Monday, July 15, 2024

ABD Plans Investments in Start-Ups & Global Brand Partnerships to Enhance Premium Spirits in India

Mumbai: Allied Blenders and Distillers (ABD), a prominent player in India’s liquor industry, is gearing up for a significant expansion in the premium spirits market. The company is exploring distribution tie-ups to bring international liquor brands to India and is in active discussions with homegrown start-ups to invest in craft spirits.

Strategic Shift Towards Premium Dark Spirits

Alok Gupta, Managing Director of ABD, highlighted the company’s interest in premium dark spirits during a pre-IPO press meet on Thursday. “We spend reasonable time looking at the whole startup space. There’s a lot of interest and current conversations that we are doing with a few founders in the non-gin and non-whisky space, the focus is on premium dark spirits, for instance,” Gupta stated.

ABD’s core business has traditionally been whisky, particularly the Officer’s Choice brand, which sells 19 million cases annually and constitutes nearly 95% of its sales. However, the company has recently diversified into selling gin and aims to capture a larger share of the premium segment.

Embracing Start-Ups and Emerging Trends

Gupta acknowledged that start-ups are adept at tapping into emerging consumer trends, which established companies often miss. That nimbleness is what we like, so the idea is we retain all of that and open access to our distribution to them,” he added. While specific investment figures were not disclosed, ABD’s interest in new-age brands indicates a strategic shift towards innovation and variety in the spirits market.

ABD’s Expanding Product Portfolio

ABD’s product lineup includes over two dozen Indian-made foreign liquor (IMFL) brands across various categories such as whisky, brandy, rum, and vodka. Notable brands include Officer’s Choice whisky, Sterling Reserve, Jolly Roger rum, and Zoya gin. The company sells 30 million cases annually across its entire portfolio.

To further its premium market presence, ABD has established a vertical called PremBrands, which includes products like Sterling Reserve B10, X&O, Srishti whiskies, and Kyron Brandy.

Pursuing Global Partnerships

In addition to domestic investments, ABD is actively seeking partnerships with global liquor companies to introduce more international brands to India. Gupta mentioned that discussions are at an advanced stage, with interest from brands worldwide, including tequila from Mexico and whiskies from Japan and Taiwan.

“The idea is to find that unique white space where we have the right to play and right to win. There are some unique flavour-price combinations that are undiscovered and try to build a first-mover advantage there. Tequila could be one of them,” Gupta explained.

Financial Performance and IPO Plans

For the fiscal year ending March 31, 2023, ABD reported consolidated revenue from operations of ₹7,105.6 crore, a 1.2% decline year-on-year. The company’s main competitors include United Spirits Limited, Pernod Ricard India Private Limited, and Radico Khaitan Limited.

Allied Blenders and Distillers’ (ABD) IPO, which launched on June 25th, 2024, proved successful with oversubscription on the second day itself. Investors purchased 5.96 crore equity shares, exceeding the offer size of 3.93 crore shares by 1.52 times.

This strong investor interest indicates positive reception for the company’s plan to utilize the public offering’s proceeds, estimated at ₹1500 crore, for debt settlement and strategic investments in premium segments like craft spirits and international partnerships.

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