 Allied
Blenders and Distillers - the New face of BDA -
Trilok Desai & Rojita B. Tiwari
 A
new name, a new brand identity and a new CEO, is the sea change
and the new face of the Kishore Chhabriaowned BDA Company.
Deepak Roy, one of the oldest and senior most individuals in the
Indian liquor industry and pioneer of vodka revolution in India
recently took over as the Executive Vice Chairman and CEO of
Allied Blenders and Distillers (ABD). He is also known better as
an ex-UB man and Vijay Malaya’s close associate.
In an exclusive
interview with Ambrosia, he speaks out all that the industry
would like to know about ABD, about Officer’s Choice brand and
about his dreams to make ABD a multi brand company.
He has been there and done that. He has witnessed some of the
most talked about take over and revolutions in the history of
Indian liquor industry. However, when we ask him about his
journey so far, Deepak Roy, Executive Vice Chairman and CEO, ABD
just shows his contentment and prefers to talk about the
present.
Can you update us on the status of
Officer’s Choice at the moment?
The brand Officer’s Choice (OC) has been growing from strength
to strength, especially since the last 3 years, the average
compounded growth rate is over 20 per cent. In spite of no
above-theline inputs, OC is the fastest growing liquor brand in
India with a strong hold in North Indian markets, AP and the
North East.
The brand is a leader in markets like Chandigarh, Rajasthan and
Andhra Pradesh and Assam. He adds that we are expecting to grow
this year by 24 per cent and sell around 7 million cases, which
will make Officer’s Choice the third largest IMFL brand after
Bagpiper and McDowell No 1.
"In the immediate future we
will be launching a premium German vodka brand called
'Wodka Gorbatschow' in India through a 50:50 JV."
By when is BDA becoming a multi-brand
company from a single brand company? Have you already started
working in this regard?
Yes, we are planning to become a multi brand company very soon.
At the moment 90 per cent of the company’s business comes from
one brand, which is not a very favourable situation. So, we are
planning to launch 3-4 new products, which are in the pipeline.
In the immediate future we will be launching a premium German
vodka brand called ‘Wodka Gorbatschow’ in India through a 50:50
JV Company Henkel & Sohnlein SEKTKELLEREIEN KG. This locally
bottled premium vodka will be our first offering and in the
following months we will witness the launch of other new
products. After United Spirits, we have the best distribution
set up and a great reach with a great sales force and we intend
to leverage on that. We have also recently launched a regular
vodka brand called “Class” priced in the same segment as Romanov
at around Rs. 225/- per bottle.
What is your sales projection for this
new German vodka brand in India?
We are targeting at the premium vodka market which is
essentially controlled by Smirnoff at the moment with around 95
per cent market share that is close to about 6,50,000 cases. In
the first year we are planning to acquire 10 per cent of the
premium vodka market. The price of ‘Wodka Gorbatschow’ will be
similar to Smirnoff but our quality will be superior as our
product goes through chill filtration process.
This brand will be initially promoted through print and outdoor
and once volumes grow we will also advertise in the electronic
media. A very exciting mix of below line promotions, clubs, bars
and lounges have been designed to built quick awareness and
consumer trials...
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A Tęte-Ŕ-Tęte With Kishore
Chhabria |
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BDA Ltd (now known as ABD Ltd), the makers of Officer's Choice
has had several litigations, which also includes its Chairman
Kishore Chhabria's fight against his late brother Manu Chhabria,
erstwhile Chairman of Shaw Wallace Ltd. The dust seemed to have
settled with the settlement of Kishore Chhabria equity in
Herbertson Ltd and the acquisition of SWC by the UB group.
But now rumors are agog in the industry that Vijay Malaya has
claimed that Officer's Choice belongs to SWC and he is thinking
of court proceedings. Ambrosia got in touch with Kishore
Chhabria to bring first hand news on the issue and his comments
on these rumours; he said that there is no case as far as BDA is
concerned. He declined to comment further on this matter.
At the time of going to press, another judgment on the trademark
infringement on the case between John Distillers’ brand Original
Choice and BDA Ltd’s Officer's Choice was pending. The trade
mark registry approved Original Choice certification under class
33 of wine, spirits and Liqueurs. However, the main case is
still pending in the Delhi High Court. In the meanwhile, BDA Ltd
has changed the name to Allied Blenders and Distillers Ltd (ABD
Ltd). We asked him why he thought of changing the name now. He
said, “We wanted to give the company and the brands a new look.
A new approach and a new way for doing business. We had hired an
agency that gave us various options and we zeroed down on this
name.” Meanwhile the expectations are high with the roping in of
Deepak Roy as the CEO, who has also bought 5% equity to take the
company to a new heigh.
ABD Ltd has ambitious plans to unlock the value and to go to
public. Currently the sale is in the region of 6.5 to 7 million
cases and is growing at 20% will touch a turnover of
approximately 800 crores. By the time the company registers a
turnover of 1000 crores, we will be ready to go public. The
company is also planning to launch several products in phases
and is also looking at collaborations. We have already tied up
with the German company Hen kell & Sohnlein se ktkellereien kg
and might see action on this turf in future.
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"The trade mark registry
approved Original Choice certification under class 33 of wine,
spirits and Liqueurs. However, the main case is still pending in
the Delhi High court."
Are you planning to launch any whisky
in the higher segment than Officer’s Choice? There was some talk
about your company partnering with a scotch company?
We do not have any such plans at the moment. However, we will be
looking for opportunities in all categories and segments in the
IMFL industry; I would not like to confirm whether it will be in
malt whisky or premium whisky or a regular category. We are
niche players in comparison to giants like UB and we will
certainly examine opportunities in the future. I do not want to
get into head on war with any company.
There are many unexplored segments in the Indian liquor industry
which remains untapped. At the moment everyone seems to be
getting into the regular and prestigious whisky segment where
all the action is happening, however, there are other important
categories, which remain untapped.
Which are the strong markets for
Officer’s Choice brand?
Officer’s Choice has a strong base in entire northern India,
including the North-Eastern states; Kolkata, West Bengal and we
are doing well in Bihar and Orissa. As I have mentioned, we are
leaders in Andhra Pradesh, in the north in Punjab, Rajasthan
Chandigarh and Himachal Pradesh. Areas where we need to work on
are Maharashtra and Mumbai.
"At the moment, barring 3
states, Maharashtra, Karnataka and Haryana, we do not have
our own bottling plants anywhere, even though we have presence
in 23 states.
Our first investment area would be in expansion of bottling
capacity.
What according to you are the reasons
for the robust growth of the whisky market in India at the
moment?
The Indian economy is growing at 8-10 per cent growth rate per
annum for the last 4-5 years which is extremely creditable.
There is a wider consumer base that’s buying IMFL then what it
was earlier. In 1993 the total liquor market was around 30
million cases and now it has reached to 130 million cases. A lot
of people are upgrading themselves from country liquor to cheap
IMFL to regular IMFL etc. The foreign liquor market is expected
to grow at around 12 to 15 per cent. Though I believe, some
categories will grow faster like vodka, the premium segment and
the prestige market, keeping in mind the change in consumer
drinking habits. Wine industry will grow fast too. The reason
for growth in beer industry is because of the affluence and due
to the liberalization of beer policies in different states.
What challenges and opportunities do
you see in taking your company to the next stage of development?
We would like to maintain a low profile and let the products and
efforts of the company speak for itself. But we are interested
to go public in next 3-4 years time.
 What
is the current turnover and profitability of ABD?
ABD is a closely held company and I am 5 per cent stake holder
in this company. The present turn over is approximately 500
crores. By next year we should grow by 22 per cent. ABD has
registered a healthy growth and profit since last 3 years. We
are perhaps the only company which is debt free.
Which are the areas of investment you
are looking at?
There are 2-3 areas where we are looking to invest in. At the
moment, barring 3 states, Maharashtra, Karnataka and Haryana, we
do not have our own bottling plants anywhere, even though we
have presence in 23 states. Our first investment area would be
in expansion of bottling capacity. Also we would like to have
control over purchase of raw materials and therefore, we would
actively be pursuing an acquisition or a green field project to
produce ENA on our own.
Third area which requires significant investment is on brands.
For example, if we plan to launch a whisky, it would require an
investment of 25-30 crores.
All these above plans would require around Rs 200 crores of
investment. We still need to decide whether we use our own funds
or it will be mix of debt come own funds.
The other area that we are focusing on is in upgrading the
skills of our people and in creating an ERP system. We do not
need to employ more but we need to upgrade the skills of the
existing man power.
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