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Tuesday, January 31, 2023
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Liquor Cos Join the Party, Post Strong Growth in H2 2021

IN HIGH SPIRITS companies benefited from a strong performance in retail stores and also saw a bounce-back when restaurants reopened

From beer and whiskey to vodka and gin, alcobev companies have posted strong double-digit growth during the six months ended December, with many outpacing pre-Covid volumes last quarter, indicating a sharp recovery for the segment that was among the worst-hit in 2020.

The coronavirus pandemic hit beer and spirits makers as bars, restaurant and pubs across the country operated with low footfalls and restricted travel since the past two years. As more people drink at home, companies benefitted from a strong performance in retail stores ad also saw a bounce back when restaurants reopened.

“Evidenced by the increasing footfalls, in public places, improved mobility combined with festive holiday season further led to demand buoyancy” USL Managing Director Hina Nagarajan told investors.

Diageo, maker of Johnnie Walker and McDowell’s whiskey said Indian business grew 12% between July-December, driven by strong consumer in the off-trade channel, recovery of the on-trade channel and strong premiumization. Last week, rival Pernod Ricard the company behind Absolut vodka and Chivas Regal said it expanded 19% with broad-based growth across the portfolio, strong underlying demand. Homegrown Radico Khaitan too saw a 12% increase over the past two quarters.

“For us, it’s like coming out stronger with at-home consumption and consumers premiumization,” said Bacardi India managing director Sanjit Randhawa adding that it has seen a 30% growth in India in 2021, one of its highest sales expansions.

We posted volume growth of 19% for the quarter versus prior year, driven by continued recovery of demand prevalent across nearly all the markets. In the quarter there was a full recovery of volume levels versus pre-covid “- BEREND ODINK, CFO, United Breweries

According to the IWSR Drink market Analysis Data, the overall spirits market fell 20% in the last calendar year with volume dropping to 277 million cases. The beer segment saw the sharpest dip by 39% to 193 million cases.

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Beer companies in India have been facing low demand for three summers now. In 2019 the Indian Premier League cricket tournament and summer months which have both historically boosted demand for beer, failed to revive the segment which was hurt by the general elections and consequent dry days. The segment as initially declared non-essential amid lockdown to contain the spread of Covid-19 forcing them to shut brewing and retail operations for nearly six weeks. Even last year, the second Covid wave forced many states to curb restaurant timing.

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“We posted volume growth of 19% for the quarter versus prior year, driven by continue recovery of demand prevalent across nearly all the markets. In the quarter, there was a full recovery of volume levels versus pre covid. “Berend Odink, chief financial officer at United Breweries said at the investor call.

On-trade channels accounted for 40% of beer sales in the country in 2019, but the share fell to restaurants were shut for many months due to COVID-19 and subsequently reopened with the restrictions.

Last week, Carlsberg said its Indian posted over 30% volume growth last calendar year. “In India, the year was impacted by restrictions at various times. For the full year, we saw very good recovery. Revenue per hectoliter increased due to growth of the premium Carlsberg brand, price increases in some states and a positive packaging mix.” Carlsberg chief executives Cees’t Hart said in an earning call.

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