United Spirits sells 32 brands for $105.7m
Diageo’s Indian arm, United Spirits, has agreed to offload its ‘Popular’ business of 32 brands to Inbrew Beverages for approximately 8.2 billion rupees (US$105.7m).
Diageo’s Indian subsidiary, United Spirits, began a strategic review of around 15 brands in February 2021, as part of its strategy to improve profitability.
At the time, the Diageo-controlled subsidiary said the review will cover half of its Popular brands, which consist of approximately 30 marques. The review excluded Indian whiskies McDowell’s and Director’s Special.
A report from Bloomberg in March 2022 previously named Inbrew as the leading bidder for United Spirits’ Indian brands.
United Spirits has now confirmed that Inbrew Beverages will buy its entire Popular brands business, which includes Indian whiskies Haywards and Old Tavern, White Mischief vodka, Honey Bee brandy, Green Label whisky and vodka-based spirit drink Romanov.
McDowell’s and Director’s Special will remain part of United Spirits’ portfolio.
The deal covers assets related to the 32 brands including contracts, permits, intellectual property rights, associated employees, and a manufacturing facility.
In the year to 31 March 2022, Diageo India reported a net sales decline of 13.2%, with its Popular segment falling by 17.7% as a result of ‘taxation-led price increases’. During the first three months of 2022, the company recorded net sales of 25.8% for its ‘Prestige & Above’ segment, boosted by ‘strong Scotch demand’.
Focus on premium
Hina Nagarajan, managing director and CEO of United Spirits, said: “The transaction reflects the continued evolution of the management of the Popular portfolio since 2016, when the company moved to a franchise model in many states, to enable a sharpened focus on ‘Prestige & Above’.
“This is a significant move to reshape our portfolio in service of our publicly stated mission to deliver sustained double-digit profitable top-line growth.”
United Spirits and Inbrew have also entered into a five-year franchise arrangement for 11 other brands, including Bagpiper. As part of this agreement, Inbrew will have the option to buy the brands at a pre-agreed price.
Ravi Deol, chairman of Inbrew, added: “The acquisition of these iconic brands provides Inbrew with a unique platform to extend its ambition of becoming India’s trusted household beverage company.
“These brands have delighted consumers over generations, and we are excited at the prospect of strengthening this legacy. Inbrew will revitalise these brands through expanded distribution, innovation and investments.
“After the acquisition of Molson Coors’ beer business last year, we will now participate in the mainstream spirits category, making Inbrew India’s diverse alcobev player.”
The deal is expected to be completed by the third quarter of 2022.
In March 2022, Diageo India acquired a minority stake in Nao Spirits, producer of gins Greater Than and Hapusa.