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I see India from a millennial standpoint: Robinson Brown

LiveMint logoLiveMint 07-07-2017 Amrit Raj

New Delhi: As a boy, Robinson Brown wanted to join the Christian ministry. Fate and ancestry intervened, and today he runs the Asian operations of Jack Daniel’s, one of the marquee brands in spirits, in which the Brown-Forman family owns a majority stake. A communications and finance major from the University of Kentucky, Brown, 38, now works out of Dubai, where he lives with his wife and children. Professionally, his great passion is building the famous Jack Daniel’s brand in underserved markets like India, which he visits every few months, says the fourth-generation Brown-Forman family member in an interview on his most recent trip.

Edited excerpts:

Can you give us a sense of where your India business stands compared with your global revenue?

In India, we are tiny. What Brown-Forman has done is an exceptional job in expanding their business outside of the US. In the 1990s, that primarily meant Europe and a little bit of Latin America. The business in India started actually in 1994, basically with the embassies, and then it picked up with duty-free and with the local economy picking up in the last 10 years. But, if you look at how they expanded, they primarily went to countries like the United Kingdom, where we sell over a million cases now; France, Germany, Australia... Now what you have seen is that Brown-Forman has a heavy focus on emerging markets. So, Brazil, Russia, China and India. That was one of the reason why I was hired in this role to develop a long-term strategy till 2025.

Consumption of beer in India has been on the rise. Is that a concern?

If you look at the global alcohol market, it actually declined in 2016 and the category that declined was beer. Spirits grew half a percentage point and wine grew. India is a little unique. Here beer is growing. It has to do with occasion, affordability, accessibility. If you look at the US, craft beers and some of the really exciting beers are tapping into occasion, where normally spirits and wine had a play . But, they have been on a decline and that’s pretty much the reason why you see a lot of consolidation there because frankly the way for global companies to survive is either through acquisitions of small craft beers or through consolidation to really work for the cause. We do not view beer as a threat, to be frank with you. We view it as an opportunity. If you look at where all beer is being consumed, you have consumers who will enjoy beer, while Jack Daniel’s is often an additionally responsibly consumed shot, in some cases cocktails can be mixed with beers, so what we are trying to do is capitalize on that growing trend, particularly the premium beers.

Millennial drinkers in the US side, India is still learning, are drinking brown spirits. American whiskey is the fastest growing category within brown spirits right now. If you look at global trends, blended scotch was declining until last year, vodka has been declining, value and premium vodka still growing. For the last eight years in a row, one of the fastest growing categories globally has been American whiskey, particularly bourbon. Who is drinking that? Millennial generation. They are very fascinated by mixology. They are still having brands that have a heritage of intricacy like a scotch. But, unlike a scotch—mixability. That’s where Jack Daniel’s falls into play because you can make great cocktails with an American whiskey. You can also buy a premium brand like Sinatra Select and enjoy it on the rocks. That’s where we see brown spirits, which are probably projected to have a two- or three-decade run because they kind of give you best of both worlds. I see India from a millennial standpoint—60% of the Indian population is under the age of 40. We look at India as a significant source of future growth. India will continue to have a legal drinking age population till 2050. It is very exciting from a standpoint of bringing in new drinkers into responsible consumption of American spirits and that’s why India is a very unique place for us.

Do all the legislative changes aimed at prohibiting liquor bother you?

It does not. There is a problem of lot of people abusing alcohol in India and not being educated to consume alcohol responsibly. We recognize that. That was an issue in the US too. That was the reason why prohibition happened in 1919. I don’t disagree with what the government is trying to do in the interest of people in India. If you look at the US, what we learnt was that prohibition led to counterfeit alcohol, smuggling, which are more dangerous. What we would like to see is a stronger educational format for proper consumption of alcohol. We want to be able to work with the government (state and federal) on how we can educate the Indian consumers and how to enjoy something in moderation.

So, what is the 2025 strategy that you talked about?

We want to be in a position in India where we can still be who we are as a company. We don’t want to come in and change our brand to get market share. That is not our game. We are a premium spirits company. Most of the brands we have are quite expensive here; we are not going to change that. What we can do is to create new occasions, with new products, or existing products we can expand to more consumers and send specifications through bringing in more products at different price points to get them to enter and try more of our products. But the strategy is what can our company look like in the next eight-nine years. We are the only alcohol company that takes that kind of long-term vision.

The Brown family is the majority owner of the company. We are in a very interesting situation. If you look at us, there are 3,500 publicly traded companies. Of these, about 175 are family-owned, publicly traded. Only nine companies existed before 1900 and we are one of those. Why would I mention that? I would mention that because as opposed to our competitors, who are held severely accountable, every quarter by shareholders, people who buy Brown-Forman, they know who we are...they know this is a long-term play. You don’t day-trade Brown-Forman. You buy this stock and you hold it for your investors for the long run...therefore to think beyond two-three years puts us in a very unique platform, which, going back to India, puts us in a unique situation as well. Lot of companies may have come here and acquired brands to grow but we are not looking at that. We are looking at what can we do that can take 10 years to pay off versus two years.

I am 38 years old. I plan to be with the company unless they force me to retire. But this country, no matter where I live, is a significant high priority for the long term. We are looking at 2030-2040. We are looking at where does our operating income come from? We don’t have to be a competitive force to buy $10 billion of brands everyday to grow. We want to do that through thoughtful expansion in the right countries, and India is a 200-million-case whiskey market. The palate of the Indian consumer is whiskey and that is not going to change. Last five years, 80% of the spirits growth was in whiskey and that is unheard of. So, it is really important that we do think longer term than most of our competitors, to be fair.

You have a large family...some 70 relatives. How do you manage the business among your family members?

The family doesn’t run the business. We are very strong owners, we still have 10 employees from the family. As opposed to a traditional company where dad hands over a company to son—that’s great enough for a while, but that’s a reason 80% of family companies fail by the third generation because the truth is nepotism fails ultimately. You need to hire the best and the brightest talent all over the world. My cousin, Garvin Brown IV, for instance, is a fifth- generation member. He is chairman of the board. But our CEO is not a family member. We have had CEOs in the 1960s, who were not members of the family. The reason why we did that was because it is important we have the right talent in the organization...we need to be educated owners.

The family has a number of set-ups to ensure that we stay engaged with the company. One of the biggest challenges you have when you have sixth or seventh generations is that if you don’t have engagements from that generation and if they don’t understand what responsibility it is to be an owner, that’s where you begin to fail...level of engagement among family members is what matters to us. We have 4,600 employees across the world…we want to make sure that our family stays united. Constant communication, engagement with family members is the key.

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