Alcobev in India
TABLE OF CONTENTS
SR No.
CONTENTS
PAGE NO.
1 Industry Overview 6
2 Product Segments
19
3 Beer
4 Wine 24
5 IMFL 28
6 Company – United Spirits 36
7 Financials 47
8 Conclusion 50
9 Bibliography 51
EXECUTIVE SUMMARY
The alcoholic beverages industry in India is at an inflexion point. Given the favorable demographics, higher bargaining power following industry consolidation and favorable change in operating environment, the party has just begun. Robust volume growth is expected across segments - IMFL (Indian made foreign liquor), beer and wine. Given the strong visibility for earnings growth, the valuations are expected to further move up.
India is best placed demographically, with nearly 485m people in the drinking age. With growing discretionary income of young consumers and increasing consumption of lifestyle products, demand for alcoholic beverages is set to rise.
The top-2 players account for over 70% market share in IMFL and beer, the top player alone accounts for about 70% market share in the wine segment. Consolidation, especially in the IMFL segment, has enhanced the industry's bargaining power.
The industry is still characterized by strong entry barriers like ban on advertising, duty on inter-state movement of products, licensing and very high taxes. This works to the advantage of existing players.
United Spirits is the new entity born after the consolidation of UB Goup's IMFL operations under the erstwhile McDowell & Co. The company acquired its archrival, Shaw Wallace and now controls over 59% of India's IMFL market. The retail sales of United Spirits' top-4 brands are US$1.5b and these brands account for 46% of the company's volumes. Its total retail sales are estimated at US$2.7-3b, while the enterprise value of the company is US$2b, valuing the company at less than 1x retail sales. INDUSTRY OVERVIEW
Demographics favorable to consumption of alcoholic beverages
India's per capita consumption of alcoholic
SR No.
CONTENTS
PAGE NO.
1 Industry Overview 6
2 Product Segments
19
3 Beer
4 Wine 24
5 IMFL 28
6 Company – United Spirits 36
7 Financials 47
8 Conclusion 50
9 Bibliography 51
EXECUTIVE SUMMARY
The alcoholic beverages industry in India is at an inflexion point. Given the favorable demographics, higher bargaining power following industry consolidation and favorable change in operating environment, the party has just begun. Robust volume growth is expected across segments - IMFL (Indian made foreign liquor), beer and wine. Given the strong visibility for earnings growth, the valuations are expected to further move up.
India is best placed demographically, with nearly 485m people in the drinking age. With growing discretionary income of young consumers and increasing consumption of lifestyle products, demand for alcoholic beverages is set to rise.
The top-2 players account for over 70% market share in IMFL and beer, the top player alone accounts for about 70% market share in the wine segment. Consolidation, especially in the IMFL segment, has enhanced the industry's bargaining power.
The industry is still characterized by strong entry barriers like ban on advertising, duty on inter-state movement of products, licensing and very high taxes. This works to the advantage of existing players.
United Spirits is the new entity born after the consolidation of UB Goup's IMFL operations under the erstwhile McDowell & Co. The company acquired its archrival, Shaw Wallace and now controls over 59% of India's IMFL market. The retail sales of United Spirits' top-4 brands are US$1.5b and these brands account for 46% of the company's volumes. Its total retail sales are estimated at US$2.7-3b, while the enterprise value of the company is US$2b, valuing the company at less than 1x retail sales. INDUSTRY OVERVIEW
Demographics favorable to consumption of alcoholic beverages
India's per capita consumption of alcoholic