United Spirits (USL), the spirits division of the Vijay Mallya-led United Breweries Group, is launching an ambitious plan to more than double revenues and treble EBITDA in the next five years.
Aiming at increasing its revenue to Rs 16,000 crore by 2015-16 from the current Rs 6,000 crore, USL is planning to restructure its business by strengthening its back-end supply of critical materials through acquisitions, focusing on its international brand recognition, and filling the gaps in its product portfolio. Its sales volumes, which touched 100 million cases last year, is set to reach 200 million cases in five years.
Vijay Rekhi, managing director and president, USL, said, ?Last year, we celebrated a 100 million case landmark.
This year, we will celebrate global leadership in volume terms. We had set a target of getting the next 100 million cases by 2015-16. As part of this Vision 200,we are going to go from Rs 6,000 crore to Rs 16,000 crore in revenue, and triple our EBITDA in the same time frame.? With volumes going up, USL’s self sufficiency for this key component, at its current levels, is likely to be a problem area. It had slipped from 30% to 11% in recent times and was likely to fall to 5% in the course of getting to 200 million cases.
One area of focus for the company is acquiring distilleries to augment self sufficiency in the production of extra neutral alcohol, a critical component in alcoholic beverages. ?One is already completed, two more are in the pipeline, 3 more are in the negotiating stage,? Rekhi said.
With broadening horizons, USL’s product portfolio is also likely to widen. Currently, the company has a range of whiskeys, vodkas, rums, gins, and wines, in price points ranging from Rs 250 to Rs 10,000. While it has the basics covered, unlike competitors such as Diageo, USL’s portfolio lacks spirits such as cognacs, tequilas, and liqueurs. USL will also look at plugging these gaps as a part of its ?vision 200?. Having cornered 60% market share in India, sales in international markets, a sore point for the company will receive greater attention. Out of USL’s sales of approximately 3.6 billion bottles of spirits, a miniscule 4% is consumed outside India. USL’s target is to increse it to 8% in five years.
Currently, 20% of its revenues come from exports and international markets and the company aims to take that to 35% for the same period.
?We will be seeking out joint ventures, franchisees and acquisitions abroad, as we have done earlier. Our international focus will be on emerging markets,? Rekhi added.
?We have to do much more thinking now than we have in the past as to how we are going to get there. This year, we will end on a high, after celebrating our global leadership in April, following which, we will take these challenges on,? Rekhi said.