3. Global Scenario
• Legally consumed in most countries, and over 100 countries have laws regulating their
production, sale, and consumption
• Minimum drinking age varies between 16 and 25 years, depending upon the country
and 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
5. 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 in
2010, IWSR data showed
• The Indian market for alcohol — mostly spirits and beer, as well as wine — totaled $14
billion 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 about
70% of the market.
• India is the largest whiskey market in the world, so American whiskey producers figure
they've 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 last
year, and it is expected to more than double to $630 million by 2013.
6. The Market for Beverage Alcohol
Regulatory environment :
• The Indian market is highly regulated, highly restricted and highly taxed.
• Licensing requirement exists for Raw material procurement, Stocking of
raw material, Production, Inter-state movement, Retailing and Distribution.
• Controls also exist on Brand entry, Advertising, Distribution & Pricing.
These regulatory hurdles constitute an entry
barrier to the industry
7. The Indian Market
Re-distribution structure –
• Government market (65%) –State government is the sole
distributor
• Auction market (16%) – State government auctions geographical
territories which has led to monopolies / cartels
• Free market (19%) – Through trade licenses
• Bargaining power in the distribution network is commanded by
players with premium brands, large volume base and product
range
The UB Group enjoys a unique advantage as the
Leader in both Spirits and Beer Segments
8. The Indian Market
•Regulatory hurdles constitute an entry barrier to the industry
•The alcohol distribution structure is 65% state government
controlled
•UB group with its premium brands,large volume base and product
range has better bargaining power with the distribution network
Market category and consumption
•Whisky constitutes 54% ,followed by rum at 27%
•Youngsters seeking western lifestyle typically begin by drinking beer
and move up to spirits .The brand positioning of UB spirit brands are
designed to attract these upwardly mobile and aspirational
consumers.
9. T o bring all Spirits business together and create
“United Spirits”
“Alcohol may be man's worst enemy, but the bible says love your enemy.”
10. 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, and
other creators of innovative concepts
To be increase the long-term value of our Group for the
benefit of our shareholders.
To focus on assuming leadership in all our target markets
To be a major contributor to our National Economy and
take full advantage of our strong resource base.
“Alcohol may be man's worst enemy, but the bible says love your enemy.”
11. Quality leadership is vital to the long-term success of
the UB Group in
Building quality into our workplace, products and
service
The UB Group will work to provide products and
services that always meet or exceed expectations
Will create an environment in which each employee
can contribute skills, talents and ideas to a never-
ending process of improvement
“Alcohol may be man's worst enemy, but the bible says love your enemy.”
12. 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 to
International
Wine and Spirit Competition (IWSC) to International Taste & Quality Institute
(ITQI).
Innovator in the industry
USL has a global footprint with exports to over 37 countries. It has a sizeable
presence in India
13. Introduction of United Spirits Ltd
USL‘s Wine Business in India operates through two companies – United Vintners
Limited and Four Seasons Wines Limited.
UVL imports wines from all over the world to offer a portfolio of wines of different
origin, varietals, styles and price points.
The current portfolio comprises a selection of some exquisite ‗New world‘ & ‗Old
world‘ wines from New Zealand, Australia, Portugal, South Africa and France.
14. History of United Spirits
“Beer is proof that God loves us and wants us to be happy.”
1857 - Mr. Thomas Leishman formed United Breweries
Ltd.
1947 - Mr. Vittal Mallya became the first Chairman
of Indian Origin.
1974 - International beer exports began to Aden and
Middle East.
1983 - Dr. Vijay Mallya became the Chairman of the
UB group.
15. Milestones
o 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 including
Herbertsons,
o 2002 :-
McDowell Alcobev became the wholly owned subsidiary of the company.
UB group gave a new look to No.1 McDowell's, its flagship in the prestige
segment 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.
16. Milestones
o 2003 :-
Rolled out its new Whisky brand, 'Derby Special Whisky' in Andhra Pradesh
Market.
Forged alliance with Newzealand Co called Independent Liquor to pursue an
agressive 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 in
Herbertsons Ltd., priced at Rs.200 a share.
McDowell unleash new Vodka
o 2004 :-
McDowell unveils `Signature` in TN market
17. History of United Spirits
o 2005:-
Triumph Distillers & Vintnersgot, and Shaw Wallace, the company got its current
name
o 2006 :-
United Spirits acquired of Bouvet Ladubay SAS, a Company in France engaged in
manufacture of wines. This acquisition has been made by Asian Opportunities and
Investments Limited, a wholly owned subsidiary of USL in Mauritius. The acquisition
involved the purchase of entire share capital of Bouvet Ladubay SAS for a
consideration of Euro 14.75 Million.
o 2007:-
United Spirits Limited, the flagship of The UB Group acquired a hundred percent of
Whyte & 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 unveiled
Bagpiper Whisky and McDowell‘s Celebration Rum, in a revolutionary ―bullet‖ pack of
60 ML and 90 ML respectively, creating the biggest packaging innovation for the
spirits industry.
18. History of United Spirits Ltd.
o 2008:-
Its board had approved the merger of Balaji Distilleries, into USL in an all stock deal
with effect from Apr. 01, 2009.
o 2009:-
United Spirits Ltd sells 90 million cases in 2008-2009; Narrows the gap to the No 1
position in the global spirits market.
A special initiative by United Spirits to modernize and enhance consumer
experience, this is multi-brand Spiritz & More experience store in the city is the
upgraded version of Wine Supply Depot, one of the oldest spirits retail stores in
Bangalore. Spiritz & More currently has 12 outlets in Bangalore and another 19
elsewhere in the country.
o 2010:-
Merger of Balaji Distilleries Ltd into United Spirits Ltd Approved
They created dimension in liquor retailing with the launch of Spiritz and More @ House
of Spirits- India‘s largest Hypermall.
19. Critical Success Factors
Core Competencies
Focus on Brand Imagery
• USL has successfully positioned different brands on different platforms
relevant 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 with
Enterprise Rent-A-Car which will allow USL teams to receive the best
available rental rates from Enterprise..
20.
21.
22. Critical Success Factors
Core 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
23. New Product Initiatives
To achieve the national roll out of McDowells’ Diet Mate whisky (using a
proprietary and US patented technology from the Group Research
Foundation – VMSRF)
Launching of unique
Diet Vodka (using
another US patented
technology from VMSRF)
24. New Marketing Initiatives
- To pursue the launch of existing products in
innovative packaging variants (tetra packs, pre-
formed sachets, etc) and there by reduce the
packaging cost as well as the price point to
consumers in addition to the convenience of the
pack itself .
Pre-formed
Sachets
28. Whisky Brandy Rum Vodka & Gin
• Bagpiper
• McDowell’s No.1
• Director’s Special
• Old Tavern
• Haywards
• McDowell’s Green
Label
• 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
29. USL PERFORMANCE HIGHLIGHTS
USL Brands grew 14%
World’s Top 100 Spirits Brands grew 1%*
18 of the Top 25 global Premium brands lost ground
Smirnoff, Bacardi, Johnnie Walker, Absolut collectively lost 4 million cases*
USL is one of two companies with more than 10 brands featuring in the Top 100
brand listing*
32. Particulars Total Number Comments
Brands 140 19 of these are millionaire
brands and there are about
151 brand variants
SKU’s 2992 Distillery-State-Brand-Pack
combinations
Distillery/Bottling Plants 79 30 Owned Manufacturing
facilities;49 contract
manufacturing units
Depots 48 Break-bulk points for finished
goods distribution
Retail Outlets 64000 Inclusive of both on and off
premise outlets
33. •USL has a global footprint with exports to over 37 countries. It has a sizeable presence
in India
•with distilleries and sales offices all across the country, and a committed team of over
7500 people dedicated to the fulfillment of the company's 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 has
established a robust distribution network covering the whole country.
•USL acquired Balaji Distilleries Limited in 2008. This acquisition gave the company the
strategic advantage to consolidate the Group’s leadership position in a critical, large and
growing State like Tamil Nadu.
•For its annual production requirement, the company has already entered into long term
contractual agreement with local farmers for 500 acres and will enter into contractual
agreements for a further 2000 acres of vineyards.
•Besides, the company will also share its technical expertise with the local farmers of
Baramati and help in viticulture.
Geographical Presence
36. Ratios 2007 2008 2009 2010 2011
Gross Profit Ratio% 12.63 18.38 14.87 15.42 14.03
Net Profit% 17.81 9.82 7.22 7.59 6
ROCE 15.37 18.9 12.56 9.39 10.87
Return on Networth 36.81 15.48 9.56 7.91 7.55
Current Ratio 1.83 1.53 1.22 2.47 5.34
Debt Equity Ratio 1.11 0.58 0.62 0.73 0.71
Financial Charges Coverage RATIO 3.8 4.72 3.33 2.6 2.47
Total Assets Turnover Ratio 0.98 0.99 0.81 0.59 0.73
Debtors Turnover Ratio 8.43 8.19 7.57 6.12 6.68
37. Competition (in crores)
Particulars USL Radico Khaitan
Sales 12837 1742.31
Operating Profit 940.88 149.01
EBITDA 1032.1 160.13
(per Share)
Particulars USL Radico Khaitan
EPS % 29.47 5.49
BOOK VALUE PER SHARE 390.21 49.14
Dividend per share % 25 35
38. Competition
Ratios USL Radico Khaitan
Gross Profit Ratio% 14.03 12.23
Net Profit% 6 7.22
ROCE 10.87 11.63
Return on Networth 7.55 11.17
Current Ratio 5.34 3.58
Debt Equity Ratio 0.71 0.75
Financial Charges Coverage RATIO 2.47 4.77
Total Assets Turnover Ratio 0.73 0.87
Debtors Turnover Ratio 6.68 3.59
40. Potential Entrants
Barrier To Entry-customer
loyalty, high setup costs.
Industry Competitors
Strong Image, Brand Loyalty, and
Innovative R& D
Buyers
Retailers Power
increasing
Suppliers
Global Economies
Of scale keep
supplier prices
low
Substitutes
Other emerging brands
45. 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 and
Globalization- entered Europe, Africa.
DIVERSIFICATION
Concentric diversification is one of the major strategies of the Group.Beer, Whisky, etc.
Conglomerate Diversification is not a part of their practices at presently.
47. Strategic Themes Metrics & Objectives
Increase profitability to bring
USL in line with other FMCG
companies in India
Value growth to lead volume growth
Focus on increasing market
share in premium segments
Managing market share
for profitability in other
segments
Enhance MS in scotch and
premium whisky segments
Increase Market share
48. Strategic Themes Metrics & Objectives
To increase exports
Indian Whisky to be exported in bulk to
African Countries for packaging in
Sachets.
To build 3 large multi sub strata plants enabling
manufacture and export of grain based whisky to
US and Europe
Enter Wines Segment
Acquisition of International Brands and
Viticulture technology.
Enhance existing Winery.
Introduce Balance Scorecard.
