India’s Smirnoff vodka maker United Spirits Q2 profit rises on strong premium demand

BENGALURU (Reuters) – India’s United Spirits, which makes Smirnoff vodka, reported a 14.2% rise in second-quarter profit on Wednesday boosted by strong demand for its premium brands of alcohol.

The Diageo PLC-owned company’s profit before exceptional items and tax rose to 4.17 billion rupees ($50.08 million) in the quarter ended Sept. 30 from 3.65 billion rupees a year ago.

Sales in its premium ‘Prestige and Above’ segment, which includes brands such as Johnnie Walker, Signature and Antiquity and accounted for 88% of net sales, rose 12.8% to 25.20 billion rupees.

The company’s revenue from operations, however, fell 18.6% to 67.34 billion rupees amid softer demand in its ‘Popular’ segment, which includes McDowell’s No.1, Vat 69 and Royal Challenger liquor brands.

“Net sales in the popular segment were weighed by inflation impacting the target consumer,” the alcoholic beverage maker said in a statement.

Non-premium product sales for liquor firms were hit by a delayed festive season in September, analysts said, adding sales growth is expected to accelerate in the third quarter.

Earlier this week, rival Radico Khaitan, which makes Magic Moments vodka, posted an almost 20% rise in second-quarter profit on strong demand for its premium brands.

Separately, United Spirits approved an interim dividend of 4 rupees per share.

Shares of the company settled 1.6% higher ahead of the results and were up 10.4% in the September quarter.

($1 = 83.2705 Indian rupees)

(Reporting by Manvi Pant in Bengaluru)