Post SWC acquisition, UB lords over 75% of liquor trade in Andhra

The 'King of good times' is literally having a good time in Andhra Pradesh. Post its acquisition of Shaw Wallace & Company (SWC), Vijay Mallya's UB group reigns supreme over the Andhra Pradesh liquor market with a market share of over 75 per cent across all categories of liquor.

The Andhra Pradesh market is the biggest in south India and consumes over 20 lakh cases a month.

Of the total monthly consumption of 20 lakh cases of liquor, approximately 11 lakh cases are shared by the UB group's brands and over 5 lakh cases are being shared by Shaw Wallace in Andhra Pradesh, according to market estimates.

The UB group's presence in the state extends from the ordinary liquor segment to the premium segment and now with Shaw Wallace also in its fold, the group will have a staggering presence in the state's market.

UB group's ability to offer competitive pricing across its brands will now be greater with this acquisition, than earlier.

Moreover, thanks to the combined strength of UB's brands in the premium whisky segment and SWC brands like Royal Challenge and Antiquity alongside McDowell's Signature whisky, this will effectively pose a much stiffer challenge to Seagram's Blender's Pride, the most popular whisky brand in the particular segment.

As per the 2003-04 figures, while Blender's Pride sold 28,091 cases during the year, Royal Challenge came close with 20,983 cases and McDowell's Signature was third with a total sale of 12,085 cases. The acquisition has changed the entire scenario.

But in terms of business, the regular and the ordinary liquor segments add to the majority turnover of the UB group, where it has further strengthened its control over the market with popular SWC brands like Haywards, DSP Regular and Old Tavern.

Of the total sales of 37.89 lakh cases in the 'upper cheap' whisky segment, Haywards and DSP Regular alone account for 15.76 lakh cases. In the deluxe segment, with a size of 12.22 lakh cases annually, McDowell's No 1 whisky sold 6.85 lakh cases during 2003-04.

Of the total sales, the upper cheap segment constitutes around 56 per cent while the deluxe/regular/brandy segments account for 38 per cent.

The UB group's monthly turnover in Andhra Pradesh is estimated to be over Rs 40 crore and the combined turnover post-acquisition will be anywhere around Rs 55 crore of the total monthly turnover of over Rs 80 crore (turnover figures represent only basic price paid by the APBCL to the liquor manufacturers and do not include taxes and margins).

The implication of the takeover for other smaller brands in the market is significant. This is because, in Andhra Pradesh, the government buys liquor from the manufacturer at fixed rates and, in turn, sells it to retail licencees.