Amrut Distilleries to take its home-grown liquor to new markets this year
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Bengaluru: Boutique home-grown liquor maker Amrut Distilleries Pvt. Ltd will expand to new geographies overseas as well as within India this year.
The Bengaluru-based firm, which began operations a year after India’s independence, currently sells its brands in 42 countries. Within India, its products, including the popular Amrut single malt whiskies, are available in 13 states and Union Territories.
This year the plan is to take the blends to newer markets such as Andhra Pradesh, Telangana and West Bengal in India and Poland, Czech Republic, Nigeria, Ghana, Brazil and Argentina abroad, said Amrut’s executive director Rakshit Jagdale.
Amrut currently sells only two of its many brands in international markets—single malt whiskies and the Two Indies pale rum. The company is launching a dark rum under its Two Indies brand and a new natural, matured jaggery rum brand this year.
While the Two Indies dark rum will be sold overseas too, it is meant mostly for the domestic market. The premium natural jaggery rum will only be sold in international markets. It also plans to take its MaQintosh brand of blended whiskies global this year, Jagdale said.
“Indian firms either have to be backed by heritage and legacy or have a unique selling proposition to succeed abroad,” said Wazir Advisors’ founder and managing director Harminder Sahni. Nevertheless, Sahni said taking more products abroad is a good thing for any Indian consumer company.
Amrut is also planning to double distilling capacity for its signature single malts. It plans to commission a new plant, to be built at the same site as its existing distillery in Bengaluru, in September or October. But considering it takes around five or six years for whisky to mature, the firm will benefit from this only over the long term.
Still these expansions—of geographies, products and production—are crucial as growth in the Indian liquor industry has slowed and is expected to stay muted over the coming year. Even with the expansion plans, Amrut’s revenue growth is expected to slow to around 3.5% in the 2017-18 fiscal year after clocking 10% in FY2016-17.
“Growing at about 10% is okay. But sustaining the (revenue) growth this year is not possible. We’ll be touching Rs290 crore this fiscal and I’ll be happy if we do Rs300 crore next fiscal,” said Jagdale. Amrut recorded net sales of Rs265 crore in FY2014-15.
The global alcoholic beverage market will grow more moderately than previously seen, slowing from a compounded annual growth rate of 1% between 2010 and 2015 to 0.6% between 2015 and 2021, according to forecast data from the International Wine and Spirit Research (IWSR).
Jagdale was of a similar view. “Over the past five years, especially after 2011-12, the liquor industry growth has slipped drastically. All the markets have reached their saturation points as far as growth and volumes are concerned. Value-wise, growth can come if we look at premiumisation of our portfolio.”
That’s exactly what the company is focusing on by launching new premium brands and taking existing ones to newer locales, even though most of its revenue currently comes from the regular and deluxe price segments.
Amrut expects the premium and super premium segments to account for 35% of total revenue over the long run. While around 70% of overall revenue currently comes from domestic consumption and 30% from international sales, it expects the mix to change to 60-40 over the next four to five years.