A home-grown liquor giant is making a bold pivot
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Amid a rapidly transforming market, one of India's home-grown liquor producer is taking a sharp turn. Premium brandy manufacturer Tilaknagar Industries Ltd, the owner of India's biggest and the world's second biggest brandy brand Mansion House , is reportedly eying a big foray into whisky business. ET has reported based on information from people familiar with the matter that Tilaknagar Industries is the frontrunner in the race for the Imperial Blue whisky brand being sold by the French alcobev major Pernod Ricard Imperial Blue, Pernod Ricard's largest brand by volume, has an estimated enterprise value of up to $600 million, as per the ET report, and a deal will mean the largest M&A in India's liquor industry in more than a decade after Diageo's buyout of United Spirits in 2013 for $1.9 billion. Chairman-cum-Managing Director Amit Dahanukar refused to comment on ET's query on the proposed deal.Tilaknagar has been asked to submit a binding bid by June 23, as per the ET report, while Inbrew Beverages , established by London-based serial entrepreneur Ravi Deol, is also in the reckoning.India is one of the biggest markets for brandy, accounting for nearly 40% of the overall consumption globally. In India, brandy is the second most consumed alcoholic beverage after whisky, but more than 98% is sold in southern India, especially Kerala and Tamil Nadu.Tilaknagar Industries, or TIL, India's fifth-largest alcoholic beverage firm by market cap, is the leader by far in India's brandy business. The company enjoys a leadership position in the segment with 94% of total volume) in the IMFL industry, with a market share of nearly 25%, excluding Tamil Nadu, as per a CRISIL analysis from December last year. Within the prestige and above segment, TIL has around 30% market share. Brandy is the second largest in the spirits category, forming over 20% volume share after whiskey (55%).Tilaknagar was founded in 1933, as The Maharashtra Sugar Mills Ltd by Mahadev L Dahanukar. In the 1970s, the company shifted its focus to alcohol production, and soon became a prominent manufacturer of alcoholic beverage (alcobev) brands in India. Tilaknagar is the maker of India's highest-selling premium brandy brands, Mansion House and Courrier Napoleon. The company offers over 15 different brands of brandy, whiskey, gin, rum and vodka, with a focus on the 'prestige-and-above' segments. Manufacturing operations span 19 units, including 4 owned units and 15 contract manufacturing units.The company has a strong distribution network of nearly 40,000 outlets across the country, and sells mainly through state corporations, direct sales, and distributors. It also exports to Africa, Middle East, East and South-East Asia and Europe, as per CRISIL. Tilaknagar is a major player in south India, which accounted for around 86% of total revenue. The promoters have experience of more than five decades and strong relationships with dealers/distributors. CMD Amit Dahanukar joined the board in 2001 and has been instrumental in guiding the company through its troubled phase and reviving the business prospects.Brandy forms nearly 20% of the overall IMFL market in India. Tilaknagar is the largest player in the brandy segment with nearly 25% market share excluding Tamil Nadu (market dominated by local players). Tilaknagar has a strong foothold and brand-recall in South Indian states (AP, Telangana, Karnataka, Kerala and Puducherry). In fiscal 2024, the company sold over 11.2 million cases (1 case = 9 litres), reflecting 16% increase compared to fiscal 2023, with southern states contributing 86% of the volume, as per CRISIL.For Tilaknagar, a successful acquisition of Imperial Blue would help expand its brand as well as non-brandy portfolio. While brandy is a dominant category in Tilaknagar's portfolio, the company forayed into whisky in 2012, leveraging flagship brand Mansion House. However, more than 90% of its sales still comes from brandy. During its earnings call on May 21, chairman and managing director Dahanukar said Tilaknagar will focus on enhancing its presence within brandy and other IMFL categories through its own brands and strategic investments. Tilaknagar had earlier acquired Round The Cocktails, Spaceman Spirits and Incredible Spirits. Tilaknagar has been in a long-drawn trademark dispute with Allied Blenders & Distillers (ABD) and Dutch distiller Herman Jansen Beverages (formerly UTO) over its Mansion House brand.Tilaknagar, if it indeed ends up buying Imperial Blue, will be making a big push into the whisky market when it is in ferment. After several years of growth, demand for spirits across categories slowed down to 1.6% in FY25, falling from 4.2% a year ago. Volume sales of whiskey, which accounts for roughly two-thirds of the market, saw a muted 1.5% increase in volume last fiscal while brandy and vodka sales were flat, according to excise department data reported by ET. Brandy grew less than 1%. Globally too, liquor sales fell 1% by volume in 2024, according to alcohol market researcher IWSR, which attributed this to large markets such as China and India failing to live up to growth projections. Spirits slowdown in India has been attributed mainly to distribution changes in a few states, higher taxes and tipplers cutting back on most discretionary spends including alcobev.Notwithstanding these disruptions, liquor industry in India holds immense potential. Despite being the world's most populous nation with more than 1.4 billion inhabitants, India's drinking consumer base is estimated at around 300 million-of whom nearly half rely on cheap, unbranded liquor.In 2024, India's alcohol industry is valued at approx. $64.19 billion with projections indicating it could reach $115.27 billion by 2034 at a CAGR of 6.7 per cent, as per an ET report. Spirits like whisky, vodka and rum are expected to dominate the market reaching USD 50.55 billion by 2034. India remains one of the world's largest consumers of whisky, accounting for over 48 per cent of global whisky consumption.India's liquor industry is transforming in response to consumer trends and policy shifts. Premiumization and innovation are driving growth, with consumers willing to pay more for craft breweries, premium whiskies and flavored spirits. Companies are adapting by launching unique offerings tailored to local tastes. Meanwhile, although e-commerce restrictions remain in place, some states are exploring online liquor delivery, which could unlock new growth opportunities. Policy reforms are also gaining momentum, with increasing pressure on state governments to streamline tax structures and modernize the industry. Progressive moves by states like reduced state duties by 10-15 per cent across various alcoholic beverage segments in Karnataka suggest a shift towards a more business-friendly environment.While the FTA with the UK, which includes deep cuts in import duties on several spirits, and a possible trade deal with the US can make make imported liquor more affordable in India which may challenge local liquor brands in the premium and luxury space, Imperial Blue whisky brand may not be impacted much as it straddles the space between mass and premium.
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