Officer's Choice: One suitor too many

Vijay Mallya and Kishore Chhabria are set to take their fight over India’s largest selling whisky brand to the wire.

Imagine David facing off Goliath, not with a sling and a few stones but with a rocket launcher. This is exactly the scenario playing out in the Indian spirits market.

A legal case, which was going on for some time, has now come to the fore between Vijay Mallya and Kishore Chhabria. The bone of contention: India’s fastest growing whisky brand – Officer’s Choice — owned by Kishore Chhabria-led Allied Blenders & Distillers.

In all probability, by the end of next year, ‘Officer’s Choice’ will be India’s largest selling whisky brand by selling 20 million cases, overhauling Mallya’s brands - Bagpiper and McDowell. It is a scenario which has made Mallya move the Calcutta High Court to restrain Chhabria from raising additional funds to expand the franchise of Officer’s Choice, even as he parallely fights another legal battle to claim ‘Officer’s Choice’ as his brand.

The issue is rather simple as far as Mallya is concerned. He claims that ‘Officer’s Choice’ belongs to him as it was part of the package when he acquired Shaw Wallace from the Chhabria family nearly six years ago for Rs 1,200 crore, when Kishore brother, Manu Chhabria, was at the helm. Mallya claims that Kishore has caused the assets of Shaw Wallace and its subsidiaries to be dealt with in a manner prejudicial to the interests of Shaw Wallace and its subsidiaries to make personal gain – in particular, the valuable ownership and control of BDA Limited, the manufacturer of ‘Officers Choice’ whisky. Kishore is of course not the one to give up easily and the legal case trundles along.

Even as these protracted battles go on, Chhabria has quietly built ‘Officer’s Choice’ as a brand to reckon with. Industry information indicates that Chhabria has spent as much as Rs 50 crore in expanding Officer’s Choice franchise during the past few years and the move to raise an additional Rs 250 crore will catapult the brand into the real big league in India.

‘Officer’s Choice’, operating in the economy band of the IMFL market with a price range of Rs 400-500 (per 750 ml bottle) is currently the third largest selling whisky brand in India selling 15,265 million cases, following McDowell’s 15,377 million cases. Leading the pack is Bagpiper at 16,926 million cases.

“Chhabria, during the past four years, really stepped on the gas and added four million cases during the past couple of years. During last fiscal, it grew at a scorching pace of 33 per cent and if Mallya’s United Spirits does not act now, they may well lose out to Officer’s Choice,” said an industry player. Chhabria, as part of this game plan to expand his business, also roped in alcohol beverages industry veteran Deepak Roy to steer the ship as vice-chairman.

Industry analysts indicate that the growth of ‘Officer’s Choice’ has been planned and structured methodically by Chhabria and Roy and it has strangle-hold in the West and North Indian markets, controlling 21 per cent of the 240 million cases IMFL market in India.

Both Mallya and Chhabria are fighting it out in the Indian spirits market, which during the recent past has been one of the major drivers, as it boosted world spirits consumption, with its Indian-made foreign liquor (IMFL). According to International Wine & Spirits Research (IWSR), of the top 10 largest volume growth brands in the world in 2010, six have India as their main market, each with over 95 per cent of sales in India and 13 of the 15 ‘other whiskies’ on the top 100 list are Indian.

“IMFL benefited from population growth and a young population, with more consumers entering the market – although at least 65 per cent of adult Indians do not drink alcohol – and more female consumers entering the market, mainly middle-class-and-above women,” IWSR said in its recent report. It also predicted that total spirits consumption across the world will rise from 2.81billion cases to 3.32 billion cases – a rise of over half a billion cases between 2010 and 2016. Almost 86 per cent of this growth will come from just two markets – China (63.2 per cent) and India (22.7 per cent).

“Imported brands have failed to see booming growth due to the country’s restrictive tax policies on imports. If this changes, whisky in particular is believed to have huge growth potential,” IWSR detailed.

Mallya and Chhabria know this pretty well and are set to take the fight to the wire in India which is the third-largest market for spirits.