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Drinks giant’s Thai unit bets on innovation

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KAAN BARAL, managing director of Diageo Moet Hennessy (Thailand), aims to drive sustainable business growth with a focus on product and marketing innovation, business simplification, and productivity enhancement within the orgnisation.

Baral, who has led the company since August last year, said his priority was to build a united organisation through corporate purpose – encapsulated in the motto “Celebrating Life, Every Day, Everywhere” - and encourage employees to promote Diageo’s corporate values.
“I want to ensure that our long-term business plan will be driven to reach our goals, which are to strengthen and grow our premium core brands, namely Johnnie Walker and Smirnoff, and to continue to increase the reach of our brands through innovation in our products to better meet consumer needs and preferences, while driving growth in productivity,” he said. 
Baral said that the company would drive “productivity” behaviour patterns for employees across the business. This would result in the company spending less but having greater impact as the company simplifies its business. 
“Being in the Thai market for over 30 years with the world’s leading premium brands portfolio including Johnnie Walker, Smirnoff, J&B, Ciroc and Ketel One Vodkas, Baileys, Captain Morgan, Tanqueray, Hennessy, Belvedere Vodka and Moet & Chandon, we have a strong ambition to grow our business by double digits,” said Baral.
“In achieving that, we would focus on three main strategies and continue our commitment to promoting a positive attitude for alcohol in Thai society, while raising awareness of responsible drinking.”
Baral said that the three strategies are: Strengthen growth of the company’s premium core brands – it will continue to leverage the iconic brands with strong heritage including Johnnie Walker and Smirnoff to capture consumer needs and emerging trends; Innovate at scale to meet new consumer needs with expansion of coverage and distribution – while continuing to increase the reach of brands through innovation, “making our brands more relevant to consumers and in step with the growing trends”; and Ensure “we have the right talents to drive our performance ambition – we have been encouraging our employees to ‘act like an owner’ and supporting them to grow together with the company”.
Baral said that Diageo was positive about the long-term growth of the Thai market. International spirits have captured only less than 5 per cent of the market, but Thailand attracts more than 30 million tourists each year. This presents plenty of opportunities, he added.
“How consumers interact with our brands is changing. They like the brand that they can associate with and which is meaningful to them,” Baral said. Thailand is the world’s fourth largest market for Johnnie Walker as Thai consumers prefer Scotch; it trails the US, Brazil and Mexico for this brand, Baral said. However, the alcohol excise taxation has hurt the imported spirits market. Baral said the overly complex excise tax is discriminatory and penalises premium and imported products. Rather than address problem issues with alcohol, the tax may inadvertently push consumers towards unregulated or illicit alcohol. Since the tax was introduced in 2013, the imported sprits market has declined by more than 30 per cent.
“We are happy to see the government’s attempts to improve the ease of doing business in Thailand and promoting foreign direct Investment, including the new regulations and laws in Excise and Customs tax, which are intended to increase transparency and effectiveness in tax collection,” Baral said.The complex alcohol excise tax is discriminatory and penalises premium and imported products which accounts for less than 5 per cent sprits market. By targeting premium and imported products, the current alcohol excise tax unintentionally pushes consumers towards unregulated or illicit alcohol, which in turn poses heath risks and negatively affects tax revenues. “We see that specific taxation that levies duties on the basis of alcohol content is the best international practice to reduce harmful usage of alcohol and optimum tax collection.”The complex alcohol excise tax is discriminatory and penalises premium and imported products which accounts for less than 5 per cent sprits market. By targeting premium and imported products, the current alcohol excise tax unintentionally pushes consumers towards unregulated or illicit alcohol, which in turn poses heath risks and negatively affects tax revenues.
 

Published : June 08, 2017

By : KWANCHAI RUNGFAPAISARN THE NATION