Radico Khaitan, which is best-known for its Magic Moments vodka and 8PM whisky, delivered a 62% year-on-year jump in Q3 profit, helped by strong volume growth in the ‘prestige and above’ segment, which gives the company 50% of its volume sales. In an interview with Viveat Susan Pinto, Abhishek Khaitan, managing director of the company, admits the firm’s strategy will be underpinned by its performance in premium categories in the future. Khaitan also throws light on the firm’s proposed entry into the Maharashtra-made liquor category, new launches and capacity expansion. Excerpts:
1) Premiumisation has emerged a strong pillar for the company. What is the way forward?
Our long-term premiumisation strategy will continue to chug along. We have no plans to slow that pace at all. In Q3 (of FY26), for instance, we delivered a 25% volume growth in our ‘prestige and above’ (P&A) segment, led by a robust portfolio of brands. For the nine months of FY26, this portfolio delivered a 28% volume growth and for the full year (of FY26) we expect to be at over 20% (volume growth).
At an overall level, we expect to end FY26 with a volume growth of 20-25%, which will be led by the premium segment. That isn’t to say that the regular segment will not grow. We get 50% of our volume sales from regular (liquor) products and the other half from premium products. But we see greater traction at the higher end of the market. We expect the P&A category to grow at 15% in terms of volume growth over the next two to three years.
2) You are guiding for a lower volume growth in the premium segment for the future. Is this because competition is growing and most listed players are looking to trade up?
As disposable incomes improve and lifestyles get better, people will graduate to better products. So yes, competition is growing. But 15% is a strong number from a volume perspective for P&A. As far as our luxury portfolio is concerned, we see even stronger growth coming, at 30-35% (per annum). We have been clear all along that we wanted to move up the value ladder with our products. Which is why we launched six luxury brands in five years. We are close to achieving our Rs 500 crore revenue target in our luxury portfolio. The strategy now will be to consolidate our P&A presence and grow all these brands.
3) Will you touch the Rs 500 crore target for the luxury portfolio in FY26 or will this target be achieved next year?
We are getting there. It has a long runway for growth. We see this portfolio, which includes whiskeys such as Royal Ranthambore, Sangam, Rampur Barrel Blush, The Spirit of Kashmyr’ vodka, The Kohinoor Reserve (dark rum) and Virasat (single-malt whisky), getting bigger.
4)Most liquor majors have pointed to an impact on their business due to the Maharashtra government’s creation of the Maharashtra-made liquor category. What is the impact for Radico Khaitan?
The Maharashtra market has seen an industry-wide decline of around 20%, and we have seen a similar impact. The regular liquor segment has been most affected because of the state government’s move to create a new grain-based spirit category, produced and sold exclusively in the state. We plan to enter this category soon through our joint venture partner NV Distilleries in Aurangabad.
5) What is your capex outlook and do you have any new launches lined up for the next year?
Our annual capital expenditure (capex) run-rate is around Rs 125-150 crore, largely towards maintenance and brand-led investments such as maturation infrastructure. Major expansion including the Rs 750 -crore Sitapur facility in Uttar Pradesh, has already been completed and is now delivering returns. As far as our new launches are concerned, our immediate focus is on scaling and distributing recently launched brands across India. Over the next one to two years, we will prioritise consolidation and pan-India expansion rather than frequent new launches.
6)What is your outlook on margins. Do you see the raw material cycle staying favourable at least for now?
For now, raw material prices seem favourable, so we are not seeing a major change in outlook as far as margins are concerned. We ended Q3 with Ebitda margins of 17.2% and for the nine months it was 16.2%. We should be within this range in Q4. Going forward, we expect about 125 basis point improvement in Ebitda margins, if raw material prices stay where they are.