United Breweries Sees Business Nearing Pre-Covid Levels
As the travel sector and restaurants reopened, liquor sales rebounded. That reflected in the quarterly numbers of United Breweries Ltd., the owner of Kingfisher beer.
The company’s revenue rose 27.6% sequentially to Rs 1,426 crore in the quarter ended September, led by volume growth. Operating margin expanded 300 basis points to 11.6%, though it was lower than expected.
United Breweries’ revenue rose more than 50% over a year earlier and profit jumped 18 times on a low base.
Second-quarter sales were at 78% of the pre-Covid period of 2019 and at 88% in September, Rishi Pardal, managing director at liquor company, told BloombergQuint’s Niraj Shah in an interview. The month-on-month traction has since improved and augurs well for the third quarter, he said.
Barring two markets that still have policy issues, the company’s index of recovery is 100% or more in all the places, he said.
Pardal said the company’s premium brands recovered faster, with more established brands leading the rebound. United Breweries’ new brands, including Witbier that was launched most recently, continue to hit targeted milestones, he said.
As volumes tumbled last year, the company took measures to optimise costs. As sales rose this year, the company’s margin improved, he said.
And as cash flows improve, the company will preserve the strength of the balance sheet for investing in the business.
Beer is an underpenetrated market and growth will come by focusing on how to expand the overall base for a social beverage that is lower on alcohol content, according to Pardal.
Delhi has removed certain restrictions on alcohol consumption and has lowered the drinking age as well. According to Pardal, a freer market coupled with the fact that India is a hot country with rising affluence and a younger population means there is still scope for a significant increase in beer penetration.
The Competition Commission of India imposed a penalty Rs 752 crore for alleged cartelisation. Pardal said the matter is sub judice and the company’s legal team is working to contest the penalty.
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