Som Distilleries to invest at least Rs 1,000 crore in three years: CMD

Arora talks about the market trends and robust growth trajectory

Consumer preferences are undergoing a significant shift, driven by rising disposable incomes and a penchant for experimentation, particularly in the beverage sector. Som Distilleries and Breweries Ltd has seen a surge in demand for premiumisation, especially in Indian single malt whisky. As the company gears up for expansion and introduction of new offerings, JK Arora, chairman and managing director of the alcobev company, talks about the market trends and robust growth trajectory in a video interview with Aneeka Chatterjee. Edited excerpts:

How do you see the shift in consumer preferences?
 

The shift in consumer preference is primarily there for two reasons. First, the young generation now prefers to experiment with new things. With disposable income rising, the youth is okay with paying extra, for say, beer. Second, there is a premiumisation trend for the scotch category too. Currently, Indian single malt is gaining traction in the domestic market as well as through exports and is accepted worldwide. At Som Distilleries, we have a wide portfolio starting from single malt to economy-range whisky. Currently, Black Label whisky is getting costly, hence, consumers tend to opt for Red Label if their budget is tight. Consumer shift also depends on pricing when the government raises taxes.

What are your investment plans for FY25?
 

Som Distilleries has concrete expansion plans in both greenfield and brownfield areas. We will invest at least Rs 1,000 crore over the next three years in new setups including product facility and expansion.

Which brands in your portfolio look promising in the coming quarters?
 

We are sure of growth from all our segments as we strategise on value for money. Growth also depends on markets. For example, in Karnataka, Bengaluru has a different market landscape than Belgaum. We are rolling our products throughout categories – economy, middle-class, upper-middle-class, and mass category. This strategy has played out very well. We consider Karnataka as the ‘beer capital of the country’, and have reached a market share of 19-20 per cent from 3 per cent in the last four years.

What does the upcoming product line look like?
 

We are gearing up to introduce an Indian single malt, flavoured vodka, and premium Woodpecker beer in the next 3-6 months to tap into the increasing demand in these segments. Woodpecker Premium will initially launch in Karnataka.

How different is the domestic market from the international market?
 

Despite receiving supply proposals from global regions like Europe, West Asia, Africa, and the US, we are experiencing a notable upsurge in the domestic market. Currently, we export to 26 countries and have entered Uttar Pradesh, domestically. Sales and marketing strategies differ significantly between international and domestic markets. Establishing a solid market share and presence is crucial to thrive in India. We have observed a rising trend in international markets, particularly in inquiries regarding Indian single malt supply, bolstering our strong footprint in Africa and West Asia.
 

We see the international business as a huge opportunity and are evaluating it closely. The RTM (route to market), pricing, and opportunity to promote our brands of beer and spirits are far more relaxed out there than in domestic markets and that requires the right structure and resourcing to manage it, which we are establishing, while we are servicing the huge demand for our brands domestically.

Within the domestic market, any particular focus areas for expansion?
 

We have identified West Bengal and Uttar Pradesh as definite geographies to establish a manufacturing unit. Additionally, we are exploring opportunities in either of these locations – Punjab, Rajasthan, Tamil Nadu, and Telangana. In another 15-18 months, plants in West Bengal and Uttar Pradesh are likely to be operational.

What is your growth outlook for FY25?

We are very optimistic. In the last three years, we have been growing at a 50-60 per cent compound annual growth rate (CAGR). We believe that the same growth will continue for the next five years. In the next three years, we aim to be in the top two or three companies in India. We closed FY24 at Rs 1,283 crore in revenue and expect to close FY25 at about Rs 1,600 crore.