Amrut: Investors want to ride single malt wave

Amrut Distilleries has seen investment interests from many but it has not considered to tinker with shareholding at a time when Indian single malt whiskey business is on an upswing amid a premiumisation drive in the country.

Amrut has seen interests from many investors in recent times, Rakshit N. Jagdale, managing director, Amrut Distillers, told ET Online, without revealing further details. The company also hasn’t considered to tap into the markets with D-Street listing as of now but the aim remains to increase exports and grab larger market share.

The single malt whisky accounts for about 25% to 26% of Rs 500 crore annual turnover now and the share of this luxury category is expected to account for 35-40% of total turnover in five years, Jagdale added.

Indian single malt from global biggies. A worry?

Indian single malts have cornered a share of around 53% of total sales in 2023, according to early estimates by industry body Confederation of Indian Alcoholic Beverage Companies (CIABC). Out of the approximately 675,000 cases (each containing nine liters) of single malts sold in India last year, Indian-origin producers accounted for around 345,000 cases, with Scottish and other producers accounting for the remaining 330,000 cases.

While desi single malts are alluring to consumers increasingly, global biggies are now also launching local brands. Pernod Ricard launched Longitude 77 an Diageo launched Godawan to name a few.

However, Jagdale is unfettered by the global biggies’ play in this market and thinks this will only help the industry to grow and it is a positive move.

“The very fact that both Diageo and Pernod have entered the Indian Single malt whisky space speaks volumes about this category. We look at it positively wherein the Indian SM category will grow robustly,” he added. “What we have witnessed is that consumers are moving towards consuming quality alcohol rather than quantity.”

What this shows is the rising demand for Indian single malt whiskey and the need to serve that demand. This shows how popular the Indian single malt has become, which is only a bullish trend for desi companies such as ours who have crafted unique products and we have served the market in this category for two decades Jagdale said, adding the entry of global companies is also an opportunity for the local firms.

Say Cheers: Celebrations to grow louder

“The category is growing and it will continuously grow globally. We are able to compete today with scotch, Irish or even Japanese whiskey, because Indian single malt whisky is now recognised for the quality,” the official said.

Jagdale also said there is enough headroom for the single malt business to grow and the market for Indian single malt in India is growing at 12% year on year.

India’s rising wealth and shift in choice for premium and quality products are now expected to further help the category grow, Jagdale said.

Rising income levels may lead to increase in sales. The growth potentila for alcobev majors in India is phenominal. There has been growth in both exports and imports of alcobev products. Our current exports of single malt whisky stand at Rs 35 crore annually and this will further grow.

According to ICRA, a credit rating agency, the Indian alcohol beverages industry is set for enhanced margins and increased sales in the fiscal year 2025.

ICRA forecasts a revenue growth of 8-10% for its selected domestic alcohol beverages (alcobev) companies in FY2025. Indian made foreign liquor (IMFL) companies are expected to experience revenue growth of 11-13%, fueled by a growing preference for premium products and a volume increase of approximately 3-5%.

Amrut & Indian single malt’s fight with the Scotch

Amrut, the producer of the renowned single malt, has garnered global acclaim and awards for its namesake product. This success has inspired other Indian brands to strive for greater competition and growth.

In 2022, Indian and Scotch brands engaged in a direct competition, with the former selling approximately 281,000 cases, reflecting a 2.4 percent increase in sales, while the latter sold 296,000 cases, marking a significant 35 percent increase in sales, according to data accessed by TOI.

Among the top-selling offerings in 2022, two were from Amrut, surpassing Glenlivet, followed by Paul John. Amrut Fusion recorded sales of 99,000 cases, while Amrut Amalgam reached 94,000 cases.

The challenges, or opportunities?

However, the alcohol business in India has its challenges with varied state tax rates and also the weather hindrance.

India’s climate presents a unique challenge for desi single malt compared to Scottish single malt: the angel’s share. This term refers to the alcohol that evaporates during maturation and aging in wooden casks before becoming whisky. Legend in the spirits industry suggests that “angels come and drink their share of alcohol” as it matures in casks stored in dark cellars. This discrepancy has become a contentious issue in the negotiations between India and the UK for a free-trade agreement.

However, Amrut believes that one will have to work with what you have and turn around the best possible, while they also referred to differential state taxes existing even for the US markets.

“Indian Alcobev market regulation is federal in nature, hence making it a highly regulated and taxed industry. Though it’s a challenge, its also an opportunity too,” the company said. Also, modernisation of excise rules is happening in a few states which will lead to ease of doing business, it added.

As for the FTA, Jagdale said the India–UK FTA will alter the alcobev landscape in our country. The prices of bottled in origin products will drop but Indian single malt category, whose quality is not inferior, to Scotch is ready for it.

Amrut is also currently expanding its distillery capacity with a capital expenditure of approximately Rs 10 crore.

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