The Hindu Business Line : UB open to joint management, ownership of regional brands

UB group, the world's fourth largest spirits marketer, has thrown a new bait to drive consolidation in the difficult theatre of the Indian liquor business. It has mooted the proposal for joint management and ownership of established regional brands in the country even as it continues to look for outright acquisitions.

Mr Vijay Rekhi, President of UB Spirits Division (UBSPD), told Business Line, "We feel this level of fragmentation in the industry is desirable. However, we reckon there are some regional brands that can be managed better. We are willing to look at joint management and ownership of these brands.''

He, however, did not name any brand and stated: "There are a few of them and it is known.''

"We will continue to look at acquisitions if there is an opportunity,'' Mr Rekhi added.

But corporate mergers and acquisitions have proved to be difficult in the domestic spirits business as personal egos and family dissensions — most Indian liquor businesses are in the hands of large influential families — have thwarted many an opportunity.

It must be mentioned that the Vijay Mallya-controlled UB group has had discussions with traditional powerhouses such as Mohan Meakins and Jagatjit Industries for a possible takeover but has been spurned by the doyen of the families, which control them.

UBSPD comprising McDowell & Co and Herbertsons sells over 35 million cases annually and has nearly 40 per cent share of the Indian Made Foreign Liquor market. It is targeting to achieve sales of 50 million cases annually in three years' time.

The only acquisition effected by the UB group in many years was the purchase of 85 per cent stake in the Deepak Roy-managed Triumph Distillers & Vintners (TDV) that owns prominent whisky Gilbey's Green Label. Archrival Shaw Wallace & Co Ltd follows second with 14.5 million cases annually.

In this context, UB's posture for joint management of brands with traditional and regional powerhouses is significant even though there is little clarity whether the latest proposal would cut ice with the latter.

"It comes at a time when these companies were holding out in an increasingly challenging environment and UB perhaps does not want them to fall into the waiting hands of multinationals like Seagram,'' analysts pointed out. The notable brands outside the UB and Shaw Wallace portfolios include Old Monk, Hercules, Aristrocrat and Peter Scot.