Hic Hic Hurray: UB’s brands outrun Diageo’s

Hic Hic Hurray: UB’s brands outrun Diageo’s

Author | Source: The Economic Times | Saturday, Aug 20,2005 7:57 AM

Hic Hic Hurray: UB’s brands outrun Diageo’s

This is UB's bottoms-up to the global drinks industry. The frontline brands of Vijay Mallya's spirits empire, which is one among the three leading liquor behemoths in the world, outpaced its counterparts at the drinks industry leader Diageo Plc in volume growth during the year '04.

UB and Diageo have 15 frontline brands, each selling over a million cases annually, the longest list of 'millionaire' brands among all the companies. The French drinks giant Pernod Ricard closely follows with 14 millionaire brands.

A comparative listing of millionaire brands based on the figures reported by Drinks International (DI), a respected digest on the alcoholic beverage sector, showed that 12 UB brands turned up with robust double digit growth as against Diageo's two. The remaining three UB millionaire brands posted single digit growth even as six brands of Diageo registered no growth and another six brands showed up with single digit rise in volume sales. In fact, one of Diageo's millionaire brands reported a negative growth in 2004.

The UK-based Diageo, with depletions topping 100 million cases annually, clearly overwhelms UB in terms of existing volume base and profitability. “However, UB has demonstrated sustainable brisk volume growth in recent years,” Vijay Rekhi, President of UB Spirits Division, said. Global spirits majors have been attempting to beat sedate volume growth in mature western markets by scripting consolidation moves and looking at emerging markets, especially those in Asia.

Two millionaire brands of Diageo - Captain Morgan Rum and Cacique Rum - returned with volume growth of 12.5% and 13.3% respectively, while 12 UB brands figured in the double-digit growth bracket. The UB list included Celebration Rum (17%), Old Cask Rum (24.3%), No.1 McDowell Whisky (13.1%), Bagpiper Whisky (12.9%), Honey Bee Brandy (11.5%), Director's Special Whisky (23%), Royal Challenge Whisky (11.1%), Haywards Whisky (10.6%)Golconda Brandy (25%), Old Tavern Whisky (18.2%), Gold Riband Whisky (27%) and No.1 McDowell Brandy (33.9%).

Three UB brands with single-digit growth were Gilbey's Green Label, John ExShaw Brandy and Old Adventurer Rum. Diageo's list of single-digit growth brands include names like Smirnoff Vodka (7%), Johnnie Walker Whisky (5.3%), J&B Whisky, Bells Whisky, Tanquary Gin, Vat 69 Whisky, Gordon's Gin and Seagram's Seven Crown Whisky. In fact, one of Diageo's millionaire brands, Seagram's VO Canadian Whisky reported 6.7 percent de-growth during the year.

The industry observers said the brisk volume growth of UB brands should be viewed in the context of the buoyancy in the Indian Made Foreign (IMFL) market, which is tipped to grow between 8 to 10 percent (the FY'05 first quarter growth pegged at 6% to 7%), making it one of the attractive growth areas for the global drinks industry.

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