ABD to increase thrust in semi-premium, premium whisky

Kishore Chhabria-owned Allied Blenders and Distillers (ABD) is looking to make a significant move in the premium and semi-premium whisky categories. The company known for its Officer’s Choice brand sees a clear opportunity as consumers are now keen on upgrading apart from the possibility of bolstering margins through launching more expensive brands. 

According to Shekhar Ramamurthy, Executive Deputy Chairman, ABD, the pandemic did take a toll on the spirits industry but numbers are almost back to what was seen in early 2020. India, in the good times, did around 350 million cases (one case is 9 litres or typically 12 bottles of 750 ml each) of spirits sales each year, which dropped to 310 million cases in FY21. Around 63 per cent of that is accounted for by whisky, with brandy’s share being 19 per cent and rum another 13 per cent; the other 5 per cent is what white spirits like vodka and gin sell. 

Speaking for ABD, it has a presence across the board, though the numbers are driven, like the national proportion, by whisky. For FY21, the company had a total income of Rs 2,277 crore, while net profit was close to Rs 6 crore; the corresponding numbers for FY20 were Rs 2,892 crore and Rs 15 crore.  

“We saw an opportunity in upgrading our own brands, which has been done through superior packaging or a better blend. Overall, the objective has been to refine the category,” explains Ramamurthy. Between Officer’s Choice and Sterling Reserve, ABD does around 30 million cases, with the former doing a tad over 25 million cases. Now, the strategy is to move towards premium and semi-premium. “We will launch 3-4 innovative brands over the next six months,” he says. The thumb rule for semi-premium in terms of pricing is over Rs 750, while premium is over Rs 1,200. Margins here are known to be upwards of 2x compared to the brands that are relatively more inexpensive. 

In the spirits industry, the time taken to build a brand of scale takes 3-4 years, with a lot of money going into distribution and promotion. Since advertising is not allowed, the process of creating brand awareness is time-consuming. By way of distribution, the universe of retail outlets selling alcohol in some form (beer and spirits) is no more than 80,000 across India. Ramamurthy looks at the aspirational consumer, relative vulnerability of competition and higher per capita GDP as factors that will drive the process of consumers upgrading their brands.