Bengaluru Liquor manufacturers like United Spirits Ltd (USL), Pernod Ricard, United Breweries Ltd (UBL) are staring at an uncertain demand environment in the first quarter of this financial year as the second wave of the pandemic forces many states to impose temporary lockdowns to contain the spread.
During the first wave of the Covid-19 pandemic, liquor consumption was down drastically during the March-July period of 2020 on the back of strict lockdown measures.
However, demand sprung back immediately after opening of the establishments last year. It helped many of the major liquor manufacturers post-double digit growth during the last three quarters of the 2020-21 financial year.
But the raging second wave of the pandemic is posing a threat to the last fiscal's demand momentum.
"Due to the second wave, the industry outlook is volatile. Impact will depend on magnitude and duration of lockdowns, including any partial or full trade restrictions. UBL will continue to manage all elements of costs and capital investments in light of the uncertain demand given the situation of the second Covid-19 wave across the country," the company said post announcement of its fourth quarter results last month.
Heineken-controlled UBL is the maker of popular beer brand Kingfisher, Heineken and counts Karnataka, Maharashtra and Goa as its key markets. Due to the second wave, all these key states are currently under lockdown. Though standalone liquor shops are open with home delivery of liquor being allowed by most states, consumption will still be down due to the restrictions and the abstinence of people amid the pandemic.
"In India, the situation is changing probably from day one to the other. As you know, we are facing right now some restrictions into key states of Maharashtra and in Delhi. So, only essential businesses are open. And in India, that means that all the off-trade is closed for our business and so is our facility," said Helene de Tissot, executive V-P (finance, IT & operations) and member of executive board of Pernod Ricard SA, in the recent earnings call. Pernod Ricard sells popular whisky Blenders Pride and Absolute Vodka in India. The company has reported double-digit growth in sales for the three months ended March 31, 2021, in India.
Similarly, Diageo-controlled United Spirits Ltd (USL) is also likely to face demand disruption owing to the second wave of the pandemic. Diageo India MD & CEO Anand Kripalu had said earlier that despite the quicker rebound than originally expected, there were still reasons to remain cautious. Therefore, the company has refrained from providing quantitative guidance for fiscal 2021.
Some of the brands manufactured by USL are Bagpiper whiskey, Haywards whiskey, McDowell's whiskey, Signature, VAT 69. Royal Challenge, Antiquity among others.
