The Rise and Fall of Old Monk | Business Case Study
Summary
TLDRThe video script narrates the legendary tale of Old Monk, an iconic Indian rum brand that soared to global fame in the '60s without marketing, becoming the world's third-largest selling rum. It delves into the brand's unique production process, the factors behind its initial success, and the challenges that led to its near bankruptcy. The script also discusses Old Monk's recent resurgence, drawing business lessons on product quality, market adaptability, and the importance of diversification.
Takeaways
- 😀 Old Monk was once the third largest selling rum globally, with a unique taste considered as 'the drink of gods and lords'.
- 📚 The brand's success was achieved with a zero marketing budget, relying solely on word-of-mouth publicity.
- 📉 Despite its past glory, Old Monk faced a significant downfall, with the company incurring losses of 20 crores and near bankruptcy.
- 🔍 The Indian business ecosystem has largely overlooked the story of Old Monk, with business schools not covering its rise and fall.
- 🍾 The classification of alcohol is crucial, with Old Monk being a distilled beverage made from sugar cane, which was abundant in India.
- 🏆 Old Monk's success was attributed to its exceptional taste, availability of raw materials, aesthetic packaging, high import duties on foreign alcohol, and branding as a 'tough man's drink'.
- 🚫 The Indian government's policies and state regulations played a significant role in Old Monk's decline, with some states favoring local brands over Old Monk.
- 🌐 Liberalization in 1991 opened the Indian market to new players, increasing competition and leading to Old Monk's struggle to maintain its market position.
- 💼 The brand failed to innovate and adapt to the market's shift towards premiumization, which was a missed opportunity for growth.
- 🔄 Despite its setbacks, Old Monk made a comeback in recent years, selling 8 million cases per year as of 2021, though the reasons behind this resurgence are unclear.
- 📝 Key business lessons from Old Monk's story include the importance of product quality, the need for continuous innovation, and the risks of relying too heavily on a single product.
Q & A
What is Old Monk and why is it iconic in Indian liquor history?
-Old Monk is a brand of rum that has been sold since the 1960s and is considered iconic in Indian liquor history due to its widespread popularity and status as the third largest selling rum worldwide at one point. It was known for its strong presence in the market with a zero marketing budget and was once considered the drink of gods and lords.
How did Old Monk achieve its success without any marketing budget?
-Old Monk's success was attributed to its iconic taste, which was achieved through a meticulous aging and blending process in oak barrels for seven years. Its availability, unbeatable taste, aesthetic packaging, high import duties on foreign alcohol, and branding as a tough man's drink contributed to its popularity without the need for marketing.
What factors contributed to Old Monk's decline in the market?
-Old Monk's decline was due to liberalization in 1991, which allowed new competitors to enter the market with different products. Additionally, the rise of premiumization and Old Monk's failure to innovate and cater to the premium market, along with government policies favoring other brands, led to its downfall.
How did the Indian government's policies impact Old Monk's sales?
-Government policies, particularly at the state level, had a significant impact on Old Monk's sales. For instance, Tamil Nadu's decision to abolish private parties in the liquor business and Uttar Pradesh's granting of wholesale rights to a single individual, both led to Old Monk being sidelined and experiencing heavy losses.
What is the significance of oak barrels in the production of Old Monk?
-Oak barrels play a crucial role in the production of Old Monk by imparting unique flavors through the natural compounds in oak wood, such as vanillin, tannins, and lactones. They also contribute to oxidation and evaporation, which mellow the rum's flavors, and charring or toasting, which releases additional flavors like caramel, smoke, and spice.
What is the current status of Old Monk in the Indian liquor market?
-Despite its decline, Old Monk has made a comeback, selling 8 million cases per year as of 2021. The exact reasons for this resurgence are not clear from the script, but it indicates a renewed interest in the brand.
What are the business lessons that can be learned from the rise and fall of Old Monk?
-The business lessons from Old Monk's story include the importance of product quality for market favor, the need to build barriers to entry, the danger of relying too heavily on a single product, and the necessity to innovate and adapt to market changes.
Why was Old Monk considered the drink of the Gods and Lords?
-Old Monk was considered the drink of the Gods and Lords due to its rich and natural taste, which was achieved through a careful aging process in oak barrels, setting it apart from other synthetic-tasting drinks in the market.
How did Old Monk's packaging contribute to its popularity?
-Old Monk's packaging, with its distinctive square base and rounded edges, gave it a unique appeal that stood out among other drinks. The aesthetic bottles were even repurposed into drinking glasses and decorative items, further enhancing its visibility.
What role did the Indian army play in Old Monk's branding?
-Old Monk was carefully branded as a tough man's drink, partly because it was distributed in the Indian army and navy. This association with the armed forces contributed to its image and appeal as a strong and robust drink.
How did the Indian economy's liberalization in 1991 affect Old Monk?
-The liberalization of the Indian economy in 1991 opened up the market to new players and products, increasing competition. Old Monk failed to adapt to the changing market dynamics and the rise of premiumization, which contributed to its decline.
What is the significance of the 8 million case sales figure for Old Monk in 2021?
-The figure of 8 million case sales in 2021 signifies a remarkable comeback for Old Monk after experiencing a low point in sales. It suggests that the brand has regained some of its lost market share and popularity.
Outlines
🍸 The Rise and Fall of Old Monk: An Indian Icon
This paragraph delves into the history and cultural significance of Old Monk, a rum brand that became an emblem of nostalgia in India. It was once the third largest selling rum globally, achieving this feat without any marketing budget. The paragraph highlights the brand's humble beginnings, its legendary status, and the mystery surrounding its sudden disappearance from the market, despite its previous success. It also introduces the video's aim to explore the brand's journey, including its mistakes and lessons for business students.
🌾 The Making of Old Monk: A Distinctive Taste and Legacy
This section provides an in-depth look at the production process of Old Monk, emphasizing its unique flavor profile and the factors that contributed to its popularity. The use of abundant sugar cane as a raw material, the meticulous aging process in oak barrels, and the brand's distinctive packaging are highlighted. The paragraph also discusses how Old Monk's taste, coupled with its strong association with the Indian army, helped it become a symbol of strength and a market leader for decades.
📉 The Downfall of Old Monk: Market Forces and Government Policies
This paragraph examines the factors that led to Old Monk's decline. It discusses the impact of liberalization in 1991, which opened the Indian market to new competitors, and the shift towards premiumization as India's per capita income increased. The paragraph also details how government policies, particularly in Tamil Nadu and Uttar Pradesh, negatively affected Old Monk's sales by favoring local brands and distributors, leading to a significant drop in the brand's market presence.
🚀 The Resurgence of Old Monk: A Comeback Story
The final paragraph discusses Old Monk's surprising resurgence, with sales increasing from 2 million cases in 2014 to 8 million cases per year by 2021. It invites insights from Old Monk representatives on the reasons behind this comeback. The paragraph concludes with key business lessons to be learned from Old Monk's journey, emphasizing the importance of product quality, innovation, and diversification to maintain market relevance.
Mindmap
Keywords
💡Old Monk
💡Market Dominance
💡Zero Marketing Budget
💡Rum Production
💡Oak Barrels
💡Import Duty
💡State Government
💡Liberalization
💡Premiumization
💡Barrier to Entry
💡Product Reliance
Highlights
Old Monk is an iconic Indian liquor with a history dating back to the 1960s.
It was once the third largest selling rum worldwide without any marketing budget.
Old Monk's unique taste was considered the drink of gods and lords, setting it apart from competitors.
The brand sold 8 million cases annually, significantly outperforming its competition.
Old Monk's success was attributed to its exceptional taste, zero marketing, and high demand.
The company faced a downturn, with losses of 20 crores and near bankruptcy.
The rise and fall of Old Monk has been largely ignored by the business ecosystem of India.
The video aims to extract wisdom from Old Monk's journey for business students.
Old Monk's story began in the 1900s during the British Raj, with the launch of Asia's first beer, Lion.
After India's independence, Narendra Mohan bought a majority stake in D breweries, a bold move for an Indian entrepreneur.
Old Monk's launch in 1954 capitalized on the lack of strong alcohol manufacturers in India at the time.
The brand's popularity led to a black market for Old Monk, with prices tripled.
Old Monk's success was due to the availability of raw materials, unbeatable taste, aesthetic packaging, and high import duties on foreign alcohol.
The brand was carefully branded as a tough man's drink, associated with the Indian army and navy.
Old Monk's downfall began with the liberalization of the Indian economy in 1991, introducing new competitors.
The brand failed to adapt to the premiumization trend and did not launch new products to cater to the changing market.
Government policies and state interventions negatively impacted Old Monk's sales and distribution.
Despite the setbacks, Old Monk made a comeback, selling 8 million cases per year as of 2021.
The video concludes with key business lessons from Old Monk's experience, emphasizing the importance of product quality, innovation, and diversification.
Transcripts
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
[Music]
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
the lessons that we need to learn from
the remarkable rise and fall of old
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[Music]
best people before we dive into the
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
[Music]
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
[Music]
[Music]
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