United Spirits

United Spirits is leveraging progressive policy shifts, notably in Uttar Pradesh, where excise policy reforms for FY25-26 have doubled liquor retail touch points from 6,500 to approximately 12,500. This move is expected to enhance access and consumer choice. The company also recommenced business in Andhra Pradesh after a 5-year hiatus, quickly regaining national market share. The India-U.K. free trade agreement, halving Scotch duty from 150% to 75%, is anticipated to lead to a high single-digit reduction in consumer prices and a corresponding increase in Scotch volume, with BII portfolio prices expected to reduce by 4-5%.

The company's strategy focuses on premiumization, with 70% of its growth in FY25 coming from the top half of its portfolio. Key brands like Johnnie Walker, Singleton, and Godawan are being nurtured through targeted campaigns and market expansion. McDowell's, RC, and Johnnie Walker are now over INR1,000 crores NSV trademarks, while Signature, Black Dog, and Black & White exceed INR500 crores NSV. McDowell's remains the world's largest selling whiskey with 30 million cases, highlighting the portfolio's scale and value.

Innovation is a core pillar, with a target to double its contribution to NSV growth from the current high single-digit/low double-digit range within the next 3-5 years. This involves both international and local trademarks, focusing on premiumizing offerings, addressing consumer repertoire, and driving occasions. New product launches like McDowell's Double Oaked Barrel and X-series, along with Royal Challenge Pocket Packs, are part of this strategy to unlock value and stay ahead of evolving consumer aspirations.

The multiyear supply agility program, initiated in January 2023, is on track, having achieved almost two-thirds of its cost optimization benefits, contributing INR70 crores to the P&L and INR15-20 crores in working capital efficiencies. Productivity initiatives delivered INR388 crores in FY25. On the ESG front, the company has created 1.1 million cubic meters of water replenishment capacity, increased distillation efficiency to 54%, and achieved 99% renewable energy in operations, leading to a 93% reduction in Scope 1 and 2 emissions from 2020 levels.

Diageo India reported strong employee engagement with an overall score of 89%, 13 points above the external benchmark. 94% of employees are proud to work for the company, and 89% recommend it. Social initiatives include the 'Learning for Life' program, which has trained over 7,000 individuals since July 2020, and 'Act Smart India' educating over 500,000 people on underage drinking. The company also employs 56 persons with disabilities across its manufacturing facilities.

The company acknowledges struggling to grow share in the competitive UP market in recent years. With the new excise law doubling retail outlets, United Spirits is implementing a multi-pronged strategy. This includes the recent launch of Double Oak Barrel and the McDowell's X-series, which are getting seeded into the market. Further initiatives involve strengthening route-to-market capabilities, go-to-market strategies, and the upcoming launch of a McDowell pocket-sized product to drive share in this high-potential state.