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Cover Feature

Published on: Oct. 22, 2022, 7:10 p.m.
Allied Blenders and Distillers: On a new high
  • ABD’s state-of-the-art plant; Photos: Sanjay Borade

By Lancelot Joseph. Executive Editor, Business India

“Please don’t interview me, talk to the professional management team,” says Kishore Rajaram Chhabria who built Officer’s Choice as the country’s third largest whisky brand and Allied Blenders and Distillers (ABD) Limited as a major liquor company to reckon with. “I have passed the baton on to professionals now,” says 67-year-old Chhabria who ventured into the liquor business with his elder brother the late Manohar alias Manu, by taking over Shaw Wallace & Company in 1987.

Much water has flowed into the Bay of Bengal as well as the Arabian Sea since then. The Chhabria brothers fell out, Kishore walked out with ABD which was earlier acquired by Shaw Wallace. “All that is history now,” says Kishore when asked about the last 35 years. Now he says: “Let us look to the future.”

ABD today has emerged as the largest Indian-owned IMFL (India Made Foreign Liquor) company and the third largest IMFL company in India, in terms of annual sales volumes between Fiscal 2014 and Fiscal 2021, as per a Technopak Report.  The biggest is United Spirits , now controlled by UK giant Diageo.  And the second largest is the French controlled Pernod Ricard. Three of ABD’s brands – Officer’s Choice Whisky, Sterling Reserve Whisky and Officer’s Choice Blue Whisky – have achieved the rare distinction of ‘millionaire brands’ selling millions of cases of liquor.

ABD’s revenue from operations stood at Rs6,378.78 crore for Fiscal 2021, and profit after tax at Rs2.51 crore. For the nine months ending December 2021, revenue from operations stood at Rs5,444.98 crore and profit after tax at Rs3.30 crore.  Its revenues from export sales were Rs133.55 crore for Fiscal 2021 and Rs113.24 crore for the nine months ended 31 December, 2021. 

Leading the pack

ABD’s top selling whisky brand, Officer’s Choice, launched in 1988, rose to the top of the Indian market with sales of 25.12 million cases in Fiscal 2016. Officer’s Choice franchise, including Officer’s Choice Whisky and Officer’s Choice Blue, bettered its performance by selling of 34.15 million cases in Fiscal 2016. Its flagship brand Officer’s Choice Whisky franchise has been among the top selling whisky brands globally in terms of annual sales volumes, as opposed to value, between 2016 and 2019.

Officer’s Choice Whisky franchise including Officer’s Choice Blue was ranked third among the largest selling whisky brands globally in 2020. Officer’s Choice Whisky is the market leader in the popular segment also known as the mass premium segment in India with a market share of 23 per cent in terms of annual sales volumes in Fiscal 2021.

ABD’s product bouquet has 10 brands of IMFL with five brands of whisky, two brands each of rum and brandy and one brand of vodka. “The company has grown organically and its maiden brand Officer’s Choice has been a runaway success,” says Shekhar Ramamurthy, Executive Deputy Chairman, ABD, who moved to the company from United Breweries Limited of which he was the managing director.

“ABD has stayed invested in the mass-premium segment with Officer’s Choice,” says Bikram Basu, Vice President – Marketing, Strategy and Business Development, who came to the Chhabria fold having spent 6 years with United Spirits, and 14 years with Pernod Ricard India.

“We understand that consumers aspire to every segment and it is imperative to give them a good quality, consistent, well-packaged product,” he says and explains the multi-pronged strategy saying “as we premiumise for product and value, we also stay focused on mass premium.” This keeps ABD at the entry gate to a world of branded alcohol for new consumers coming into legal drinking age, of a relatively lower income or from country spirits.

  • Basu: ABD has stayed invested in the mass-premium segment

    Basu: ABD has stayed invested in the mass-premium segment

“The fully Indian-owned company grows as premiumisation happens and ABD targets the country liquor audience, offering them entry level, yet constantly improvised, well designed packs,” explains Ramamurthy. ABD listens to its consumer and treats him with respect and that is one of the core values that the company imbibes.

Asked if packaging matters, he says: “Design has to be contemporary for any consumer product. Haven’t we been noticing changes in packaging of toothpastes to detergents, chocolates and biscuits? Brand has to be relevant to the consumer of the day which explains why some brands which were big 30 years ago are no longer so,” he adds.

“ABD has, in the past year, improved Officer’s Choice Whisky to blend some Scotch with best quality Indian grain spirits. Scotch does enhance product attributes and betters our ability to inbound more consumers or retain them for longer cycles. This thinking for Officer’s Choice has made the brand one of the largest whiskies in the world for many years now,” says Basu.

ABD has transitioned from an exclusive popular segment play in the whisky category to one with launches in both the prestige and premium categories. Officer’s Choice Blue whisky, its offering in the prestige segment, sold one million cases in the first year of its launch in 2011 and is among the leading whisky brands in its segment in several Indian states with an overall peak share of 8.4 per cent in Fiscal 2020 by sales volume.

It touched sales of 8 million cases within four years of its launch in 2015-2016. Officer’s Choice Blue whisky is the fifth largest whisky brand in India in the prestige segment, also known as the deluxe segment. 

ABD entered the premium segment in 2017 with its twin offerings Sterling Reserve Blend 10 and Blend 7 which crossed one million cases in the first year of launch. In calendar year 2019, Sterling Reserve was the fastest growing spirits brand globally by volume, at a growth rate of 131 per cent. Sterling Reserve was the fastest growing spirits brand by volume in India in Fiscal 2021 with 2 per cent growth.

Sterling Reserve Blend 7 is the third largest selling brand in the premium whisky segment by volume in India in Fiscal 2021. ABD is also the top exporter of IMFL from India with close to 20 per cent share in overall exports from India by volumes in Fiscal 2021, according to the Technopak research report.

As per Technopak Report, the flagship brand Officer’s Choice Whisky has been among the top selling whisky brands globally in terms of annual sales volume between calendar year 2016 and 2019, before Covid and the lockdown impacted the world.

Awards and accolades

The products have received various recognitions over the years. For example, Officer’s Choice Whisky received the Wines Beers and Drinks Awards in 2018 for the world’s largest selling whisky; Sterling Reserve Premium Whisky the Spiritz Award in 2019 for the fastest growing whisky brand and the Wines Beers and Drinks Award in 2018 in a similar category. Officer’s Choice Brandy received the IndSpirit Award in 2018 for the best popular brandy; Sterling Reserve Blend 7 Whisky was given the IndSpirit Award in 2018 for the best semi-premium whisky.

Sterling Reserve Blend 7, Kyron Premium Brandy and Officer’s Choice Blue were rated as ‘Notable Products’ at the Superior Taste Award by the International Taste Institute, Brussels in 2021. Sterling Reserve Blend 10 Whisky, Sterling Reserve Blend 7 Whisky and Kyron Premium Brandy all won gold awards at the prestigious Monde Selection Brussels in 2022.

  • Ramamurthy: brand has to be relevant to consumer

    Ramamurthy: brand has to be relevant to consumer

IMFL is the largest segment of the Indian alco-beverage market both in volume and value terms as the segment recorded sales of 310 million cases in Fiscal 2021 with a decline of 11.4 per cent in volumes as compared to Fiscal 2020 sales, at 350 million cases. The IMFL market is estimated to have recovered to 355 million cases in Fiscal 2022 and the sales volume is projected to reach 425 million cases by Fiscal 2025.

IMFL sales by value are estimated at Rs1,74,000 crore in Fiscal 2022 and projected to reach Rs2,40,000 crore by Fiscal 2025 with a CAGR of 11.3 per cent and sales volume is expected to grow at a CAGR of 6.2 per cent.

“A growing number of people are joining the workforce more quickly than in the past, along with changing lifestyles and dismantling of social barriers to the consumption of alcohol, and this is driving growth in the alcoholic beverage market in India. Greater social acceptance for drinking amongst women as well in Tier II and Tier III towns is expected to open up newer, profitable consumer segments.

Rapid increase in urban population, a sizable middle-class population with rising disposable income, and a growing economy are driving the consumption of alcohol in India. In addition, 10 million to 12 million people are expected to enter the legal alcohol drinking age each year,” says Ramamurthy. “Backed by our extensive portfolio of offerings across the mass premium segment, we believe, we are well positioned to capitalise on the shift towards premiumisation of consumption,” he feels.

“The IMFL market is dominated by five southern states contributing more than 50 per cent of total consumption by volume. Karnataka and Tamil Nadu are the top two markets in the country contributing more than 30 per cent of overall consumption by volume in India in Fiscal 2020. Prohibition of country liquor has led to growth of IMFL in southern states. Southern states contribute close to 45 per cent of whisky sold in the country,” says Basu.

Indian whisky brands dominate the list of top selling whisky brands in the world. As per ‘The Millionaires Club’ by, in 2020, the top four highest selling whisky brands in the world are from India and 16 out of the top 33 selling whisky brands in the world are from India. Indian whisky brands have historically dominated the list of top selling whisky brands with 15 out of the top 31 in the list in 2016.

The top five whisky brands in India sold close to 110 million cases in 2020 which is close to 60 per cent of the overall market in India. The top five whisky brands in India include one each from United Spirits, Allied Blenders and Distillers and John Distillers. Pernod Ricard has two whisky brands in the top five whisky brands.

Ramamurthy says Indian whisky is unique as it is not bound by any rules on ageing or storage in specialised casks. Indian whisky is only required to use ethanol produced from an agricultural source. Weather condition in India can also be detrimental to ageing of alcohol as losses are higher in Indian tropical weather. Indian sugar companies use molasses produced as a by-product during processing of cane sugar, to produce extra neutral alcohol (ENA) which is sold off to Indian spirits companies, though top spirits companies in India nowadays mainly use ENA produced from grain in their IMFL products.

  • ABD will selectively pursue strategic acquisitions and investments and other strategic alliance partnerships that are complementary to its growth strategy, particularly those that can help it enrich our product portfolio and expand the customer base

Imported whisky plays an important role in blending with Indian grain whisky. The majority of whisky imported in India is used to blend with Indian grain whisky. Another important segment of imported whisky includes whisky that is imported in bulk and bottled in India. This constitutes a large part of the premium segment. The luxury segment of whisky is dominated by bottled in origin (BIO segment) whisky with both blended as well as single malt whisky.

Key players in the Indian whisky market

The Indian IMFL market is a concentrated market with the top three players controlling close to half of the IMFL market by volume in Fiscal 2021. “These three companies are also the top whisky selling companies in India. United Spirits Limited is the leader in the IMFL market. It achieved the coveted distinction of the largest spirits company in the world by volume with the largest number of millionaire brands in the world till 2015.

United Spirits Limited is controlled by the largest spirits company in the world, Diageo plc. United Spirits has 8 millionaire brands in the Indian whisky category including McDowell’s No 1 which was the top selling whisky in the world for calendar year 2020 by volume,” says Technopak.

Pernod Ricard India is a wholly owned subsidiary of Pernod Ricard SA. It is the second largest company in the IMFL market in India. Pernod Ricard has played a key role in the premiumisation of Indian whisky market with a range of iconic brands including Imperial Blue, Royal Stag, and Blenders Pride. Pernod Ricard acquired the wine and spirits business of Seagram in India which gave it a prominent position in the Indian IMFL market. It is the most profitable company in the alco-beverage industry in India. It had three millionaire brands in the Indian whisky category for calendar year 2020.

“It is in this context that ABD’s unique feature of being the only fully Indian-owned liquor business comes to the fore,” Basu says and explains: “Over the years, we have developed a well-recognised product portfolio, and transformed ourselves from a single brand company to a multi-product and multi-brand company with a presence across various categories and segments of the IMFL industry in India.”

Since the launch of Officer’s Choice Whisky in 1988 in the mass premium segment, the company invested significant resources in enhancing the strength and appeal of the Officer’s Choice brand. Officer’s Choice Whisky is the market leader in the mass premium segment with a market share of 23 per cent in terms of annual sales volumes in Fiscal 2021. “Our proposition with Officer’s Choice is aimed at offering high quality products at affordable price points that elevate a consumer’s drinking experience,” he claims.

“Our consumer-centric approach in building brands has enabled us to achieve high sales volumes. Our brands have been positioned based on relevant consumer insights,” says Basu. Over the years, it has introduced contemporary brands that appeal to various consumer tastes and preferences.

  • Shah: strict code of business conduct

“The young like to experiment. They normally flirt with a few flavours before they settle on their choice. There are individual choices and collective choices and the need, state or motivation for the drinking occasion also has a role to play for the brand and the segment to be consumed. Most new consumers have a repertoire. Yes, it’s a fact that more than 1 crore young adults come into the legal drinking age every year in India. If you consider 21-25 as the young starters, there are 5-plus crore consumers experimenting with flavour and brand choice as they settle,” says Basu.

The company has strategically undertaken brand-building initiatives through prudent use of resources and investments to increase awareness and recall of its brands.

Marketing campaigns

Ramakrishnan Ramaswamy, ABD’s CFO who has been with the company since 2010, says over the last three fiscals, “we have undertaken several campaigns, including Jo Smooth Vahi Officer campaign, Salute Toh Banta Hai, Rok Sake Toh Rok Le and Chase The Next. In Fiscal 2019 the company’s advertisement and promotion expenses were Rs168.5 crore, in 2020 Rs131.6 crore, in 2021 Rs90.6 crore and in the 9 months ended 31 December, 2021 ABD spent Rs70.4 crore on promotions. We have undertaken strategic marketing investments towards associating with key sporting events across the country and to build a better connect with consumers that included partnerships with teams participating in the Indian Premier League, the Pro Kabaddi League and regional football leagues for our focus markets of West Bengal and the North East.”

Basu says: “Brandy is the second largest segment of the Indian IMFL market with a sale of $3 billion in Fiscal 2021. It accounts for approximately 15 per cent of the total IMFL market by value. The brandy category witnessed a trend like whisky during Covid-19 and saw a de-growth of 16 per cent by value but is further projected to grow at a CAGR of 10 per cent over the period of Fiscal 2021 to Fiscal 2025. It accounted for 20 per cent of the total volume of the IMFL market in Fiscal 2021, witnessing a sharp decline of 13 per cent by volume in Fiscal 2021. It is projected to grow at a CAGR for 7.4 per cent by volume from Fiscal 2021 to Fiscal 2025.”

The brandy story

As per the Food Safety and Standards Authority of India (FSSAI)’s alcohol beverages regulations 2018, brandy is a beverage made by distillation of wine. It may be aged or matured to possess the aroma and taste of brandy. Unlike brandies from European and other western countries, Indian blended brandy is a mixture of a minimum of 2 per cent of pure grape brandy with any other fruit or flower brandy as recommended by Indian law.

Indian brandies are permitted to use ENA (extra neutral alcohol) from other sources of agricultural origin. This is convenient for the producers as it is very cheap compared to brandy made from the distillation of 100 per cent grapes. India’s tropical and warm weather almost round the year does not make brandy a suitable drink for all seasons due to its warming effects on the body.

  • Ramakrishnan: strategic marketing

The Indian spirits industry operates in a highly regulated manner with state-specific policies which impact industry volumes in some markets. High inter-state duties compel Indian spirits producers to set up owned or engage third party manufacturers in every state. Licences are required to produce, bottle, store, distribute or retail alcoholic products. Distribution is also highly controlled, both at the wholesale and retail levels. “All these factors serve as potential entry barriers for newer players,” says Ramamurthy.

Further, distribution of alco-beverage products is highly controlled by state governments and the entry of new players in distribution is prohibitive due to high regulation across states and strong relations between the current players and the retail outlets which may include exclusive arrangements. “With our extensive operations across India, our presence in multiple states and current capacity ensure that we are able to effectively address these issues which has allowed us to garner a significant share of the mass premium market and noticeable and growing market share for our premium products,” he says.

Leading exporter

As of 31 March, 2021, ABD’s products are retailed through 64,001 outlets across India. ABD has also emerged as a leading exporter of IMFL in terms of annual sales volumes between Fiscal 2019 to Fiscal 2021 with an estimated peak share of 20 per cent in Fiscal 2021. Its products are exported to 22 countries, including United Arab Emirates, Haiti, Oman, Nigeria, and Kenya, with Officer’s Choice Whisky being one of the largest exported brands in 2021.

The export of Indian whisky is limited as it does not conform to specifications listed for whisky in major markets of the world. Indian whisky is popular in countries with a large Indian diaspora with the Middle East being the biggest market for the same. In 2020, India exported approximately 6.12 million cases of whisky to other countries in the world.

United Arab Emirates (UAE) was the largest importer of IMFL whisky, importing 23.7 million litres (2.6 million cases) in 2020, accounting for 43 per cent of the total share. Indian whisky companies have started to develop marquee brands adhering to the highest quality of raw material and processing standards to come up with unique product offerings which stand out for product notes and flavour as well as overall product quality.

Amrut Single Malt Whisky and Paul John Single Malt Whisky are two products with a successful launch in this category. Top alco-beverage companies including United Spirits and Pernod Ricard have also forayed into India-based single malt products. India gets approximately 86 per cent of its total imports from the UK, which is the largest exporter of whisky to India. India was the second largest importer of Scotch whisky by volume in the world in 2019.

Team spirit

“Chhabria has built an experienced and professional senior management team with significant industry experience and it has demonstrated an ability to develop and build brand recognition and deliver growth and profitability. The company follows a strict code of business conduct for its operations having implemented board approved policies on anti-bribery and corruption, gifting and entertainment, anti-money laundering, antitrust and competition and conflicts of interest,” says Ritesh Ramniklal Shah, Company Secretary and Compliance Officer.

ABD has whistle-blower, breach management, disciplinary, prevention of sexual harassment, marketing code and corporate social responsibility policies.

  • We believe that the skills and diversity of our employees give us the flexibility and agility to adapt to the future needs of our business

“We sold 37.32 million cases of IMFL in the country in Fiscal 2019, 33.23 million in 2020 and 25.52 million in 2021 and 20.66 million cases in the nine months ended 31 December, 2021, and the company recorded an overall market share of 8.2 per cent by sales volumes in Fiscal 2021,” says Basu.

ABD’s distillery is located in Rangapur, Telangana and is spread over an area of 74.95 acres and has a built-up area of over 25,000 sq m. Its in-house distillation capacity of ENA is 54.75 million litres per year. The company also has extensive bottling capabilities with an optimal mix of owned and third-party facilities with a pan-India presence across 22 states and union territories.

As of 31 December, 2021, it owned and operated nine bottling units, and had entered into arrangements with six third-party bottling facilities where the entire licensed capacity is utilised by the company. Over the years, ABD has developed relationships with third-party bottlers and entered into 15 bottling agreements on a non-exclusive basis including one where it has entered into a royalty arrangement.

R&D boost 

Basu explains: “The company’s research and development capabilities are centred on product innovation, which includes new product conceptualisation and development, acquiring novel raw materials and product engineering. Its research and development facility is located at Aurangabad and is equipped with instrumentation for testing of raw materials, packaging materials, blend tasting and testing and finished product quality.”  In addition, ABD’s R&D is also focussed on innovation in packaging and the material is also evaluated to ensure that it conforms to all the requisite standards.

“For instance, we have developed sustainable packaging for Sterling Reserve and have been awarded Gold at the Design and Packaging Masters 2021 for the brand’s limited-edition packs. We also trained an in-house panel of sensory experts that analyse and evaluate consistency and correctness of the products,” says Basu whose strategy at ABD has been to first deepen the play in whiskies with the launch of Sterling Reserve.

“It has enhanced our offers to the semi-premium and premium whisky consumers who are fast growing and we’ve met with strong success. Whisky contributes 65 per cent to the Indian spirit consuming class. Secondly, we have introduced two very interesting concept whiskies in the last month – namely Sterling Reserve Whisky Cola Mix and Srishti Premium Blended Whisky.

Sterling Reserve Whisky Cola is the colour of whisky in the bottle and retains the colour after mixing with water or soda. It’s got an infusion of cola which plays out on the palate and aftertaste with every sip. It appeals to the young adult who has spirits with a mixer and gives a superb choice. In the specific case of whisky, we find that it’s an acquired taste for a few and this allows for an immediate and friendly consideration,” adds Basu.

Shah says: “Environmental and social practices as well as environment sustainability are a key focus across all parts of our business and operations. Our sustainability initiatives are aimed at zero harm, zero waste and zero discharge. To achieve this vision, quality and compliance controls are being established and revamped right from the supply chain to the value chain. We intend to continue our growth in this area. We intend to reduce our consumption of fossil fuels and increase use of aseptic packaging, implementation of solar energy to power manufacturing operations and reduction in the use of water as part of our distilling and IMFL bottling operations.”

  • The company’s R&D capabilities are centred on product innovation

Despite the limitations imposed due to Covid-19, ABD enabled virtual training of its employees. “We believe that the skills and diversity of our employees give us the flexibility and agility to adapt to the future needs of our business. Our employee base is the key to our competitive advantage – it has 744 employees including 74 production workers, 179 sales consultants, 14 consultants, and 2,611 contract workers,” says Ramamurthy.

Market leader

In Fiscal 2021, the sale of whisky accounted for 64 per cent of IMFL sales in India. The mass premium segment constituted approximately 31 per cent of the total IMFL market in India in the same year. Officer’s Choice Whisky is the market leader in the mass premium segment with a market share of 23 per cent in terms of annual sales volumes in Fiscal 2021. The flavoured local alcoholic beverage popularly known as country liquor or Indian made Indian liquor is close to one-third of the alcoholic beverage market by volume in Fiscal 2021.

The country liquor market was estimated at 325 million cases in Fiscal 2022 and the market is projected to be range-bound at 350 million cases by Fiscal 2025. “We believe we can address the requirements of large segments of audiences that currently consume country liquor or economy brands and are looking to upgrade,” adds Ramamurthy.

Given the positive change in attitude towards alcoholic beverages and the higher social acceptance and rise in income levels, ABD plans to expand penetration of Officer’s Choice Whisky in states such as Karnataka and Uttar Pradesh. It also intends to position Officer’s Choice Whisky as a brand for the younger generation and make it the ‘first port of call’ for new entrants in the category.

Its campaign ‘Jo Smooth Vahi Officer’ has been successful in appealing to consumers and the company will further amplify the campaign through digital and social media to build a better connect with potential consumers. The mass-premium segment requires large-scale operations, multiple units across various states, a strong distribution network, the ability to deliver products cost-efficiently while maintaining product quality to match consumer expectations. “We believe that Officer’s Choice Whisky is best positioned for this role and there is a natural barrier to new entrants given the significant entry barriers and complexities,” says Ramamurthy.

Aiming high margins

“Going ahead, we intend to continue to introduce products in the premium, semi-premium and deluxe segments with an intent to provide our company with higher margins and greater profitability over time. We have consciously developed our product portfolio to provide consumers with products with different tastes at various price points,” says Basu.

“ABD introduced limited editions of its existing brands, and has now launched some of the best, differentiated work with the launch of ICONiQ White Whisky, Srishti Premium Blended Whisky, and a youth purposed packaging format called ‘Hippy’ on Sterling Reserve. Sterling Reserve ‘Hippy’ is a trendy, convenient and gives an option to consumers who look for differentiation,” he explains.

  • We understand that consumers aspire to every segment and it is imperative to give them a good quality, consistent, well-packaged product

Having built the brand, Team Chhabria is now taking ABD public, having filed its Draft Red Herring Prospectus (DRHP) with SEBI, targeting Rs2,000 crore via a fresh issue and offer for sale (OFS). Some breaking news – the offer document states that Kishore Chhabria will be redesignated as the non-executive chairman on the listing of the company.

Incidentally, Chhabria himself does not own a single share in ABD as per the DRHP. The OFS is by his family members – Bina Kishore Chhabria (Rs500 crore); Rs250 crore by Resham Chhabria and Jeetendra Hemdev, and another Rs250 crore by Neesha Kishore Chhabria. An amount of Rs708.98 crore from the fresh issuance will be utilised for retiring the company debt and balance used for general corporate purposes. The equity shares are proposed to be listed on the BSE and NSE.      

“A liquor company will be tapping the markets after a really long time,” says Arun Kejriwal, director, KRIS. Considering the increase in demand and that millennials seem to be enjoying their peg of fun, the prospects of the industry have improved significantly. To add to the good times is the fact that the government has become more open-minded on duties levied on the industry, Kejriwal says as he looks forward to “interesting times ahead for the sector”.

“India is the 9th largest consumer globally and is one of the fastest growing markets - a double digit growth pre-covid. Rising levels of disposable income and growing urbanisation will ensure that liquor demand, though recently the growth has slowed to 8 percent. However, will this translate into every listed liquor stock outperforming the markets? I doubt, since valuations for multinationals are clearly at a premium compared to the home grown ones baring possible 1 or 2."

"Liquor has been a heavily regulated sector with multiple agencies at the state as well Centre vying for a larger share of the spoils. Having to operate in such a notorious environment, the market gives a premium for transparency. Diageo’s latest move of selling popular brands and concentrating only on premium brands is a pointer on where the value lies. With distribution getting controlled by the States barring a few, the cost push price increase has been slower which has been eating into the margins of mass brands” says Ambareesh Baliga, independent research analyst pointing that despite the ban on advertising, last 5 years have witnessed more successful brands than possibly the last two decades.

And quite a few have been start ups. These brands have been slowly eating into existing mass brands as the younger generation is more experimental with their taste. Many niche brands have been successful in micro markets which again should be a worry for the established brands.

  • None

    ICONiQ White Whisky is one of the best and differentiated work from ABD

Modernisation push

Ramamurthy explains that ABD will continue to focus on reducing operating costs and improving utilisation by investing in modernisation of its manufacturing facilities with the relevant technologies and production methods. This, he hopes, will increase their capacity, improve efficiency and operating performance and reduce the need for future capital expenditure.

“We continue to evaluate front-line technologies and resultant benefits with a view to maintaining competitive advantages. Higher capacity utilisation will result in more production and higher sales, thereby allowing us to spread fixed costs over higher sales and increase profit margins. Further, we intend to continue to enter into additional contract manufacturing tie-ups and leasing and sub-leasing bottling units to increase our production volumes. We will evaluate options to establish additional grain ENA manufacturing facilities which will help reduce dependency on vendors, ensure improved supply security, and stable quality and input costs. We believe in an optimum asset-light model which will be reviewed as the business grows, thereby improving our operating efficiencies and margins. We will evaluate growth opportunities through selective acquisitions,” he says.

 “ABD will selectively pursue strategic acquisitions and investments and other strategic alliance partnerships that are complementary to its growth strategy, particularly those that can help it enrich our product portfolio and expand the customer base,” says Basu as the company searches for opportunities to acquire or license third-party brands in India and overseas that will add value to its existing portfolio. To improve its backward integration capabilities, the company plans to acquire or build additional distilleries across India.

Pride of place

“Acquisition or development of such distilleries will limit supply constraints which in turn will allow us to improve our margins,” says Ramaswamy. “In evaluating the financing of any such acquisitions, we remain committed to enhancing shareholder value in the long term, both by investing in the businesses and brands so as to improve the return on investment,” he says.

Shah says: “We have created an exclusive limited-edition pack for our Sterling Reserve whisky using discarded fabric. This limited-edition packaging is hand-crafted and results in reduced waste in landfills, water saving and provides employment to handicraft artisans,” Basu points out.

Finally, Basu says: “ABD has pride of place as the largest Indian, independent spirits organisation. We stay ahead for a reason. We deliver a quality benchmarked, consistent product and have renewed packaging consistently.” The company looks forward to a new chapter, post the IPO, and Chhabria plans to retire and engage in CSR.


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