On Wednesday, United Spirits, the producer of Smirnoff vodka in India, revealed a substantial 14.2% increase in second-quarter profit, driven by an increased demand for its premium alcohol brands. The company, owned by Diageo PLC, reported a profit before exceptional items and tax amounting to 4.17 billion rupees ($50.08 million) for the quarter concluding on Sept. 30, marking a notable rise from the 3.65 billion rupees reported a year earlier.
The ‘Prestige and Above’ segment, which includes renowned brands such as Johnnie Walker, Signature, and Antiquity, contributed 88% to net sales, registering a significant increase of 12.8% to reach 25.20 billion rupees. Nevertheless, the company’s total revenue from operations saw a decline of 18.6% to 67.34 billion rupees, attributed to subdued demand in the ‘Popular’ segment, which includes McDowell’s No.1, Vat 69, and Royal Challenger liquor brands.
In a statement, the alcoholic beverage maker acknowledged that “Net sales in the popular segment were weighed by inflation impacting the target consumer.”
Industry experts linked the decrease in sales of non-premium products to a postponed festive season in September but foresee a recovery in sales growth during the third quarter. In a parallel development this week, competitor Radico Khaitan, known for producing Magic Moments vodka, disclosed a noteworthy nearly 20% surge in second-quarter profit, propelled by robust demand for its high-end brands.
Moreover, United Spirits sanctioned a provisional dividend of 4 rupees per share. The company’s stocks concluded 1.6% higher before the announcement of the results, displaying a significant 10.4% upswing in the September quarter.
