This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
United Spirits pauses sales in Indian states
By Nicola CarruthersDiageo’s United Spirits arm has temporarily suspended sales of several brands in certain Indian states amid ongoing price discussions with government authorities.
United Spirits, Diageo’s Indian subsidiary, did not confirm which brands it had stopped sales of, or which states.
A Diageo spokesperson said: “We are committed to delivering sustainable long-term growth and stakeholder value. We have temporarily suspended supplies of a few imported brands in some states due to ongoing price discussions.
“We are working closely with state governments through evidence-based dialogue on price advocacy, and are hopeful of positive outcomes very soon.”
Bobby Verghese, consumer analyst at Global Data, said the challenge for United Spirits was to “convince state authorities to link alcohol price caps with inflation levels”.
Verghese noted that the rise in prices of raw materials and fuel, as a result of Russia’s invasion of Ukraine, had “eroded” Diageo’s margins since March 2022.
“United Spirits’ stand-off with the state authorities is likely to be short-lived, as a prolonged shortage of stocks of its popular brands can compel the retailers, food service operators, and consumers to switch to competitors, such as Pernod Ricard and Bacardi,” Verghese explained.
He said Diageo’s “bold move” to stop sales will “raise the trumpet call for contemporising India’s outdated liquor regulations”. Each state in India sets its own laws for alcohol.
Indian spirits market to reach US$49.6 billion
“This is pivotal for the success of Diageo in its premium-play ‘long game’ in the Indian spirits market, which Global Data forecasts will grow from US$41.9 billion in 2021 to US$49.6 billion by 2026,” Verghese added.
The move follows United Spirits’ recent sale of its ‘Popular’ business of 32 brands to Inbrew Beverages for approximately 8.2bn rupees (US$105.7m).
The deal, which excludes Indian whisky McDowell’s, was made to allow the company to focus on its ‘Prestige & Above’ portfolio.
The sale included Indian whiskies Haywards and Old Tavern, White Mischief vodka, Honey Bee brandy, Green Label whisky and vodka-based spirit drink Romanov.
Verghese added: “Despite the divestment, United Spirits retains an iconic range of Indian-made foreign liquor (IMFL) brands, including Johnnie Walker, Vat 69, Black & White, Smirnoff, Cîroc, McDowell’s, and Director’s Special.
“With this arsenal, United Spirits will be able to compete in the lucrative premium and super-premium spirits market.
“As the economy recovers from the Covid-19 impact, this premium-plus IMFL segment is on the rebound, with 29% of Indian respondents in Global Data’s Q2 2022 Consumer Survey affirming that their spending on spirits was quite/very high in the last three months (April to June 2022).”
According to Global Data, Diageo and its United Spirits division had a 29% volume share of the 3.3bn-litre Indian spirits market in 2020.
In March 2022, Diageo India acquired a minority stake in Nao Spirits, producer of gins Greater Than and Hapusa.