In the June quarter, except for United Spirits, most liquor companies reported an increase in volumes , largely thanks to the liquor distributed by political parties during elections-a widespread practice in India.
United Spirits Ltd, which is struggling to clean its books, continued to lose market share to rivals, including Pernod Ricard and Allied Blenders and Distillers Pvt. Ltd, in the first quarter, even as the general elections helped prop up overall demand for liquor.
Sales volumes at United Spirits, India’s largest distiller, slumped more than 4% in the first quarter while industry volumes grew 3-4%, according to executives at liquor companies.
Two companies, Allied Blenders, which makes Officer’s Choice whisky, and Pernod Ricard, maker of Royal Stag and Blenders Pride whiskies, grabbed most of the market share lost by United Spirits. Allied Blenders’ volumes rose 27-29% while Pernod Ricard volumes increased by more than 15% in the quarter.
Diageo Plc, which now controls United Spirits, also reported strong growth in its India business, with volumes rising by more than 30% in the quarter.
United Spirits, which is yet to report its 2013 annual earnings because of accounting problems, did not reply to an email seeking comment.
“Despite cost pressures, we’ve continued to invest in marketing and brand-building and that has helped us report consistent growth,” said Deepak Roy, chief executive at Allied Blenders. “We’ve also significantly increased distribution of our Officer’s Choice Blue and Officer’s Choice Black whiskies.”
In the June quarter, except for United Spirits, most liquor companies reported an increase in volumes , largely thanks to the liquor distributed by political parties during elections-a widespread practice in India.
“Liquor sales are usually good during election time, and last quarter, elections helped demand,” said Raju Vaziraney, executive director at Jagatjit Industries Ltd.
Jagatjit re-launched its AC Black whisky with new packaging and launched a new blended whisky called Royal Pride last quarter, which helped grow sales, Vaziraney said.
The improvement in volume growth in the first quarter for liquor companies comes after Indians cut back on alcohol last year because of higher prices and slowing economic growth. Liquor sales volumes were flat in the year ended 31 March, the weakest in a decade.
Despite the slight recovery in volumes in the first quarter, executives cautioned that liquor demand may not improve significantly this year as several state governments, including those in Delhi, Haryana and Uttar Pradesh, had increased levies.
“Demand is still quite weak as many state governments continue to increase duties. That has led to higher prices and most categories are still struggling (for growth),” Allied Blenders’ Roy said.
Weak demand for spirits over the past two years has hurt United Spirits more than any other liquor company. Last year, Allied Blenders, Pernod Ricard and others grabbed market share from United Spirits, partly as Diageo forced United Spirits to cut spending on promotions and commissions to wholesalers.
Indian liquor companies have long relied on their clout with wholesalers to push volumes, whereas Diageo and other international liquor companies focus on generating consumer demand by building their brands through marketing activities.
United Spirits, meanwhile, is trying to sort out accounting issues. The company, which was expected to publish its fiscal fourth-quarter results on Friday after a delay of more than two months, said on Saturday that it was postponing reporting results for the third time after the audit committee of the board sought “certain clarifications and information on the draft financial results and related issues”.
United Spirits was initially expected to publish its fourth-quarter and full-year results on 16 May but said on 15 May that its earnings report would be delayed due to “unavoidable circumstances”. It then said on 27 May that it would take more time to report its results, partly because of the accounting related to the sale of its Whyte and Mackay whisky business.
Source: Livemint
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