India: Radico Khaitan increasing production of its single malt whiskey

Radico Khaitan Ltd is increasing production of its Rampur Indian Single Malt whiskey to meet rising demand for the product from North American and European markets, Chief Financial Officer Dilip Banthiya told Cogencis.

While Banthiya did not give details of the capacity expansion, sources said production of the single malt whiskey is being raised by around 15% from the current 500,000 ltr per year at the company’s Rampur distillery.

The additional capacity is expected to come on stream by May, Banthiya said.

“We are pumping in inventory of matured malt to increase production of RISM (Rampur Indian Single Malt) and expect supply to be increased after three to four years as malt needs to be aged,” Banthiya said.

Rampur Indian Single Malt whiskey contributed 20% to the company’s exports in 2017-18 (Apr-Mar). Exports contributed 7% to Radico Khaitan’s total sales of 62.7 bln rupees in that year, a Mumbai-based analyst said.

Most of the company’s capital expenditure for the past two years has gone into increasing capacity for single malt whiskey.

The company will spend 400-500 mln rupees in capital expenditure in 2018-19 (Ap-Mar), Banthiya said.

The alcohol maker has an overall liquor production capacity of 157.5 mln ltr per year, the company had said in a recent presentation.

In the domestic market, Radico Khaitan expects to report 9-10% volume growth in 2018-19 (Apr-Mar) as it sees better demand in Uttar Pradesh because of the new liquor policy, which will provide district-wise wholesale licences instead of zonal licences.

Shares of Radico Khaitan recovered on the news. At 1325 IST, the shares were up 0.6% at 390 rupees on the National Stock Exchange.

The company expects its high-margin “prestige and higher” segments to grow around 15% in 2018-19 (Apr-Mar). At present, “prestige and higher” segments contribute around 28% to the company’s total volumes, 45% to its topline and 65-70% to its bottomline.

Radico is a leader in the domestic market in the vodka segment with its Magic Moments brand having over 50% market share, the company said. Among other popular brands of the company are Morpheus brandy and 8 PM whiskey.

The Delhi-based alcohol maker is also looking to increase volumes of its Jaisalmer Indian Craft gin to increase distribution across Europe and North America. Radico Khaitan is pitching the Jaisalmer Indian Craft gin as a premium offering and has priced it at $60 per ltr.

Radico Khaitan will launch its 8 PM Premium Black whiskey across the country in 2018-19 (Apr-Mar) after launching it in five states earlier this year.

“We have received positive response for the product and are seeing a lot of traction coming in for this brand…,” Banthiya said.

Radico Khaitan also looks to capitalise on low raw material prices for better margins. Grain costs have remained benign this year and there is very good availability of molasses due to higher sugarcane production this year, Banthiya said.

01 November, 2018