Highlights of the meet

Beer as a category got impacted more versus spirits due to demonetization as beer is more expensive and consumers typically downgrade to cheaper alcohol whenever there is pressure on income levels

Bigger cities were more resilient while rural markets witnessed higher impact of demonetization.

In November, consumer may have used old notes but in December impact was more.

Primary volume decline due to demonetization.

Excise hike in several states and regulatory measure in Bihar impacted overall performance.

North – industry volume declined 36% while UBL grew 1%. Volume in Delhi grew by 30%, Haryana grew by 15% while volume in Rajasthan declined by 8% and UP by 9%

East – industry volume declined 30% while UBL down by 24%.

West – UBL volume declined by12%. Maharashtra is seeing pressure on market share.

South – industry volume declined 2% while UBL down 7% . In Karnataka market share went up. Telanga also saw market share up. Tamil Nadu is facing challenges.

West declined more than other region due to LBT and demonetization.

West India – in last 5 yrs excise duty has gone substantial high. MRP of beer has gone up frm Rs 75 to 125 in last 5 yrs. In addition to these, competition activities impacting the growth.

The mgmt said that it faced competitive pressures in several key markets like Maharashtra, Karnataka and Rajasthan and has taken corrective actions, which should reflect in ensuing quarters. It is also facing significant regulatory issues in Tamil Nadu – no orders from TASMAC this quarter. The mgmt attributed this partly to transition in political leadership in the state.

Barley, sugar and rice prices jump seen, thus impacting gross margin

Heineken brand not launch in AP and Telengana, and in few months will be launch.

The mgmt said that ban of sale on liquor outlets along national and state highways remains the biggest near-term challenge to volumes due to potential disruption in shifting outlets; more a logistical issue as outlets shift to a convenient location before license gets renewed and likely to be a bigger challenge in cities/towns.

In some states – some state highway may be de-notify, which will have less impact on liquor outlets along state highways.

The mgmt said that industry is declining in some large states. Excise, LBT, state issues impacting industry volume growth

Capex guidance for FY18 stands at Rs 200-250 crore to be spent on brownfield expansion and maintenance.

GST - looking at July as date. Largest impact will be services rate, which will go up from 15% to 18%.

Input cost outlook – sugar prices don't see coming down and so barley. There is upward pressure. Glass bottle has seen no particular trend.

Gng fwd – focus on product development in UBL and also launching products from Heineken.

Not seen volume growth came back yet.