Bottles of McDowell’s No. 1 whiskey produced by United Spirits Ltd., a distiller partly owned by Diageo Plc, sit on display at a roadside liquor store in Gurgaon, Haryana, India (Photographer: Udit Kulshrestha/Bloomberg)

Blend For Premiumisation Brews At United Spirits

Liquor major United Spirits Ltd. (USL) is embarking on the path of premiumisation as it expects premium products to account for 70 percent of spirits industry profits by 2021, given that India is the largest market for whiskey.

"Within our core brands, our focus is on premiumisation through strengthening our Prestige and above brands. The Prestige and above segment is also where most of the spirits industry profit pool is. It is expected to contribute 70 percent of spirits industry profits by 2021," USL CEO Anand Kripalu said in a presentation to global investors.

USL's key brands under the Prestige and above segment include McDowell's No 1, Signature, Royal Challenge and Antiquity Blue whiskey. Making his point, Kripalu said: “India is the largest whiskey market in the world selling almost 200 million cases. However, there is a stark difference between volume and value, with the average retail price per 750 ml in the rest of the world being more than 5 times that in India."

“With rising incomes... we are seeing a strong premiumisation trend in spirits which is expected to drive double-digit growth in the Prestige and above segment," he added.

USL said Prestige and above brands represent about 60 percent of its net sales.

"So, while the popular segment will continue to be a sizeable (though shrinking) portion of the spirits industry's sales and profits, the growth and profit pool is in the Prestige and above segment," Kripalu said.

However, the popular segment will continue to be important as "it is the pathway to trading up consumers into the Prestige and above segment".