India Alcohol Sector FY27: Premiumisation Fuels Growth

India’s alcoholic beverage industry began FY27 with a robust performance, as a strategic shift towards premiumisation significantly boosted revenue growth across major players. This upward trajectory occurred despite the persistent challenges of rising input costs and complex policy changes in various states.

• Overall premium-and-above (P&A) segment growth ranged from 10% to 36%.
• United Breweries Ltd. (UBL) saw a 17% increase in premium beer volumes.

Leading companies such as United Spirits Ltd. (USL), Radico Khaitan, and Allied Blenders and Distillers Ltd. (ABDL) reported substantial double-digit growth within their prestige-and-above (P&A) categories. These high-end segments encompass premium whiskies, vodkas, gins, and rums, indicating a clear consumer preference for higher-value products.

Radico Khaitan’s Record Performance

Radico Khaitan achieved its highest ever volume, top line, and profitability, demonstrating the strong impact of its premium strategy. The company’s financial results underscore the sector’s potential when focusing on high-margin products.

• Revenue climbed 13.22% to Rs 5,867.69 crore.
• Consolidated net profit surged 76% to Rs 229.60 crore.
• P&A brands volume increased 35.8%, reaching 5.22 million cases.

Managing Director Abhishek Khaitan noted that their P&A portfolio significantly outpaced the broader industry. He anticipates this segment will grow by over 25% in FY27, maintaining an EBITDA margin of approximately 20%.

USL and UBL Push Premium Portfolios

Diageo-owned USL, known for brands like Johnnie Walker, reported a significant rise in net profit, largely driven by its premium offerings. Meanwhile, UBL, India’s largest beer manufacturer, also highlighted the increasing importance of its premium portfolio.

• USL’s net profit rose 51.6% to Rs 391 crore.
• Its P&A volume grew 6.4% (excluding Maharashtra), with 14.8% NSV growth.
• The popular segment, less than 10% of total revenue, saw a 17.5% decrease in NSV.

UBL’s consolidated net profit declined by 9.64% to Rs 166.28 crore despite a 10% revenue increase to Rs 5,919.44 crore, affected by increased expenses and the West Asia conflict. UBL CFO Jorn Kersten stated that premium margins became accretive for the first time recently, positioning the premium portfolio as a key future profitability contributor.

ABDL Navigates Supply Disruptions with Premium Focus

Allied Blenders and Distillers Ltd. (ABDL) faced a drop in net profit but maintained its commitment to premiumisation as a core growth driver. Global supply chain disruptions presented temporary hurdles for the company.

• Consolidated net profit dropped 18.65% to Rs 45.42 crore.
• Operating revenue increased 5.8% to Rs 984 crore.
• Volumes in the June quarter increased 6.2% to 9 million cases.

Managing Director Amar Sinha confirmed the company’s focus on premiumisation and backward integration, expecting these efforts to fuel future growth despite the temporary impacts from supply chain issues.

Sula Vineyards’ Elite & Premium Traction

Sula Vineyards also reported robust performance in its higher-end offerings, reinforcing the industry-wide trend. CEO Rajeev Samant highlighted strong traction in their Elite & Premium portfolio.

Flagship brands like The Source and Rāsā achieved robust double-digit growth, further solidifying the strategic imperative for premium segments across the alcoholic beverage spectrum.