United Spirits hikes liquor prices 30-35% in Maharashtra after excise duty surge
Praveen Someshwar, CEO & MD of United Spirits, said the alcohol sector remained resilient compared with other fast moving consumer goods (FMCG) categories, but policy headwinds were affecting prices.
"The most notable and recent one being from the state of Maharashtra, significant hikes in excise duties impacting IMFL or Indian-Made Foreign Liquor has led to spikes in the consumer maximum retail price (MRP), almost in the range of 30 to 40%. This is despite the company making some decisive and bold moves of not passing the complete burden to the consumer,' Someshwar said during the company's post-earnings call on Thursday.
In June, Maharashtra raised excise duty on IMFL by over 50%, with duties on country liquor and imported premium spirits also climbing, pushing retail prices up by roughly 14% and over 25%, respectively. The government also introduced a new category—Maharashtra-made liquor (MML)—to promote local spirits, which will be exempt from the hike.
On the introduction of MML, Someshwar said the steps were 'extreme' and could affect the consumer value proposition.
'Maharashtra as a consumer market is significant for us, our national value salience in the state hovers in the mid-to-high teens. However, at this stage, it is too early for us to assess the complete impact of the announcement, as there are many moving parts around the MML entry,' he said.
Someshwar said that the company's early assessment indicated the IMFL market would likely contract due to steep price hikes, but added that consumption habits in the segment were relatively stable, so the decline was expected to be smaller than the scale of the price increases.
He noted that early signs point to mid-teen growth in consumer spending. 'Early indicators, and I say very early indicators, suggest that the consumer spend is seeing mid-teen growth, which is very, very encouraging.'
The company has taken a staggered approach to the price increase across different segments.
'I don't think there was a one-size fits-all, it was different brands priced differently and it was nicely laddered. If you see the middle—prestige level, we have absorbed significant sums of money. At lower prestige, there is marginal absorption, that's not very big absorption in terms of absolute duties. At the popular (segment), we passed on everything…So it's been done differently across brands and across categories,' he added. The popular segment consists of the company's lower-priced portfolio of spirits.
Someshwar remains "cautiously optimistic" about the state's impact on the company's liquor portfolio in India in the current fiscal.
'Our mid-range, mid-term guidance is very simple, which is double-digit growth in 'prestige and above' I think we are completely committed towards it, and we don't see any of this changing it in the short term at all,' he added.
In Q1FY26, USL's net sales value rose 9.4% to ₹ 3,021 crore, while consolidated profit after tax reached ₹ 417 crore. The Prestige and Above segment accounted for 88.3% of net sales, with the popular segment contributing 9.8%.
On the India-UK free trade agreement, which is expected to offer reduced duty benefits, CFO Pradeep Jain said these could materialize between April and June of the next fiscal year. '(T)hese products have a long pipeline, at any point of time between the high seas and the stocks that we have for across the country et cetera. There is a long inventory pipeline so we believe that will happen sometime between April and June,' Jain said.
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