On a Premium High
Fortune India|March 2021
A regular listee on the Fortune India Next 500 since 2015, Radico Khaitan’s double-digit growth, backed by premium product offerings, has propelled the liquor manufacturer into the big league of the Fortune India 500 companies.
ANSHUL DHAMIJA

Last year, around the same time when the maker of Magic Moments vodka, Radico Khaitan, topped the Fortune India Next 500 list—jumping up 27 ranks from the previous year—it was evidently clear that the alcoholic beverage (alcove) manufacturer was all set to make its debut in our flagship 500 lists. And the reason behind this? Radico Khaitan has been on a double-digit growth trajectory and was expected to end FY20 on a high. Eventually, it did so, clocking a 15.7% year-on-year revenue growth, which gave the company a five-year CAGR (compound annual growth rate) of 10.1%.

Its FY20 growth also came at a time when the overall spirits industry in India clocked less than 2% sales growth due to a slowing economy and fall in discretionary spending among consumers. “We have completely outsmarted industry growth for the last three years,” says Amar Sinha, chief operating officer, Radico Khaitan.

The Indian premium branded liquor market has a disproportionate presence of multinational corporations such as Pernod Ricard (makers of Blenders Pride whisky and Chivas), Diageo India (or United Spirits Limited, makers of McDowell’s No.1 whisky), and Beam Suntory (Teacher’s whisky). “Radico [Khaitan] is increasing its premium products to join this gang,” says Sanjay Jain, a financial adviser to the Indian spirits industry.

Premiumisation of the product portfolio has been at the heart of the company’s revenue and profit growth (which recorded a 33% five-year CAGR). It has introduced brands like Rampur Indian Single Malt whisky, Jaisalmer Indian Craft gin, 8 PM Premium Black whisky, 1965 The Spirit of Victory rum, besides adding premium offerings to its core spirit categories of vodka and brandy. Today, the company’s premium product portfolio contributes to more than 30% of the business in volume and 50% in terms of value. Five years ago, it was 24% in volume and 41% in value.

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