Indian Liquor Industry is high riskindustry
on account of high taxesand innumerable regulations
governing it.
The Liquor...
 French company,
headquartered at Paris,
France, founded in 1975
after arch rivals Pernod &
Ricard joined hands.
 Major ...
Current Status:
India set to become the third largest
market for the company after USA
and China, overtaking France.
Not ...
 Britishmultinational whose
products are sold in over 180
countries.
 Formed in 1997from the merger
of Guinness and Gran...
Situation in Kenya
 Increase in illicitliquorsalesleading to ill health
effects on citizens.
 Introductionof low costbee...
● Americanmanufacturer of spirits
headquartered in Deerfield, Illinois.
● Subsidiary of SuntoryHoldingsof
Osaka, Japan.
● ...
• In US, Federal Uniform Drinking
Age Act of 1984 sets the minimum
legal drinking age to
• Alcohol duties applied in UK
• ...
• Foundedby Scottish gentleman named
ThomasLeishmanin 1857.
•The Group is professionally managed and
is headedby Dr VijayM...
M & A
•McDowell & Company Limited
(Listed)
•Herbertsons Limited (Listed)
•Triumph Distillers & Vintners
Private Limited
•U...
• Indianalcoholic beverages company, and
the world's second-largest spirits company
by volume
•Originatedas a trading comp...
•USL exports its products to over 37
countries.
•Has more than 140 liquorbrands, of
which 20 brands each sell more than
on...
•Information and Broadcasting
ministry of India has banned direct
advertisement
•‘Regulated’industry- movement,
prices of ...
• Rs 45/litre
Liquorfrom
spirits
• Rs 60/litre
Premium
MaltWhisky
• 60%SalesTax
• 230%Importduty
•Limitedhoursof trading, ...
• Low marginlevelsbecause of
State deciding the retail prices.
• Taxes and duties constituting
more than 50%of final consu...
PrateekKathuria
Chhavi Rahul
AishwaryaRaj Khanna
KshitizSinghal
ShubhamThukral
RitikaSinghPuria
Political risks in The Liquor Industry
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Political risks in The Liquor Industry

We first do a company analysis of all the existing liquor companies, and then look at the political risks faced by them
Published on: Mar 4, 2016
Published in: Education      
Source: www.slideshare.net


Transcripts - Political risks in The Liquor Industry

  • 1. Indian Liquor Industry is high riskindustry on account of high taxesand innumerable regulations governing it. The Liquor industry has seen players with strong brands, diversifiedportfolios, and largeoperationsachieve market leadership positions. Indian Liquor Industry is divided into 2 broad categories IndianMadeForeignLiquor(IMFL) CountryMadeLiquor  Has a marketvalueof INR 350 Billion, growing at 12-15% per annum over last 2 yrs.
  • 2.  French company, headquartered at Paris, France, founded in 1975 after arch rivals Pernod & Ricard joined hands.  Major subsidiaries in Australia, Greece, India, Canada.  Major brands : 100 Pipers, Absolut Vodka, Blenders Pride, Chivas Regal, Havana Club, Imperial Blue, Royal Stag.  Madeheadlinesfollowing its tusslewith Vijaya Mallya’sUnitedBreweries.
  • 3. Current Status: India set to become the third largest market for the company after USA and China, overtaking France. Not allowedto operate in Andhra Pradesh& Karnataka, the largest consumer market for distilled beverages in India. Indian Liquor Industry is molasses basedwhich adds on to the regulatory and political risks. Limited Price Flexibility.
  • 4.  Britishmultinational whose products are sold in over 180 countries.  Formed in 1997from the merger of Guinness and Grand Metropolitan.  Headquartered in London  8th-largest company on the London Stock Exchange.  Major brands include Smirnoff, JohnnieWalker, Baileysand Guinness.  Recently in news over restructuring of its SouthAfricanandNamibian operations.
  • 5. Situation in Kenya  Increase in illicitliquorsalesleading to ill health effects on citizens.  Introductionof low costbeer, Senator Keg to cater to the Kenyan market by Diageo to game the situation. Proposedthe government to reducetaxesto make liquor affordable by the masses, thus eliminating trade of illicit liquor  In 2012, Kenyan government waivedtaxes off altogether after seeing the health benefits. Current Status  In 2014, Kenyan govt put an excisetax of 50% to increase its revenue from liquor industry.  7,500distributors out of the original 12,000 that supplied Senator Keg have closedbusiness as an effect of a tax.
  • 6. ● Americanmanufacturer of spirits headquartered in Deerfield, Illinois. ● Subsidiary of SuntoryHoldingsof Osaka, Japan. ● Established as Beam Inc. on October3, ● Founder : Remainder company created from Fortune Brands by Matthew Stanton, top political lobbyist ● Marketpresencein Europe, China, Japan, Southeast Asia, the Oceania, and the Americas. ● Majorbrands:Jim Beam, Maker’s Mark,Teacher’s. ● Investmentsin bottlingand distributioninfrastructure enhance company’s future prospects in India.
  • 7. • In US, Federal Uniform Drinking Age Act of 1984 sets the minimum legal drinking age to • Alcohol duties applied in UK • Canada has highesttaxrateon alcohol in the world.
  • 8. • Foundedby Scottish gentleman named ThomasLeishmanin 1857. •The Group is professionally managed and is headedby Dr VijayMallya •Headquartered in UB City,Bangalore • The UB Group, is the marketleaderin both Spirits & Beer in the country with 79 distilleriesand bottlingunitsacross the world . •Turnoverof Rs 3700Crores •Marketshareof 48%by volume. • The core Beverage Alcohol business account for 80%of the group turnover • Other interests include Fertilizer, Engineering , Life Science, Infrastructure development, Aviation & Media •Flagship brand: KingfisherBeer
  • 9. M & A •McDowell & Company Limited (Listed) •Herbertsons Limited (Listed) •Triumph Distillers & Vintners Private Limited •United Distillers India Limited •Baramati Grape Industries Limited •Phipson Distillery Limited •United Spirits Limited •McDowell International Brands Limited •Shaw Wallace Distilleries Limited with its subsidiaries Whyte and Mackay Products Kingfisher Strong Kingfisher Premium Kingfisher Draught Kingfisher Ultra Kingfisher Blue Kingfisher Red Kingfisher Strong Fresh London Pilsner UB Export Kalyani Black Label Kalyani Black Label Strong Bullet
  • 10. • Indianalcoholic beverages company, and the world's second-largest spirits company by volume •Originatedas a trading company called McDowellandCompany, founded in India in 1826by Angus McDowell •Subsidiary of the UnitedBreweriesGroup, and headquarteredat UB Tower in Bangalore, Karnataka. •Largest Spirits Company in India, with 60%market share
  • 11. •USL exports its products to over 37 countries. •Has more than 140 liquorbrands, of which 20 brands each sell more than onemillioncases annually while 5 brands each sell more than 10 million cases annually. •Major brands include Antiquity, Black Dog, Signature, White Mischief
  • 12. •Information and Broadcasting ministry of India has banned direct advertisement •‘Regulated’industry- movement, prices of intermediate goods (molasses, ethanol) tightly controlled - state governments exert considerable influence. •Subject to licensingunder Industrial Development and RegulationAct, 1956 •Cap on licensed capacity; special license for expansion. •Plethora of dutiesandtaxes from bottling to salesstage;varying from state to state. Political Risk
  • 13. • Rs 45/litre Liquorfrom spirits • Rs 60/litre Premium MaltWhisky • 60%SalesTax • 230%Importduty •Limitedhoursof trading, prohibiting sale of alcohol between 11 pmto 8 am. • Consumption of alcohol prohibitedin the states of Gujarat,Manipur, and the union territory of Lakshadweep •Keralagovernmenthas planned to implement almost fullprohibitionof hard liquor •Illegal to sell or supply any liquor to Andamanese, Nicobareseor any other ScheduledTribes. • Legaldrinkingage in india is in most of the states and 18 in other states
  • 14. • Low marginlevelsbecause of State deciding the retail prices. • Taxes and duties constituting more than 50%of final consumer price • Decrease in salesof liquor, and in turn revenue, which may lead to decrease in supply •Increasesaleof spurious country liquor. Economic Social & Technological • Increase in consumer awarenessregarding harmful effects of liquor. • Newproduct developments needed– Diet Whisky. •Newpackaginginitiatives needed to reduce costs and curtail counterfeiting.
  • 15. PrateekKathuria Chhavi Rahul AishwaryaRaj Khanna KshitizSinghal ShubhamThukral RitikaSinghPuria