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The SWA has released the 2021 global export figures for Scotch Whisky

Global exports of Scotch Whisky grew to £4.51bn during 2021, according to figures released recently by the Scotch Whisky Association (SWA), as the industry continues to recover from the impact of the Covid-19 pandemic and US tariffs.

In 2021, the value of Scotch Whisky exports was up 19% by value, to £4.51bn. The number of 70cl bottles exported also grew by 21% to the equivalent of 1.38bn.

Growth in 2021 was driven in particular by consumers in Asia Pacific and Latin America, with value increases of 21% and 71% respectively. Key emerging markets for Scotch Whisky – like India, Brazil, and China – grew strongly. Exports grew by 8% in the United States – the industry largest market by value – despite the first quarter of 2021 impacted by the 25% tariff on Single Malt Scotch Whisky. Exports to the European Union grew by 8% in the first year since the UK left the transition period.

Despite the return to growth in 2021, the value of Scotch Whisky exports has not recovered to pre-pandemic levels, with exports remaining 8% lower than 2019.

Commenting on the figures, Chief Executive of the Scotch Whisky Association Mark Kent said, “The global footprint of the industry in 2021 is a clear sign that the Scotch Whisky industry is on the road to recovery.

“Value and volume are both up as consumers return to bars and restaurants, people return to travel and tourism, and we all return to a degree of normality after a period of enormous uncertainty for consumers and business.

“Scotch Whisky growth in global markets means more jobs and investment across Scotland and the UK supply chain. The industry has continued to invest in its production sites, tourist attractions and workforce to ensure that Scotch Whisky remains at the heart of a dynamic international spirits market and attracts new consumers around the world.

“But this this is no time for complacency. The industry continues to face global challenges, including ongoing trade disruption, growing supply chain costs and inflationary pressures, and undoubtedly there is some road to run before exports return to pre-pandemic levels.

“The UK and Scottish governments should do all they can to support the industry’s continued recovery by making the most of global opportunities, including the ongoing UK-India trade talks, ensuring fairness in the UK duty system, and investing in a more sustainable future as the industry works to reach net-zero by 2040.”

Summary

Export value of Scotch Whisky in 2021 was £4.51bn, up £705m compared with 2020, but down £403m compared to 2019.

Export volume of Scotch Whisky in 2021 was 1.38bn 70cl bottles (equivalent), up 238m 70cl bottles compared with 2020 and up 73m compared to 2019.

On average, 44 bottles of Scotch Whisky are exported every second (up from 36 bottles per second in 2020).

Top 10 Markets

The largest export destinations for Scotch Whisky (defined by value) in 2021 were:

USA:	£ 790m	8.4% (£729m in 2020)
France:	£ 387m	2.8% (£376m in 2020)
Taiwan:	£226m	24.3% (£182m in 2020)
Singapore:	£212m	-14.3% (£247m in 2020)
China:	£198m	84.9% (£107m in 2020)
Latvia:	£156m	-11.8% (£176m in 2020)
Germany:	£148m	6.4% (£139m in 2020)
India:	£146m	42.9% (£102m in 2020)
Japan:	£133m	16.2% (£114m in 2020)
Spain:	£118m	7.9% (£109m in 2020)

The largest export destinations for Scotch Whisky (defined by volume, 70cl bottles equivalent) in 2021 were:

France:	176m bottles	-0.1% (176m bottles in 2020)
India:	136m bottles	44.3% (95m bottles in 2020)
United States:	126m bottles	12.6% (112 m bottles in 2020)
Brazil:	82m bottles	80.5% (45 m bottles in 2020)
Japan:	56m bottles	25.9% (45 m bottles in 2020)
Spain:	48m bottles	32.0% (36 m bottles in 2020)
Mexico:	48m bottles	13.0% (42 m bottles in 2020)
Germany:	46m bottles	7.2% (43 m bottles in 2020)
Poland:	45m bottles	19.4% (37 m bottles in 2020)
Russia:	42m bottles	40.7% (30 m bottles in 2020)

Regional data

In 2021, Scotch Whisky exports by global region (defined by value) were (% change vs 2020):

European Union:	£1360m	8.2% (30% of global exports)
Asia Pacific:	£1210m	21.4% (27% of global exports)
North America:	£1000m	11.2% (22% of global exports)
Central and South America:	£443m	70.7% (10% of global exports)
Middle East and N Africa:	£187m	55.0% (4% of global exports)
Africa:	£157m	14.6% (3% of global exports)
Western Europe (ex.EU):	£98m	6.0% (2% of global exports)
Eastern Europe (ex.EU):	£47m	33.8% (1% of global exports)

Diageo India reports continued growth momentum, thanks to premiumisation

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In the unaudited third quarter, Diageo India has registered an increase in net sales of 15.9%, reflecting a strong quarter driven by resilient consumer demand in the off-trade channel, continued premiumisation and recovery of the on-trade channel. Underlying net sales increased 14.3%, excluding the one-off sale of bulk scotch.

Diageo India said that the Prestige & Above segment net sales grew 20.0%, with strong double-digit growth in our scotch portfolio. However, Popular segment net sales declined 1.7%, while priority states were flat. The Gross margin was 44.1%, down 49bps on a reported basis, driven by input cost inflation, partially offset by favourable product mix and productivity savings. Adjusting the one-off sale of bulk scotch, underlying gross margin was 44.3%, down 31bps.

Ms Hina Nagarajan, CEO, commenting on the quarter and nine months ended 31 Dec. 2021 said, “We have delivered a strong quarter, continuing the growth momentum amidst rising inflation. The broad-based growth in the Prestige & Above segment demonstrates the strength of our portfolio, and the continued agility and resilience of the team. We launched the second limited edition of Epitome Reserve Craft Whiskey, a Peated Indian Single Malt. We continued to expand distribution of the renovated Black Dog Scotch, Signature Whiskey and our innovation offering of Royal Challenge American Pride Whiskey.

We also launched ‘In.thebar.com’ this quarter, our digital platform to drive focussed consumer engagement and celebrations.

Healthy operating cash flow has enabled us to reach debt free status as on Dec.31st 2021. CRISIL upgraded its rating on United Spirits Limited’s long-term bank facilities to ‘AAA / Stable’ while reaffirming its ‘A1+’ rating on the short-term bank facilities.

External operating environment in the near-term will remain challenging, including potential impact from Covid-19 and rising cost inflation. We continue to work with agility and remain focussed on strengthening our portfolio while driving productivity across the value chain. We remain confident in the market potential and continue to stay focussed on our strategic priorities to drive long-term value creation for all our stakeholders.”

The Reported EBITDA was Rs. 491 Crores, up 27.9% and the reported EBITDA margin was 17.0%, up 159 bps, primarily driven by operating leverage on fixed costs. It said that Interest includes a one-off non-debt related charge. Underlying interest was Rs. 16 Crores, down 56.8% driven by reduced debt and lower interest rates.

The profit after tax was Rs. 291 Crores, up 26.7% and PAT margin was 10.1%.

Nine month’s performance highlights:

The reported net sales increased 22.6%, lapping soft prior year comparators. Growth was underpinned by strong consumer demand in the off-trade, premiumisation trend and continued momentum in at-home consumption occasions. Underlying net sales increased 21.9%, excluding the one-off sale of bulk scotch.

The Prestige & Above segment net sales increased 26.9%, lapping soft comparators and favourable product mix. The popular segment net sales increased 11.0%, while the priority states increased 10%. The Gross margin was 44.3%, up 113bps, primarily driven by favourable product mix, productivity savings from everyday cost efficiencies and lapping a one-off inventory provision. It said marketing investment was up 24.9% as the company lapped a reduction in promotional activity during the same period last year due to Covid-19. Marketing reinvestment rate was 8.0% of reported net sales.

The reported EBITDA was Rs. 1,084 Crores, up 88.2% and the reported EBITDA margin was 15.6%, up 544 bps primarily due to recovery in gross margin, operating leverage and lapping one-off costs in the prior year. Excluding the one-off items, underlying EBITDA was up 430 bps.

The reported interest cost was Rs. 52 Crores, down 62.3% driven by debt, interest rate reduction and a net reversal benefit of non-debt related interest charge. Exceptional items include a one-off provision towards an additional demand in relation to a historical customer dispute and tax includes a one-off reversal of 19.2 Crores.

The profit after tax was Rs. 634 Crores, up 343.2% and PAT margin was 9.1%.

United Spirits Ltd reports 27% PAT for third quarter

United Spirits Ltd (USL) has reported a 27 % year-on-year surge in profit after tax (PAT) for the third quarter of financial year 2021-22, which came in at Rs. 291 Crore, up from a Rs. 230 crore during the same period last year.

The PAT margin in Q3 FY22 was 10.1%, the company said. In a press release attached with the quarterly results, USL said it reached “debt-free status” by December 31, 2021, due to its “healthy operating cash flow”. The reported net sales in the three-month period ending December 2021 increased to Rs. 2,885 Crore, marking a 15.9% YoY jump.

The surge was driven by resilient consumer demand in the off trade channel, continued premiumisation and recovery of the on-trade channel, USL said. Underlying net sales increased by 14.3%, excluding the one-off sale of bulk scotch, it added.

“Prestige & Above segment net sales grew 20%, with strong double-digit growth in our scotch portfolio,” the company said. Popular segment net sales, however, declined by 1.7%.

The earnings before interest, tax, depreciation and amortization (EBIDTA) came in at Rs. 491 Crore, which was 27.9% higher as compared to the year-ago period. The EBITDA margin came in at 17%, up 159 bps, primarily driven by operating leverage on fixed costs.

“We upweighted our investment in marketing to support strategic priorities and on-going demand growth initiatives,” USL said.

Gross profit came in at Rs. 1,273 Crore, as compared to Rs. 1,082 Crore in the second quarter. Gross profit margin was 44.1%, down 49 bps on a reported basis, driven by input cost inflation, and “partially offset by favourable product mix and productivity savings”, USL said.

Diageo India chief executive officer Hina Nagarajan, while commenting on USL’s Q3 performance, said “external operating environment in the near-term will remain challenging, including potential impact from Covid-19 and rising cost inflation”.

“We continue to work with agility and remain focussed on strengthening our portfolio while driving productivity across the value chain. We remain confident in the market potential and continue to stay focussed on our strategic priorities to drive long-term value creation for all our stakeholders,” the CEO added.

The operations remained broadly normal for the quarter with sentiment gradually inching up seen in improved mobility and strong festive period helped demand. While input cost pressures continue, the global supply chains remain disrupted with port congestion and container availability issues. However, efforts, it said, are on to ramp up of innovation and renovation agenda, premiumisation trends continue, launched digital platform In.thebar.com during the quarter. It said it aligned itself with the new policies in Delhi and West Bengal, and tax rationalisation on BIO spirits in Maharashtra and West Bengal.

On the outlook, it said it was aiming to retain current demand momentum despite challenging near-term environment, expanding on new productivity initiatives, renovated portfolio well placed to benefit from ongoing premiumisation, and final stages of strategic review of popular brands.

Beam Suntory global sales up 11%, India and China key markets for future growth

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Beam Suntory, a world leader in premium spirits, reported full-year 2021 results, with sales up 11% globally. These results also demonstrated strong growth versus the pre-pandemic year of 2019, with sales also up 11% over the past two years.

The company’s 2021 results were led by sustained strength in off-premise sales, and very strong performance in markets where bars and restaurants reopened faster than expected. Markets including Germany, Russia, Spain, emerging Asia and Global Travel Retail all grew at double-digit rates, as did China and India, key markets for Beam Suntory’s future growth ambitions. Sales in the U.S. grew high-single digits, bolstered by robust demand for premium brands. Sales in Japan, up mid-single-digits, benefitted from strong demand for convenient ready-to-drink beverages like -196x but were impacted by extended on-premise restrictions.

Premium brands to the fore

By brand, results underscore the strength of consumer interest in premium brands. Sales grew double digits for brands including Maker’s Mark, Basil Hayden, Knob Creek, Booker’s and Legent bourbons, Laphroaig, Bowmore and Auchentoshan scotches, Hibiki, Hakushu and Toki Japanese whiskies, Sipsmith and Suntory Roku gins, and El Tesoro and Hornitos tequilas, while On the Rocks (acquired in 2020) continued to show exceptional growth. Beam Suntory’s flagship Jim Beam also demonstrated solid growth despite glass supply constraints affecting certain bottle sizes.

“We’re immensely proud of the results our business has been able to deliver in the face of historical challenges related to the pandemic, including on-premise closures and supply chain constraints,” said Albert Baladi, president & CEO of Beam Suntory. “Our results underscore the strength of our premiumisation strategy that relies on exceptional quality, superior storytelling, and executional excellence across consumer touchpoints.”

Strategic moves with accelerated investments

“Our confidence in the future is reinforced by the strategic moves we’re making, with accelerated investment in our business — including capacity, capabilities and our sustainability agenda — the 2021 acquisition of our route to market in Spain, and our upcoming joint innovations with Boston Beer. The people of Beam Suntory look forward to delivering another year of outstanding performance in 2022.”

Beam Suntory launched Proof Positive in 2021, the company’s comprehensive sustainability strategy, representing a $1 billion+ commitment to making a positive impact on nature, consumers and communities.

The key Proof Positive developments during 2021 include renewable energy usage; water conservation; sustainable brands; consumer focus and DEI (diversity, equity and inclusion).

Renewable Energy Usage: All global manufacturing sites began purchasing renewable electricity (or renewable electricity certificates) in 2021, with the goal of 100% renewable electricity usage at across operations by the end of 2022. The Fred Booker Noe Distillery opened in 2021 in Clermont, KY powered by an electric boiler using renewable electricity. In 2022, a pilot project to generate “green” hydrogen will commence at the Ardmore distillery in Scotland. This work supports the company’s commitment to the Race to Zero initiative.

Water Conservation: Closed-Loop Cooling systems were installed in two of the company’s Kentucky distilleries, significantly reducing water usage. Through watershed sustainability collaborations, the company established the first Peatlands Water Sanctuary (Scotland) and the Charco Bendito Project (Mexico).

Sustainable Brands: Sipsmith Gin & Maker’s Mark both achieved B Corp certification in 2021. B Corp Certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials.

Consumer: Beam Suntory has increased options for low and no-ABV drinks with products like Sipsmith FreeGlider and the expansion of Lemon Sour Zero. The company is also applying nutrition labelling to key brands across Europe and the U.S. as part of its voluntary commitment to provide nutrition information and alcohol content information on packaging or online for all products by 2030.

Diversity, equity and inclusion (DEI): The percentage of female new hires increased 6% to 50% in 2021, with the US multicultural employee population increasing by 4% at both the mid- and senior-manager levels. New and expanded opportunities for internal multicultural talent also increased, accounting for 19% of US promotions and 21% for lateral promotions.

‘Nolo’ is soon going to froth in Asia

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Specific to Asia, Carlsberg has five brands brewed in China and one in Malaysia, while it has made its presence felt in Hong Kong and Singapore markets, it is now keen on expanding to other markets in the region. Alcohol free segment accounted for the largest revenue size of USD 2 billion in 2017 owing to the increasing adoption of healthier lifestyles coupled with the benefits of non-alcoholic beer in China, India, and Japan.

Growing at over 7.5% CAGR

According to a Graphical Research report, the Asia Pacific non-alcoholic beer market size was valued at USD 4.3 billion in 2017 and is expected to grow at over 7.5% CAGR from 2018 to 2024. As of now, China is leading in this segment in Asia and the drivers are the adoption of a healthy lifestyle along with shifting consumer preferences towards ‘Nolo’. The report said that increasing awareness for negative health effects of alcohol consumption is among major factors boosting market penetration.

China holds nearly 30% market share in ‘Nolo’

China holds nearly 30% share in launching new non-alcoholic beer products. As mentioned earlier, Carlsberg has four brands – WuSu Fresh Orange & C; WuSu Pineapple & C; Xixia Fresh Orange & C; Xixia Pineapple & C, and Chongqing Beer AFB in China and Carlsberg Alcohol Free in Singapore and Hong Kong while in Malaysia it vends Nutrimalt which is said to be nonalcoholic malt beverage that is nourishing and packed with vitamins and nutrients such as Vitamin C & B complex. It is said to be a great energy booster after a workout.

Manufacturers are launching new beverage brands with different flavours to expand consumer base as it is estimated that there is a sizable market which is looking at healthy brews. An increased attention on both physical and mental health has been cited as a cause of the growth of nolo products, which are increasingly popular among younger consumers.

However, in India the trend is not that perceptible, though non alcoholic brews are making the rounds, mostly propped by young beer drinkers who are either switching from standard beers to non-alcoholic variants or they are willing to taste new beers, both with alcohol or no or low alcohol content ones.

India sees slow but steady growth

Some of the ‘Nolo’ in India include Budweiser 0.0%; Heineken 0.0% non alcoholic lager beer; Kingfisher Ultra non-alcoholic beer; Hoegaarden 0.0% non-alcoholic beer; Kingfisher Radler – non-alcoholic malt drink; Coolberg Cranberry non-alcoholic beer; Crofters non-alcoholic beer; and Barbican. Carlsberg is said to be exploring the market opportunity in India with regard to ‘Nolo’. But it has been steadfast in its commitment to creating a culture of responsible drinking by promoting moderate consumption of products and addressing alcohol-related harm in society. “We therefore aim to celebrate the positive aspects of moderate beer consumption and to position beer as a relevant and responsible choice with a role to play in the ‘good life’ to which modern consumers aspire.”

Young beer drinkers call the shots

As per a survey by Mintel about 40% of young beer drinkers in India are interested in switching from standard-strength beer to low calorie or non alcoholic variants of the brew. The survey pointed out that internet users who were contacted and who had consumed beer in the past six months were interested in exploring alternatives to beer.

Carlsberg’s ‘Sail’ strategy

Carlsberg has set sail for the next five-year journey with its 2016 ‘Sail’ strategy. Since its launch, ‘Sail’ 27 has been providing a clear overall direction for Carlsberg resulting in a healthy and strong company. The company said that “In developing Sail 27, we have aimed at keeping and sharpening our strong strategic, organisational and financial dynamics while ensuring that our direction-setting was refreshed and that our new strategy reflects expected consumer, customer, societal, regulatory, economic and geopolitical trends.”

The Chief Executive Officer Cees ‘t Hart said, “SAIL’27 is the exciting next step in the evolution of Carlsberg. Co-created by a large group of employees and leaders, and built around our purpose, SAIL’27 has clear choices for brands, categories, markets and capabilities, and steps up our ambitions for top- and bottom-line growth.” In essence, SAIL’27 focusses on five strategic levers – portfolio, geographies, execution, culture and funding the journey – for which the company has made distinct strategic choices, defining the focus of our efforts and resource allocation.

Our strategic levers and choices should be viewed as an integrated set of activities that together will drive value for all stakeholders. “SAIL’27 is built around our purpose of brewing for a better today and tomorrow, and our ambition of being the most successful, professional, and attractive brewer in our markets,” Cees ‘t Hart adds.

Collaborative effort 

SAIL’27 is a collaborative, company-wide effort, co-created by over 200 Carlsberg employees from more than 30 different markets. “Talents, experts and leaders from all over Carlsberg Group have brought their day-to-day knowledge and fresh ideas into this new strategy. They have assessed the impact of the current strategy on their local business or function, shared learnings and trends they see impacting the business and challenged our thinking on the future strategy. By bringing such a diverse set of voices the process we have created an even stronger strategic path for Carlsberg,” says Marcela Linke, Director, Group Strategy. 

Carlsberg said that the beer category continues to offer attractive long-term volume and value growth opportunities, though with different growth dynamics between categories and markets. Our portfolio choices target these growth opportunities. In addition, the company sees further attractive growth opportunities for selected categories beyond beer. Today, the Group has attractive widespread geographical presence and no. 1 or 2 positions in 22 markets across Western Europe, Asia and Central & Eastern Europe. While market dynamics are different in the three regions, they all offer appealing long-term revenue and earnings growth opportunities.

Carlsberg ‘Nolo’ brands grow by 11%

Carlsberg’s recent financial statement revealed its ‘Nolo’ brands grew by 11%, making it one of the most successful areas of the business for the brewing giant. While sales of other household names owned by Carlsberg shrunk (namely Tuborg and the Carlsberg brand itself), the ‘nolo’ range demonstrated quite a sizeable growth, which is perhaps indicative of a shift in consumer habits towards alcohol-free beverages.

Carlsberg said it saw good results for its recent launches in the category, including Baltika Zero Grapefruit and Raspberry, Brooklyn Special Effects and Somersby 0.0. In addition, the brewing group entered the Asian market with similar ‘nolo’ products in 2020 too, with the launch of Chongqing Beer AFB in China and Carlsberg Alcohol Free in Singapore and Hong Kong.

What’s driving ‘nolo’ growth?

“Brewers have had to adapt to unprecedented market conditions and one area of success is Carlsberg’s low-ABV or alcohol-free ‘nolo’ brands, which are notable for 11% growth as consumers continue to moderate their alcohol intake,” said Ryan Whittaker, Consumer Analyst at GlobalData.

“Increased health consciousness, which includes both physical and mental health concerns, is causing many to reduce their alcohol intake, and the pandemic has brought all of this to the fore.”

According to GlobalData, 28% of global consumers claim to be buying less beer during the pandemic and approximately 27% of consumers say that they are extremely concerned about their physical health. What’s interesting is that these trends correlate with age, with millennials being both the most extremely concerned about their health and most likely to be buying less beer than before the pandemic. Even otherwise, the millennials are known to experiment, try out new products and that is driving manufacturers to innovate.

The Struggle with Counterfeiting in Spirits Industry: Coming out of Covid Crisis

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Spokesperson: Mr. Ankit Gupta, Gov Body Member, ASPA (Authentication Solution Providers’ Association)

What has been the counterfeiting scenario in the spirits industry during the Covid crisis?

During the Covid crisis, alcohol in India has emerged as the sector with the largest number of counterfeiting incidents. This includes adulteration, trademark infringement, fake liquor, fraud, and other ways to copy products. According to ASPA counterfeit news repository study, alcohol continues to be in the top five sectors in 2018, 2019 and 2020 facing these risks. The same trend continued through 2021. Alone in Uttar Pradesh officials had seized approximately 12.57 lakh litre illicit liquor till November 2021 (Source: Aabkari Times, December 2021).

Despite being one of the most regulated sectors, in normal circumstances also alcohol industry is one of the biggest victims of counterfeiting and illicit trade. During the pandemic the industry was hit badly as sales through restaurants, hotels, etc. was adversely affected. Drinking at home became more acceptable and picked up but was still not enough to substitute the lost revenues. While the industry was struggling with low demand, criminals exploited the demand-supply gap to sell more quantities of counterfeit liquor, creating an even bigger threat to human well-being.

Why is the alcohol industry one of the top targets for counterfeiters and illicit trade?

Criminals are attracted to the alcohol industry because of various reasons e.g. high profitability, evasion of taxes, low consumer awareness, lack of universal pricing in India as well as high demand. In addition to this, the easy availability of raw material Methyl Alcohol, which is widely used for industrial purposes is another reason.

The margins for criminals are considerably huge and despite regulations, the task of counterfeiting and illicit trade is not being made challenging enough for them. During lockdowns, restricted access to and availability of good quality liquor gave a bigger push to the sale and purchase of counterfeit or illicit liquor. In some cases, it was observed that people saw the acquisition of liquor in difficult times at higher rates as social status or public image booster.

The danger has increased as criminals are using more reckless methods of producing and smuggling alcohol. For instance, many incidents of liquor being produced from sanitizers or ethyl alcohol or spirits from petrol and diesel mixed with colour being sold in copycat or discarded packaging surfaced across the country. These products are hazardous.

How can counterfeiting be controlled effectively post-pandemic?

Development of a solution always starts with recognising the problem and assessing its magnitude. Counterfeiting has been underestimated and this has prevented the development of a robust strategy and solution to curtail it. The fight against counterfeiting and illicit trade needs to be fought from three fronts – policy, brand, and consumer. A policy framework that guides support and nurtures an ecosystem which strong against counterfeiters. It should protect businesses and consumers against counterfeiting malice while enabling effective law enforcement and effective punishment to those who commit the crime.

Being an integral part of the system, brands should take solid steps to protect their products by building an adequate defence of anti-counterfeiting solutions and traceability infrastructure. For instance, multi-layered protection through packaging by implementing anti-counterfeiting solutions which make it almost impossible to copy – one-time break seals and sleeves. Supported by smart solutions such as tax stamps, digitally readable labels, QR Codes, etc. Made more effective by awareness which educates consumers about how they can safeguard themselves from counterfeit products.

Consumers can play an important role in the fight against fakes, they are their first line of defence. A little bit of carefulness and attentiveness on their part while buying liquor can save them from getting cheated.

Can the online sale of alcohol be a welcomed trend? Can it help in curbing the sale of counterfeit liquor in the country?

The pandemic crisis has encouraged discussions about the online sale of liquor in many states. According to a survey by YouGov National survey findings, almost 60% of consumers are eager to purchase alcohol online. Safety and convenience have been cited as key reasons to prefer the e-commerce channel to buy alcoholic beverages. While the online channel offers consumers more choice leading to innovation within the category and incremental revenue opportunities for state governments, we need comprehensive regulations and safeguards for selling liquor online and need to tread with a lot of caution. The process and compliance regulations for alcohol delivery will vary from the delivery of groceries or essentials. Moreover, the possibility of alcohol being seized during transit and the adulteration of alcohol by criminals cannot be ruled out either. The authentication industry can offer technology-enabled packaging and anti-counterfeiting solutions that can plug these risks and challenges. The digital footprint cn help in traceability and if done with proper provisions it can ease the process of identifying and catching frauds.

The Macallan unveils The Reach Single Malt Whisky

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The Macallan has unveiled The Reach, an incomparable single malt whisky that reflects an extraordinary moment in time and exemplifies the enduring spirit that has been at the heart of the brand for almost 200 years.

Crafted during the Second World War in a period of increasing hardship, The Reach was laid to rest in 1940 before The Macallan was compelled to close its doors for the first time in its history.

Its very existence is testament to the care and commitment to uncompromised excellence that has driven The Macallan since it was founded in 1824. It also pays tribute to those who strived amid great adversity to resume distilling The Macallan’s spirit, as well as the crafts people today who continue to uphold the brand’s values.

A rare single malt at 81 Years Old, The Reach is the oldest whisky ever released by The Macallan, crafted from a single, sherry seasoned oak cask. The dark, precious whisky is encased in an exquisite decanter created from mouth-blown, hot glass, cradled on a bronze sculpture of three hands.

Each hand represents characters in The Macallan’s history and their unique story. One commemorates the Distillery workers of 1940 who crafted the spirit into existence, in challenging times, over eight decades ago. Another is the hand of one-time chairman, Allan Shiach, whose grandfather headed the company when this remarkable spirit was first consigned to its cask. The third is that of today’s Master Whisky Maker, Kirsteen Campbell, who carefully selected the 1940 cask used to create The Reach, deciding that now was the time to share this precious whisky with the world.

Kirsteen Campbell, Master Whisky Maker, The Macallan, said, “It is an honour to introduce The Reach. Created during a turbulent time in the world, this extraordinary expression showcases The Macallan’s history, ingenuity and unmistakable strength of character.

“The creation of many hands, The Reach has been a truly collaborative effort. It’s also a tribute to the people who made this precious whisky, and their enduring spirit which never wavered.

“Its deep auburn hue is the first hint of this remarkable whisky’s astonishing depth. Offering notes of dark chocolate, sweet cinnamon and aromatic peat, leading on to treacle toffee, crystalised ginger and charred pineapple, before giving way to an intensely rich, sweet and smoky finish.”

Reflecting its rarity and significance, The Reach is presented in unique packaging brought together by a collective of Scottish artisans. A tale of collaboration and connectivity, the result is a handcrafted quartet of liquid, glass, bronze and wood that is a fitting tribute to this very special whisky.

Sculptor Saskia Robinson created the timeless sculpture featuring three hands, producing countless drawings from every perspective before working in a physical medium. The veins, nails and skin detail are recorded in extraordinary accuracy, modelled on an artist’s impression of a hand of one of those original still men. The sculpture is cast in bronze and the glimmer of the metal contrasts beautifully with the amber whisky.

The surface of the glass decanter features subtle indentations that match the fingerprints of the bronze hands which support it, while a beautiful cabinet crafted using wood from an alien elm tree, which is thought to have been on The Macallan Estate in 1940, houses the decanter.

A film has been created by renowned London-based photographer Nadav Kander working closely with his art director, Matt Willey, who was previously the art director at The New York Times Magazine. Featuring original music composed and recorded by Scottish band Mogwai, recently shortlisted for the prestigious Mercury Prize, it tells the story of The Macallan’s legacy and the collaborative process behind The Reach.

Highly limited to only 288 decanters worldwide, The Reach will be on display at The Macallan Estate Boutique from 9th February 2022 and later in The Macallan domestic and travel retail Boutiques. The RSP is $125,000/£92,000/€110,000.

Heineken excited about ‘long-term growth opportunity’ UBL provides

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The Chief Executive Officer of Heineken NV, Dolf van den Brink said that, in India, beer volume grew in the thirties, outperforming the market, following a progressive recovery and returning back to pre-pandemic levels in the fourth quarter. Premium volume grew ahead of the total portfolio, led by Kingfisher Ultra, Heineken and Amstel.

Overall, he said the company “delivered a strong set of results in 2021 in a challenging and fast-changing environment. I am proud of how our colleagues, customers, and suppliers continued to adapt, support one another, and deliver these results.

We made a big step towards recovering to pre-pandemic levels, and in parts going beyond. I am pleased with the great momentum of the Heineken brand, the renewal of our brand and product portfolio, the acceleration of our digital transformation and how we are strengthening our footprint with the acquisition of UBL in India and our announced intentions for Southern Africa. We raised the bar on sustainability and responsibility and are making big strides in right-sizing our cost base.”

He said that operating profit grew by 476.2% mainly due to the exceptional gain this year from the remeasurement to fair value of the previously held equity interest in UBL in India, and the exceptional losses from last year’s impairments and restructuring provisions.

Looking ahead

“Although the speed of recovery remains uncertain and we face significant inflationary challenges, we are encouraged by the strong performance of our business and how EverGreen is taking shape. This gives me confidence we are on course to deliver superior and balanced growth to drive sustainable long-term value creation,” he said.

Net revenues up by 12%

Net revenue (beia) for the full year 2021 increased by 12.2% organically, with total consolidated volume growing by 3.6% and net revenue (beia) per hectolitre up 8.3%. The underlying price-mix on a constant geographic basis was up 7.1%, driven by assertive pricing and premiumisation, with the regions Americas and Africa, Middle East and Eastern Europe (AMEE) growing double-digits. Currency translation negatively impacted net revenue (beia) by €515 million or 2.6%, mainly driven by the Brazilian Real and the Nigerian Naira. The consolidation of United Breweries Limited (UBL) in India positively impacted net revenue (beia) by €280 million or 1.4%.

In the second half of the year, net revenue (beia) grew 10.6% organically. We took further pricing actions and accelerated net revenue (beia) per hectolitre growth to 11.0%. Underlying price-mix in the second half was up 8.8% primarily driven by Nigeria, Brazil, Mexico and Europe, the latter benefiting from an improved channel mix. Total consolidated volume declined slightly by 0.3%, mainly impacted by the restrictions in the Asia Pacific region.

Beer volumes grow nearly 5%

Beer volume grew 4.6% organically for the full year. In the fourth quarter, beer volume grew 6.2%, benefitting from fewer restrictions in Europe relative to last year, continued momentum in the Americas and AMEE, and a sequential recovery in Asia Pacific (APAC) relative to the third quarter.

Operating profit (beia) grew 43.8% organically with a strong recovery in Europe, AMEE and the Americas, partially offset by the impact of the pandemic in APAC. Currency translation negatively impacted operating profit (beia) by €98 million, or 4.0%, mainly driven by the Brazilian Real, the Surinamese Dollar, the Vietnamese Dong and the Ethiopian Birr.

Outlook

“We launched our EverGreen strategy in February 2021 to future-proof our business and deliver superior, balanced growth for sustainable, long-term value creation. It requires us to constantly navigate the long-term transformation with the short-term financial delivery under fast-changing external circumstances. We are encouraged by the progress made, witnessed by the strong performance of our business in 2021 and how EverGreen is taking shape.

In 2022, we will continue to navigate an uncertain environment and expect Covid-19 to still have an impact on revenues. Our plans assume markets in APAC to progressively bounce back during the year, yet full recovery of the on-trade in Europe may take longer.

We also expect to be significantly impacted by inflation and supply chain resilience pressures. More specifically, we expect our input cost per hectolitre (beia) to increase in the mid-teens given our hedged positions and the sharp increase in the prices of commodities, energy, and freight. We will offset these input cost increases through pricing in absolute terms, which may lead to softer beer consumption.

Reflecting our confidence in the long-term, we intend to reverse the cost mitigation actions undertaken in 2021 and to further step up our investments in brand support and our digital and sustainability initiatives. This investment will be partially offset by further delivery of gross savings from our productivity programme. These changes are expected to have a greater impact in the first half of the year.

Overall, we expect a stable to modest sequential improvement in operating profit margin (beia) in 2022. Whilst continuing to target 17% operating margin (beia) in 2023 and operating leverage beyond, there is increased uncertainty given current and evolving economic and input cost circumstances. Therefore, we will update the 2023 guidance later in the year.”

It may be mentioned here that UBL was started nearly 73 years by the late Vittal Mallya, father of Vijay Mallya. Heineken took control of United Breweries, the erstwhile flagship brand of the UB Group. This follows Heineken’s acquisition of additional ordinary shares in UBL on June 23, 2021, taking its shareholding in UBL from 46.5 % to 61.5%.

UBL has a proud history

Dolf van den Brink had then said, “UBL has a proud history dating back more than a century as an influential shaper of the beer industry in India. It built its position as the undisputed market leader in India with a strong network of breweries across the country and a fantastic portfolio led by its iconic Kingfisher brand family, complemented more recently by a strong Heineken international brand portfolio. We are honoured to build on this legacy and look forward to working with our colleagues at UBL to continue to win in the market, delight consumers and customers and unlock future growth.”

India offers an exciting long-term growth opportunity as per capita beer consumption is low at 2 litres per annum. Its growing population of nearly 1.4 billion people includes a strong emerging middle class, enabling further premiumisation, Heineken said.

Russia’s alcohol market

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As vodka comes under the spotlight amidst Russia’s invasion of Ukraine, IWSR takes a deeper look at the Russian alcohol market.

Russia is the 4th largest alcohol market in the world in terms of volume, with imports accounting for 9% of total consumption. Whisky makes up 5% of Russia’s spirits consumption, and a third of its spirits imports. 91% of Russia’s whisky consumption is from imported whisky. While there have been calls to ban Russian-made goods in light of the country’s invasion of Ukraine, boycotts of Russian vodka brands will have a fairly minimal impact on Russian vodka producers. Any significant impact is more likely to be symbolic.

While Russia is the largest vodka producer in the world, with over 30% of global production, the vast majority (over 90%) of Russian-made vodka is consumed domestically.

Outside of Russia, the UK, Germany, the US and Israel round out the top five markets for Russian-made vodka, although volumes are relatively small.

Russian vodka accounts for under 3% of all vodka consumed in Europe (excluding CIS) by volume.

In the US, the world’s second largest vodka market by volume, Russian vodka accounts for less than 1% of all vodka consumed. Approximately half of all vodka consumed in the US is made in the US. While vodka is the country’s largest export, Russia is also a relatively large producer of beer and wine – though much of this is consumed domestically.

Russian beer makes up 1% of the global beer market. Over 99% of Russian beer is consumed domestically.

Similarly, Russia produces 2% of the world’s still wine, with almost all of it consumed locally.

Russia also produces 6% of the world’s sparkling wine, with 99% of it consumed domestically.

Ambrosia Awards 2021 is like a booster shot to the alcobev industry

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The Ambrosia Awards 2021, held on December 17 at Hotel Andaz, New Delhi, was an extraordinary event, held during extraordinary times. The alcobev industry was starved of any networking event for nearly two years with the pandemic in full play. The Ambrosia Awards night came as refreshing breather to an industry which needed all the booster shots it could get. The Ambrosia Awards and the day-long Indspirit 2021 conference provided that perfect platform for the sector to not only network, but also to strategise going forward.

It was a packed awards night. There was one common refrain among the award winners as they were delighted to win as it endorsed and encouraged their efforts in keeping the focus of the industry going through resilience, strategising differently, innovation and above all the ‘never say die’ spirit.

That spirit was summed by the Ambrosia Business Leader of the Year 2021, Mr. Abhishek Khaitan, the Managing Director of Radico Khaitan Limited. While thanking Ambrosia for honouring him with the award, he thanked his team for growing the company. “With the team of ours we have been able to create over 15 premium brands in the country including a single malt whisky which is retailing at `1 lakh per bottle. This is a proud moment not only for me, but the entire team at Radico.”

Team spirit echoes at Awards Night

This ‘team spirit’ sentiment echoed through the huge gathering which had descended upon the venue to cheer the alcobev sector. Each of the awardees had a story to tell, even if it was just a ‘thank you’. It was not easy for the esteemed panel of judges who had to sift through so many deserving players. The panel of judges included: Mr. Bernard Schaefer, whisky expert and consultant; Mr. Ajoy Shaw, wine maker and consultant; Mr. Binod K. Maitin, independent consultant; Mr. Graeme Bowie, Scotch whisky expert; and Ms. Sheetal Kadam, wine promoter and consultant; and the judges for the packaging segment were Dr. Santosh Kshirsagar, Dean of J.J. School of Arts; Mr. Pranav Bhide, Sr. Creative Director, Leo Burnett; Mr. Shekar Ambedkar, Head of International Packaging Centre; and Prof. K. Munshi, former Head of Design Department, IIT.

Alcobev industry stands solidly behind the community

It hasn’t been easy for SAP Media Worldwide and its leader, Mr. Trilok Desai, to ensure the success of this event after a couple of postponements which the industry well understood. The Awards Night began with 30 seconds silence in memory of those from the industry who had lost their lives to Covid-19. In his address at the Awards Night, Mr. Trilok Desai talked about how the alcobev industry – be it Diageo, Pernod Ricard, Beam Suntory, Radico Khaitan, Jagatjit and several others – stood solidly behind to help the alcobev community overcome the Covid-19 crisis in whatever way possible. “Now, the worst period in the history of the alcobev industry is over. And we pray that Omicron does not turn out to be that dangerous.”

Mr. Desai was optimistic. There is a positive outlook on all fronts for the alcobev industry including the announcement of industry-friendly policies by the governments of Maharashtra and West Bengal. He singled out the efforts of the Delhi government which has revamped the excise policy and taken government out of the liquor business, a welcome move.

India, a global hub for alcoholic beverages

“India is fast becoming a global hub for alcoholic beverages as many of the world’s biggest brands continue to move to the nation in a bid to sell their products; compete with local distillers and producers. The reason is not far-fetched, India remains the world’s fastest growing major economy and, according to the International Monetary Fund (IMF), the country will continue to lead in economic growth at 8.5% in 2022 following an impressive growth of 9.5% in 2021.

All these have been possible with the Indian economy growing at a decent rate of 8.5% with the third largest PPP- purchasing power parity- and over millions of young consumers who have high purchasing power. India’s ever increasing number of high networth individuals (HNIs) is also contributing to the growth of high-end whiskies; scotches and single malts, besides wine. The society is lot more liberal now and has started accepting social drinking culture for the past few years.”

Centre, State now more amenable to industry needs

Mr. Desai mentioned how the alcobev industry has been contributing to almost all the State exchequers and how a few states have had to reverse prohibition within months of enforcing it, given the challenges of the huge revenue losses. The alcobev sector also creates millions of jobs directly and indirectly and contributes in no small measure to the growth of the industry. “The Central and the State governments have started understanding these aspects and several states are responding positively in the interest of the alcobev industry, thanks to the continuous efforts of CIABC; ISWAI; AIBA and AIDA. Let’s give them a big round of applaud for their efforts.”

Changing dynamics

The Indian alcobev industry has become more innovative with more single malts rolling out of the stables, not only concentrating in the Indian market, but have performing well in exports. “More crafted spirits; flavoured spirits; increasing number of gins and several start-ups during the past two years have attracted investors and kept the industry buoyant.”

India’s increased requirement of ethanol blending in petrol of 20% by 2025 to control pollution and reduce the bill on import of oil has fuelled the investment in the sugar and distillery industry for the ethanol production. This will lead to increased employment in the sugar producing states like UP and Maharashtra.

Ambrosia Awards instituted 28 years ago

Talking about Ambrosia Awards per se, he recalled how they were instituted 28 years ago and how over the years it has earned recognition and credibility as it has maintained a strict criteria and parameters for their evaluation. We have been continuously investing in this property over the years.

“The evaluation process is very stringent and the international jury has expressed their satisfaction at the judging process as we maintain strict international standards. The jury is highly reputed and is recognised in their respective fields. They have also been surprised at the quality of products over the last five years. They feel that IMFL products quality is constantly improving and they offer the best value on an average price of 6/7 dollars a bottle.”

While thanking the staff for the success of the event, Mr. Desai mentioned how Ambrosia has come to be one of Asia’s highest circulated wine and spirits magazine and is in its 28th year of publication. It was the first English language magazine launched in Asia in the alcobev sector and we continue to maintain the leadership position. The publication is owned by SAP Media Worldwide Ltd which has several other titles like Asian Photography and International Aerospace, Show Dailies and so on besides many other verticals like conferences, awards etc. In certain segment of the industry like Aerospace & Defense we are the 4th highest circulated magazine in the world and we publish dailies under the title SHOW DAILIES in several countries like Japan; Korea; UK (Farnborough); France (Paris); UAE (Dubai); Singapore and so on during the year.

Over the years, Ambrosia has evolved and has even moved on to publishing the first Coffee Table Book and now the 3rd edition of the Coffee Table Book is under preparation with lot of additions and deletions looking at the continuous changes in the markets.

Mr. Bhavya Desai, Group Head and CEO, talked about how the Ambrosia Awards and Indspirit 2021 conference had been planned to not only stimulate one’s thinking but one’s senses. He mentioned that a record number of entries had come for this year’s awards, despite the many challenges that surfaced due to the pandemic.

Svami pays a tribute to the Legendary football player by collaborating with Amazon Original Series Maradona: Blessed Dream

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Svami, a brand in the non-alcoholic beverage segment, has teamed recently with Amazon Prime Video’s most anticipated football series on the legendary player, Diego Maradona. Svami has launched a Limited-Edition bottle for 2 Cal Cola in honour of Maradona’s No. 10 jersey. The partnership also commemorates Maradona’s birth anniversary, as the series premiered on the same day. The series premiered exclusively on Amazon Prime Video on October 29, 2021, across 240 countries and territories.

This collaboration between Svami and Amazon Prime Video is a one-of-a-kind partnership in which Svami’s varied selection of beverages and mixers, especially the new limited edition 2 Cal Cola, is the ideal choice of refreshment while watching the all-new exhilarating series at the edge of one’s seat. Through this collaboration, the brands aim to reach out to a larger football fanbase across the various metros of India. They have an exclusive retail tie up with Foodhall pan India and engagement on social media by involving the Maradona fan base has been on the cards. The brand will also run a digital ad to announce this partnership.

Aneesh Bhasin, Cofounder at Svami further added that, “Svami always has a different taste when it comes to collaborations. When we got to know that Maradona: Blessed dream was going to be launched on Amazon Prime Video, it was a no-brainer for us to onboard and thereby engage our football fan base via this collaboration. The launch of 2 Cal Cola Limited Edition, is our way of paying a tribute and celebrating the No 10 associated with this legend.”

Svami is spearheading the category of mixers and non-alcoholic drinks for adults. Svami’s comprehensive portfolio of drinks ranges from products like tonics to non-alcoholic rum and cola, giving people choices for great tasting drinks on all occasions. In a short period, Svami has become the default choice for bars and restaurants and retails in 40+ cities in India, Singapore and Hong Kong.

Maradona: Blessed Dream follows the controversial life of legendary footballer Diego Armando Maradona. A boy from Argentina with a dream of greatness, made his mark in the international football league, earning himself a well-deserved place in history. Living a life strewn with drugs, sex and public scrutiny, he played by his own rules regardless of the consequence.