00:00:00
hi everybody old monk is one of the most
00:00:02
iconic drinks in the Indian liquor
00:00:04
history sold since the' 60s as Russian
00:00:07
to the FIS but still going
00:00:10
[Music]
00:00:25
strong okay so now I like that this is
00:00:28
the monk who won't sell his
00:00:31
Rari and while most people see old monk
00:00:33
as a symbol of college Nostalgia what
00:00:36
they don't know is that back then old
00:00:38
Monon had been such a legend in the
00:00:40
Indian market that once upon a time old
00:00:42
Monon was the third largest selling rum
00:00:44
all across the world and its taste was
00:00:46
so iconic that it was considered to be
00:00:48
the drink of gods and Lords
00:01:00
old mon was so far ahead of its
00:01:02
competition that while its competitors
00:01:04
were selling 2 to 3 million cases a year
00:01:06
old mon alone was selling 8 million
00:01:09
cases a year and you know what old mon
00:01:12
achieved all of this with a zero
00:01:14
marketing
00:01:21
budget I think ofk one two being present
00:01:26
everywhere the only publicity it needs
00:01:29
is word of Mone MTH but sadly today
00:01:31
somehow old mon seems to have suddenly
00:01:34
disappeared from the market and today
00:01:36
old Monon is nowhere close to being a
00:01:38
market leader and from what I last read
00:01:41
the condition of the company was so bad
00:01:43
that it was bleeding with 20 crores in
00:01:45
losses and was almost on the verge of
00:01:47
bankruptcy but even then somehow the
00:01:49
business ecosystem of India has clearly
00:01:51
ignored the rise and fall of this Legend
00:01:54
and it is so sad to see that a legendary
00:01:56
Indian company Rose to the top of the
00:01:58
world and disappeared and yet no
00:02:00
business school has ever covered the
00:02:02
case study of the rise and fall of old
00:02:04
monk so we decided to pull up our socks
00:02:06
to help you get these Pearls of Wisdom
00:02:08
from the rise and fall of the legendary
00:02:10
brand of old mon so in this episode
00:02:13
today let's do a deep dive and try to
00:02:15
understand how did old monk become a
00:02:17
best seller all across the world with a
00:02:19
zero marketing budget after rising to
00:02:21
the top how did old monk start bleeding
00:02:24
with Crowes and losses what are the
00:02:26
biggest mistakes that old Mong made
00:02:28
which got it close to bankruptcy and
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lastly as students of business what are
00:02:32
the lessons that we need to learn from
00:02:33
the remarkable rise and fall of old
00:02:39
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[Music]
00:03:56
best people before we dive into the
00:03:58
story of old Mong you need to understand
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the classification of alcohol and how
00:04:02
each of these products is
00:04:05
produced if you look at the alcohol
00:04:07
Market the major categories today are
00:04:09
beer Vine whiskey rum and vodka and
00:04:13
fundamentally on the basis of their
00:04:14
production process they are divided into
00:04:16
two categories fermented and distilled
00:04:19
beverages so if you look at the
00:04:20
production of beer grains like barley
00:04:22
are soaked and dried and then they
00:04:25
mashed with water and hops of flavor
00:04:27
after that yeast is added to ferment the
00:04:29
mixture mixure and this yeast turns the
00:04:31
sugars into alcohol and creates carbon
00:04:33
dioxide Bubbles and when this liquid is
00:04:36
filtered and carbonated it gives you a
00:04:38
wonderful pint of beer if this is very
00:04:40
very clear to you let's come to
00:04:42
distilled beverages to produce distilled
00:04:44
beverages a fermented liquid is heated
00:04:47
to an extent where the alcohol actually
00:04:49
starts vaporizing and then this vapor is
00:04:52
condensed back into a liquid form so
00:04:54
this way the concentration of alcohol is
00:04:57
very high in distilled drinks for
00:04:59
example if you look at the production of
00:05:00
rum to produce a bottle of rum sugar
00:05:03
cane is fermented with yeast and then
00:05:06
this fermented liquid is heated to
00:05:08
evaporate the alcohol eventually this
00:05:10
alcohol is condensed and concentrated
00:05:12
and then starts the aging process
00:05:14
whereby this alcohol is preserved in
00:05:16
barrels to add flavor and color and if
00:05:19
you see this chart beer Vine and cider
00:05:21
fall into fermented beverages with a 4
00:05:24
to 15% alcohol concentration whereas if
00:05:26
you look at Whiskey RAM and vodka they
00:05:28
are distilled beverage
00:05:30
with an alcohol concentration of 35 to
00:05:32
50% if this is very very clear to you
00:05:35
let's come to the story of old
00:05:37
[Music]
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monk this is a story that dates back to
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1900s India and during that time India
00:05:45
was under the British Raj during that
00:05:47
time the market condition was such that
00:05:49
the only way to enjoy a cold beer in
00:05:51
India was to import it all the way from
00:05:53
England by ship so obviously it was a
00:05:56
very costly and very Troublesome process
00:05:58
this is when a man named ed Edward Dyer
00:06:00
started a company called D breweries in
00:06:02
1855 you know who this guy was this guy
00:06:05
was the father of the infamous General
00:06:07
Dyer who ordered the Jalen Wala B
00:06:09
Massacre Edward soon launched Asia's
00:06:12
first beer called lion which quickly
00:06:14
became a favorite drink among the
00:06:15
British officers but fast forward to
00:06:17
1947 India gained independence and the
00:06:19
Brits wanted to pack their bags from
00:06:21
India and go back home and during this
00:06:23
time while the entire world saw India as
00:06:25
a poor country which was surviving on
00:06:27
British money this is when a proud
00:06:28
Indian man named named Narendra Nat moan
00:06:30
raised funds traveled all the way to
00:06:32
London saw the owners of the brewery eye
00:06:35
to ey and bought a majority stake in the
00:06:37
dire making breweries and with this
00:06:40
purchase mohanji put out a bold
00:06:41
statement Indians still have the
00:06:43
audacity and money to buy off the Brits
00:06:46
and Indian entrepreneurs have utmost
00:06:48
faith in the growth story of India
00:06:50
little did the Brits know that day that
00:06:53
this Indian company would go on to beat
00:06:55
their own companies to become the third
00:06:57
largest selling rum in the world but
00:07:00
coming back to our story India just had
00:07:02
gained independence and there were very
00:07:04
few companies making strong alcohol or
00:07:06
Spirits like RAM and whiskey in India so
00:07:08
there was a huge market and there were
00:07:10
very few manufacturers so in 1954 the
00:07:13
son of Narendra Mohan launched a
00:07:15
legendary drum that we all know today as
00:07:18
old Monon and you know what magically as
00:07:20
soon as old monk was launched it won the
00:07:22
hearts of millions of Indians all across
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the country and it became so popular so
00:07:27
popular that there was a plan black
00:07:29
market for old Monon Yes you heard it
00:07:32
right there was a black market for old
00:07:35
Monon in fact an army veteran told me
00:07:38
that if old mon was available in the
00:07:40
market for 20 rupees then in the black
00:07:42
market old mon would sell for 60 rupees
00:07:46
and that is because the demand for old
00:07:48
Monon was very high this is how old mon
00:07:50
went on to become the third largest
00:07:52
selling rum in the world with a sale of
00:07:54
8.4 million cases annually and all of
00:07:57
this happened without spending a single
00:08:00
rupee on ads or marketing so the
00:08:02
question over here is what was so
00:08:04
special about old mon that it became so
00:08:06
popular so quickly and that to with a
00:08:08
zero marketing budget well there were
00:08:10
four simple reasons number one was the
00:08:12
availability of raw materials long story
00:08:15
short to make whiskey beer brandy or
00:08:17
Vine we need barley wheat corn or grape
00:08:21
vine as raw materials but if you
00:08:23
remember back then in the 1940s India
00:08:26
was struggling with food shortages but
00:08:28
when it came to sugar cane specifically
00:08:31
sugar cane was one of the few crops in
00:08:33
India which was always produced in such
00:08:35
large quantities that we always had
00:08:38
extra sugar cane in India if you look at
00:08:40
this chart for every 5-year plan India
00:08:43
always had extra sugar cane from 1951 to
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1956 while we needed 18 tons we produced
00:08:50
19.3 tons from 56 to 61 we needed 25
00:08:54
tons but we produced 30 tons so raw
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material for rum was very easily
00:08:58
available secondly old Monon had an
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unbeatable taste in the market for those
00:09:03
who don't know old Monon is a carefully
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orchestrated Symphony of flavors which
00:09:08
is achieved through a meticulous process
00:09:10
of aging and blending and the secret to
00:09:12
it lies in these Oak barrels where old
00:09:14
Monon is kept for Aging for seven long
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years and here's why ladies and
00:09:18
gentlemen the magic of Oak barrels
00:09:20
presents itself while most people see
00:09:22
Oak barrels as just containers what they
00:09:24
don't know is that these Oak barrels
00:09:27
actually transform rum from just another
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alcoholic drink into a masterpiece of
00:09:32
flavors and this happens because of
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their three magical properties and by
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the way guys even if you have never
00:09:38
tasted an old monk just listen to what
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I'm saying and you will feel the taste
00:09:42
of old monk in your mouth you don't
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believe me listen to this firstly the
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oak barrels participate in flavor
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infusion because the beauty of oak wood
00:09:50
is that it contains natural compounds
00:09:53
like vanillin tannins and lactones so
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vanillin provides a vanilla Aroma to the
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drink as the tannins have a drying
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puckering sensation on the tongue like
00:10:03
the feeling that you get after drinking
00:10:04
black tea or red wine and then the
00:10:06
lactones contribute to the coconut and
00:10:08
Woody notes then comes oxidation and
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evaporation so if you look at the nature
00:10:12
of ok wood it has pores and these pores
00:10:15
allow a small amount of oxygen to
00:10:18
interact with the ram in such a way that
00:10:20
this oxygen oxidizes the drink and this
00:10:23
process Mellows the harsh edges rounds
00:10:26
out the flavors and adds a subtle nutty
00:10:29
and dry fru note to the rum additionally
00:10:32
a portion of rum evaporates Through the
00:10:34
Wood and it concentrates the remaining
00:10:36
liquid eventually it starts intensifying
00:10:38
its flavors and lastly there is charring
00:10:41
and toasting so many of these Oak
00:10:44
barrels are charred or toasted on the
00:10:46
inside before filling them with rum and
00:10:49
this process caramelizes the woods
00:10:51
sugars in such a way that it releases
00:10:53
additional flavors like caramel smoke
00:10:56
and spice to the rum So eventually at
00:10:59
the end of 7even years what you have is
00:11:01
a drink with a rich Aroma and with
00:11:03
lingering notes of vanilla Oak coconut
00:11:06
and spice this is what makes old monk an
00:11:10
unforgettable experience for the pette
00:11:12
and while all other drinks tasted
00:11:14
synthetic old Mong had this Rich natural
00:11:16
taste that made it stand out in the
00:11:18
market this is the reason why it was
00:11:20
such an iconic drink during that time
00:11:22
that it was considered to be the drink
00:11:24
of the Gods and LS now you tell me guys
00:11:27
merely by listening to the symphony of
00:11:29
all these flavors you were able to taste
00:11:31
a tasty drink in your mouth right well
00:11:34
this is what made old monk an
00:11:35
unforgettable experience for the pette
00:11:38
and while all other drinks tasted
00:11:39
synthetic old monk had this Rich natural
00:11:42
taste that made it stand out in the
00:11:44
market and cherry on the cake old monk
00:11:46
had such an aesthetic packaging that
00:11:48
even if there was a rack full of
00:11:50
imported drinks old monk always stood
00:11:52
out again if you've seen an old monong
00:11:55
bottle you would know that it has this
00:11:57
distinctive shape with a square base and
00:11:59
rounded edges and this crack-like design
00:12:02
gives it a unique appeal in fact it
00:12:04
looks so good that the empty bottles of
00:12:06
old Monon are handcrafted into drinking
00:12:08
glasses and decorative items so again
00:12:11
old monk gained visibility due to its
00:12:14
aesthetic bottles thirdly because import
00:12:17
Duty on foreign alcohol was as high as
00:12:19
100% it was very difficult for any
00:12:22
company to enter India because the
00:12:24
population was extremely sensitive to
00:12:25
price and lastly old mon was very
00:12:28
carefully branded as as a tough man's
00:12:30
drink why because we are one always made
00:12:33
sure that a small amount of old monk was
00:12:35
always distributed in the Indian army
00:12:37
and since it started to be stocked in
00:12:38
the Indian army old monk by default
00:12:41
became associated with the Indian army
00:12:43
and the Indian Navy this is how the
00:12:45
image of old Monon was created as a
00:12:47
strong man's drink so it carried the
00:12:50
aspiration and appeal of the Indian army
00:12:53
this is how with unbeatable taste with
00:12:55
no competition due to import regulations
00:12:57
due to lack of raw materal for other
00:12:59
drinks and with the aspiration of the
00:13:01
Indian army and Indian Navy even with
00:13:04
zero rupees spent on marketing old monk
00:13:06
went on to become one of the best
00:13:08
selling rums and soon enough old Monon
00:13:10
even exported to other countries and
00:13:12
went on to win some of the most
00:13:14
prestigious Awards in the world this is
00:13:16
how old Monon became a legend in the
00:13:18
Indian liquor market and dominated the
00:13:20
market for five long decades but then
00:13:23
the question over here is when old Monon
00:13:25
was able to dominate the Indian market
00:13:27
for five long decades what exactly
00:13:29
happened in the next two decades that it
00:13:31
fell on the verge of bankruptcy well the
00:13:34
reasons for downfall were pretty
00:13:35
straightforward liberalization happened
00:13:38
in 1991 the Indian economy opened up and
00:13:41
many other players entered the market so
00:13:43
old Bon wasn't the only choice and there
00:13:45
were several other players who were
00:13:47
entering the market with different
00:13:48
products like whiskey rum vodka and even
00:13:51
beers secondly as the per capita income
00:13:54
of India increased premiumization
00:13:56
happened in the Indian market so people
00:13:59
people started tasting more Le drinks
00:14:01
like scotch and imported drinks and
00:14:03
while all other companies were trying
00:14:04
hard with different marketing strategies
00:14:06
different flavors and more products you
00:14:08
know what old Mong did old Mong did
00:14:10
nothing to cater to this premium market
00:14:13
and while the sales were falling they
00:14:15
did not launch new hero products at all
00:14:17
they did launch a few products but none
00:14:19
of them really caught in the market to
00:14:21
become a hero product and instead of
00:14:22
launching premium products they tried to
00:14:25
decrease the price of their existing
00:14:26
products with the hope that Indians will
00:14:28
look at the prize and prefer old Monk
00:14:30
and obviously that did not help because
00:14:33
India was on the race of premiumization
00:14:35
and to make matters worse The Godfather
00:14:37
started punishing old monk Now who is
00:14:40
the Godfather over here The Godfather is
00:14:43
none other than the government of India
00:14:46
so the question over here is why exactly
00:14:48
did the government of India punish old
00:14:50
Bonk well here's where the complex story
00:14:53
of the state governments come in you see
00:14:55
guys alcohol in India comes under the
00:14:57
State subject so it's not the the
00:14:59
central government but the state
00:15:00
government that takes decisions on
00:15:02
alcohol related matters so the state
00:15:04
government can set their own laws rules
00:15:07
and taxes and the first problem for old
00:15:09
Mong started with Tamil Nadu and back
00:15:11
then Tamil Nadu contributed 20% to Old
00:15:14
Mong sales but in 2003 the state
00:15:16
government of Tamil Nadu completely
00:15:18
abolished the interference of private
00:15:20
parties in the liquor business and give
00:15:22
exclusive privilege of both wholesale as
00:15:25
well as retail sales to the Tamil Nadu
00:15:27
State marketing corporation which is a
00:15:30
government undertaking which means the
00:15:32
Tamil Nadu government itself became both
00:15:34
the wholesaler and the retailer of the
00:15:36
liquor Market in Tamil Nadu and as soon
00:15:39
as the government took over they started
00:15:40
favoring those companies that were
00:15:42
operating from Tamil Nadu and started
00:15:44
discarding the brands that came from
00:15:46
outside of Tamil Nadu so old Monon
00:15:48
practically vanished from the shells of
00:15:49
Tamil Nadu as a result 20% of their
00:15:52
sales were completely cut off sounds
00:15:54
shocking right well the story doesn't
00:15:57
end here in 2009
00:15:59
the mayawati government turned a man
00:16:01
named Ponty chadda into a monopoly by
00:16:04
giving him the complete wholesale rights
00:16:06
to distribute lior in uttar Pradesh this
00:16:09
was the first case in India where an
00:16:11
individual person got complete control
00:16:13
over distribution of liquor in the
00:16:15
entire State and that to uttar Pradesh
00:16:18
and what did chaji do chaji favored his
00:16:21
own brand and started to choose which
00:16:23
brands would be available in Up's retail
00:16:25
outlets so guess what again old Mong got
00:16:28
sidelined and and their LNO Distillery
00:16:30
shut down and their beer market got
00:16:32
wiped out by Chad's wave beer and this
00:16:35
is when the sales manager of moan Mak
00:16:36
famously said that their top selling
00:16:39
product became a ghost in the market I
00:16:42
repeat their top selling product became
00:16:44
a ghost in the market and since up was
00:16:47
one of the biggest consumers of alcohol
00:16:49
in India old monk again suffered very
00:16:52
heavy losses this is how because of the
00:16:55
entry of new brands in the market
00:16:57
because old monong failed to catch up
00:16:59
with premiumization as the Godfather of
00:17:01
the state Market started favoring other
00:17:03
players old Mong went from being a
00:17:05
legend to a ghost in the Indian liquor
00:17:09
Market but you know what guys strangely
00:17:11
old Monon has actually started making a
00:17:13
comeback from a low of Just 2 million
00:17:15
cases in 2014 old Monon made a stunning
00:17:18
comeback by selling 8 million cases per
00:17:20
year as of 2021 now we couldn't find the
00:17:23
exact reasons for this comeback so if
00:17:24
there is anyone from old Bon who's
00:17:26
watching this episode please let us know
00:17:28
because we would love to do a podcast
00:17:30
with you and understand the rise of old
00:17:32
monk in the Indian liquor Market again
00:17:34
and this brings us to the most important
00:17:35
part of the episode and that are the
00:17:37
business lessons that we need to learn
00:17:38
from the rise and fall of old monong
00:17:41
lesson number one people if you build a
00:17:43
formidable product the market is bound
00:17:45
to favor you regardless of your
00:17:47
marketing budget in this case while
00:17:49
other rums were synthetic tasting old
00:17:51
monong stood out in the market and
00:17:52
dominated the market for five decades
00:17:54
only due to its quality and taste lesson
00:17:57
number two this F favor of the market
00:17:59
for your great product will only last
00:18:02
for a limited time so in this limited
00:18:04
time you need to build a barrier to
00:18:06
entry for yourself in such a way that
00:18:08
even if the competitors enter the market
00:18:10
with a billion dollars in their pocket
00:18:12
they must find it hard to catch up with
00:18:14
you in this case while old Monon was
00:18:17
resting on its Laurels for too long if
00:18:19
you remember Sula wines kept on
00:18:21
innovating with Sula Fest Sula Resorts
00:18:24
and new products that kept it way ahead
00:18:26
of its competition and more importantly
00:18:28
Sula also built a barrier to entry with
00:18:31
12E contracts with the grap Vine farmers
00:18:33
and lastly always remember never be too
00:18:36
reliant on a single product in this case
00:18:39
while old Monon was reliant on its rum
00:18:41
apple was once too reliant on Apple 2
00:18:43
and Microsoft was once too reliant on
00:18:46
Windows and as entrepreneurs what we
00:18:48
need to realize is that while your hero
00:18:50
product looks like your greatest
00:18:52
opportunity if you become over dependent
00:18:54
on it the same product will become your
00:18:57
greatest threat in the market
00:18:59
these are the lessons that we need to
00:19:01
learn from the rise and fall of old Monk
00:19:03
and I just hope you learn something
00:19:05
valuable from this case study that's all
00:19:07
from my side for today guys if you learn
00:19:08
something valuable please make sure to
00:19:10
hit the like button and not to make youy
00:19:11
Baba happy and for more such insightful
00:19:13
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00:19:15
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00:19:16
you so much for watching I will see you
00:19:18
in the next one bye-bye
00:19:22
[Music]
00:19:28
[Music]
