
The King has caught a sweet fish.