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Bangalore: Amrut Distilleries Ltd, a 65-year-old liquor maker based in Bangalore, is best known for its single malt Fusion, which was rated the world’s third finest whisky by Jim Murray’s Whisky Bible in 2010. But single malt brands, the first of which was launched by Amrut in 2004, contribute just 3% of the company’s revenue, most of which comes from the so-called Indian made foreign liquor (IMFL). In an interview, managing director Neelakanta Rao Jagdale spoke about the challenges of selling an Indian single malt in the West, the company’s plans to increase distribution of the single malt in India, sales targets and the launch of new “semi-premium" brands. Edited excerpts:

How tough was it to sell an Indian single malt whisky in Western markets, especially in Scotland, which is the home of the single malt?

We started in 2003-04. We had to prove ourselves in the international market that we are a genuine malt-whisky producer—that was a major hurdle we had to cross and it took quite some time. Till 2009-2010 when recognition came with Amrut Fusion being awarded the third best single malt of the year, we had to struggle to get recognition, especially in Scotland. In the Western perception, there had never been a high quality whisky from India. One of the advantages we had was that though the whisky market was not growing much in the West, the single malt category was growing strongly. People were prepared to look into newer malt whiskies, not just Indian whiskies, even Japanese, Welsh, etc.

Which are the main markets for your single malt?

We are currently present in over 20 countries. The biggest markets for us are Canada and the US, Western Europe and Scotland. Eastern Europe will be a good growth market for us. The reception has been very good, but we don’t have enough capacity to meet the demand given the fact that we’re not a very large distiller and we have to comply with the rigid maturation requirements of the countries we’re marketing in.

What’s your sales target for the year and how much does single malt contribute to the company’s sales?

We’ll be doing nearly 200 crore in turnover this year, which will be a growth of over 10% from last year. Amrut single malt will account for roughly 3% of the overall sales. It’s not a volume game, but you’re there at the peak of the pyramid. It will grow to about 5% of our sales over the next two years. Most of our sales come from blended whiskies, brandies and rum. Like any other IMFL player, we have an entire portfolio of economy and semi-premium brands.

Growth in the Indian liquor market has dropped for the second year running. How have you coped with this?

It is a reflection of the GDP (gross domestic product) growth. Partly, the state governments’ pricing policies are also responsible for the slowdown. If the GDP growth comes back to 8-9%, the liquor industry will also bounce back. This year, we took some price increases; our volumes have been stagnant, but we have made it up in value. That happens—when you take a price increase you have to sacrifice some volumes. That’s part of the premiumisation process. You grow, then consolidate and then grow again. And this year has been a year of consolidation for us. Now we have to focus on getting back the volumes.

What’s going to drive Amrut’s growth over the next two-three years?

Wherever we are present, in states like Karnataka, Kerala, Tamil Nadu, we will have to maintain organic growth of 5-7%. If there is a possibility of increased penetration by launching new products, we will look at that.

What new products are being planned?

We will mostly be focusing on launching brands in the semi-premium segments such as blended malt whisky ( 900-1,000 per 750ml bottle), specialty vodka, brandy and rums. We have just launched a new rum in Bangalore called Two Indies, which is a genuine non-flavoured rum. It has a mix of Caribbean components and Indian components. It is mostly meant for the international markets and we have started shipping it to the US. We also recently launched a Silver edition of our MaQintosh whisky. It is a blend of well-matured grain whiskies and our single-malt whiskies. It sells (for) about 800 per bottle in Bangalore.

In vodka, we are looking at launching one flavoured vodka brand. We have done some work on it and we will launch it within a couple of years. We have also revived our grape-based Napoleon brandy. We have changed the packaging, imagery and it is aged six years now versus three years before. It is also priced at 800 per bottle.

The brandy segment looks interesting right now. But apart from these, we are not looking at launching more products. We have a handful and we are not a big company which can spend a lot of marketing money.

Amrut is a respected brand, but people in India complain that it is not easily available. Any plans to increase distribution?

Amrut was designed for international markets. We didn’t expect the Indian market to respond so vigorously. Clearly, our presence has to increase. We are only in Karnataka presently and mostly in Bangalore. We will be expanding into Mumbai in the coming financial year. Delhi is a difficult market because of the quantity restrictions and other complications. But we will be making it available in Chandigarh next year, which is close to Delhi. We will also be improving our distribution in Bangalore. We increased production and our availability in Bangalore is far better than what it used to be last year. In international markets, we want to improve penetration in the countries we are already present in.

How will you fund your growth?

Our own reserves and accruals are enough to grow for now. If there is a need to resort to debt, we will do it. But right now we have no long-term debt.

Are you open to a stake sale?

We have had no compulsion to do it. If we get an opportunity to divest some brand which may not be a focus area for us, like a brand in the cheap/economy segment, we may do it. This happens to every liquor company. But we are not looking at selling a stake in the company.

What are your favourite whiskies?

Apart from Amrut, of course, I like the Lagavulin 18, that’s a lovely whisky. There are a lot of other whiskies coming into the market which I like. Some of the rye whiskies from the US are fabulous. Sazerac rye whisky is one. It is a different experience altogether to drink a rye whiskey.

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