The Enigma called Vijay Mallya

Vijay Mallya. Playboy. Owner of a struggling airline. Reckless spender on women, IPL teams and F1 teams. King of Good Times. So many epithets we hear about him. The latest one doing the rounds is how he is a failure as a businessman. Well I am not here to praise him. I am myself puzzled by some of his actions. But I have a theory-which tells me Vijay Mallya isnt as nuts as people think him to be.

First we need to understand what his core competency is. He was, and is, a liquour baron. Selling alcohol is his business. But Indian alcohol market is severely villified. Liquour companies cannot run advertisements. They cannot do marketing. So what does Mallya do in such circumstances? He turns to innovative ways. Creates Brand Mallya- The king of good times. Creates kingfisher calender. Creates an airline and names it after his bestselling beer brand. Even the logo of Kingfisher beer and the airline are the same. Creates buzz that he has personally selected the airhostesses. Gives the passengers the best amenities he could. Gives the passengers a very good time( incidentally, everyone unanimously agrees that kingfisher airlines gives the best facilities). All this is to build the kingfisher brand. Kingfisher airlines is not an airline only,it is the face of the Kingfisher brand, the mascot. And as such we cannot look at Kingfisher in isolation from the spirits division. So what kingfisher is undergoing losses? This loss is nothing but advertising/marketing expense. The money he saves in UB group coz of advertising, he is spending on kingfisher airlines.

Is it really a very costly way of advertising? I did a comparision of marketing/advertising spend of top 4 liquour companies of the world-Anheur Busch, Diageo, Heineken and UB. Anheur Busch spends around 850 m annually on marketing alone. Diageo spends 310 m. Heineken spends between 300-350 m. Now if we translate the losses of kingfisher, 1750 crores annual loss(approx) is 350 m dollars. Pretty decent advertising expense for a no 2 company in the world,isnt it?

Of course he isnt tht smart either. As I said, he is an enigma. There are some things I still cant understand. Why did he buy Air Deccan when kingfisher would have been sufficient for marketing? Why did he run after market share? Did his ego get the better of him and he thought of becoming an airline baron too? I dont know, it doesnt make sense, but I cant believe he can be so smart and yet so stupid.

But at least I understand now why he is so desperate to save the airline, forgetting the 'sunk cost' principle. Coz Kingfisher Airlines is essential to the existense of Brand Mallya and his beer. So dont blame Mallya. If u want to blame, blame the government which doesnt allow the liquour companies a level playing field.Blame it on the government which doesnt allow the airline industry to be competitive. Blame it on the tax policies. Vijay Mallya just exposed how much the airline sector is suffering from the govt missteps; he should have highlighted the plight of the liquour industry as well