Allied Blenders and Distillers IPO - Unveiling the Company’s Competitive Strengths and Allocation Quota

Key Highlights

• Some brands of Allied Blenders and Distillers are millionaire brands
• Advanced manufacturing facilities, the strategic location of its distillery and an extensive portfolio of offerings are some of the major strengths of the company

India’s premier Indian-made foreign liquor (IMFL) company, Allied Blenders and Distillers Limited is launching its Rs 1500 crore initial public offering (IPO) on 25th June. As of December 31, 2023, the company’s product portfolio comprised 16 major brands of IMFL across whisky, brandy, rum and vodka. Certain brands of the company, such as Officer’s Choice Whisky, Sterling Reserve, Officer’s Choice Blue and ICONiQ Whisky, are ‘Millionaire Brands’ or brands that have sold over a million 9-litre cases in one year.

Key strengths of Allied Blenders and Distillers

Given below are some of the key strengths of the company:

• One of the largest IMFL companies in India with a diversified and contemporary product portfolio

Allied Blenders and Distillers is the largest Indian owned IMFL company and the third largest IMFL company in India, in terms of annual sales volumes between fiscal 2014 and fiscal 2022. Four of its brands, namely, Officer’s Choice Whisky, Sterling Reserve, Officer’s Choice Blue and ICONiQ Whisky are ‘Millionaire Brands’.

The company's products are available at various price points in IMFL categories in India. In fiscal 2021, 2022 and 2023, and in the nine months ended December 31, 2022 and December 31, 2023, the company sold 2.55 crores, 2.84 crores, 3.22 crores, 2.45 crores and 2.46 crores cases of IMFL in India, respectively. The company had an overall market share of 8.2% in IMFL market by sales volumes in fiscal 2023.

• Strong brand recognition

Over the years, Allied Blenders and Distillers has developed a well-recognised product portfolio and transformed from a single-brand company to a multi-product and multi-brand company with a presence across various categories and segments of the IMFL industry in India.

Since the launch of Officer’s Choice Whisky in 1988 in the mass premium segment, the company has invested significant resources in enhancing the strength and appeal of the Officer’s Choice brand. Officer’s Choice Whisky stood as the market leader in the mass premium segment with a market share of 20.9% in terms of annual sales volumes in 2023 fiscal.

• Strategically located, large scale and advanced manufacturing facilities with a sophisticated research and development centre

This is another major strength of the company. Its distillery is located in Rangapur, Telangana, and is spread over 74.95 acres. It has a built-up area of over 25,000 square meters. Its in-house distillation capacity of extra neutral alcohol (“ENA”) is 600 lakh litres per year. In addition, the company also has extensive bottling capabilities with an optimal mix of owned and third-party facilities and a pan-India presence across 22 states and union territories as of December 31, 2023.

As of December 31, 2023, the company owned and operated nine bottling units and had entered into arrangements with five third-party bottling facilities, utilising the entire licensed capacity.

• Access to extensive pan-India distribution network with ability to scale

Allied Blenders and Distillers has access to a pan-India multi-channel distribution network. It's one of only four spirits companies in India with a pan-India sales and distribution footprint. The company's multiple route-to-market capabilities cover all channels including open market, part corporation market and full corporation market channels. As of March 31, 2023, its products are retailed through 79,329 retail outlets across 30 states and union territories in India.

• Well-positioned to capture tailwinds in the Indian IMFL industry

India is one of the fastest-growing alcoholic beverage markets in the world, growing from a small base of 1.3 litres per capita of recorded consumption of pure alcohol in 2005 to 2.7 litres per capita in 2010 and further to 3.2 litres per capita in 2023. IMFL is the largest segment of the Indian alco-beverage market in terms of volume and value. The IMFL segment recorded sales of 39.5 cr cases in fiscal 2023 compared to pre-COVID levels of 35.5 crores cases in fiscal 2020.

IMFL sales volume is projected to reach 52 crore cases by fiscal 2028. Backed by its extensive portfolio of offerings across the mass premium segment, the company believes it's well positioned to capitalise on the shift towards premiumisation of consumption.

Allocation quota

Given below is the allocation quota of shares for different categories of investors:

Summing it up

Kotak Securities Limited is one of the sub-syndicate members of this issue. After the IPO, the company's shares will be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.