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Tuesday, June 28, 2022
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Liquor sales: Diageo-owned United Spirits outperforms Pernod Richard in premium segment

United Spirits has outpaced Pernod Ricard in the premium segment for the first time ever in India last fiscal.Pernod Ricard, which only sells premium and semi-premium brands, mainly Blenders Pride, Royal Stag and Imperial Blue, grew 9% during the year ended June. In comparison, Diageo-owned USL expanded 13.7% during the same period, with prestige-and-above (P&A) business now exceeding two-thirds of its overall sales, up from less than half five years ago.

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“Our winning play in P&A last year has been driven by the resurgence of McDowell’s No. 1 Whisky on the back of its successful renovation and strong performance in bottled in origin (BIO) scotch where we have further enhanced our market leadership position” said Abanti Sankaranarayanan, chief strategy officer, Diageo India.

Pernod, the world’s second largest distiller controls about a fourth of the overall whiskey market in India and is the leader in the premium segment. The French alco-bev firm said it expects some recovery in India in fiscal year 2022 even if it believes there might still be some volatility linked to the pandemic situation.

“For this year we expect a gradual recovery. India was up 9%, and was very resilient given the environment, while the underlying consumer driven trends are clearly there,” Pernod’s chairman Alexandre Ricard said after the company’s quarterly earnings on Wednesday.

Analysts said considering market disruption caused by the pandemic, they will have to see if USL can sustainably grow ahead of Pernod. “It is still heartening to see USL grow faster than Pernod, which has not been very common in the past few years. However USL under new managing director needs to sustain this for further re-rating of the stock,” said a report by Edelweiss Securities.

Hina Nagarajan, who took charge as USL’s MD in July has been tasked to get the company back on the growth path, driving revenues and profits in the premium and prestige segment of the Indian alcohol market. United Spirits P&A reported a volume CAGR of 3.7% over FY18-20, underperforming the market average of 8.5%.

Earlier this year, USL said it was reviewing select mass-priced products in its portfolio as part of a strategy to drive higher profit by focusing on premium brands. Over the past four years, USL has moved towards the franchisee model in the popular segment with fixed-fee arrangements in more than a dozen states and this has helped expand margins. The popular segment accounts for almost half of its annual volumes and about a third of net sales, although it has been shrinking after it shifted focus to pricier products.

The above news was originally posted on economictimes.indiatimes.com

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