Japanese major sniffs Indian market through John Distilleries stake

By : Reghu Balakrishnan
Last Updated: Fri, Feb 08, 2013 04:10 hrs

John Distilleries (JDL), maker of leading whisky brand Original Choice, is seeing high interest from foreign liquor majors for acquiring a stake. According to sources, Suntory Liquors Ltd, the alcoholic beverages division of Suntory Holdings, the $23-billion Japanese beverages major, is interested in buying a significant minority stake in the Rs 500-crore JDL.

JDL, founded in 1992 by Paul John, is in the process of raising funds to meet the expansion plan by roping in a partner. According to sources, the company is in the process of appointing an advisor for the fundraising and talks are on with Morgan Stanley for giving the sell mandate. Details of company valuation and size of proposed fund are not yet known.

JDL, which sells about 11 million cases, has a five per cent share in the 260-million-cases Indian Made Foreign Liquor (IMFL) market.

According to industry sources, Suntory has been looking to set up a presence in the Indian alcoholic drinks sector through an acquisition and to engage in discussions with a few regional players. Last year, Suntory had acquired controlling stake in Narang Connect, subsidiary of Narang Group, to enter the non-alcoholic beverages sector in India.

Presently, Suntory's two whisky brands — Yamazaki 12 YO single malt whiskey and Hibiki 17 YO blended whisky are sold in India through an exclusive marketing tie-up with Radico Khaitan.

The products are priced at Rs 6,500 for a 700-ml bottle. Its single malt brands, Yamazaki 18 Year Old and Hakushu 25 Year Old, are popular worldwide.

Last year, John Distilleries had launched its first single malt whisky — Paul John Single Cask 161 — in the UK market. The company has plans to launch the product across the globe, along with introducing other premium products.

JDL's Original Choice Whisky is the seventh largest-selling liquor brand in India and among the 20 largest selling brands globally, with sales of 10.7 million cases annually. Apart from Original Choice, the company sells other brands such as Mônt Castlé French Grape Brandy, Grand Duke Whisky and Big Banyan Wines.

When contacted, Sridhar Pongur, joint managing director & chief operation officer, refused to comment on the matter. A mail sent to a Suntory spokesperson did not elicit any response. At present, private equity investor Gaja Capital holds about 30 per cent stake in John Distilleries.

According to a recent report by Anand Rathi research, foreign brands, even if launched in India, are likely to have limited success, as brand creation is extremely challenging. According to the report, South India accounts for 59 per cent of liquor consumption in India while the north and west hold 15 per cent each.

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