We'll be only co in India with play in both beer and spirits: Inbrew chief

In a Q&A, Ravi Deol talks about why he acquired these mass brands and the Inbrew Holdings' plans to grow the business

Inbrew Holdings of Singapore is buying United Spirits’ (USL’s) portfolio of 32 mass brands, which includes Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label and Romanov, for Rs 820 crore. It has also entered into a five-year franchise arrangement for 12 other brands. In 2021, Inbrew acquired the India business of Molson Coors, to sell and produce beer brands such as Miller, Carling, Blue Moon and Cobra in India. In an interview with Sharleen D’Souza & Dev Chatterjee, chairman of Inbrew Holdings Ravi Deol talks about why he acquired these mass brands and the company’s plans to grow its business. 

ALSO READ - United Spirits to sell 32 liquor brands to Ravi Deol's Inbrew for Rs 820 cr
 

You are entering the spirits business, which United Spirits is exiting by selling its mass brands. Why are you entering the sector?

Diageo, the owner of United Spirits, will continue to sell USL’s premium brands, especially its global brands in India. The cost structure of MNCs makes it difficult for them to sell high frequency, low margins spirits businesses in India. However, entrepreneurial-run companies in businesses like ours are distribution driven and have the execution skills to do a better job. These brands used to contribute 25 per cent of USL’s profits and almost 40 per cent of its volumes. These brands are a highly profitable business for us.

How big are the brands that you will get from this buyout?

Six of the brands acquired by us have million-plus cases sales. In fact, Haywards is 12.5 million cases. It is in total a 35-million-case business. So, it will be the second largest beer in the country. Diageo (United Spirits) will still be the largest in India as it sells about 40-43 million cases.

What is your vision for the spirits business after this acquisition?

The vision for us really is to build a wider beverages platform. Consumption of beverages has been growing exponentially. India still remains a mainstream market, whether it's strong beer or dark spirits. But, going forward, there is a significant shift that’s going to happen. We will be the only company in India which has presence in both beer and spirits unlike MNCs, which are focusing on either beer or spirits. We are open for more joint ventures with global companies in the beverages segment. We see a lot of opportunities in alternative beverages like low-calorie alcohol, beer, seltzers and tonics. We have a strong distribution network in place and we will have over 40 million cases of business, which is huge.

How many manufacturing facilities will you have in India?

Five in spirits and distilleries and we will have four in breweries. We will have a spirits and beer business of Rs 9,000 crore by the end of the current financial year.

Will you look at more acquisitions?

It doesn’t make sense to buy boutique brands and then start building it. But if there is a synergy, distribution and a consumer affinity for the brands, then we are open to looking at them. We are a young country and out-of-home consumption is still very small and that’s one big opportunity in front of us. Consumers are becoming more discerning. We are focused on building scale out of these two businesses. We have a very strong foothold in the northern market and the businesses we have acquired from Diageo are predominantly very strong in South India. We see big distribution synergies emerging out of this.

How will you fund this transaction?

This is a combination of debt and equity which is coming from our parent company in Singapore. It is 100 per cent owned by Inbrew beverages. So there is no other shareholder. It is predominantly funded internally.