With prices of molasses having almost doubled during the last one year, liquor manufacturers are mulling prices hikes across the board making popular whiskey, rum and vodka brands dearer by around 5%.
In fact, the country’s largest liquor manufacturer, United Breweries, which sells the popular whiskey brand, Royal Challenge, has already hiked prices of its products by around 3.5%. Radico Khaitan is all set to increase prices post-March. Raju Vaziraney, chief operating officer (COO) of Radico Khaitan, said: ?We are looking at increasing prices of our products across the board by around 5% in April this year.?
?We are looking at premiumisation of products along with the right product mix to keep our margins intact. We have reduced the use of molasses and shifted to grain spirit or extra neutral alcohol (ENA) to deal with higher input costs,? an official of United Breweries said.
UB had maintained a profit margin of around 19% during the last two quarters. Of this, 12% was due to growth in volume and 3.5% each for price hike and right product mix. The UB official admitted that 93% of its total sale comes from frontline brands.
Most of the Indian liquor manufacturers use molasses as the base product. ?With price of molasses almost doubling, the operating cost will increase substantially for lower-end brands. So their prices have to be hiked. But companies will most likely absorb prices for the high-end brands,? said an industry analyst.
