`MH' maker moving to premium brandy; to make whisky too

Tilaknagar Industries Ltd, the maker of Mansion House brandy and other spirits, will expand into premium brandy over the next 18-24 months, followed by other categories like whisky, as expensive alcoholic beverages targeted at affluent consumers continue to outpace mass-market consumption.

Kerala is a key consumer of the `MH' brandy.  The Mumbai-based company plans to “price ladder” or offer its brandy at multiple price points, tapping into popular markets including Karnataka, Kerala, Puducherry, Andhra Pradesh, and Telangana, the chairperson and managing director, Amit Dahanukar, said in an interview. with Mint. These States make up 50-60% of its brandy sales. The category contributes 85% to the company’s topline.

“We would look at expanding the premium and luxury segments because the regular segments are always under pressure due to investments,” he said. “There is also pressure from many States where prices are regulated. When something compelling comes along, we would be open to acquiring more businesses.”

Demand for premium liquor rising

India’s alcoholic beverages companies are estimated to see their revenue expand 8-10% in 2024-25, led by steady demand for beer and a revival in consumption of spirits, according to Investment Information and Credit Rating Agency. The consumer preference for premium products is increasing and many companies turned their focus towards premium spirits after the Covid pandemic ebbed.

ICRA also expects the growth to be supported by the price hikes allowed by a few State governments in the current fiscal. In the first quarter of this financial year, the industry’s revenue rose 9% over a year earlier, while volumes grew 2-4%.

"At least for the next two years, we will see our portfolio growing on similar lines, including introductions at both higher and lower price points in this (brandy) category. But we are open to opportunities as the company is now debt-free.”

MH whisky in Assam

In October, the distiller launched a whisky in Assam. “Right now, it's a targeted investment in a select State, but we will see the response and then decide to scale it further,” he said. “But to target the north of the market, we will need a complete portfolio with whisky.”

The company switched from being a sugar mill to making spirits in the 1980s with the launch of its Mansion House brandy. The rest of the business comes from rum, and a small fraction is contributed by whisky.

“Our Mansion House whisky sits in the most competitive category but it is also the fastest growing and the largest in India,” Dahanukar said. “It's ultra-competitive and growing at 15% CAGR. We do now have some wherewithal to have long-term aspirations in whisky.”

 Andhra Pradesh accounts for about 30% of the sales for Tilaknagar Industries. Across the States going to the polls, retailers are not allowed to pick up more stock than usual to prevent any leakage in the system.

Making profits 

The company reported a net profit of ₹40 crore for the quarter ended June on a revenue from operations of ₹664 crore, according to its filings with the BSE. For the same period in FY24, the company reported a ₹25.7 crore profit and a revenue from operations of ₹640 crore. “We expected H2 to grow strongly. We will end the year on a double-digit growth.”

Tilaknagar Industries invested ₹9.75 crore for a 10% stake in Spaceman Spirits Labs, the makers of craft gin Samsara, in March 2023. In September this year, it increased its stake by a follow-on investment of ₹13 crore, taking its holding to over 20%.

“Craft gins are an emerging category, but it is a crowded space. So instead of organically investing in the brand, we decided to invest in this company,” Mr Dahanukar said. The company will also distribute the products for Spaceman in the southern Indian markets and use its own marketing and distribution network as a royalty arrangement. Almost 70% of Samsara's portfolio is pink gin.

Tilaknagar also acquired a 36.17% stake for ₹8 crore in Goa-based Bartisans, a premium non-alcoholic mixer brand.

(By arrangements with livemint.com)