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Radico Khaitan Ltd'

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Title: Radico Khaitan Ltd'


1
Radico Khaitan Ltd.
  • Investor Presentation
  • October 08

2
Contents
  • The Indian Spirits Market
  • Challenges Of Indian Spirits Industry
  • Indian Spirits Industry Growth Drivers
  • Radico - The Journey So Far
  • Future Growth Drivers for Radico

3
Contents
  • 6. SWOT Analysis
  • 7. Financials
  • 8. Core team of Radico

4
The Indian Spirits Market
  • Grown at CAGR of 9 over the past decade with
    11-12 in last 2 years
  • Total market volume 140 million cases in
    FY2008
  • Liquor industry segmentation Whisky 61
    Brandy 19 Rum 15 White Spirits
    05
  • Lowest per capita consumption India 1.4
  • (In litres) China 3.0 Thailand
    3.5 Japan 3.8

Source NACER
5
Challenges for Spirits Industry
  • Liquor in India is a state subject. Addressing
    each state is like addressing a country.
  • High investments for production distribution
    channels.
  • Restrictive Liquor Advertising.
  • High entry barriers for new entrants

6
Indian Spirits Industry Growth Drivers
Large increase projected in emerging and regular
consumers
Aspiration Profile Change in Urban India
Spending Patterns
1012
1178
Age Profile
Shift from savings to spending on lifestyle
products services
150 million likely to be added to target consumer
group in this decade
gt 60
7
8
20-59
48
54
0-19
45
38
2001
2011
Increasingly favourable demographics profile
increase in discretionary spends to further boost
demand
Source NCAER, BW Marketing Handbook
7
Growth Drivers of the Spirits Industry
  • 790 million are in the drinking age group which
    are
  • increasing by 20 million annually
  • Deregulation by state governments.

Strong growth opportunities in the coming years
8
Radico The Journey So Far..
1943-1997 - Spirit Company
1998-2008 Second Largest Branded Company
  • Started Distillery in 1943
  • A Major Spirits Supplier
  • Supplier of Rum to Armed Forces
  • Bottler for others
  • Launched its first brand 8 PM Whisky in 1998
  • Second fastest growing company in the world by
    volume from 2002-2006. (avg growth rate29.8)
  • Creation of number of Millionaire brands - 8PM
    Whisky, Contessa Rum and Old Admiral Brandy.
  • Market leader in semi- premium vodka segment
    with launch of Magic Moments in 2006 reaching
    millionaire club by 2008-09
  • Strong and dedicated sales distribution team,
    covering 95 of bars, clubs and retail points
  • Acquisition of Whytehall whisky from Bacardi
    Martini India Ltd in 2004 and Brihans range of
    brands from Brihans, Maharashtra in 2005.
  • 28 bottling units 5 own bottling units 23
    Contract bottling units in India
  • Diageo Radico JV to create premium brands in
    the IMFL segment with its first launch of
    Masterstroke Deluxe Whiskey in 2007.

Source JP Morgan Nov 2007
9
High Success Rate Of Brands Launches
Acquisitions
2006
2005
2004
2002
1998
1972
CONTESSA RUM (Regular Range) 2.5 million case
8PM WHISKY (Regular Range) 4 million case
MAGIC MOMENTS VODKA (Semi premium
Range) 1.1million
OLD ADMIRAL BRANDY (Regular Range) 2 million
case
WHYTEHALL WHISKY Acquisition (Deluxe
Range) 0.5 million case
BRIHANS BRANDS Acquisition (Regular Range) 1.5
million case
10
Radicos Robust growth over last decade
Over the last 9 years Radico Volume grown at
CAGR of 23 against Industry volume CAGR at 9
11
Indian Spirits Segmentation
Liquor Segment
Industry estimates
12
Indian Spirits Segmentation
Liquor Segment
Industry estimates
13
Indian Spirits Segmentation
Liquor Segment
Industry estimates
14
Radico Marketing
Success Stories
  • 8 PM Whisky
  • Launched in 1998, it was the first Indian whisky
    (blended with scotch) offered to Indian consumers
  • First Spirits brand to enter Limca book of
    Records for selling one million cases in the
    first year of launch
  • The launch TV campaign was adjudged among the
    best ads of the century at Cannes
  • Recently famous Bollywood actress Mallika
    Sherawat endorsed the brand.

15
Radico Marketing Success Stories
  • 8 PM Whisky
  • The new packaging launched in FY 09 is the first
    Grain blended whisky launched in operating
    segment.
  • Grain proposition is considered to be smooth,
    mellow a superior whisky.

16
Radico Marketing Success Stories
  • Old Admiral Brandy
  • Launched in 2002
  • Adjudged fastest growing brandy brand in the
    world by Drinks International for two consecutive
    years 2003 and 2004
  • Sold one million cases in the second year of its
    launch
  • Katrina Kaif had endorsed the brand in 2004.

Source Drinks International,U.K,May 2006
17
Radico Marketing Success Stories
  • Contessa Rum
  • Largest selling rum brand in the defense segment
    in FY08
  • 20 of the defense market share
  • Sold 2.35 million case in FY08

18
Radico Marketing Success Stories
  • Magic Moments Vodka
  • The only successful Brand launch in the industry
    across all flavors in last 5 years
  • Innovation in Packaging
  • Created new price point in the segment
  • Fastest growing brand in the category
  • The youth icon of Indian Bollywood industry-
    Hrithik Roshan has endorsed the brand
  • Rewarded with Gold Medal at Monde selection in
    2008

19
Radico Marketing Success Stories
  • Magic Moments Vodka

20
Radico Marketing Success Stories
  • Magic Moments Remix Vodka- launched in Six New
    Flavors in FY 09.
  • Chocolate
  • Green Apple
  • Raspberry
  • Lemon Grass Ginger
  • Lemon
  • Orange

21
  • M2- Remix

22
Largest Alcohol Manufacturer in the Country
Radicos Sustained Competitive Edge
Distillery
  • The company has its largest distillery in the
    country based in Rampur, UP
  • The distillery has a capacity of manufacturing
    104 million litres annually
  • 100 capacity utilization
  • Molasses Based 75 million litres
  • Grain Based 28 million litres
  • Malt Based 720 thousand litres
  • The grain based facility was added in FY07

New Greenfield project
  • The company has entered into joint venture to
    set up another distillery in Maharashtra with an
    annual capacity of 36 million litres
  • It is expected to be operational by Dec 2008

Canteen Stores Department (CSD)
  • Radico market share is 29 of the CSD volume.
  • High Entry Barriers for getting brands approved.

23
Diageo Radico Joint Venture
The Blue Blood Marriage
Diageo is the No.1 premium alcohol Beverage
company in the world It has 10 brands among the
top 20 brands in the impacts hot brands survey (
impact UK based trading magazine) Diageo has a
strong presence in premium scotch segment with
leading brands in India such as- Johnnie Walker,
Black White and VAT 69
  • The company has entered into a 5050 JV with
    Diageo which is the largest Premium liquor player
    globally to set up a brand marketing company
  • The JV has launched its first brand Master
    Stroke in the deluxe whiskey segment. It has
    registered sale of around 230000 cases in 1st
    year
  • Both the companies have contributed Rs.75 million
    as the equity capital
  • Shahrukh Khan had endorsed the brand Masterstroke

Diageo Radico Pvt. Ltd.
Organization Structure of JV
Asif Adil MD
Raju Vaziraney CEO
Abhishek Khaitan MD
Dr. Lalit Khaitan Director
24
M2 with Flavors Spreading the Magic..
Global Vodka Industry 22.5 Indian Vodka
Industry 3 (4.4 million) (2007-08) Indian
Vodka Industry growing 36 CAGR
M2 Driving the semi-premium Vodka segment
At Present
M2 Vodka aims to become a millionaire brand in
2008-09 M2 CAGR96 (2006 onwards) Industry
Market Share 15 Semi premium segment market
share 70
Indian Vodka Industry 15 million
(estimated) Indian Vodka Growth seen at 27 CAGR
In 5 years By 2013
Magic moments aiming at becoming market leader
in the vodka category
Source JP Morgan 2007
25
Future Growth Drivers
  • Magic Moments
  • Expanding M2 brand portfolio through 6 new
    flavors introduced in the country
  • Test marketing of M2 vodka initiated in
    international markets in FY09
  • Increasing width of distribution through CSD in
    FY09
  • 8PM growth track
  • Launch of new packaging in the country with
    strong new communication backed by Malika
    Shehrawats endorsement
  • Launch of grain blended whisky
  • New Brand Launches
  • Exploring possibilities of tapping premium
    spirits market segment through launch of premium
    brands in the country.
  • Open to Strategic tie ups with global players
  • Old Admiral Brandy and Contessa Rum to witness
    the volume growth
  • Due to upgradation of the consumer from cheap to
    regular

26
SWOT Analysis
  • Strengths
  • Second largest player in the Indian spirits
    market
  • 3 millionaire brands
  • Innovation in brand creation.
  • Established distribution network
  • Largest distillery in UP and Maharashtra
  • Large Presence In CSD
  • Opportunities
  • Launching new premium brands
  • Making inroads in the untapped markets
  • Uniform Federal Excise Policy
  • Strategic tie up with global players
  • Weakness
  • Surrogate advertisement
  • Not present in all price points
  • Threats
  • Volatility in raw material prices
  • Change in regulatory environment.

27
Financial Summary
Key Financials
28
Shareholding Pattern
As on 28.09.2008
29
Radico Core Team
Raju Vaziraney COO, Domestic Business
Sanjeev Banga Head International Business
Dilip Banthiya CFO
K.P Singh Director, Mfg Operations
Vice Presidents /Asst Vice Presidents
Management Committees , Regional Profit Center
Committees.
30
Disclaimer
Certain statements in this presentation
concerning our future growth prospects are
forward- looking statements, which involve a
number of risks, and uncertainties that could
cause actual results to differ materially from
those in such forward-looking statements. The
risks and uncertainties relating to these
statements include, but are not limited to, risks
and uncertainties regarding fluctuations in
earnings, our ability to manage growth, including
those factors which may affect our cost
advantage, wage increases, our ability to attract
and retain highly skilled professionals, time and
cost overruns on fixed- price, fixed-time frame
contracts, client concentration, restrictions on
immigration, our ability to manage our
international operations, reduced demand for
technology in our key focus areas, disruptions in
telecommunication networks, our ability to
successfully complete and integrate potential
acquisitions, withdrawal of governmental fiscal
incentives, political instability, legal
restrictions on raising capital or acquiring
companies outside India. Radico Khaitan may,
from time to time, make additional written and
oral forward-looking statements, including our
reports to shareholders. The Company does not
undertake to update any forward-looking statement
that may be made from time to time by or on
behalf of the company.  
31
Thank You!
  • QA
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