Allied Blenders and Distillers (ABD), the third largest Indian IMFL (Indian-made foreign liquor) company in the country, has firmed up plans to acquire three brands in the semi premium and premium whisky segment as it embarks on an aggressive growth strategy to widen the reach in the fast-growing Indian alcohol market.
According to industry sources, ABD is exploring the option of acquiring three brands and the deal will be completed at the earliest.
ABD officials declined to comment on specific details of the acquisition saying that the company is exploring organic as well as inorganic opportunities.
“All these years we have grown organically. It is now the time to grow inorganically and we are planning for that. We also have plans to strengthen our in-house production facilities,”said Kishore R Chhabria, chairman ABD. At present, ABD has 30 bottling plants and one distillery near Telangana.
The expansion plan comes at a time when the liquor major has filed prospects for a Rs 2,000 crore IPO. The IPO comprises a fresh issue and an offer for sale (OFS) of up to Rs 1,000 crore each, as per the Draft Red Herring Prospectus (DRHP) filed.
The proceeds from the IPO would be used to expand the national presence through brand acquisitions and organic expansions, monetise assets, clear debts and institutionalise the company. “We have embarked on a journey of institutionalisation. This will gather pace now,” Chhabria said.
The public offer is part of the ongoing efforts to drive growth through a set of senior professionals. The process of professionalisation, which started more than 15 years ago, is gaining momentum with plans to offer ESOPs to employees. Consultant firm Deloitte is working on a blueprint to provide ESOPs to its employees, according to informed sources in the consultancy sector. ADB declined to comment on the subject.
Shekhar Ramamurthy, who joined the company as executive deputy chairman and Managing Director more than a year ago, is at the helm of the changes that are sweeping across the company. Ramamurthy, who comes with a wealth of experience in the liquor industry , is quite clear about the future growth. He says
“We decided to set a growth agenda at the base level and to fuel the same, we set out to do two things — we are not a commodity or a service; we are in the business of brands. Hence, the focus is entirely on growing the brands. Another thing was clarity on where we wanted to go. In India, margins may be less or high in particular states, but we don’t know what they will be later. So, the direction we set was that we should be a genuine national player rather than pick and choose where we wanted to be. We want to revive the brands and put better energies into the existing ones while driving a solid efficiency agenda. “
Ramamurthy believes that Indian consumers are moving increasingly towards premiumisation due to rising disposable incomes and “evolved sensibilities.” “Hence the organic and inorganic strategies will revolve around premiumisation” he comments.
“Premiumisation will happen at every price point at ADB,” Ramamurthy said.
Whisky takes up 65 per cent share of the Indian spirit consuming class. According to a Technopak research, the whisky market of the country valued at USD 14.9 billion in FY20 is expected to reach USD 22.4 billion by FY25 fuelled by a strong premiumisation narrative in the alco-beverage industry.
To further diversify its product portfolio, ABD has launched Sterling Reserve B7 Whisky Cola Mix, Srishti Premium Blended Whisky, ICONiQ White Whisky and curcumin infused Craft Whisky.
The company’s products are sold across 30 states and Union Territories, as of December 31, 2021. It also exported its products to 22 international markets, including countries in West Asia, North and South America, Africa, Asia and Europe.
As of March 31, 2022, its product portfolio comprised 10 brands of IMFL across whisky, brandy, rum and vodka. It also sells packaged drinking water under Officer’s Choice, Officer’s Choice Blue and Sterling Reserve brands.
The company, which has been growing at the rate of 22 per cent during the current fiscal, posted revenue from operations to the tune of Rs. 6,378.76 crore in FY21.