The coming months of the current fiscal are going to be challenging due to the COVID-19 pandemic that has resulted in shutting down of major global economies, and consumers may hold back discretionary spends to focus on health and hygiene, according to liquor major Radico Khaitan MD Abhishek Khaitan.
The coming months of the current fiscal are going to be challenging due to the COVID-19 pandemic that has resulted in shutting down of major global economies, and consumers may hold back discretionary spends to focus on health and hygiene, according to liquor major Radico Khaitan MD Abhishek Khaitan. Although the spirits industry has faced significant challenges in the short term, he said the long-term dynamics of the industry in India remained intact due to a host of favourable factors. Expansion of the middle-class, increasing rural consumption and dispersed urbanisation, greater acceptance of social drinking and a higher proportion of the young population entering the drinking age are some of the factors, Khaitan added.
In his address to shareholders in the company’s Annual Report 2019-20, Khaitan said, “In the current scenario, the company has adopted a deliberate and prudent approach which is not very different from our long-term strategy. First and foremost is the focus on strengthening our brand portfolio.” Radico Khaitan will continue to launch brands in the premium category, which will contribute to the future growth, he said. The company will reassess and refocus its advertising and sales promotion strategy with the share of digital to increase even further going forward, he added.
“We are taking a conscious effort towards the review of each capex (capital expenditure) and cost line item. Particularly in the context of the COVID-19 scenario, this will enable the company to further optimise cash flows and make operations much leaner,” Khaitan said. On the future impact of the pandemic, he said, “We entered the new financial year when the major global economies were shut down. The impact is widespread and the coming months are going to be challenging.”
He further said, “Consumers are likely to hold back on discretionary spends with focus on health and hygiene potentially leading to future behaviour shifts. Going forward, technology will take a centre stage for providing convenience and enhanced experiences to consumers.” Given the uncertain economic environment, Khaitan said it is difficult to predict how exactly is the consumer behaviour going to change in the longer term and its impact on business models. “Radico Khaitan has a strong brand equity and loyal consumer base. This will enable us to continue to gain market shares in the coming years,” he said.
The company would continue to take necessary steps to maintain its “robust foundation and financial strength whilst at the same time delivering differentiated consumer experience”, Khaitan added. In 2019-20, he said that despite the ongoing economic crisis, the company delivered Indian-made foreign liquor (IMFL) volume growth of 12.5 per cent, led by “prestige and above” category with a volume growth of 15.2 per cent. “We currently have four millionaire brands and at least two more of our brands are approaching the milestone of annual sales of a million cases in the near to mid-term,” Khaitan said.
He added that the 8PM family of brands has crossed a total volume of 10 million cases during the financial year 2019-20. Radico Khaitan sells a wide range of spirits, including the popular 8PM Whisky, Old Admiral Brandy, Whytehall Premium Brandy, Contessa Rum and Rampur Indian Single Malt Whisky, among others.