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Informist, Thursday, Aug. 14, 2025

--United Spirits: See strong double-digit growth in consumer spend

--CONTEXT: United Spirits mgmt's comments at post-earnings investor concall

--United Spirits: See healthy growth in Uttar Pradesh in coming months

By Avishek Rakshit & J. Navya Sruthi

KOLKATA/MUMBAI – In wake of the recent liquor policy in Maharashtra which raised the retail prices substantially and is expected to dampen liquor demand in the state, United Spirits Ltd. is betting on Uttar Pradesh to improve its sales owing to its new policy.

"It's just coming into play in Maharashtra as UP (Uttar Pradesh) is just coming into play, but absolutely it is a tailwind," Praveen Someshwar, the company's chief executive officer and managing director, told sector analysts in a conference call Thursday after declaring the company's June quarter earnings. United Spirits reported a muted financial performance for Apr-Jun on Wednesday evening, with net profit falling 13.7% on year to INR 2.6 billion and revenues flat at INR 25.5 billion despite a volume increase.

Under the new liquor policy, Maharashtra has raised taxes on alcoholic beverages substantially. Indian Made Foreign Liquor – which is the backbone of most of the listed alcoholic beverages manufacturers in the country – is now taxed higher by 50-60% under the new state policy. The state government also introduced the Maharashtra-made liquor policy where taxes are lower and, hence, the retail price is competitively placed.

As a result, United Spirits absorbed most of the taxes in the premium segment to keep sales growing but hiked prices of the products in the mass segment. Over 80% of the company's revenues come from the premium and luxury product segment. Maharashtra mostly consumes liquor in the low-mid premium price range, according to United Spirits.

"It (price hike in Maharashtra) was different; brands (are) priced differently and it was nicely laddered. If you see the middle prestige level, we have absorbed significant sums of money. At lower prestige, we did marginal absorption and that's not very big absorption in terms of absolute duties," Someshwar said. "At popular, at the lower prestige, we passed on everything because there was a minimum price requirement."

However, according to the top company official, although Maharashtra contributes a significant portion to the company's revenues in "high teens" per cent, consumer demand for liquor is expected to remain steady despite the price hikes. Someshwar said that he has been noticing strong double-digit growth in consumer spends for discretionary consumer products in the past few months and this trend is expected to maintain its momentum. In fact, most of the consumer goods companies reported a fall in consumer demand primarily in the mass segment while sales in the premium and luxury portfolio fared comparatively better despite tepid market conditions.

At the same time, the new liquor policy in Uttar Pradesh is expected to boost United Spirits' sales in line with its peers. Under the new policy, Uttar Pradesh did away with its old method of granting separate licences for beer shops and foreign liquor shops and merged them into composite shops which are being given licences thrugh a lottery system. Hence, those shops selling only beer previously can now sell foreign liquor and vice versa. The state also introduced new pack sizes--60 ml and 90 ml bottles of foreign liquor which have been made available in the premium segment. Such moves by the state government is expected to drive consumption and, hence, better the taxes.

However, Someshwar expressed his doubts over the feasibility of the Maharashtra liquor policy.

"I am told Rajasthan had it some years back. Much before that, UP (Uttar Pradesh) experimented with it. In both cases, they realised over a period of time that it did not make any substantial impact. It just impacted the taxes in UP and they completely changed it over the next few years in their yearly policy updates," he said.

On Thursday, shares of United Spirits closed 1% higher at INR 1,319.30 on the National Stock Exchange.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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