NEWS
DIAGEO OWNED INDIA’S UNITED SPIRITS COULD SELL HALF OF ITS LOW-PRICED BRANDS
By Siulan Law Mathews DipWSET
24-2-2021
Source: Diageo India
India’s leading liquor maker United Spirits Ltd (USL) has initiated a strategic review on its mass-priced brands, this would mean some of the brands will be sold off while the company concentrates on upper market brands with higher profit margins.
As the world’s second biggest liquor company by volume, USL’s popular portfolio comprises around 30 brands and the strategic review will look at approximately half of them. The company did not reveal which are the brands under review but said it will not include McDowell’s or Director’s Special trademarks and any related variants.
"While the move is expected to help the Diageo-controlled spirits company chase profitable growth through a premiumisation strategy, it could also mean selling off half its portfolio in the segment. of select popular brands in the country,” the company said on Tuesday.
The popular portfolio consists of several entry-level brands, with an average consumer price of less than IDR400 (USD5.53) for a 750ml bottle. These straddle whisky, rum, brandy, vodka, and gin. Some of the popular brands include Bagpiper, Old Tavern, and White Mischief.
The move could see the Diageo-owned company divesting half of its mass market portfolio.
“Several outcomes are possible, including, but not limited to, extension of the franchise model that we started some years ago, accelerating select brands by additional investment, potential divestment, and an organisational review of our operating model. The strategic review will assess all options considering the potential impact of each approach," said Anand Kripalu, managing director and CEO of USL.
The strategic review is likely to be completed by the end of 2021. It will help the liquor maker boost profitability by moving up the price ladder.
“This review reinforces USL and Diageo’s commitment to deliver long-term growth and improve profitability via a sharpened focus on core-popular and ‘prestige and above’ brands, including international brands," Kripalu said.
For the year ended 31 March 2020, the company’s prestige and above segment represented 65.2 percent of sales by value and 51.3 percent of sales by volume. The popular segment, on the other hand, represented 49 percent of sales volume, performance was flat compared to previous year.
(the writer can be contacted at: info@thewinechronicle.com)
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