Hi everybody old monk is one of the most iconic drinks in the Indian liquor history sold since the’ 60s as Russian to the FIS but still going strong okay so now I like that this is the monk who won’t sell his Rari and while most people see old monk as a symbol of college Nostalgia what.
They don’t know is that back then old Monon had been such a legend in the Indian market that once upon a time old Monon was the third largest selling rum all across the world and its taste was so iconic that it was considered to be the drink of gods and Lords old mon was so far ahead of its competition that while its competitors.
Were selling 2 to 3 million cases a year old mon alone was selling 8 million cases a year and you know what old mon achieved all of this with a zero marketing budget I think ofk one two being present everywhere the only publicity it needs is word of Mone MTH but sadly today somehow old mon seems to have suddenly.
Disappeared from the market and today old Monon is nowhere close to being a market leader and from what I last read the condition of the company was so bad that it was bleeding with 20 crores in losses and was almost on the verge of bankruptcy but even then somehow the business ecosystem of India has clearly ignored the rise and fall of this Legend.
And it is so sad to see that a legendary Indian company Rose to the top of the world and disappeared and yet no business school has ever covered the case study of the rise and fall of old monk so we decided to pull up our socks to help you get these Pearls of Wisdom from the rise and fall of the legendary brand of old mon so in this episode.
Today let’s do a deep dive and try to understand how did old monk become a best seller all across the world with a zero marketing budget after rising to the top how did old monk start bleeding with Crowes and losses what are the biggest mistakes that old Mong made which got it close to bankruptcy and lastly as students of business what are.
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Story of old Mong you need to understand the classification of alcohol and how each of these products is produced if you look at the alcohol Market the major categories today are beer Vine whiskey rum and vodka and fundamentally on the basis of their production process they are divided into two categories fermented and distilled.
Beverages so if you look at the production of beer grains like barley are soaked and dried and then they mashed with water and hops of flavor after that yeast is added to ferment the mixture mixure and this yeast turns the sugars into alcohol and creates carbon dioxide Bubbles and when this liquid is filtered and carbonated it gives you a.
Wonderful pint of beer if this is very very clear to you let’s come to distilled beverages to produce distilled beverages a fermented liquid is heated to an extent where the alcohol actually starts vaporizing and then this vapor is condensed back into a liquid form so this way the concentration of alcohol is very high in distilled drinks for.
Example if you look at the production of rum to produce a bottle of rum sugar cane is fermented with yeast and then this fermented liquid is heated to evaporate the alcohol eventually this alcohol is condensed and concentrated and then starts the aging process whereby this alcohol is preserved in barrels to add flavor and color and if.
You see this chart beer Vine and cider fall into fermented beverages with a 4 to 15% alcohol concentration whereas if you look at Whiskey RAM and vodka they are distilled beverage with an alcohol concentration of 35 to 50% if this is very very clear to you let’s come to the story of old.
Monk this is a story that dates back to 1900s India and during that time India was under the British Raj during that time the market condition was such that the only way to enjoy a cold beer in India was to import it all the way from England by ship so obviously it was a very costly and very Troublesome process this is when a man named ed Edward Dyer.
Started a company called D breweries in 1855 you know who this guy was this guy was the father of the infamous General Dyer who ordered the Jalen Wala B Massacre Edward soon launched Asia’s first beer called lion which quickly became a favorite drink among the British officers but fast forward to 1947 India gained independence and the.
Brits wanted to pack their bags from India and go back home and during this time while the entire world saw India as a poor country which was surviving on British money this is when a proud Indian man named named Narendra Nat moan raised funds traveled all the way to London saw the owners of the brewery eye to ey and bought a majority stake in the.
Dire making breweries and with this purchase mohanji put out a bold statement Indians still have the audacity and money to buy off the Brits and Indian entrepreneurs have utmost faith in the growth story of India little did the Brits know that day that this Indian company would go on to beat their own companies to become the third.
Largest selling rum in the world but coming back to our story India just had gained independence and there were very few companies making strong alcohol or Spirits like RAM and whiskey in India so there was a huge market and there were very few manufacturers so in 1954 the son of Narendra Mohan launched a legendary drum that we all know today as.
Old Monon and you know what magically as soon as old monk was launched it won the hearts of millions of Indians all across the country and it became so popular so popular that there was a plan black market for old Monon Yes you heard it right there was a black market for old Monon in fact an army veteran told me that if old mon was available in the.
Market for 20 rupees then in the black market old mon would sell for 60 rupees and that is because the demand for old Monon was very high this is how old mon went on to become the third largest selling rum in the world with a sale of 8.4 million cases annually and all of this happened without spending a single rupee on ads or marketing so the.
Question over here is what was so special about old mon that it became so popular so quickly and that to with a zero marketing budget well there were four simple reasons number one was the availability of raw materials long story short to make whiskey beer brandy or Vine we need barley wheat corn or grape vine as raw materials but if you.
Remember back then in the 1940s India was struggling with food shortages but when it came to sugar cane specifically sugar cane was one of the few crops in India which was always produced in such large quantities that we always had extra sugar cane in India if you look at this chart for every 5-year plan India always had extra sugar cane from 1951 to.
1956 while we needed 18 tons we produced 19.3 tons from 56 to 61 we needed 25 tons but we produced 30 tons so raw material for rum was very easily available secondly old Monon had an unbeatable taste in the market for those who don’t know old Monon is a carefully orchestrated Symphony of flavors which is achieved through a meticulous process.
Of aging and blending and the secret to it lies in these Oak barrels where old Monon is kept for Aging for seven long years and here’s why ladies and gentlemen the magic of Oak barrels presents itself while most people see Oak barrels as just containers what they don’t know is that these Oak barrels actually transform rum from just another.
Alcoholic drink into a masterpiece of flavors and this happens because of their three magical properties and by the way guys even if you have never tasted an old monk just listen to what I’m saying and you will feel the taste of old monk in your mouth you don’t believe me listen to this firstly the oak barrels participate in flavor.
Infusion because the beauty of oak wood is that it contains natural compounds like vanillin tannins and lactones so vanillin provides a vanilla Aroma to the drink as the tannins have a drying puckering sensation on the tongue like the feeling that you get after drinking black tea or red wine and then the lactones contribute to the coconut and.
Woody notes then comes oxidation and evaporation so if you look at the nature of ok wood it has pores and these pores allow a small amount of oxygen to interact with the ram in such a way that this oxygen oxidizes the drink and this process Mellows the harsh edges rounds out the flavors and adds a subtle nutty and dry fru note to the rum additionally.
A portion of rum evaporates Through the Wood and it concentrates the remaining liquid eventually it starts intensifying its flavors and lastly there is charring and toasting so many of these Oak barrels are charred or toasted on the inside before filling them with rum and this process caramelizes the woods sugars in such a way that it releases.
Additional flavors like caramel smoke and spice to the rum So eventually at the end of 7even years what you have is a drink with a rich Aroma and with lingering notes of vanilla Oak coconut and spice this is what makes old monk an unforgettable experience for the pette and while all other drinks tasted synthetic old Mong had this Rich natural.
Taste that made it stand out in the market this is the reason why it was such an iconic drink during that time that it was considered to be the drink of the Gods and LS now you tell me guys merely by listening to the symphony of all these flavors you were able to taste a tasty drink in your mouth right well this is what made old monk an.
Unforgettable experience for the pette and while all other drinks tasted synthetic old monk had this Rich natural taste that made it stand out in the market and cherry on the cake old monk had such an aesthetic packaging that even if there was a rack full of imported drinks old monk always stood out again if you’ve seen an old monong.
Bottle you would know that it has this distinctive shape with a square base and rounded edges and this crack-like design gives it a unique appeal in fact it looks so good that the empty bottles of old Monon are handcrafted into drinking glasses and decorative items so again old monk gained visibility due to its aesthetic bottles thirdly because import.
Duty on foreign alcohol was as high as 100% it was very difficult for any company to enter India because the population was extremely sensitive to price and lastly old mon was very carefully branded as as a tough man’s drink why because we are one always made sure that a small amount of old monk was always distributed in the Indian army.
And since it started to be stocked in the Indian army old monk by default became associated with the Indian army and the Indian Navy this is how the image of old Monon was created as a strong man’s drink so it carried the aspiration and appeal of the Indian army this is how with unbeatable taste with no competition due to import regulations.
Due to lack of raw materal for other drinks and with the aspiration of the Indian army and Indian Navy even with zero rupees spent on marketing old monk went on to become one of the best selling rums and soon enough old Monon even exported to other countries and went on to win some of the most prestigious Awards in the world this is.
How old Monon became a legend in the Indian liquor market and dominated the market for five long decades but then the question over here is when old Monon was able to dominate the Indian market for five long decades what exactly happened in the next two decades that it fell on the verge of bankruptcy well the reasons for downfall were pretty.
Straightforward liberalization happened in 1991 the Indian economy opened up and many other players entered the market so old Bon wasn’t the only choice and there were several other players who were entering the market with different products like whiskey rum vodka and even beers secondly as the per capita income of India increased premiumization.
Happened in the Indian market so people people started tasting more Le drinks like scotch and imported drinks and while all other companies were trying hard with different marketing strategies different flavors and more products you know what old Mong did old Mong did nothing to cater to this premium market and while the sales were falling they.
Did not launch new hero products at all they did launch a few products but none of them really caught in the market to become a hero product and instead of launching premium products they tried to decrease the price of their existing products with the hope that Indians will look at the prize and prefer old Monk and obviously that did not help because.
India was on the race of premiumization and to make matters worse The Godfather started punishing old monk Now who is the Godfather over here The Godfather is none other than the government of India so the question over here is why exactly did the government of India punish old Bonk well here’s where the complex story of the state governments come in you see.
Guys alcohol in India comes under the State subject so it’s not the the central government but the state government that takes decisions on alcohol related matters so the state government can set their own laws rules and taxes and the first problem for old Mong started with Tamil Nadu and back then Tamil Nadu contributed 20% to Old.
Mong sales but in 2003 the state government of Tamil Nadu completely abolished the interference of private parties in the liquor business and give exclusive privilege of both wholesale as well as retail sales to the Tamil Nadu State marketing corporation which is a government undertaking which means the Tamil Nadu government itself became both.
The wholesaler and the retailer of the liquor Market in Tamil Nadu and as soon as the government took over they started favoring those companies that were operating from Tamil Nadu and started discarding the brands that came from outside of Tamil Nadu so old Monon practically vanished from the shells of Tamil Nadu as a result 20% of their.
Sales were completely cut off sounds shocking right well the story doesn’t end here in 2009 the mayawati government turned a man named Ponty chadda into a monopoly by giving him the complete wholesale rights to distribute lior in uttar Pradesh this was the first case in India where an individual person got complete control.
Over distribution of liquor in the entire State and that to uttar Pradesh and what did chaji do chaji favored his own brand and started to choose which brands would be available in Up’s retail outlets so guess what again old Mong got sidelined and and their LNO Distillery shut down and their beer market got wiped out by Chad’s wave beer and this.
Is when the sales manager of moan Mak famously said that their top selling product became a ghost in the market I repeat their top selling product became a ghost in the market and since up was one of the biggest consumers of alcohol in India old monk again suffered very heavy losses this is how because of the entry of new brands in the market.
Because old monong failed to catch up with premiumization as the Godfather of the state Market started favoring other players old Mong went from being a legend to a ghost in the Indian liquor Market but you know what guys strangely old Monon has actually started making a comeback from a low of Just 2 million cases in 2014 old Monon made a stunning.
Comeback by selling 8 million cases per year as of 2021 now we couldn’t find the exact reasons for this comeback so if there is anyone from old Bon who’s watching this episode please let us know because we would love to do a podcast with you and understand the rise of old monk in the Indian liquor Market again and this brings us to the most important.
Part of the episode and that are the business lessons that we need to learn from the rise and fall of old monong lesson number one people if you build a formidable product the market is bound to favor you regardless of your marketing budget in this case while other rums were synthetic tasting old monong stood out in the market and.
Dominated the market for five decades only due to its quality and taste lesson number two this F favor of the market for your great product will only last for a limited time so in this limited time you need to build a barrier to entry for yourself in such a way that even if the competitors enter the market with a billion dollars in their pocket.
They must find it hard to catch up with you in this case while old Monon was resting on its Laurels for too long if you remember Sula wines kept on innovating with Sula Fest Sula Resorts and new products that kept it way ahead of its competition and more importantly Sula also built a barrier to entry with 12E contracts with the grap Vine farmers.
And lastly always remember never be too reliant on a single product in this case while old Monon was reliant on its rum apple was once too reliant on Apple 2 and Microsoft was once too reliant on Windows and as entrepreneurs what we need to realize is that while your hero product looks like your greatest opportunity if you become over dependent.
On it the same product will become your greatest threat in the market these are the lessons that we need to learn from the rise and fall of old Monk and I just hope you learn something valuable from this case study that’s all from my side for today guys if you learn something valuable please make sure to hit the like button and not to make youy.
Baba happy and for more such insightful business and political case studies please subscribe to our Channel thank you so much for watching I will see you in the next one bye-bye
