India: United Spirits to start strategic review of several of its mass-priced brands

United Spirits on February 23 said it is set to start a strategic review of several of its mass-priced brands, excluding the McDowell’s and Director’s Special trademarks, the Times of India reported.

USL has around 30 brands in its ‘popular’ portfolio and the brands that will be reviewed account for half of these in terms of volumes.

While the move is expected to help the Diageo-controlled spirits company chase profitable growth through a premiumization strategy, it could also mean selling off half its portfolio in the segment. Premium brands currently account for around 70% of Diageo’s sales in India pitting the company against French liquor giant Pernod Ricard.

“These could mean brands like Bagpiper, Old Tavern, Hayward’s Fine range, Gold Riband/Blue Riband range, Karmazov vodka, Green Label, Mughal Monarch,” said a senior industry executive. “They have several such brands which are in the popular category, which is primarily the mainstream segment, where the margins are very thin.”

“They have already in the last few years signed franchisee agreements in some states where some of these brands have been let out to local companies against royalty/franchisee fees. This note could mean that they are now exploring to finally sell off some of these brands all together,” he added.

The strategic review is expected to be completed by the end of the 2021 calendar year, the company said in a statement.

“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 and above brands, including international brands,” said Anand Kripalu, MD & CEO at Bengaluru-headquartered USL.

The company has also focused on renovating its brands like McDowell’s No 1 and Royal Challenge.

“The company has set up a separate popular strategic business unit (SBU) to enable a more focused business approach,” said Abneesh Roy, executive VP at Edelweiss Securities. “This strategy will give the company the right platform for future growth.”

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