United Breweries Eyes Revenue Increase With New Andhra Liquor Policy

United Breweries Ltd. is looking at a potential increase in revenue from sales in Andhra Pradesh, according to Managing Director and Chief Executive Officer Vivek Gupta. This comment comes in light of the state government's recent announcement to resume liquor procurement from top brands such as United Breweries, United Spirits, Radico Khaitan, and Globus Spirits.

The CEO added that while United Breweries already sells its brands in the state, there is a substantial opportunity to expand. Historically, Kingfisher held a 75% market share in Andhra Pradesh, and with the state's changing policies, the company sees more potential.

"We have a brewery operating at 30% capacity, which can do much better. We are hopeful that the new policy will be favourable for the industry," Gupta said. 

The new policy aims to replace local brands with popular ones, potentially increasing market opportunities for established companies like United Breweries in the state.

In regards to the company’s June quarter earnings that came out on Thursday, he voiced optimism in the company's future prospects, despite facing disruptions and capacity constraints in the last quarter. 

• Revenue up 10.8% at Rs 2,475 crore. (Bloomberg Estimate: Rs 2,631
  crore).

• Ebitda up 27.9% at Rs 285 crore. (Bloomberg Estimate: Rs 285 crore).

• Ebitda margin at 11.5% versus 9.8% (Bloomberg Estimate: 10.80%).

• Net profit up 27.5% at Rs 173 crore. (Bloomberg Estimate: Rs 179 crore)

United Breweries reported strong growth in its premium business, with a 44% increase in volume. The company is focusing on driving category growth and expanding its premium offerings, said Gupta.

"Consumers are seeking different price points, and despite high taxation in many states, there are opportunities to meet consumer needs through local production and a broader portfolio," he said.

The company remains committed to sustaining its margin levels, which saw a 250 basis point improvement, he said. This growth is part of a broader strategy to enhance both top-line and bottom-line performance.

The company is in investment mode, focusing on business and category growth, Gupta said. Notable innovations include the launch of Queenfisher and London Pilsner in Karnataka, which have received positive market responses, according to him.

"We are banking on big bets and strong innovations in the next quarter to accelerate category growth," Gupta said. The company aims to drive sequential marginal improvement while expanding its market share, which currently stands around 30–35%, he added.

The company is also optimistic about high single-digit volume growth and double-digit revenue growth, the CEO said. They are focused on understanding unmet consumer needs and improving the quality of beer in India.

The company's goal is to establish Queenfisher as a standalone brand with significant domestic and international appeal, despite its current low volume.

"We have received a tremendous response from domestic and overseas consumers for Queenfisher. In terms of volume, it’s low right now compared to the total category, but we have amazing repeat rates and trials on this innovation. It will take a few years to establish itself as a (standalone) brand," said Gupta.

Shares of the company were trading 3.40% lower at Rs 2,037 apiece, compared to a 1.60% advance in the benchmark NSE Nifty 50 as of 2:37 p.m..