United Spirits plans to offer on franchise more than 50 of its non-core brands to its major distributors and bottling companies across the country. This marks a strategic shift from its earlier proposal of selling them out.
The Vijay Mallya-owned United Breweries is consolidating its spirits business under the banner of United Spirits by merging McDowell & Co, Herbertsons and the recently acquired Shaw Wallace & Company.
The franchise model, besides bringing in royalty on sales to United Spirits, will ensure the brands will not pose competition to the company in the future. The move is part of a portfolio rationalisation of the group to concentrate on the national and millionaire brands after the consolidation of three companies.
At present, the group has over 120 brands, including about 56 brands of McDowell and another 34 of Shaw Wallace. The product portfolio includes a number of regional brands as well. United Spirits will concentrate mainly on 30-35 brands, picking up the major and millionaire brands of pre-merger companies. According to company sources, there will be 12 millionaire brands in the United Spirits portfolio.
"Though the company's earlier plan was to sell the small and regional brands as part of a portfolio rationalisation following the consolidation, the proposal has been revised to avoid competition from the same brands in future," a source close to the development said.
Soon after UB's acquisition of Shaw Wallace early last year, the company had stated that it would narrow down its brand portfolio by selling several of its small and regional brands.
Radico Khaitan, the second largest spirit company in the country, had evinced interest in some brands which UB wanted to sell off from its portfolio as part of the brand rationalisation.
McDowell -- the flagship company of the UB group's spirit division -- is the seventh largest spirit manufacturer in the world. It is one of the only two companies in the world to have seven brands that sell more than a million cases per annum. The company owns 42 spirit brands with a presence in all taste and price segments.
Its flagship brand McDowell No 1 whisky is the second largest non-scotch whisky brand globally. With sales of more than five million cases, it is also the second fastest growing spirit brand in the world recording a 24 per cent volume growth.
Bagpiper's Whisky, owned by Herbertsons, is the largest non-scotch whisky brand in the world with sales of 10 million cases. McDowell's five other brands -- McDowell No 1 Brandy, Kerala Malt Whisky, Old Cask Rum, Celebration Rum Diplomat Whisky -- have sales of over three million cases annually.
The company's brands are manufactured in 29 distilleries spread all over the country. Out of these, 15 are owned or managed by the UB group. The rest are contract manufacturers.
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