United Spirits sales slide 29.7% in H1

5th November, 2020 by Melita Kiely

Diageo-controlled United Spirits has reported a 29.7% sales decline for the first half of its 2021 fiscal year due to the impact of India’s nationwide lockdown.

Diageo India brands

United Spirits’ portfolio includes Indian whiskies McDowell’s No. 1 and Royal Challenge

Reported net sales for the six months to 30 September 2020 fell to Rs 3,176 crore (US$429m), down from RS 4,515 crore (US$610m) during the same period last year.

United Spirits’ ‘prestige and above’ segment declined 24.9% during the first half of the year, largely due to a ‘weak first quarter’. The continued closure of on-trade premises for the majority of H1, leading to a reduction in social occasions for consumption, also affected sales.

The ‘popular’ segment experienced a 31% drop in sales during H1, with priority states down 27%.

The second quarter – the three months ending 30 September 2020 – showed signs of improvement for the group, however. Reported net sales were down 6.6% during this period – a stark improvement on the 27% net sales decline reported in Q1.

United Spirits said the improvement seen in Q2 compared to Q1 was driven by strong resilience in the off-trade, which offset the on-trade remaining largely shut.

The prestige and above segment saw net sales rise 1% during Q2, but the popular segment dropped 12.5% with priority states declining at 10%.

Anand Kripalu, CEO, said: “The underlying revenue decline of 3.4% in the second quarter is ahead of expectations and reflects the resilience of our category, notwithstanding prolonged on-trade closures, the route to market change in Andhra Pradesh and high taxation led price increases post-Covid-19.

“The agility of our supply chain team provided a fast start post-lockdown and the renovation of our two core brands supported the top-line recovery.

“Prestige and above segment net sales grew 1% in Q2, backed by strong momentum in our Scotch portfolio, driven by relative price positioning in key markets as well as lapping softer comparatives.”

Due to the evolving challenges presented by Covid-19, Kripalu said it would not be possible to provide financial guidance for fiscal 2021.

Kripalu added: “Looking ahead, we remain cautiously optimistic with the gradual re-opening of on-premise and the ensuing festive season, recognising that safety and social distancing norms could impact demand versus prior years.

“Due to unprecedented variability in the macro environment brought on by Covid-19, the company is unable to provide quantative guidance for fiscal 2021. Our business fundamentals and our financial position is strong allowing us to navigate this pandemic as circumstances evolve.”

Johnnie Walker owner Diageo increased its stake in United Spirits to 55.9% in March this year, as part of the firm’s long-term premiumisation strategy in India.

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