RED HERRING PROSPECTUS Dated August 24 ... - Globus Spirits

• Scotch rose by 7.0%. Scotch brands Bottled-in-India rose by 5.1%, and Bottled-in-Scotland
imports rose +10.4%. There was more growth in smuggled 12-Year Old and Malts than in
Standard brands, as the economic and political outlook improved markedly.
• Gin (99.5% Indian) rose by 5.0% due to the promotion of high strength flavoured Gins
which rose by 20.3%.
• The Vodka market rose strongly by +67% as leading Indian brands promoted strongly and
imports continued to rise. The category is now only slightly smaller than Gin. Tequila is
returning on a very small scale after having almost vanished from the market in 2001 and
2002.
• Rum recovered and rose by 8% in 2005, as molasses prices moderated. It is now the
number 1 rum market in the world (if Cachaca is left out of the calculation).
• Brandy (non-grape) rose by 8.5% as molasses prices fell back. Both brandy and rum
benefited in the South from the ban on Country Liquor in Tamil Nadu and some smaller
states in 2001.
• Flavoured spirits rose +6.6%, with a fall in imports, and growth in local Indian specialities.
• RTD’s sales fell back (even though Bacardi Breezers sold into more states): Other RTD's
flopped due to high price and low `kick'.
• Beer rose strongly by 13% in 2005, as the shortage of returnable glass bottles ceased. The
future is seen as very bright, if the promised re-assessment of taxation levels versus spirits
takes place. Imports only take 0.05% of Beer sales. The Strong Beer segment continued to
rise, taking 65.0% of all beer sales in 2005.
(Source: The IWSR 2006 Report; Date of Publication March 2006)
The upwardly young population with prosperity to spend is guzzling booze like never before.
Consumption of beer has jumped 51% from 70 million cases in 2002 to 105 million cases in
2006 while consumption of Indian made foreign liquor (IMFL) grew 53% to 115 million cases
during the period. The country has one of the youngest populations, with around 50% citizens
below 25 years. A free media and increasing exposure to western influences have lifted the
stigma off liquor consumption, while rising income is stocking the shift from country liquor to
more refined varieties, said a report by SSKI Research. Alcohol consumption tends to begin at
age 16-18 in India and peak at 30-35. India’s 18-35 year age group is currently 247 million
strong and growing at 3.4% per annum. With a net addition of another 40 million to this
segment over the next five years, alcohol demand will aggregate 40 million cases over FY05-10.
Of this, IMFL will account for about 45-50%, owing to the higher aspiration levels of the new
generation. In FY05 McDowell was the dominant player in the IMFL market with a consolidated
share of 55% followed by Radico Khaitan of 10%. In third and fourth position were Mohan
Meakin and Jagatjit Industries. (Source: The Times of India, Mumbai, January 8, 2007;
http://timesofindia.indiatimes.com/NEWS/India_Business/Young_India_high_on_liquor_consump
tion/articleshow/1085620.cms)
Rising inflation will impact the alcohol industry. India being a price sensitive market the alcohol
industry also has to face the consequences of this economic slowdown. Not only has the industry
to contend with weakening consumer sentiment but also a hike in raw material costs. A hike in
the price of extra neutral alcohol (ENA), a key ingredient for IMFL has resulted into a significant
price rise of many IMFL brands. As per report, many brands will have to hike their retail prices
by at least Rs 10 a bottle.
Source:http://www.ambrosiaindia.com/currentissue/default.asp#Rising_inflation_hits_the_alcohol_industry
Ethanol:
Ethanol (ethyl alcohol, grain alcohol, ETOH) is a clear, colourless liquid with a characteristic,
agreeable odour. Ethanol, CH3CH2OH, is an alcohol, a group of chemical compounds whose
molecules contain a hydroxyl group, -OH, bonded to a carbon atom.
The Government of India has amended the control order regulating the supply and distribution
of petrol to enable doping of 5 per cent ethanol in petrol. Five per cent ethanol doped petrol has
been made mandatory in nine sugarcane-producing states and four Union Territories from
January 1, 2003. The blended fuel called ‘Gasohol’ would be supplied through 11538 retailing
outlets in 9 states and four union territories. This has thrown up immense opportunities for
industrial alcohol. (Source: Government Notification vide no. P-45018/28/2000-CC in the
Gazette of India Extraordinary (Part I-Section I) issued by the Ministry of Petroleum and Natural
Gas Resolution dated 3 rd September, 2002)
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