Indians Are Buying Bigger Bottles Of Liquor
Edibles weren’t the only items Indians purchased in larger packs as they hunkered down at home during the Covid-19 lockdown. They’re also buying bigger bottles of liquor.
With bars and pubs shut, and weddings and other social gatherings cancelled or postponed, consumption of alcohol has moved in-home, Anand Kripalu, chief executive officer at United Spirits Ltd., India’s largest spirits maker, told analysts in a conference call. And, he said, there’s a shift to larger SKU (stock-keeping units).
The switch to larger packs in edibles was also reported by cigarettes-to-consumer goods maker ITC Ltd., which said people are buying bigger SKUs to reduce frequency of purchases as the pandemic spreads across the country.
Diageo Plc.-owned United Spirits, the maker of Royal Challenge whiskey, didn’t witness any sales for more than a month when all but essential businesses remained shut in the first phase of the lockdown. Liquor consumption outside has stopped as people stay indoors during the pandemic.
United Spirits also said it saw sales of “prestige and above”, or higher-priced brands, decline. Consumers, he said, are migrating from beer to hard spirits like whiskey and vodka.
The company reported a net loss of Rs 215.3 crore in the first quarter compared with a Rs 197.4 crore profit a year ago. Revenue declined 53.6% to Rs 1,030.2 crore while volumes fell 49%. The prestige and above and popular segments witnessed volume contraction of 52% and 47%, respectively.
Kripalu also told investors that the prestige and above segment witnessed a month-on-month improvement in sales. Regional lockdowns in July are expected to affect supply chains and alcohol sales through retail outlets, he said.
United Spirits’ peer Radico Khaitan Ltd., on the other hand, said it continued to witness premiumisation during the quarter and its 8PM premium black whiskey sold around 1 lakh cases in June. It expects to sell a million cases of the beverage this year.
The company’s net profit fell 19.5% year-on-year to Rs 44.07 crore in the quarter ended June, while revenue declined by over a third to Rs 1,7746.6 crore. Volumes, it said, contracted by around 43.5% as a result of the lockdown.
“Our profitability improved due to a better state and product mix and higher share of exports business,” Abhshek Khaitan, managing director of Radico Khaitan, was quoted as saying in a company statement. “We recently received price increase in one of the key liquor consuming states in south India. This also had a positive impact on our profitability.”
Khaitan, at a conference call with investors on July 24, said Telangana permitted a price hike of 10% in the second half of May.
Some states, including Maharashtra, Odisha, West Bengal, Chhattisgarh, had recently permitted online ordering and delivery of alcohol, but Khaitan said the trend hasn’t been very significant for them. There are many logistics-related issues and we’ll have to wait for another quarter to see how it emerges, he said.