Liquor major United Spirits Limited (USL) has sold its stake in technology start-up Hip Bar Pvt. Ltd, for an estimated ₹52 lakh, three years after investing ₹27 crore in the Chennai-based company that started out as a payments and alcohol delivery platform.
In 2018, Diageo Plc-owned USL had picked up a 26% equity stake for ₹27 crore in payment technology start-up Hip Bar, which caters to the alcoholic beverage market through its mobile wallet and delivery app.
The investment was intended to provide United Spirits with growth opportunities in the online and e-commerce channels, the company had said then.
On Friday, in a filing with the exchanges, USL’s board of directors approved sale of equity shares held in the associate company, Hip Bar Private Limited to promoter Prasanna Natarajan for consideration of ₹52 lakh.
Upon completion of the sale, Hip Bar will cease to be an associate company of USL, the company said. USL had fully impaired its aforesaid investment in the financial year 2020-2021. Consequently, the proposed divestment will not have any adverse effect on the company’s performance in the current financial year, it added. For the year ended March 2020, Hip Bar’s revenue was ₹50 lakh.
The move comes as the pandemic has shifted the spotlight on home delivery of liquor especially as intermittent lockdowns lead to closure of liquor stores.
Several states are moving towards allowing and scaling up of home delivery. For instance, Delhi has made provisions for online delivery of liquor in India through changes to its excise policy.
In an earnings call on Monday, the company’s chief executive officer Hina Nagarajan said that while the company is “excited” about the home delivery opportunity, it is watching newer, emerging models of liquor delivery in India.
“We are pretty excited about home delivery. HipBar, when we entered, it was a very differentiated model, it was the only one that had a home delivery practice in Karnataka. Since then, there have been newer entrants and the models are evolving. Basically this (e-commerce) takes a long time to evolve—there is maturing period where it will take a few years…and in this period there will be a lot of learnings with different models to cater to the environment that exists in the country,” Nagarajan said.
“At this point in time, we feel that the HipBar model maybe is not as differentiated as the Swiggy’s and Zomato’s of the world and it is not appropriate for us to invest in an exclusive alco-bev only home delivery platform,”, she added.
USL will continue to work with retailers, regulators and delivery platforms to determine what are the best models that evolve in this space.
“We will continue to look at this space and be really active to participate in the opportunity that we think can be attained,” she said.
