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Unperturbed by the legal cases filed by UB Group chairman Vijay Mallya for control of world’s largest selling whisky brand — ‘Officer’s Choice’, Kishore Chhabria led Allied Blenders & Distillers (ABD), which owns ‘Officer’s Choice’, is charting out an aggressive expansion plans.
On the cards is a Rs 500 crore expansion plan, including setting up its first distillery mostly in Maharashtra and then expanding the bottling unit capacity significantly. Presently, ADB owns three bottling units with a capacity of 3 million cases and three more are to be added in Andhra Pradesh, West Bengal and Rajasthan. In addition to this, ABD has another 33 contract bottlers across India with a capacity of 22 million cases.
Deepak Roy, vice-chairman, ABD, and the key player behind the growth of ‘Officer’s Choice’ told Business Standard that in the past four years, the flagship ‘Officer’s Choice’ has almost trebled in volumes and they will continue the expansion. According to the latest IWSR (The International Wine & Spirits) magazine, ABD’s ‘Officer’s Choice’, is the eighth-largest alcohol beverages brand in the world overall. The brand has gained more than 10 million cases in the past five years and has a CAGR of 26.4 per cent during 2006-11. To further fuel the next phase of expansion, ABD which reported a topline of Rs 1,800 crore during last fiscal, is in the market to raise external equity to an extent of Rs 250 crore for this expansion.
According to Roy, they are looking to sell as much as 18.5 million cases of ‘Officer’s Choice’ during 2012, a growth of 12 per cent over last year volumes of 16.5 million cases. “Even as we are expanding the flagship, our premium offering - ‘Officer’s Choice Blue’ is gaining acceptance on a quick pace and we are expecting to sell one million cases mark during this year,” Roy added. In addition to ‘Officer’s Choice’ franchise, ABD has vodka, rum and brandy, which cumulatively will enable ABD to cross the 20 million cases mark during 2012.
According to globally reputed spirits research firm - Impact International - Officer’s Choice was the leading whisky brand in the world with 16.5 million cases during 2011, followed by United Spirit’s McDowell’s No.1 whisky at 16.1 million and then followed by another of United Spirits’ product Bagpiper whisky at 16 million cases. United Spirits officials have been maintaining that on a company basis they sell 120 million cases and they are not unduly worried about ABD scaling up operations. “While we are in the mass volume game with Bagpiper whisky, we are focussing more on McDowell franchise, which is giving us more returns due to its premium positioning,” a senior management official told Business Standard.
However, the fast-paced growth of ‘Officer’s Choice’ in mid of last year rattled UB Group chairman and he filed a suit in the Calcutta High Court seeking to restrain ABD from raising fresh resources. Mallya believes ‘Officer’s Choice’ belongs to Shaw Wallace, a company he acquired in 2005, and during that time according Mallya, Kishore Chhabria has taken away this brand. The High Court has since ruled that Chhabria can raise resources, but he cannot lose control of the company.
“It feels good that we have the largest selling whisky brand in the world. But more important to us is that we are able to create value and creating more premium brands which will give us better margins. Officer’s Choice Blue is a move towards that,” Roy added.