One of the largest spirits company in the country, Radico Khaitan, just second to Vijay Mallya-led United Spirits, posted a 94% increase in its net profit at Rs 18.8 crore because of premium brands 8PM (whiskey), Morpheus (brandy) and Magic Moments (vodka). Radico Khaitan managing director Abhishek Khaitan speaks to FE?s Shubham Batra on the national roll out of whiskey brands which have been test marketed over the past few months Excerpts:
What has led to the growth in your profits for the second quarter?
We had gone for strategic brand premiumisation and some of the brands have done exceedingly well. We had created Magic Moments vodka, which has become the largest selling vodka in the country. It has seen a volume growth of 47.5% in the second quarter. We had also created Morpheus Brandy, the costliest in India. It has grown five fold and sold 60,000 cases in the last quarter. We also have a brand called 8PM Whisky, whose sales rose 10% in the last quarter. These are high value products. Indian made foreign liquor (IMFL), which consists of semi-premium, premium and super premium brands, makes 80% of the company?s total sales.
What kind of margin performance you think the company will be able to maintain?
To comment on margins on quarter-on-quarter basis, is a little difficult but in three years? time I see it rising substantially. In the second quarter of FY11, the margins are same as last quarter at about 16.5% and we expect this to continue. However, our total advertising and sales promotion has seen an increase in September quarter and is currently at about 8% per annum but in spite of that our profit has grown 94%.
Tell us about the two whiskeys launched in July 2010?
We had also launched two whiskey brands in the premium segment, After Dark and Eagles Dare. They are being test marketed in northern India and we are going to go commercial in FY11. Only one of them may be rolled out at the national level. A decision will be taken in the next 15 days. Both are priced at around Rs 400-450.
Any guidance for FY11?
The total volume growth in the mainline brands has been 17% while the total growth is about 14% in the last quarter. For the first half of FY11, we have seen a volume growth of 71%. We expect to grow 20% for the full year while the volume growth should be 15-17%. Radico?s focus continues to be on building strong brands, premiumisation of portfolio and profitable growth.
Raw material (molasses) prices have come down in last quarter. Where do you see them heading?
Going forward, what we have been seeing is that sugar production is expected to see a significant jump of 25%. Hence, we expect molasses prices to remain at the current level or softening a bit.