Whalesbook
Mass Market Volumes Drop
Leading alcoholic beverage companies in India are struggling with a significant slowdown in their mass and economy product lines. United Spirits, a major player, experienced a 16% drop in volumes for its popular branded products during the March quarter and a 3.5% decrease for the full fiscal year 2026. Allied Blenders and Distillers also reported flat volumes for its Officer's Choice whisky in the mass premium category for the same quarter and a 4% decline for the fiscal year.
Premiumization Strategy Challenges
Companies have focused on premium products to improve earnings, but this strategy seems to have hit its limit. Relying solely on higher-priced items is not enough for steady growth. The ongoing poor performance in mass-market segments is now affecting overall growth.
Despite a strong presence in premium segments, United Spirits saw only a modest 1.5% volume growth for fiscal year 2026. Its prestige and above category products grew by just 2.6%, suggesting even the premium segment isn't expanding rapidly. United Breweries, known for Kingfisher beer, reported 3% total volume growth for FY26, even with strong sales in premium offerings.
Regulatory Issues and Competition
Unfavorable regulatory changes in states like Maharashtra have affected United Spirits' performance. While such shifts are common in India's varied market, the company benefited from the Andhra Pradesh market reopening. However, increased competition from regional brands has led to United Spirits losing market share in its popular product category.
Recognizing these issues, United Spirits is focusing again on its popular segment. Analysts at Nomura noted that after six quarters of losing market share, the company is updating its lower-prestige products, like McDowell's, with new liquid, design, and formats to make them more appealing.
Radico Khaitan Shows Different Trend
Unlike the general trend, Radico Khaitan has successfully grown its regular brands business. The company reported a significant 31% increase in regular brand volumes for fiscal year 2026, although its sales dipped 10% in the March quarter.