Radico Khaitan: In high spirit
Liquor major Radico Khaitan has outperformed most peers with overall volume growth of 10% and Prestige & Above category (P&A) volume growth of 14% over the last three years, compared to 5-7% volume growth for larger peers.
Radico is attractively-placed to exploit the opportunity in Vodka with a leadership position in the premium vodka segment with a market share of more than 60%.
Vodka accounts for 20-30% of consumption globally versus 4-5% in India due to premium pricing.
Given the rising affordability, greater acceptance among youth and women and preferred choice of base for cocktails offer faster growth in the category versus other spirits, Radico Khaitan with a dominant position should be a key beneficiary.
Radico Khaitan has been more innovative than peers, and the stronger innovation pace and success in new launches have accelerated growth and diversified the company’s P&A franchise.
Excluding Magic Moments, growth in other P&A brands has been stronger at a 25% CAGR, with its share rising to 40% of P&A from 22% in FY15, led by continued success in niche and emerging categories and recent success in premium Whisky.
It’s Q1 performance was better than the industry, which is expected to continue due to faster recovery in core states, particularly Uttar Pradesh, Uttaranchal, Karnataka and Telangana. Despite a steep 34% sales decline in Q1, Radico is expected to report marginal growth in FY21 led by a strong volume performance in the coming quarters.