Liquor maker United Spirits Ltd (USL) is initiating a strategic review of select popular brands in the country, it said on Tuesday. This comes as it chases more profitable growth by way of premiumizing its portfolio of brands while sharpening its focus on core popular liquor and pricey global spirits here.
USL’s popular portfolio comprises around 30 brands and the strategic review will look at approximately half of it by volume. The company did not reveal the names of brands that are likely to be part of the review but said it will not include McDowell’s or Director’s Special trademarks and any variants within those.
The popular portfolio consists of several entry-level brands, with an average consumer price of less than ₹400 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-led company consider divestment. “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 organizational review of our operating model. The strategic review will assess all options considering the potential impact of each approach,” Anand Kripalu, managing director and chief executive officer, USL, said on Tuesday evening.
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 even as it builds its core popular brands and sells more of its pricey global spirits in India.
“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% of its total net sales and 51.3% of total sales volume. The popular segment, on the other hand, represented 49% of total volumes for the same period, remaining flat over a year-ago period.
