United Spirits Limited (USL), a subsidiary of Diageo Plc, has reported a robust start to the fiscal year, with consolidated net sales reaching INR 3,021.00 crores for the quarter ended June 30. This represents a 9.4% increase from INR 2,761.00 crores in the same period last year, despite a muted demand environment.

Segment-wise Performance

The company's performance across different segments showcased varied results:

On a standalone basis, USL's total revenue grew by 8.4% to INR 2,549.00 crores. The Prestige & Above (P&A) segment, which forms the bulk of the company's revenue, contributed INR 2,251.00 crores with a 9.0% growth. Notably, the Popular segment showed stronger growth of 13.6%, reaching INR 250.00 crores. However, the Other/NBR segment saw a decline of 27.3%, dropping to INR 48.00 crores.

Challenging Comparatives

It's worth noting that the company was comparing against a high base from the previous year. The Q1 performance last year had included proactive measures taken by USL to mitigate potential supply chain disruptions due to Union Elections. Despite this challenging comparative, the company has managed to sustain its growth momentum.

Management Commentary

While the demand environment remains muted, USL's management expressed satisfaction with the company's ability to maintain growth momentum. The company's focus on its premium portfolio and strategic initiatives appears to be yielding positive results, particularly evident in the strong performance of the Popular segment.

Upcoming Board Meeting

United Spirits has scheduled a board meeting for August 13 to approve the detailed unaudited results for the quarter ended June 30. This meeting will provide more comprehensive insights into the company's financial performance and strategic direction for the fiscal year.

About United Spirits Limited

United Spirits Limited, headquartered in Bengaluru, is one of India's leading beverage alcohol companies. With a diverse portfolio of premium brands including Johnnie Walker, Black Dog, Signature, and McDowell's No1, USL operates 36 manufacturing facilities across India. The company is committed to driving positive societal impact through initiatives focused on improving livelihoods, promoting sustainability, and nurturing the alcobev ecosystem.

As United Spirits continues to navigate the challenging market conditions, investors and industry observers will be keenly watching the detailed Q1 results for further insights into the company's performance and future outlook.

Shares of Radico Khaitan, a prominent Indian liquor company, experienced a decline following the announcement of a free trade agreement (FTA) between India and the United Kingdom. The stock dropped 1.69% in recent trading, reflecting investor concerns about potential impacts on domestic liquor manufacturers.

Impact on Indian Liquor Stocks

The newly signed FTA between India and the UK has sent ripples through the Indian liquor industry, affecting several key players:

• Radico Khaitan: Down 1.69%
• Tilaknagar Industries: Fell 2.09%
• United Spirits : Declined 0.69%

Key Points of the India-UK Free Trade Agreement

The FTA introduces significant changes to the import duty structure for spirits:

• Immediate Reduction: Import duties on Scotch whisky and gin will be cut from 150% to 75%
• Long-term Plan: Further reductions to 40% over a ten-year period

Potential Benefits for Consumers

The trade agreement could lead to more affordable imported spirits for Indian consumers:

• Estimated price reduction: Rs 100.00 to Rs 300.00 per bottle
• Beneficiaries: Multinational brands such as Johnnie Walker, Chivas Regal, and Ballantine's

Market Implications

While the FTA presents opportunities for imported spirits, its impact on the Indian liquor market may be nuanced:

• State-level Pricing: The actual consumer price impact could be limited due to existing state-level pricing mechanisms
• Excise Duties: State excise duties may also influence the final retail prices

Industry Perspective

The Brewers Association of India has weighed in on the potential outcomes:

• Price drops may be temporary
• The scope of price reductions could be limited

As the Indian liquor industry adapts to these new trade dynamics, companies like Radico Khaitan may face increased competition from imported brands. However, the full extent of the FTA's impact on the domestic market remains to be seen, as state-level regulations and consumer preferences will play crucial roles in shaping the industry's future landscape.