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Premium brands boost Radico Khaitan profits

Radico Khaitan has seen its profits grow thanks to recent price increases in some Indian states and the soaring global popularity of the company’s premium brands.

A focus on premium brands has helped one of India's largest spirits companies increase its Q1 profits.
A focus on premium brands has helped one of India’s largest spirits companies increase its Q1 profits.

Announcing its Q1 financial results for 2013-14, the Indian spirits company revealed a net sales increase of 10.8% to 4.67 billion rupees (£49.4 million) from 4.21 billion rupees (£44.6 million) at the same time last year.

This figure is attributed to the growing demand for the company’s premium prestige and above brands, which saw a volume growth of 18.8%, as well as price increases across the company’s portfolio in Bihar, Delhi and Odisha, among other states.

As a percentage of Indian made foreign liquor (IMFL) volume, the brands grew from 16.2% to 17.9%, while the IMFL itself increased 7.6% in volume and 14.6% in value.

A lower sugarcane acreage and an expected demand of ethanol from the oil marketing companies, mean that extra neutral alcohol (ENA) prices continued to increase on a year over year basis.

Dr Lalit Khaitan, chairman and managing director of Radico Khaitan, said: “Radico Khaitan delivered a solid performance during the quarter to start the year with a new high.

“Despite the ongoing pressure of ENA costs, we have been able to expand margins due to the recent price revisions and increasing contribution from the premium category brands.

“Our recently launched premium brand, Verve vodka, continues to gain traction as we expand its distribution to a pan India level.”

Recently, IMFL demand in India has been impacted by rising retail prices and unfavourable policies in states such as Tamil Nadu and Punjab.

Overall, industry IMFL sales volume that grew at an average of 12% between 2007-11 grew only 7% in 2012.

But Radico Khaitan said that its continued focus on “marketing strategy and premiumisation” allowed the company to achieve higher than industry growth.

Khaitan continued: “Overall, we are confident of achieving attractive returns on investments in our brand portfolio. With the evolving industry landscape, Radico Khaitan is extremely well positioned to build upon its market leadership.”

Radico Khaitan’s portfolio includes Magic Moments vodka, Contessa Rum, After Dark whisky and Verve Vodka.

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