Premium Spirits Surge In India: Allied Blenders Takes Cue From Radico Khaitan’s Re-Rating

Radico Khaitan has been a market darling in the liquor space, delivering 577% returns over the last five years. Its performance has been driven by one structural shift: premiumisation. Radico’s Prestige & Above (P&A) portfolio has grown at a 13% CAGR since FY19, and its share of total volume has doubled from 21.6% to 46.1%.

This richer mix has translated into faster bottom-line growth, as higher-margin premium brands expand profitability far more strongly than volumes alone. This trend is unfolding across sectors, and coincides with India’s rising per capita income. As per the School of Intrinsic Compounding, at around $2,700 (2024), India is nearing the discretionary spending inflexion point, where consumers upgrade to higher-quality, higher-value products.

The Indian Alcohol Story

Household spending on food has also fallen to less than half for the first time since 1947, signalling a shift toward aspirational consumption. The liquor industry clearly reflects this transition. The Indian alcohol story has been on a steady growth path, with the value growth of Indian Made Foreign Liquor (IMFL) at 5.7% being nearly 2x the volume growth of 2.8%. Nuvama estimates that industry value growth (12%) will outpace volume growth (8% CAGR) during FY22-28, driven by a growing drinking population and rapid urbanisation.

Allied Blenders’ Shift Towards Premiumisation

Radico Khaitan’s premiumisation-led trajectory set the tone for the industry, and other players are now repositioning their portfolio to ride the same wave. Allied Blenders, the company behind Officer’s Choice Whisky, has begun repositioning its portfolio to participate in this shift. To begin with, Allied Blenders (ABD) is India’s largest domestic spirits company by volume, with a 25-brand portfolio spanning whisky, rum, brandy, vodka, and gin.

By revenue, ABD is India’s fourth-largest spirits franchise, trailing Radico. Whisky is the core of the business, accounting for about 80% of sales. In the overall whisky industry, ABD is the third-largest whisky player with 12% market share, trailing Pernod (21%) and United Spirits (19%). The company is strategically reducing its reliance on the low-margin mass-premium segment and shifting focus to the higher-margin P&A portfolio.

ABD’s Premium Portfolio

ABD P&A portfolio, priced between Rs 840 and Rs 5,300 per bottle, caters to faster-growing segments. The brand includes Officer’s Choice Blue, Sterling Reserve, Srishti Whisky, Kyron Brandy, and Golden Mist Brandy. ABD has also begun building a presence at the super-premium and luxury end through ICONiQ White Whisky, the Arthaus Collective, and Zoya Gin. Four key brands, including Officers Choice and Blue variant, ICONiQ White, and Sterling Reserve, account for 95% of the 33 million volume in FY25.

Scaling Premium Brands

Within premium brands, ABD aims to grow its flagship premium brands– ICONiQ White (the world’s fastest-growing millionaire spirits brand for two consecutive years) and Sterling Reserve (B7 and B10). ICONiQ White surpassed 5.7 million cases in FY25 and is already one of India’s top five whisky brands. Sterling Reserve is also growing rapidly across India.

Entering the Super-Premium and Luxury Segments

To deepen its presence in the luxury spirits market, ABD has launched the ABD Maestro platform in partnership with actor Ranveer Singh (who holds a 20% stake). This vertical houses super-premium offerings such as Zoya Gin and the Arthaus Collective, as well as partnerships with Russian Standard Vodka and acquisitions like Woodburns Contemporary Indian Whisky.

Expansion Plans

ABD Maestro is expanding strategically into the airport duty-free retail segment (e.g., Bengaluru and Delhi) for its premium brands (Arthaus, Woodburns, Zoya, Pumori, Russian Standard). This will position its luxury brands among high-value consumers. Zoya Gin is the first luxury brand to be exported, with its UAE debut targeted for FY26. The company also plans to begin exports to Canada and the European Union (EU), for which it has received approval.

Financial Performance

Financial performance has remained strong. Income from operations has increased from Rs 3,158 crore in FY23 to Rs 3,541 crore, largely driven by growth in the P&A segment. Operating leverage is also visible with the ongoing shift toward premiumisation. Gross margin and EBITDA margin both have widened during the period.

This has translated into a sharp turnaround in profitability, with net profit rising to Rs 195 crore from just Rs 1.6 crore in FY23, supported by margin expansion and lower interest costs. With debt repayments, the company’s net debt-to-equity has declined to 0.5x from 1.8x in FY24. Meanwhile, the Return on Capital Employed has strengthened to 22.6%, up from 4.7% in FY23, reflecting better operating efficiency.

Outlook

ABD plans to increase this to 25% as revenue-mix and profitability improve. The stock trades at 68x P/E, higher than United Spirits (62x) but at a discount to Radico Khaitan (92x). To conclude, ABD is entering a phase where premiumisation, capacity upgrades, and a richer export mix can improve its profitability trajectory. If ABD sustains this shift, margins and returns may move closer to peers. The market will now look for execution to justify its valuation.

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