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India's highway liquor ban hits United Spirits Q1 2018 sales - results

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  • Net sales slip 13% to INR17.82bn (US$276m)
  • Net profits to the end of June lift 44% to INR630m
  • Operating profits (EBITDA) fall 26% to INR1.57bn

United Spirits has said a ban in India of alcohol sales near the country's highways has impacted first-quarter sales.  

United Spirits has been hit by a roadside alcohol ban in India

United Spirits has been hit by a roadside alcohol ban in India

The firm said that sales in the three months to the end of June were down 13% in reported terms. In April this year, Indian authorities introduced a ban on alcohol within 500 metres of national and state highways.

United Spirits also reported a one-off impact relating to operating model changes. Stripping out the one-off, net sales were down 7%, the company said. 

"Performance in the first quarter, as expected, was impacted by the highway ban which has led to lower consumption due to a reduction in the number of retail outlets," said CEO Anand Kripalu. "We have also witnessed destocking by customers during the first quarter."

Kripalu also blamed the ban for a net sales decline of 8% in the company's 'prestige and above' segment (47% of total volumes and 61% sales), as on-premise outlets near highways have been hit by the ban. 

"Despite these challenges, 'signature' continued to show positive momentum supported by the successful renovation and grew net sales 14%," he added. "The relaunch of Antiquity has started towards the end of the first quarter in select states with early signs of positive consumer and trade response."

'Popular' segment (53% of total volumes and 36% sales) net sales declined 8% excluding the one-off.

Looking forward, the firm said it expects the impact of the highway ban to continue into Q2 and Q3, however "to a lesser extent". 

To read the official results release, click here. 


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