Financial Daily from THE HINDU group of publications
Wednesday, Jul 10, 2002
Corporate - New Projects
UB uncorks new co for low-end market
BANGALORE, July 9
THE UB group is rejigging its presence in the low-priced segment of the Indian made foreign liquor (IMFL) market through a new company, Phipson Distilleries Ltd.
Phipson will provide the umbrella for the group's low-end (third line) brands and their variants across three flavours - whisky, rum and brandy. The portfolio may include 20 brands, some existing as well as newly introduced labels. It includes brands such as Majestic, Win, Tiger and President's Pride, which are priced below Rs 140 per quart.
Speaking to Business Line, Mr Vijay Rekhi, President of UB group's spirits division, said, "These brands will be parked with Phipson Distilleries." It must be mentioned that the name Phipson is derived from an earlier entity, Phipson & Co Ltd, which was merged years ago with McDowell & Co, the flagship spirits entity of the UB group.
"We didn't want someone else in the industry to benefit from the residual equity of the Phipson name," Mr Rekhi said while elaborating on the new entity. However, the UB group remained tightlipped on the exact legal status of Phipson Distilleries Ltd. It is not clear whether this new company is a 100 per cent subsidiary of the UB group.
It is learnt that the manufacturing, marketing and distribution of the low-end brands will be mainly handled by the associate companies of the UB group. "Our role will be of a supervisory nature," Mr Rekhi said. It is learnt that the UB group has recruited a small management team to oversee the operations of Phipson brands.
Mr Rekhi said the latest development follows the UB group's decision to be a complete alcohol beverages behemoth. "The cheap liquor accounts for nearly 48 per cent of the IMFL market in India as on March 31, 2002. It was 44 per cent per cent two years back. We see the share of the cheap segment moving up by another couple of points in the near future due to the taxation polices followed by the various State Governments," he said. Last year, the size of the IMFL market was estimated at around 70 million cases.
Replying to a specific query on whether the UB group would enter the country liquor market, estimated at over 200 million cases, Mr Rekhi said, "We will take an appropriate decision on it at the right time. I don't want to hang my coat on country liquor now."
The group's two main spirits entities - McDowell & Co Ltd and Herbertsons Ltd - through the topline and second line brands like McDowell's No.1 and Bagpiper, hold roughly 38 per cent market share in the IMFL business.
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