Rising disposable income a big opportunity for us: AABL's Tushar Bhandari

Associated Alcohol Breweries Ltd (AABL), one of the leading distilleries in India, is strategically targeting the evolving preferences of new-age consumers

Associated Alcohol Breweries (AABL), one of the leading distilleries in India, is strategically targeting the evolving preferences of new-age consumers. AABL is prioritising consistency and quality to effectively manoeuvre the market dynamics. It is also eyeing to expand its beer division, Mount Everest Breweries (MEBL). Tushar Bhandari, whole-time director at AABL, talks about partnerships, product lines and strategic expansion initiatives in a video interview with Aneeka Chatterjee. Edited excerpts:

Which market trends or patterns is the company capitalising on?

There is a rising per capita consumption and disposable income and it is a big opportunity for players like us. With the increase in disposable income and people ready to spend, the patterns are changing. At present, new-age customers are ready to experiment. The key to success would be to be consistent and have superior quality. Earlier, people were picking a few products from the shelf — brands that were well known like Diageo-USL or Pernod Ricard. Nowadays, people are looking for new products on the shelf. Hence, “from few, it has changed to new”. Likewise, Indian single malts were not known worldwide but now, they are gaining huge traction. We always had the quality but were waiting for the right opportunity for people to start accepting Indian liquor as premium liquor.

How does the company intend to sustain its market share amidst fierce competition?

Our primary goal is to balance and grow our market share. The company has studied the consumer pattern over the years. And, it shows that almost 70 per cent of customers have a fixed shop or a fixed bar from where they purchase liquor. Here, we play a bottom-up approach, where we try to influence the customer at the shop level. It is by incentivising the retailer or salesman to suggest customers an alternative for savings and quality. We are trying to provide value for money to customers. Moreover, we follow the concept of regional marketing and regional advertising.

How does the company manoeuvre through regulatory obstacles?

This is one of the biggest challenges in the liquor industry. Every state is a different country by itself, having its own set of regulations, taxes, and duties. We follow the principle of not investing a lot into capex. Hence, first, we try to send from our existing locations, which give us economies of scale. Following this, if we get a good volume, we tie up in that particular state and start getting in job work done through somebody else. Lastly, if the volume increases substantially, then we look around for acquisitions. The next big challenge that companies are facing is the price increase due to an increase in raw material prices as several ethanol plants are coming up across India. Hence, grain availability and its price control pose a big challenge. To mitigate this, the company has made 3-4 ways of purchasing the grain — through Mandi, brokers, and factories.

Are there any impending partnerships or collaborations in the works?

At present, we partnered Diageo-USL (United Spirits Ltd) in most of the verticals and it has been one of the strongest partnerships. We have partnered Diageo on manufacturing, and acquisition of its franchise product, to others. We also intend to establish a partnership with it, aligning with the development of our upcoming Malt plant.

What are your strategic plans for expansion across verticals and regions?

With MEBL, we are available in seven states and have plans to introduce our beer in five other states — Karnataka, Goa, Pondicherry, Telangana, and Odisha. About AABL, we are aggressively looking at developing our line of products. The major focus would be to increase sales of our premium products. Recently we have launched a Nicobar Gin. Now, there is a blended malt in the pipeline, which we are looking to launch in a month. Thereafter, we have RTD (ready-to-drink) in the pipeline. We will launch a premium tequila. We are also planning to launch our own single malt by FY27. Furthermore, following stabilisation and a successful performance over one or two quarters, we may look into expansion of our ethanol plant. Further, expansion will happen when we set up our single malt plant in Madhya Pradesh. We are also looking to launch a premium brandy.

What is your outlook for FY25?

Financial year 2024-25 looks promising. We are looking at a higher double-digit growth in FY24. Our nine months revenue in FY24 was around Rs 520 crore and we expect to close much higher compared to FY23. On the top line, in FY23, we were around Rs 720 crore and expect more than 20 per cent growth in FY24.