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Luxury now in mix as Allied Blenders & Distillers eyes a profitable run
'As far as our business is concerned, the first fundamental is profitable growth. And profitable growth, for us, means a cross-margin focus across our entire portfolio, including our mass premium flavour range. We're also expanding in the P&A segment. Our P&A growth was about 44 per cent in the April–June quarter, so that's where we'll stay focused — identifying new product opportunities in both the prestige and luxury portfolios. That's our first big theme,' said Alok Gupta, managing director at Allied Blenders & Distillers, in an interview with Business Standard.
He added that in 2023-24, the company had no luxury brands, whereas it now houses six, with plans to add two or three more. Within the prestige segment, Gupta said the company intends to introduce two more flavours.
The second major focus, he explained, is improving gross margins. This includes tightening procurement and enhancing supply chain efficiencies, along with leveraging the UK–India free trade agreement (FTA).
'We are India's largest importer of bulk Scotch whisky as an Indian company. The FTA will have a bearing on our costs and, in turn, our margins. Add to that the backward integration projects we've undertaken — mostly in the supply chain — and we see margin improvements ahead,' Gupta said. He noted the company is also sharpening its approach to capital planning to improve profitability.
Over the next two to three years, Gupta expects gross margins to improve by 300 basis points, which he said will flow directly into earnings before interest, tax, depreciation, and amortisation.
On the FTA's impact, he said maximum retail prices (MRPs) will drop slightly, with bottles priced at ~2,000 and above seeing the most benefit.
'The luxury segment is already growing faster than any other category. We're seeing strong double-digit growth. With MRPs set to fall, particularly on bottled-in-India brands, the segment will likely expand further — and so will the size of the pie. This consumer is driven by experience and constantly seeks out the new. Our portfolio is only just falling into place here, and we're approaching this with an opportunity mindset,' he said.
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