USL to re-launch whisky brands to boost growth
India’s largest liquor company United Spirits Ltd is betting on re-launches of its top whisky brands and brand extensions to drive growth in a market that has been sluggish for almost five years.
United Spirits chief executive Anand Kripalu said in an interview that the company has “renovated” most of its old brands. In addition, he said “there are two kinds of innovation we are bringing that is new to the market:”
Over the past 18 months the company, which owns more than 40 brands, has re-designed the look of McDowell’s No.1, Royal Challenge and Signature and backed the re-launches with extensive advertising. This year United Spirits has done the same with Captain Morgan rum and will do it with a few more brands. The company has also introduced a honey variant of McDowell’s No 1 whisky and an espresso-flavoured Royal Challenge whisky.
The Indian liquor market, which consistently grew by more than 10% a year in the 2000s, has seen growth slowing for at least five successive years now primarily because of rising state liquor taxes and regulatory clampdown. In terms of sales volumes, growth has tapered to 1-3%.
At the top, United Spirits has been the worst hit so far by the slowdown. It has consistently lost market share to Pernod Ricard India Pvt Ltd and Allied Blenders & Distillers Pvt Ltd over most of this decade. Kripalu, however, suggested that the company is starting to win back share helped by the recent whisky re-launches. (Whisky is the single-largest product category in liquor, accounting for anywhere between 55-65% of all liquor sales in the country)
Wearing a checked white shirt with USL’s logo, Kripalu, 57, said industry growth is unlikely to drop further though it will still be a few years before it starts increasing rapidly again.
“It’s very hard to say when growth rates will increase again but I think it will take a couple of years for the whole industry to get into a state of equilibrium. But it has to happen – look at the per capita consumption, look at economic growth, look at attitudinal barriers to alcohol coming down,” he said. In addition, he added, there is a strong trend of “premiumisation” with people graduating to more expensive offerings.
Kripalu joined United Spirits as CEO-designate in October 2013, months after Diageo Plc acquired it from the UB group. Since then, United Spirits has been battered by corporate governance scandals and some politicians adopting the prohibition platform. The company delayed reporting its earnings three times in 2014 and launched an internal probe into its accounting practices. In April 2015, United Spirits revealed that the probe suggested financial irregularities and fraud at the company for several years when it was run by Vijay Mallya and his team.