Global Scenario• Legally consumed in most countries, and over 100 countries have laws regulating theirproduction, sale, and consumption• Minimum drinking age varies between 16 and 25 years, depending upon the countryand the type of drink. Most nations set it at 18 years of age• The 216 billion dollorsglobal spirits market grew at its fastest pace in a decade at 9.75%during the same period.• Nearly half of the top 100 liquor brands in 2010 were from Asia
Indian Scenario• About 19 million Indians enter the legal drinking age in the country every year• The Indian spirits market grew 16% from a year ago to 234.40 million cases in2010, IWSR data showed• The Indian market for alcohol — mostly spirits and beer, as well as wine — totaled $14billion last year, and was one of the fastest-growing alcohol markets in the world.• Over the next five years, the Indian market for alcohol is projected to grow at 10% a year• Hard liquor is far more popular than beer and wine, with spirits accounting for about70% of the market.• India is the largest whiskey market in the world, so American whiskey producers figuretheyve got a head start in India compared to other new markets• The wine market has grown from virtually zero 10 years ago to $253 million lastyear, and it is expected to more than double to $630 million by 2013.
The Market for Beverage AlcoholRegulatory environment :• The Indian market is highly regulated, highly restricted and highly taxed.• Licensing requirement exists for Raw material procurement, Stocking ofraw material, Production, Inter-state movement, Retailing and Distribution.• Controls also exist on Brand entry, Advertising, Distribution & Pricing.These regulatory hurdles constitute an entrybarrier to the industry
The Indian MarketRe-distribution structure –• Government market (65%) –State government is the soledistributor• Auction market (16%) – State government auctions geographicalterritories which has led to monopolies / cartels• Free market (19%) – Through trade licenses• Bargaining power in the distribution network is commanded byplayers with premium brands, large volume base and productrangeThe UB Group enjoys a unique advantage as theLeader in both Spirits and Beer Segments
The Indian Market•Regulatory hurdles constitute an entry barrier to the industry•The alcohol distribution structure is 65% state governmentcontrolled•UB group with its premium brands,large volume base and productrange has better bargaining power with the distribution networkMarket category and consumption•Whisky constitutes 54% ,followed by rum at 27%•Youngsters seeking western lifestyle typically begin by drinking beerand move up to spirits .The brand positioning of UB spirit brands aredesigned to attract these upwardly mobile and aspirationalconsumers.
T o bring all Spirits business together and create“United Spirits”“Alcohol may be mans worst enemy, but the bible says love your enemy.”
To be the recognized leader in our target markets.To be the preferred employer wherever we operate.To recognize the value of our human assets.To be the partner of choice for customers, suppliers, andother creators of innovative conceptsTo be increase the long-term value of our Group for thebenefit of our shareholders.To focus on assuming leadership in all our target marketsTo be a major contributor to our National Economy andtake full advantage of our strong resource base.“Alcohol may be mans worst enemy, but the bible says love your enemy.”
Quality leadership is vital to the long-term success ofthe UB Group inBuilding quality into our workplace, products andserviceThe UB Group will work to provide products andservices that always meet or exceed expectationsWill create an environment in which each employeecan contribute skills, talents and ideas to a never-ending process of improvement“Alcohol may be mans worst enemy, but the bible says love your enemy.”
Introduction of United Spirits Ltd. India‘s Largest Beverage Alcohol Group and The Largest in the World Total worth of its spirits division brands is over $ 5 billion US Dollars Market Leader with over 59% market share of India Spirits Business 114 million cases in the year 2010-11 Portfolio comprises of a wide range of Brands including 21 Millionaire Brands Won the most prestigious awards for flavors, ranging from Mondial toInternationalWine and Spirit Competition (IWSC) to International Taste & Quality Institute(ITQI). Innovator in the industryUSL has a global footprint with exports to over 37 countries. It has a sizeablepresence in India
Introduction of United Spirits Ltd USL‘s Wine Business in India operates through two companies – United VintnersLimited and Four Seasons Wines Limited. UVL imports wines from all over the world to offer a portfolio of wines of differentorigin, varietals, styles and price points. The current portfolio comprises a selection of some exquisite ‗New world‘ & ‗Oldworld‘ wines from New Zealand, Australia, Portugal, South Africa and France.
History of United Spirits“Beer is proof that God loves us and wants us to be happy.”1857 - Mr. Thomas Leishman formed United BreweriesLtd.1947 - Mr. Vittal Mallya became the first Chairmanof Indian Origin.1974 - International beer exports began to Aden andMiddle East.1983 - Dr. Vijay Mallya became the Chairman of theUB group.
Milestoneso 1999 :- United Spirits (UNITDSPR) is the spirits division of the UB Group. It was originally incorporated as McDowell & Co. in 1999. On the amalgamation of eight spirit companies into the company includingHerbertsons,o 2002 :- McDowell Alcobev became the wholly owned subsidiary of the company. UB group gave a new look to No.1 McDowells, its flagship in the prestigesegment of the whisky market. Forges alliances with US, Australia and French Cos. for bulk wine import. Phipson Distilley became a wholly owned subsidiary of McDowell & Co. Acquired 85% equity stake of Truimph Distilleries & Vinters Pvt Ltd.
Milestoneso 2003 :- Rolled out its new Whisky brand, Derby Special Whisky in Andhra PradeshMarket. Forged alliance with Newzealand Co called Independent Liquor to pursue anagressive growth strategy in the ready-to-drink segment. No 1 Celebration rum crossed sales over 3 million during the year. McDowell Alcobev made open offer to acquire 25% stake in Intertia Industries. McDowell and Company soars 9.18% to Rs.49.35 on offer for Herbertsons. McDowell & Phipson made a counter offer to buy out 45.2 % equity inHerbertsons Ltd., priced at Rs.200 a share. McDowell unleash new Vodkao 2004 :- McDowell unveils `Signature` in TN market
History of United Spiritso 2005:-Triumph Distillers & Vintnersgot, and Shaw Wallace, the company got its currentnameo 2006 :-United Spirits acquired of Bouvet Ladubay SAS, a Company in France engaged inmanufacture of wines. This acquisition has been made by Asian Opportunities andInvestments Limited, a wholly owned subsidiary of USL in Mauritius. The acquisitioninvolved the purchase of entire share capital of Bouvet Ladubay SAS for aconsideration of Euro 14.75 Million.o 2007:- United Spirits Limited, the flagship of The UB Group acquired a hundred percent ofWhyte & Mackay for £595m. It is one of the major acquisitions which Vijay Mallya.o 2008 :-United Spirits Limited ranked the world‘s 3rd largest spirits company unveiledBagpiper Whisky and McDowell‘s Celebration Rum, in a revolutionary ―bullet‖ pack of60 ML and 90 ML respectively, creating the biggest packaging innovation for thespirits industry.
History of United Spirits Ltd.o 2008:- Its board had approved the merger of Balaji Distilleries, into USL in an all stock dealwith effect from Apr. 01, 2009.o 2009:- United Spirits Ltd sells 90 million cases in 2008-2009; Narrows the gap to the No 1position in the global spirits market. A special initiative by United Spirits to modernize and enhance consumerexperience, this is multi-brand Spiritz & More experience store in the city is theupgraded version of Wine Supply Depot, one of the oldest spirits retail stores inBangalore. Spiritz & More currently has 12 outlets in Bangalore and another 19elsewhere in the country.o 2010:-Merger of Balaji Distilleries Ltd into United Spirits Ltd ApprovedThey created dimension in liquor retailing with the launch of Spiritz and More @ Houseof Spirits- India‘s largest Hypermall.
Critical Success FactorsCore CompetenciesFocus on Brand Imagery• USL has successfully positioned different brands on different platformsrelevant to different consumers, different need states• USL has appropriated some of the category values including‘refreshment’Brand Association• Have sponsored many concerts and Live events• Owns a team in IPL• McDowell Pump in Whopping Rs 28 Cr for Indian Derby• United Soccer Leagues has entered into a partnership agreement withEnterprise Rent-A-Car which will allow USL teams to receive the bestavailable rental rates from Enterprise..
Critical Success FactorsCore Competencies• Focus on Value to Consumer.• Develop Synergies Through Mergers and Acquisitions.•Dominance at point of purchase / consumption through•Visibility• Innovation•In product•In packaging•In Promotion•Volume growth•Implementation of price increase in key states•Reduction in cost of sales driven by bottle cost
New Product InitiativesTo achieve the national roll out of McDowells’ Diet Mate whisky (using aproprietary and US patented technology from the Group ResearchFoundation – VMSRF)Launching of uniqueDiet Vodka (usinganother US patentedtechnology from VMSRF)
New Marketing Initiatives- To pursue the launch of existing products ininnovative packaging variants (tetra packs, pre-formed sachets, etc) and there by reduce thepackaging cost as well as the price point toconsumers in addition to the convenience of thepack itself .Pre-formedSachets
Whisky Brandy Rum Vodka & Gin• Bagpiper• McDowell’s No.1• Director’s Special• Old Tavern• Haywards• McDowell’s GreenLabel• Gold Riband• Royal Challenge• DSP Black• Signature• McDowell’s No.1• Honey Bee• John Ex-Shaw•Celebration Rum• Old Cask Rum• Old Adventurer Rum• White Mischief• Romanov• Blue Riband
USL PERFORMANCE HIGHLIGHTSUSL Brands grew 14%World’s Top 100 Spirits Brands grew 1%*18 of the Top 25 global Premium brands lost groundSmirnoff, Bacardi, Johnnie Walker, Absolut collectively lost 4 million cases*USL is one of two companies with more than 10 brands featuring in the Top 100brand listing*
Particulars Total Number CommentsBrands 140 19 of these are millionairebrands and there are about151 brand variantsSKU’s 2992 Distillery-State-Brand-PackcombinationsDistillery/Bottling Plants 79 30 Owned Manufacturingfacilities;49 contractmanufacturing unitsDepots 48 Break-bulk points for finishedgoods distributionRetail Outlets 64000 Inclusive of both on and offpremise outlets
•USL has a global footprint with exports to over 37 countries. It has a sizeable presencein India•with distilleries and sales offices all across the country, and a committed team of over7500 people dedicated to the fulfillment of the companys mission.•It has established manufacturing and bottling plants in every state of India.•In addition, to deliver its products to customers located anywhere in India, USL hasestablished a robust distribution network covering the whole country.•USL acquired Balaji Distilleries Limited in 2008. This acquisition gave the company thestrategic advantage to consolidate the Group’s leadership position in a critical, large andgrowing State like Tamil Nadu.•For its annual production requirement, the company has already entered into long termcontractual agreement with local farmers for 500 acres and will enter into contractualagreements for a further 2000 acres of vineyards.•Besides, the company will also share its technical expertise with the local farmers ofBaramati and help in viticulture.Geographical Presence
ACQUISITION•Almost all acquisitions have been very successful for the Group.•Acquisitions.•Alcoholic Drinks: Acquired McDowell, Shaw-Wallace,•Whyte and MacKay, etc.EXPANSION•Expansion policies have rapidly changed over time.•The Group expanded by acquisition, innovation in products and entering new markets.•Currently, it is more focused on introducing more products in the existing markets andGlobalization- entered Europe, Africa.DIVERSIFICATIONConcentric diversification is one of the major strategies of the Group.Beer, Whisky, etc.Conglomerate Diversification is not a part of their practices at presently.
Strategic Themes Metrics & ObjectivesIncrease profitability to bringUSL in line with other FMCGcompanies in IndiaValue growth to lead volume growthFocus on increasing marketshare in premium segmentsManaging market sharefor profitability in othersegmentsEnhance MS in scotch andpremium whisky segmentsIncrease Market share
Strategic Themes Metrics & ObjectivesTo increase exportsIndian Whisky to be exported in bulk toAfrican Countries for packaging inSachets.To build 3 large multi sub strata plants enablingmanufacture and export of grain based whisky toUS and EuropeEnter Wines SegmentAcquisition of International Brands andViticulture technology.Enhance existing Winery.Introduce Balance Scorecard.
Statutory warning: Consuming alcoholic drinks is injurious to health.