Case study

Old Monk’s vow of silence sees rum brand in freefall

By RJ Whitehead

- Last updated on GMT

Related tags Tamil nadu

Old Monk’s vow of silence sees rum brand in freefall
Is Old Monk old hat? Judging by figures released this month by Impact Databank, it seems the once omnipotent Indian rum brand is well on its way to oblivion—or ripe for a buy-out.

Just over a decade ago, Old Monk was the country’s biggest-selling spirits brand, selling almost 8m cases in 2002—almost 2m more than its nearest competitor, Bagpiper Whisky.

Moreover, its position as India’s leading rum was assured, with sales of more than double those of McDowell’s No 1 Celebration at the time.

But now, the Mohan Meakin brand sells just a quarter of the volume of the McDowell’s rum brand, having consistently slipped down the rankings over recent years. Last year, Old Monk dropped 11% from 2011’s figure and barely remained a top 10 brand. Industry estimates suggest it now only sells less than 4m cases.

Decline and fall

So what has caused this decline of an age-old favourite that once commanded exceptional brand loyalty?

For a start, its manufacturer seems to have spent a negligible amount on Old Monk’s marketing, branding or positioning. The famously squat bottle hasn’t had a facelift in decades and Meakin doesn’t seem to have taken the same route as other, burgeoning names around India’s liquor advertising laws, which prevent direct promotion but allow a spirits name to promote another product.

Also, at a time when the Indian economy has seen rapid growth, Old Monk hasn’t jumped on the premium or semi-premium bandwagon that has made other brands more appealing to a growing middle-class eager to enjoy more highbrow products. Over recent years, the former market leader’s price has even been lowered in some states. McDowell’s No 1 Celebration currently retails at 20% higher than Old Monk.

United Spirits (USL) also seems to have been more aggressive than the seemingly passive Meakin and used a wide network of distributors to jump on opportunities presented by a lack of Old Monk marketing and its rickety network.

In big-drinking markets like Andhra Pradesh, Maharashtra and Karnataka, USL has sucked up its competitor’s market share. And in eastern states, such as Orissa and West Bengal, where Old Monk has traditionally had limited presence, the McDowell’s rum now enjoys 40% share, compared to Old Monk’s 5%. This has also been backed up by increased marketing spend across the USL portfolio. 

It didn’t help Old Monk last year when the southern state of Tamil Nadu took tough regulatory actions to protect its local liquor market. With the state promoting local brands through state liquor shops and limiting the supply of products made elsewhere in India, the Meakin rum is seeing its sales in the state, which until recently accounted for 20% of its business, descend into freefall. McDowell’s isn’t facing such a problem there, though, as Tamil Nadu only accounts for 5% of its sales.

Acquisition an option

So what does the future have in store for the venerable old rum brand?

Well, that brand loyalty is still there, even if it is currently latent. What’s more, it has potential with the younger market, with one recent study by Quilo and Juxt finding that 80% of the demographic preferred the taste of Old Monk and Bacardi over other rum brands.

That there is nothing wrong with the recipe or the name might suggest that Old Monk could be a strong target for an overseas drinks company looking for an established Indian brand to help them enter the country’s market. Despite the receding sales over the last 10 years, it is a name that can be quickly invigorated, according to analysts.

But something has to give, be it action from the rum’s owners or through an investment from the open market. As we have seen with Apple and are currently witnessing with BlackBerry in the tech world, there are some old names that can complete a turn-around when given the love and attention they need. And Old Monk is surely one of these.

Have your say: What course do you think Old Monk should take? Let us know in the comments below.

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