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The New Indian Single Malt: Kamet

Kamet was envisioned by Ansh Khanna and Master Sommelier Ken Fredrickson, who believed India to be one of the greatest places in the world to produce whisky given the unique six row barley and ageing conditions. It is a JV between Peak Spirits and Piccadily Distillery.

Is India Good for single Malt?

‘We consider India to be one of the greatest places in the world to produce single malt whisky, given our unique six-row barley and ageing conditions.’ Ansh Khanna, co-founder of Peak Spirits that owns the two labels, says, “We had been working on the single malt much before Jin JiJi. Given the ageing requirements, the journey to launch is much longer.”

At the beginning of this year, Peak Spirits, run by Mumbai-based Ansh Khanna and Chicago-based sommelier Ken Frederickson, soft-launched their first product Jin Jiji in select cities in the US, Europe, and Canada. The ‘India Dry Gin’, which is distilled in Goa, and will soon be available in India as well — along with their first-ever whisky, Kamet. Named after a 20-thousander in the Garhwal Himalayas, among India’s highest mountains, work on the NAS whisky, says Khanna, began around 2016. “Ken and I believe that India’s unique conditions and six-row barley — we source ours from the foothills of the Himalayas — make it an exciting place to produce a single malt of great complexity,” adds Khanna.

Khanna and Frederickson have teamed up with Piccadily Distillery, in Karnal, Haryana, and set themselves a tough benchmark — The Macallan. Kamet is a duet, a unique collaboration between two Master Blenders – Surrinder Kumar and Nancy Fraley. Surrinder has previously served as the Master Blender for Amrut distilleries, founding and spearheading their single malt programme, and showing the world the potential for India to produce whisky of great complexity. Nancy has worked with numerous distilleries around the US. She has a deep connection with India, from her time studying Buddhism at Harvard. She serves as the Director of Education for the American Distilling Institute (ADI).

Using the local six-row barley, the whisky is distilled in copper pot stills and matured in a combination of ex-Bourbon American Oak, ex-wine French Oak and ex-Sherry casks. This gives the single malt a vinous touch, as most single malts use only ex-Bourbon casks for their standard expressions.

“Most whisky produced in India can’t be classified as whisky as per international standards since they are made from molasses (technically, rum) and not matured for an adequate period,” Khanna explains. “Our wide usage of ex-wine casks from France is a first-in-industry. We are proud to be one of the few making high-quality single malt whisky in the country.” “The wood used has always been crucial to The Macallan’s character, and I’ve been inspired a lot by them,” says Khanna. “Kamet is matured in a combination of ex-Bourbon American oak, ex-French oak and ex-sherry casks. The usage of wine and sherry casks gives Kamet a vinous complexity on the nose and a beautiful natural colour.”

The much-acclaimed Amrut Fusion is among the whiskies Kumar worked on while at the Bangalore-based distillery. The success of Amrut and Paul John has triggered a lot of interest among whisky entrepreneurs in India. “But making whisky is very different from producing, for instance, gin. Whisky makers abroad are finding it tough to sell regular single malt and are focusing on special releases.

Thanks to the wine, bourbon and sherry casks, Kamet has a fruity aroma profile with oaky spice forward notes, complemented with vanilla, caramel and subtle raisins with nutty and sweet dark chocolate on top notes. On the palate, it exhibits a melted concoction of fresh and dried fruit notes with subtle hints of oaky vanilla, spice and dark chocolate. Kamet has a long, warm complex nutty finish with a balanced dry and sherried sweetness. Khanna recommends the whisky be enjoyed neat, on the rocks or with a splash of water.

Kamet will be available in Goa, Europe and the US in early 2021 for a price of Rs. 2,699 for a special introductory price. This will be increased to Rs. 2,999 post May 2021. In Gurgaon the launch price will be Rs. 2999 with the company targeting a volume of 1000 cases a month.

Glenmorangie Highland single malt Scotch whisky cocktails from Moët Hennessy

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This upcoming World Whisky Day, raise a glass and call in the celebration with Glenmorangie The Original 10 year old single malt scotch whisky. Have it by itself the old fashioned way or shake up some signature Glenmorangie cocktails as under.

Price (Delhi, Bombay, Bangalore) Glenmorangie The Original

Delhi – ` 4800

Bangalore – ` 7618

Mumbai – ` 7426

Glenmorangie Cocktail Recipes

ORANGE MINGLE

Glassware: Nick & Nora

Ingredients:

45 ml – Glenmorangie Original

2 ml – Orange Marmalade

10 ml – Aperol

15 ml – Lemon Juice

10 ml – Orange Juice

25 ml – Egg White

Orange Bitters

Garnish: Edible Flowers

Directions:

Add all ingredients to a shaker and reverse dry shake. Double strain into a Nick & Nora glass. Garnish with bitters and edible flowers.

THE ORANGE HIGHBALL

Glassware: Highball

Ingredients:

50 ml – Glenmorangie Original

50 ml – Soda Water

50 ml – Tonic Water

Orange Wedges

Garnish: Orange Wedge

Directions:

Fill a highball with ice and add Glenmorangie. Squeeze on wedge into the glass and then top with Soda and Tonic Water. Garnish with an Orange Wedge.

GLENMORANGIE GINGER LEMON

Glassware: Old Fashioned

Ingredients

50 ml – Glenmorangie Original

7.5 ml – Sweet Vermouth

7.5 ml – Ginger Syrup

2 Dashes – Angostura Bitters

1 Dash – Orange Bitters

Garnish: Lemon Twist, Crystallised Ginger

Directions

Add all ingredients to mixing glass filled with ice. Stir until well chilled, strain into an old fashioned glass with a block of ice. Garnish with a lemon twist and crystallised Ginger.

Covid-19 Impact and Recovery to 2030

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Spirits Global Market Report 2021: Covid-19 Impact and Recovery to 2030 provides strategists, marketers and senior management with the critical information they need to assess the global spirits (distilleries) market as it emerges from the Covid-19 shut down.

Major companies in the spirits market include United Spirits Ltd (A Diageo Company); United Breweries Ltd (UB); Radico Khaitan Ltd; Globus Spirits Ltd and GM Breweries Ltd.

The global spirits market is expected to grow from $143.31 billion in 2020 to $150.87 billion in 2021 at a compound annual growth rate (CAGR) of 5.3%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $208.84 billion in 2025 at a CAGR of 8%.

The spirits market consists of sales of potable liquors, ethyl alcohol, grain alcohol and spirits by entities (organizations, sole traders and partnerships) that distil and blend liquors. The companies in the distilleries industry process raw materials into potable liquors, ethyl alcohol, grain alcohol and spirits, package and distribute them through various distribution channels to both individual customers and commercial establishments. The spirits market is segmented into whiskey; vodka; rum; tequila; gin and other spirits.

Asia Pacific was the largest region in the global spirits market, accounting for 58% of the market in 2020. North America was the second largest region accounting for 22% of the global spirits market. Middle East was the smallest region in the global spirits market.

Spirits manufacturers are now offering ready-to-mix hybrid beverages to cater to changing consumer tastes and preferences. Hybrid beverages are a blend of alcoholic drinks from multiple beverage categories. They are prepared by using unique flavour combinations, ingredients and production methods from multiple drinks. For example, producing spirits or beers in a wine barrel, to give them a distinct taste.

Hybrid beverages are particularly evident in the spirit category, with products such as beer mixed with rum and tea mixed with vodka. Some of the popular hybrid beverages include Malibu Red (rum and tequila), Kahlua Midnight (rum and Kahlua) and Absolut Tune (vodka and sparkling wine).

World population is growing and is expected to reach 10 billion by 2050. Increase in population creates more demand for alcoholic-beverages. Crop production, farming activities and trade volumes will have to increase in order to meet increased population. Therefore, companies in this market are expected to benefit from rising demand for spirits manufacturing (distilleries) products due to rising population, during the forecast period.

Global premium alcoholic beverages market is expected to register a CAGR of 8.43% during the forecast period, 2020 – 2025.

There is a growing trend that prefers low-alcohol beers, which is attributed to the growing awareness of alcohol unit consumption and the customer’s willingness to try new beverages. This shift in trend is witnessed in the demand for low alcohol drinks in the United Kingdom, where the sales of off-licenses and supermarkets have soared to a record high.

In most mature and some emerging markets, consumers are starting to drink ‘less-but-better’ alcohol, generally with higher barley and malt contents. The major players operating in the market are expanding their product portfolios, with strategic acquisitions of breweries, in order to spread their footprints across the world, and tap the premium alcoholic beverage market.

Scope of the Report

Global premium alcoholic beverages market is segmented by type which is classified as beer, wine and spirits. By distribution channel, the market is segmented into on-trade and off-trade. Moreover, the study provides an analysis of the premium alcoholic beverages market in the emerging and established markets across the world, including North America, Europe, Asia-Pacific, South America, Middle East & Africa.

As the impact of the ongoing pandemic on the global beverage alcohol market continues to come into focus, IWSR has identified six key macro trends that are driving and shaping the industry: Digital and E-commerce; Sophistication and Premiumisation; Evolving Traditions; External Pressures; Health and Ethical Consumption; and Social Drinking Experiences.

As part of the newly released IWSR Global Trends 2020 Report, IWSR analysts assess the impact that Covid-19 will have on these macro trends in the short, medium and long term, and across key global markets. Here, we highlight three of the macro trends:

Sophistication and Premiumisation

The search for authenticity and status, enabled by consumer knowledge and spending power:

Premium-and-above spirits are forecast to increase their global volume market share to 13% by 2024 as consumers continue to favour quality over quantity, including cocktails and high-end sipping spirits.

By value, China is the world’s largest premium-and-above market for wine and spirits, although, by volume, the US trails it closely.

In both countries, premium-and-above brands are forecast to increase their volume market share by approximately one percentage point between 2019 and 2024, as the premiumisation trend continues to influence market developments.

Evolving Traditions

Generational shifts in consumer behaviour encouraged by globalisation or emerging as a reaction against it:

Local products and experiences – accelerated by travel restrictions and closed borders during the pandemic – will continue to gain popularity as consumers rally behind symbolic and job-sustaining producers.

Adapting to bar and restaurant outdoor dining restrictions and closures has forced consumers – especially among younger LDA generations – to form new drinking habits that will likely persist into the future, with portable/convenient beverages such as canned wine and RTDs well-poised for this.

Spirits categories that are expected to continue to ride the globalisation trend include premium-and-above tequila (which has grown 15% year-on-year between 2015-2019), and spirit aperitifs (which after the Covid-19 slump, due to on-trade closures, should return to healthy growth by 2021, with volumes increasing by almost 16% from 2019 levels).

Health and Ethical Consumption

Increasing focus on personal health and wellness, and the impact of choices on the environment and society at large:

Health-conscious drinkers generally adopt a policy of moderation, cutting back in volume or reducing occasions. These consumers are likely to trade up to a higher-quality drink or one they perceive as healthier when they do choose to drink. Regular drinking occasions are also changing, thanks to the growing profile of better low- and no-alcohol alternatives.

In the top countries for low- and no-alcohol products, no-alcohol beer is set to grow its share of the beer category to 4.45% by 2024, as sober and moderating consumers embrace newly improved products across a wide range of occasions.

The top organic wine markets as of 2019 are Germany, France, the UK, the US, Sweden and Japan. Here and elsewhere, broad consumer-and state-led shifts toward health and/or sustainability are likely to continue in the wake of the Covid-19 pandemic. This will have implications for the whole beverage alcohol industry, from production and packaging to distribution and administration.

Delhi new excise policy lowers drinking age to 21, only 3 dry days

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The Delhi Government on March 22, 2021 came out with a new excise policy which is expected to bring about radical changes in the sale and consumption of liquor in the national capital. The headline grabbing announcement has been the government’s decision to lower the drinking age from 25 to 21; keeping bars and pubs open till 3 a.m and bringing down the number of dry days from 21 to 3, all of which are expected to shore up excise revenues from `5,068.7 crores to `7,651 crores.

The government’s decision to rework the policy was necessary as the 2009 excise policy seemed outdated and the rollout of the Goods and Services Tax (GST) had taken away a chunk from the state government’s excise kitty.

The Delhi Deputy Chief Minister, Manish Sisodia said another important decision taken is that the Delhi government will not run any liquor outlet. Presently, about 40% of the 850 odd outlets in the capital are privately run, the remaining by government. The state-run outlets were indulging in ‘brand pushing’ and there was pilferage in revenues, thus affecting the coffers. This year, the government will also not give licence for opening any new liquor retail outlets, while it will shut down those which are running without licence.

2,000 illegal outlets in the capital

The Deputy Chief Minister said the liquor mafia needed to be checked and mentioned that while the government had approved 850 liquor stores, the liquor mafia has been running about 2,000 illegal outlets and with impunity over the years. “In the last two years, over 7 lakh illegal liquor bottles have been seized, 1939 people arrested.” There was a skewed distribution network – 20% of the areas in the city are over-served, while 58% are under-served, giving room for the liquor mafia to rule.

Diageo welcomes progressive excise policy

The industry has welcomed the new policy. One of them to react first has been Diageo India’s Managing Director and CEO, Mr. Anand Kripalu, who said “Diageo India welcomes the progressive Excise Policy reforms announced by the Delhi Government yesterday. The new Excise Policy keeps the consumer at its heart, enabling their access to good quality brands in significantly safer and enhanced purchase and consumption environments. We welcome the many consumer-friendly measures including bringing the legal drinking age in Delhi at par with neighbouring states, introduction of “age-gating” at restaurant & bars, equitable geographic spread of retail outlets in the State and 100% private retail. The government’s mission to tackle the scourge of illicit liquor trade will ensure safety of citizens while minimising revenue losses of the government.”

New rules for liquor outlets

The new guidelines have factored in the size and location of liquor shops for equitable distribution in the city. The minimum space for an outlet now is 500 sq ft and that the windows of such stores should not face the road. “Most government-vend outlets had a jail-like environment and this would go.” It is the responsibility of the shop owner to ensure discipline and decorum in the premises of liquor shops, ensuring that no public drinking took place either inside or outside the liquor stores. Those below the age of 21 will not be allowed inside liquor stores.

The Delhi government had constituted a three-member panel led by the Deputy Chief Minister Manish Sisodia with Kailash Gehlot and Satyendra Jain as members to formulate the new excise policy. The panel had made several sweeping recommendations, all of which have been adopted by the government.

The Group of Ministers committee suggested allocation of liquor vends through a lottery system whereas the liquor mafia has been lobbying to keep e-auction system where they could use money and muscle power. The recommendations of the committee included:

Registration of Brands

Whiskey – The committee suggested that brands selling below the retail price of `601 per bottle would be registered in Delhi only if the brand and its variants have sold a minimum of 1,00,000 (one lakh) cases each in minimum of five states excluding Delhi which have IMFL industry (Indian Made Foreign Liquor) higher than Delhi and a minimum of 10 lakh cases volume including CSD (Canteen Stores Department) in the previous year all over India, excluding Delhi. For brands with retail price of over `601 per bottle, no sales figures will be required for registration of the brand.

Rum/Vodka – The committee suggested that brands selling below the retail price of `501 per bottle would be registered in Delhi only if the brand and its variants have sold a minimum of 10,000 (ten thousand) cases each in a minimum of five states excluding Delhi which have IMFL industry (Indian Made Foreign Liquor) higher than Delhi and a minimum of 1 lakh cases volume including CSD (Canteen Stores Department) in the previous year all over India, excluding Delhi. For brands with a retail price of more than `501 per bottle, no sales figures will be required for registration of the brand.

Beer – Strong Beer – For Beer brands above 5% alcoholic strength and MRP up to `150 per bottle, would be registered in Delhi only if the brand and its variants have sold a minimum of 10,00,000 (Ten Lakh) cases including CSD, but excluding Delhi, all over India, with registration in at least 5 states.

Lager Beer – For Beer brands up to 5 percent alcoholic strength and MRP up to `150 per bottle, would be registered in Delhi only if the brand and its variants have sold a minimum of 5,00,000 (Five Lakh) cases including CSD, but excluding Delhi, all over India, with registration in at least 5 states. For all Beer brands with a retail price of over `150 per bottle, no sales figures will be required for registration of the brand.

Brandy and Gin – For these two products, no sales figure shall be required for registration of brands in Delhi.

This recommendation has been made keeping in view of the cheap brands being manufactured in Delhi’s neighbourhood, which are owned and supplied into Delhi by persons who are already having a number of liquor vends in the capital. Such cheap brands are sold to hapless consumers over the counter by the staff of the liquor vends, denying them quality products as the owner of the liquor vend earns more by selling his self-made product as compared to other quality products.

Steep hike in Licence Fee

The committee proposed raise of licence fee from `8,00,000 (Eight Lakhs) per year to `75,00,000 (Seventy-Five Lakhs) per year. On the other hand, to ensure that the vend owner does not suffer losses due to the steep hike in licence fee, the committee made another recommendation. Till now, the liquor vend owner used to get a profit of `50 to `100 per bottle but the committee has proposed a profit of 8% from the MRP of the product for the vend owner, which will ensure that the hike in licence fee, will compensate the vend owner.

Vend allocation system to be changed

The committee recommended discontinuation of the practise of auto-renewal of licences. Now vends are to be allotted by lottery and no individual would be allotted more than two vends. This has been done to do away with the existing monopoly and cartelisation in the system as at present, there are individuals holding as many as even twenty vends in Delhi

The committee recommended to raise the number of existing 720 liquor vends in Delhi to 916 for its population of about 2 crores. Mumbai has 1190 vends against a population of 1.23 crores and Bangalore has 1794 vends across a population of 1.93 crores.

Glasgow Whisky purchases Drumguish distillery in Soctland

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Glasgow Whisky has announced its purchase of Tromie Mills Distillery Limited, as a= further advancement to its expanding global business. Tromie Mills Distillery Limited are the owners of the distillery based in Drumguish, Cairngorms National Park – regarded as one of the most scenic distillery sites in Scotland.

Glasow Whisky has undertaken to commit significant investment to construct a modern, more environmentally sustainable and energy efficient distillery. The new owners remain dedicated to the heritage of the site and maintain its traditional, established methods of distilling quality single malt Scotch whisky.

The company has confirmed that the current tenant, Speyside Distillers, will continue their operations in the Drumguish site until the expiry of their lease in Spring 2025. Speyside Distillers had already announced their own plans to build a distillery earlier this year. The renovations by Glasgow Whisky will commence from Spring 2025. The company is set to work with suppliers from the local Speyside area.

Founded in 2007, Glasgow Whisky has established influential global credentials in both – bulk exports and branded cased sales. As the company now ventures into purchasing its first distillery site, owners Graham Taylor and Stuart Hendry – who have over 70 years of combined industry experience – are delighted at how the business is evolving.

Taylor commented, “The addition of a distillery in Drumguish is an exciting and natural progression as we continue to build for the future. Since our launch in 2007, we have seen significant growth in all areas of our Scotch whisky brands and products across the globe. The distillery will enable us to add to our portfolio and continue to supply our clients around the world with quality Scotch whisky.”

“Our plans for the distillery will give us the opportunity to celebrate an established and known site, whilst bringing it into the 21 st century in terms of distilling innovation, sustainability and production methods. We are extremely excited to have this opportunity to evolve our business,” added Hendry.

Ethanol as essential energy

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In 2020, the lesson learned was that ethanol is the embodiment of “Essential Energy”. Ethanol produces the renewable fuel and delivers the nutritious feed that livestock and poultry producers rely upon. Ethanol proved essential for weathering the Covid.

Recognising the critical need to combat the spread of the virus, many ethanol producers quickly took the steps necessary to produce the high-purity alcohol that comprises roughly 70% of every bottle of hand sanitizer. Later in the year, news that vaccines were in development was greeted with understandable enthusiasm; it signalled the beginning of the end of the pandemic. But it also created a new challenge.

Much of the vaccine would need to be transported and stored at incredibly low temperatures, necessitating increased supplies of dry ice. Once again, the ethanol industry – which produces supply of CO2, the critical component of dry ice – was called upon to meet the increased demand for an essential product. The 2021 Ethanol Industry Outlook suggest that tomorrow’s challenges of climate change, food and energy security, and rural prosperity will continue to make ethanol an Essential Energy.

The global ethanol market size was valued at USD 89.1 billion in 2019 and is anticipated to register a compound annual growth rate (CAGR) of 4.8% from 2020 to 2027. The demand for the product is driven by growing usage of the product as a biofuel. The rising consumption of alcoholic beverages is another major factor supporting market growth. Ethanol can be manufactured by both natural as well as petrochemical feedstocks. In the natural process, natural sugars are fermented in the presence of yeast.

The Indian ethanol market is projected to grow from $2.50 billion in 2018 to $7.38 billion by 2024, exhibiting a CAGR of 14.50% during 2019-2024, on the back of increasing ethanol use in applications such as fuel additives and beverages. Ethanol is a prominent alcoholic beverage, mainly found in beer, cider, wine, spirits and ale. Indian government is trying to reduce its dependence on imported crude oil and incentivising Indian sugar manufacturers to produce ethanol for Oil Marketing Companies (OMCs). It is expected that ethanol production will increase by three to five folds in the future in order to meet the demand for its 20% Fuel Blending Programme (FBP). Factors such as increasing alcohol consumption and changing lifestyle along with growing influence of the western culture are likely to drive the demand for ethanol in the country.

In terms of source, the Indian ethanol market has been categorised into sugar & molasses based ethanol, second generation (mixed grains) and grain-based ethanol. Based on application, the market has been segmented into industry solvent, fuel & fuel additive, beverages, disinfectant, personal care, and flavouring & fragrance. Based on purity, the market has been segmented into denatured and undenatured. Government’s emphasis on ethanol production from bio mass and solid waste is likely to become a major source of ethanol production in future.

India has target of achieving 10% Ethanol blending by 2022 and 20% Ethanol blending by 2030.

Ethanol remains the highest-octane, lowest-cost motor fuel on the planet. And it is the only tool available at scale in the near term to significantly reduce carbon emissions from gasoline. Meanwhile, the industry’s co-products – including distillers grains and distillers oil – provide indispensable protein and energy to a hungry world.

State-run oil marketers are required to blend 10% ethanol in petrol under the national policy on biofuels 2018 by 2022 and 20% by 2030. But so far this has not been moving at scale as surplus sugarcane was not easily available and the blending is only 5% now.

To improve supplies of ethanol-blended petrol, the government has widened the feedstock options. Accordingly, the National Biofuel Coordination Committee of the oil ministry in June allowed the conversion of surplus rice with the Food Corporation into ethanol.

It has also allowed procurement and conversion of the surplus maze into ethanol. With this, the ethanol production happens from six feedstocks -100% sugarcane juice/sugar syrup/sugar; B-heavy molasses which is sweeter; C-heavy molasses which is mildly sweet; damaged food grain; surplus rice from FCI and surplus maize.

Adding surplus rice procurement process from FCI has already started for the 2020-21 cycle and very soon OMCs shall start procuring maze for making ethanol as well.

Of the total blending by 2022, 300-350 crore litres will come from sugarcane, and the rest from non-sugar feedstock like damaged foodgrains, adding 160 crore litres of 180 crore litres come from sugarcane.

The estimated annual petrol demand is pegged at 4,600 crore litre this year, which means 450-460 crore litre of ethanol mixing in the December 2020-November 2021 crop cycle.

Mills in U.P. are expected to produce about 105lac tons in 2020-21 SS, as against 126.37 lac tons produced in 2019-20 SS. Estimated lower production this year is because of reportedly lower cane yields and lower sugar recoveries in the State, much higher diversion to gur/khandsari units and much higher diversion of sugar for production of ethanol by way of diversion of B-heavy molasses and sugarcane juice. Based on the allocations made by the OMCs for supply of ethanol in 2020-21, it is estimated that about 6.74 lac tons of sugar will be diverted for production of ethanol by the sugar mills in the State in the current year as compared to about 3.70 lac tons diverted in 2019-20 SS.

In the sector of cane development and sugar industry, distillation of 120 kilolitres per day capacity will be established in Pipraich sugar mill which will start in December 2021. There will be facility to manufacture ethanol.

Pipraich sugar mill will be the first sugar mill in North India to manufacture ethanol directly from sugarcane juice.

The crushing capacity of Mohiuddinpur-Meerut sugar mill of the corporation area was increased to 3,500 TCD from 2,500 TCD.

A target to increase the crushing capacity of Mohiuddinpur-Meerut sugar mill from 3,500 TCD to 5,000 TCD is proposed to benefit 1,00,000 cane farmers in the state.

Cabinet has approved guidelines for production of ethanol from cane juice and syrup in the distilleries of the state.

Cabinet order is as follows: The decision will aid in reducing excess sugar stocks, increasing liquidity with the sugar mills for settling cane farmer’s dues and making higher ethanol available for Ethanol Blended Petrol (EBP) Programme; Surplus sugar production has depressed sugar prices, thereby impacting sugar industry’s capacity to pay sugar cane farmers. The ex-distillery price of ethanol derived from cane juice is `85 per liter while that from C- heavy molasses is `45.69 per liter, for the ethanol supply year beginning December 2020. Higher remunerative price for ethanol produced from cane juice will help in reduction of cane farmer’ arrears; Sugarcane juice shall mean, primary juice, secondary juice, mixed juice and clear juice as obtained by sulphitation or defecation process. Sugarcane syrup shall mean concentrated juice having total dissolved solid content not less than 50 brix; Sugar mills with captive distilleries within the premises shall be allowed to produce ethanol from cane juice and syrup. Standalone distilleries will not be allowed to produce ethanol from cane juice and syrup; Ethanol produced from cane juice shall be used only for Ethanol Blended (EBP) Programme; as no sugar or molasses is produced in the process, the income from ethanol derived from cane juice and syrup shall be tagged for payment of sugarcane dues to farmers. All the instructions regarding cane allotment and cane payment issued from time to time shall be binding on these units and The State Government has earlier permitted ethanol production from B-heavy molasses. Since then, more than 40 distilleries in the state are producing ethanol form B-heavy molasses, resulting in a significant increase in ethanol production in the state. The state is the highest producer of ethanol in the country.

Cabinet decision will empower the sugar mills to choose between production of sugar or production of ethanol from cane juice, based on viability of market price of sugar, further improving the income of sugar mills and there by better cane payment to farmers.

Maharashtra is expected to produce about 105.41 lac tons in 2020-21 SS, as against 61.69 lac tons produced in 2019-20 SS. Higher estimated sugar production this year is mainly due to increased cane area by about 48% and better cane yields as compared to the last season owing to favourable weather conditions as well as increase in percentage of plant cane. Based on the allocations made by the OMCs for supply of ethanol in 2020-21, it is estimated that sugar mills in the State will divert about 6.55 lac tons of sugar for production of ethanol in the current year, which is substantially higher as compared to only about 1.42 lac tons diverted in 2019-20 SS.

The third major sugar producing State viz. Karnataka is expected to produce about 42.5 lac tons of sugar in 2020-21 SS, as against 34.94 lac tons produced in 2019-20 SS. Similar to Maharashtra, there is an increase in cane area and reportedly better cane yields and better sugar recoveries, which is resulting in higher estimated sugar production in the current season. Mills in the State are expected to divert about 5.41 lac tons of sugar for ethanol production in the current year as compared to about 2.42 lac tons diverted in 2019-20 SS.

These three major sugar-producing States are estimated to contribute almost 93% of the total estimated diversion of sugar into ethanol of about 20.10 lac tons in the current season.

The Government had announced two important policy decisions to improve liquidity of sugar mills during 2020-21 SS, by way of announcement of sugar export programme of 60 lakh tons and upward revision of ethanol prices for 2020-21 SS, which have been welcomed by the industry.

However, the government is yet to announce implementation of a very crucial policy decision i.e. increasing MSP of sugar. This will improve the liquidity of the mills enabling them to make timely cane payment to farmers also. The ex-mill sugar prices are already under pressure in almost all the States and to ensure that sugar mills are able to pay to farmers on time, there is need to quickly decide on increasing the MSP of sugar.

Opportunities for beer in 2021 & beyond

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Beer suffered quite heavily during 2020, primarily due to its reliance on the on-premise. Beer markets in Italy, the UK and Colombia were amongst those particularly hard hit due to lockdown restrictions. Traditional inbound tourism hubs continue to hurt. Some brewers also faced legislative issues, notably full bans on the sale of alcohol in South Africa and India, and a ban on domestic brewing in Mexico. Changes in consumer purchasing behaviour in the off-premise, such as a tendency to purchase multi-packs and less time spent browsing, meant some players had to adapt to new packaging offerings and/or new distribution channels as well. Overall, the industry will likely see an approximate 9% decline in beer consumption across 19 key markets (2019 to 2020). Amidst the challenges, however, there are bright spots:

Market recovery

IWSR research shows that some beer markets will emerge from 2020 relatively unscathed: beer proved remarkably resilient in Japan, for example, especially in the face of a strongly-advancing ready-to-drink (RTD) category. Although beer in China will see an approximately 7% loss in volume in 2020, the decline is not as bad as many feared it could be, primarily as restrictions had largely been lifted by the key summer months. Looking forward, developing markets will continue to provide growth opportunities for brewers. Even before Covid-19, many developed beer markets had stagnated in recent years. Key players have invested heavily in increasing their brewing capability and distribution networks across developing markets. Africa has been a particular focal point for investment, with new breweries opened in countries including Mozambique, Kenya and Ethiopia. In Asia, Heineken and Carlsberg have been very active in Vietnam and Cambodia. In 2019, Heineken enjoyed success with the launch of Heineken Silver in Vietnam, while Carlsberg’s relaunch of Huda was also well received. Of the leading markets, IWSR projects these two countries to be in the top ten growth markets between 2019 and 2024. The potential for beer growth in India is strong as well. AB InBev, for example, began brewing Budweiser in the market back in 2010. In January 2021, Kirin Holdings announced an investment of $30 million in New Delhi-based B9 Beverages, the maker of the Indian craft beer Bira. IWSR anticipates beer consumption in India to return to pre-Covid-19 levels by the end of 2023, continuing on its growth path from there.

Expanding beyond beer

As consumers moved to the at-home occasion, the trend for convenience has helped to shape purchasing behaviours. In markets such as the US, the ready-to-drink (RTD) category, which includes hard seltzers, has been taking share from beer. RTDs provide a growing opportunity for brewers to diversify their product portfolios. Indeed, Heineken entered the hard seltzer category in September 2020, with the launch of Pure Piraña in Mexico and New Zealand. In the US, Heineken partnered with AriZona to launch the AriZona SunRise Hard Seltzer in October 2020. AB InBev states that Bud Light Seltzer is their leading innovation in the US market, with over 75% of volume being incremental to their portfolio. In fact, 2021 was the first year in which a hard seltzer commercial (Bud Light Seltzer) aired during the Super Bowl. Malt-based RTDs are currently dominant in the US owing to their taxation base, and brewers there are in prime position to take advantage. Elsewhere, the alcohol base of choice varies by country, driven by consumer preference and local alcohol tax structures.

Changes in purchasing behaviour propel e-commerce

As with the wider beverage alcohol industry, Covid-19 has propelled the value of the alcohol e-commerce channel. Heineken, for example, reported that Beerwulf, its direct-to-consumer platform in Europe, nearly doubled its revenues in 2020, while in the UK, its revenues tripled. Online sales of its home-draught systems grew as well. Beer has traditionally under-traded online, primarily due to the channel offering lower margins. However, this will change as consumers continue to buy more groceries online and beer is included in the weekly shop. This is especially true in the US, where IWSR expects sales of online beer to grow rapidly as supermarket chains increasingly invest in the channel. Online beer sales hold the greatest market share in countries including Japan, the UK and the US. From a lower base, online beer sales will also grow rapidly over the next five years in markets such as Israel and Nigeria.

The entrepreneurial spirit of small-batch players

Craft breweries, which tend to be more dependent on the on-premise, have propelled interest in the global beer category and revitalised its fortunes in many markets. IWSR believes that the entrepreneurial spirit of the sector will mean that craft brewery regeneration will be quick. In the US, for example, IWSR has seen the pandemic lead to a “buy local” approach amongst some consumers, which will benefit small-batch players.

Innovation in the no/low space reignites the category

No- and low-alcohol beer is a bright spot for the category, as moderation and wellness trends continue to resonate with consumers. IWSR data shows that, to date, most volume has come from no-alcohol rather than low-alcohol beer across 10 key markets. Broadly, low-alcohol beer is giving way to no-alcohol offerings particularly in markets such as Australia, France and the UK. Spain, for example, is seeing a shift from low- to no-alcohol beers, as consumers seek healthier choices and view the newer 0.0% brands as more modern. In South Africa, investment from Heineken and the emergence of a craft segment has helped to generate interest in the no-alcohol category. While no-alcohol beer has existed for decades, in markets like the US, no-alcohol beer has premiumised through the release of no-alcohol versions of non-lager styles, long the domain of no-alcohol beer. More recent no-alcohol styles, such as IPAs, stouts or porters, are starting to make a real impression, driven particularly by new challenger brands, many of which are not linked to traditional brewing. The recent no-alcohol extension of Guinness – despite some teething issues – will help to underline that no-alcohol beers are no longer the sole domain of lagers. While several key beer players continue to steer the no/low beer category, the market is fragmented with a number of smaller brands vying to establish themselves as market leaders in this space. The segment is likely to become even more of a focus for smaller craft producers who are able to bring a diverse range of products to the market in future.

How Asian drinks brands are targeting new markets

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Most Asian drinks brands sell the majority of their volumes domestically, where brand awareness is high and drinking cultures are long established. For example, IWSR data shows that approximately 97% of Japanese beer, wines, spirits and RTDs are consumed in the local market. When looking at just the premium-and-above price segment, over 60% of Japanese wines and spirits are consumed locally. But as competition from international brands mounts, local distillers, brewers and winemakers are dedicating more time and resources to developing their presence in overseas markets.

“There are lot of local champions that have a very strong position within their own market but little presence outside,” explains Tommy Keeling, Research Director at IWSR. “As Asian populations grow richer, consumers are trading up to imported drinks brands and the position of local champions suddenly looks less secure, so many are looking to diversify abroad.”

Keeling adds that for many brands, the real benefit of international expansion is the resulting uptick in interest in their domestic markets. In the case of Chinese spirit baijiu, for example, exports are unlikely to ever be more than a fraction of local sales, but distillers are hoping growing interest in the category abroad will boost its popularity at home.

Baijiu is a wealthy category, so brands are able to invest in high profile display advertising, such as Wuliangye’s billboard in Times Square. One of the main aims of this strategy would be to target relatively wealthy Chinese tourists who are already familiar with the brand. Luzhou Laojiao, another large baijiu producer, sponsored the 2019 Australian Open with its high-end Guojiao 1573 brand, again, principally targeting Chinese viewers.

For smaller brands such as Fenjiu, the main goal in international markets is education. “We would like to continue educating the UK market on baijiu and increase both trade and consumer awareness and understanding of this category,” says Qiqi Chen, managing director of Cheng International, the UK distributor of Fenjiu.

The brand takes a more intimate approach to marketing through meetings, masterclasses and tasting sessions, all supported through a strong social media drive. “There are two main baijiu education themes for us,” says Chen. “One is introducing Chinese food and drink culture, and the other is showing how Chinese baijiu can blend well with the western lifestyle.”

In order to offer a “more direct experience” of its brand, Fenjiu will increase its work with bars, restaurants, hotels and retailers, as well as brands outside of the food and drink industry.

Keeling adds that once brands start to expand internationally, it is crucial for them to tailor their approach to the market in which they are selling. For example, in South Korea, soju consumption is widespread, so brands mostly compete on price. However, due to shipping costs, import duties and excise taxes, the product becomes more expensive in overseas markets. As such, brands would be better to promote a different set of values.

For Asian beer brands, giving consumers an authentic taste of their respective cultures is an important way to expand their foreign fan base. The UK in particular gives brands the opportunity to grow their reach through the restaurant channel. Indian beer brand Kingfisher, for instance, has 5,000 distribution points in Indian and Bangladeshi restaurants in the UK.

John Price, head of marketing at KBE Drinks, the UK distributor of Kingfisher, notes that the brand “can be found in every type of eatery”, from high street curry houses to Michelin starred restaurants. “The restaurant channel will always remain the beating heart of our business, but it is sometimes hard to break out of this into wider consumption occasions,” he adds.

This is where sports sponsorships come in. Through commercial partnerships such as these, brands become visible in a new context. Kingfisher is currently a partner of Southampton FC, Leeds United FC, Sussex County Cricket and Wigan Warriors Rugby League Club. “We don’t take on a partnership unless we get pouring rights and this gives consumers the chance to re-evaluate the brand in a fun and exciting environment,” adds Price.

Thailand’s Chang Beer, which is the official beer of Leicester City Football Club, has an international marketing strategy centred around provenance and heritage. “Growing internationally is a journey that is carefully curated with the right partners, the right channels and the right marketing mix,” says Ronnie Teo, head of group marketing at Chang.

“It is important to ensure that we work with partners who share the same long-term convictions as us. Our partners understand what our Chang brand stands for – its provenance and values – and collaborate with us to market the brand in the right sales channels with the right messaging.”

For a number of years, Chang has hosted the Chang Sensory Trails event in London, which celebrates Thai cuisine in a contemporary setting filled with music and street art. Events such as these allow Asian brands to become an essential part of the cultural experiences and representations of their respective nations.

Ultimately, says Teo, to grow internationally, brands must first have a strong domestic business. “To that end, we have seen our marketing efforts in Thailand pay dividends, with our market share growing by more than 15% share points between 2014 and 2019. This strong growth has made Chang an iconic local champion, appealing to Thais, as well as the millions of tourists that visit Thailand annually. With a solid domestic foundation, we were then able to springboard our international marketing efforts.”

Beam Suntory Reports 2020 Results

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Beam Suntory, a leading global premium spirits company, reported full-year results for 2020.

Global net sales were flat for the year, as a return to growth in the second half offset lower sales in the first half of the year. Full-year sales grew 4% in the United States, as restaurant and bar activity improved in the second half and spirits continued to gain share from beer and wine. Sales were essentially flat in Japan, up at a single-digit rate in the UK and Russia, up high-single digits in Australia and Canada, and up double digits in Germany and South Korea. The impact of the pandemic led to lower sales in markets including Spain, India, China, South Africa and the Global Travel Retail channel.

Global sales for Jim Beam grew to surpass 11 million 9-litre equivalent cases for the first time, extending the brand’s leadership as the world’s number one Bourbon whiskey. Reflecting sustained consumer demand for premium brands, sales for Basil Hayden’s bourbon, Hornitos tequila, Toki whisky and Roku gin increased at double-digit rates. Sales were also exceptionally strong for Japanese ready-to-drink products and On The Rocks Premium Cocktails (acquired in September 2020), as consumer demand for convenience, refreshment and quality cocktails expanded.

“As we expected, consumer demand increased in the second half of 2020, even as the global pandemic continued to impact markets around the world,” said Albert Baladi, president & CEO of Beam Suntory. “I couldn’t be more proud of how our people adapted to confront the challenges of 2020 – from our frontline distillery workers to our sales teams, from our brand builders to every company function. As a result, we were able to meet consumers digitally in the emerging ‘home premise’ to support at-home cocktail-making and satisfy their expectations for convenience through increased investments in e-commerce and ready-to-drink products. At the same time, we supported our on-trade partners with innovations like cocktails to go, and guided by our vision of Growing for Good, we provided vital assistance to hard-hit restaurant and bar workers in markets around the world.”

“Looking ahead, the pace of recovery from the ongoing pandemic remains uncertain. In this environment, we expect to drive continued improvement in sales as we benefit from the strategic investments we made in 2020, the exciting brand plans we have in place, and our commitment to delivering quality to consumers at every step of the value chain up to the moment of consumption.”

Baladi also noted that Beam Suntory made substantial progress reducing its environmental impacts in 2020, and will soon announce a new global sustainability strategy featuring ambitious targets focussed on making a positive difference for nature, consumers and communities.

Update on Beam Suntory Growing for Good Initiatives

Environmental Sustainability

Carbon Reduction: Through the purchase of renewable electricity and the completion of multiple energy efficiency projects (Kentucky, Mexico and Scotland), Beam Suntory reduced its total Scope 1&2 carbon emissions by 25% compared to the 2015 baseline.

Water Efficiency: The company has reduced water use per unit of production by 29% (versus 2015 baseline) by optimising existing cooling systems and investing in more efficient cooling technologies at the Jim Beam distilleries in Kentucky.

Watershed Protection: The company has established Natural Water Sanctuary programmes at Maker’s Mark and adjacent to the Jim Beam distillery. The company continues to expand watershed protection activities to global manufacturing sites in India, Mexico, Spain, the US Virgin Islands and Ireland. Future activities are planned in Scotland, France and Canada.

Sanitizer: To support hospital systems and first responders in the fight against Covid-19, the company’s facilities in Kentucky, Japan, Spain, Scotland, Ireland, Canada and Mexico produced sanitizer sufficient to clean more than 50 million pairs of hands.

Hospitality industry: The company provided more than $3 million to support restaurant and bar workers and their families across numerous markets. Initiatives included Maker’s Mark’s partnership with the LEE Initiative Restaurant Reboot Relief Programme and Restaurant Workers Relief Programme, which donated more than 1 million meals to restaurant workers in the US, the company’s Shift-Meals To-Go programme supporting US hospitality workers and their families, and support programmes for on-trade workers in markets including Canada, the UK, Germany, Spain, Brazil and India.

Diageo posts Interim Results

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Encouraging return to growth, good cash generation and increased dividend

Diageo posted its Interim Results, half year ended on the 31^st December 2020 showing encouraging results, both in India and Globally which has prompted a rationalization of their portfolio and paring of debt. The Interim Results stated that the net sales (£6.9 billion) were down by 4.5%, as the organic growth of 1% was more than offset by unfavourable exchange. The operating profit (£2.2 billion) also declined by 8.3% due to the unfavourable exchange and a decline in organic operating profit.

However the organic net sales were up by 1%, despite a significant impact from Travel Retail and on-trade restrictions. The net sales in North America were also up by 12.3%, offsetting declines in other regions, except for Africa which was broadly flat. The growth in North America was driven by resilient consumer demand, share growth of total beverage alcohol, positive category mix and the replenishment of stock levels by distributors and retailers.

The report also stated that the organic operating profit was down by 3.4%, driven by the channel and category mix. The productivity benefits from everyday cost efficiencies largely offset cost of goods sold inflation. The Net Cash from the operating activities was up by £0.7 billion to £2 billion, and free cash flow was also up from £0.8 billion to £1.8 billion.

This primarily reflected a lower tax payment and working capital benefit driven by reduced creditor balances at the end of fiscal 2020, as a result of reduced sales demand and cost control measures triggered in response to the Covid-19 pandemic. The Creditor balances also recovered to more normalised levels.

The Basic eps of 67.6 pence decreased 14.6%. Pre-exceptional eps declined 12.8% to 69.9 pence, driven primarily by unfavourable exchange and lower operating profit. However the interim dividend increased 2% to 27.96 pence per share.

The improvement comes from the strong sequential performance in all regions compared to the second half of fiscal 2020. However, the manufacturer expects continued impact in the second half of fiscal 21 from on-trade restrictions and disruption to Travel Retail.

Speaking about the results Ivan Menezes, Chief Executive, Diageo said, “We delivered a strong performance in a challenging operating environment, returning to top line organic sales growth during the half. North America, our largest market, performed particularly strongly and ahead of our expectations. Consumer demand has been resilient and the spirits category continues to gain share of total beverage alcohol. Across other regions we delivered strong sequential improvement compared to the second half of fiscal 20. This reflects improved market share performance through excellent execution in the off-trade channel, and the partial re-opening of the on-trade channel in certain markets.”

Menezes expects the ongoing volatility and disruption in the second half of the year, particularly in the on-trade channel, which will make performance more challenging. However the medium and long-term growth drivers and opportunities for the business remain intact and he is confident in the strategy, the resilience of the business and Diageo’s ability to emerge stronger. The organic operating margin improved compared to the second half of fiscal 2020 increased driven by the operating leverage and tight control of discretionary expenditure. The decline compared to the first half of fiscal 2020 reflected an adverse channel and portfolio mix. Menezes expects the margins to improve as the on-trade and Travel Retail recover and with the continued benefit of everyday efficiency.

Diageo India Results

In India, United Spirits reported strong numbers for the third quarter of 2020-21, even though the recovery was not as strong as expected. Despite the current operational challenges, the company was able to report Quarter-On-Quarter (QOQ) volume and revenue growth of 7% and 16% respectively and bring its third quarter revenues close to that of the same period last year. Though more than 85% of trade channels like bars, pubs, and clubs are now operational, they are operating at a low capacity which has impacted the results. Due to Covid protocols and muted celebrations, small gatherings are replacing large events. On the other hand, off trade channels like home consumption are in the upswing and home delivery is also gathering pace.

The third quarter Net Profit also zoomed 79% QOQ, mostly because of the reduction in debt and fall in interest rates. There was a QOQ increase in margin and once volume recovers fully, margin is expected to improve further due to stable input costs and expected price hikes. Price hikes are muted currently due to tough market environments. There was a demand impact in Bengal, where United Spirits was forced to increase prices for its popular brands due to increase in excise rates by the state government.

Despite small improvement in the Covid situation, large celebrations and full capacity in trade channels are still a few quarters away and that explains why liquor companies have not been able to participate in the recent market rally. However, analysts say that these are short to medium term challenges and the long term story on liquor consumption in India is still intact. To increase its market share during these difficult times, United Spirits is focusing on off-trade channels. Home delivery is already showing good traction in states like Bengal and Maharashtra and similar trend is expected from other key states as well.

Diageo strategic Review of Selected Popular Brands

United Spirits Ltd. (“USL”) is also initiating a strategic review of selected Popular brands, continuing the strategy towards long-term profitable growth through premiumising the company’s portfolio. USL’s Popular portfolio comprises around 30 brands and the strategic review will focus on approximately half of this portfolio by volume. This review will not include the McDowell’s or Director’s Special trademarks.

The strategic review is expected to be completed by the end of the 2021 calendar year. Anand Kripalu, Managing Director & CEO, United Spirits Ltd commented, “This review reinforces USL’s and Diageo’s commitment to deliver sustainable long-term growth and improved profitability, through a sharpened focus on core Popular, Prestige and above brands, including international brands.

United Spirits management is also taking steps to reduce its debt further by selling non-core assets and by improving its working capital cycle. United Spirits is a company with strong free cash flows which will contribute towards its plans to become a debt-free company by 2022-23 he added.