United Spirits initiates strategic review of select popular brands

Updated : February 23, 2021 09:53 PM IST

The strategic review is expected to be completed by the end of calendar year 2021.

The company is also likely to do an organisational review of its operating model.

Liquor major United Spirits Ltd (USL) said on Tuesday it is initiating a strategic review of select popular brands. This is part of the company’s continuing the strategy towards long-term profitable growth through premiumising the company’s portfolio. The strategic review is expected to be completed by the end of calendar year 2021.

USL's popular portfolio comprises around 30 brands and the strategic review will focus on approximately half of this portfolio by volume, the company said. However, the review will not include the McDowell’s or Director’s Special trademarks.

Anand Kripalu, managing director and chief executive officer, USL said in an investor call on Tuesday that various outcomes are likely from the review, which could include extension of its franchise model, accelerating some brands through additional investment and even divestment of some brands. The company is also likely to do an organisational review of its operating model.

Also read: Which states have the highest taxes on liquor?

Kripalu added that the company has not made any decisions yet, and will assess all options.

Diageo Spirits, which holds around 56 percent stake in USL will also be part of the review, the company said. Kripalu said in the investor call that India is a highly attractive market for Diageo, and USL is long term and strategic for Diageo.

"This review reinforces USL's and Diageo's commitment to deliver sustainable long-term growth and improved profitability, through a sharpened focus on core popular and Prestige & Above brands, including international brands," Kripalu said in a statement.

In India, USL and Diageo manufacture and sell various brands of whiskey, rum and vodka including Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No.1, Smirnoff and Captain Morgan.

Also read: Delhi govt prepares new excise policy that will increase liquor prices by 50%

The company’s announcement comes after USL posted a 3.6 percent decline in the December quarter. Popular segment net sales declined 6.7 percent, led by a decline of 5.7 percent in priority states, while its Prestige and Above segment net sales declined 0.8 percent.

The company said in a statement at the time that increased consumer prices impacted demand in this price conscious segment and unfavorable State mix further contributed to the decline.

United Spirits initiates strategic review of select popular brands

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