A Tale of Two Spirits: Radico's High Performance Versus United Spirits' Sober Reality
The Indian alcoholic beverage market is witnessing a remarkable divergence between two of its leading listed players. While Radico Khaitan has experienced a significant surge of approximately 35% over the past year, United Spirits has faced a decline of about 8.2%. This growing performance gap highlights the shifting dynamics within the country's spirits industry, driven largely by consumer preferences and strategic execution.
Market Segmentation and Premiumization Trends
The Indian alco-beverage market is strategically divided into four distinct price segments: popular, prestige, premium, and luxury. Popular brands are typically priced up to ₹400 per 750 ml bottle. The prestige segment ranges from ₹400 to ₹1,000, while premium spirits command prices above ₹1,000. Luxury spirits, representing the top tier, cost more than ₹2,000 per 750 ml.
This segmentation is crucial as both companies are aggressively pursuing premiumization strategies. Radico Khaitan currently derives about 65-70% of its portfolio from Prestige & Above (P&A) brands, while United Spirits has an even more premium-focused approach with nearly 90% of its portfolio in the P&A segment.
Quarterly Performance Highlights
The October-December quarter (Q3 FY26) revealed stark contrasts between the two companies. Radico Khaitan achieved its highest-ever quarterly volumes of 9.75 million cases, with P&A volumes nearly tripling since Q3 FY19 to reach 4.62 million cases. The company's revenue from operations surged 19.5% year-on-year to an all-time high of ₹1,546.7 crore.
In contrast, United Spirits experienced a softer quarter, with standalone volumes declining 3.2% year-on-year to 17.57 million cases. The company's key P&A segment slipped 2% to 14.62 million cases during the same period. Despite this, United Spirits maintained positive growth with standalone net sales rising 7.3% to ₹3,683 crore.
Analyst Perspectives and Market Outlook
Market analysts have expressed varying views on the two companies' trajectories. According to Mehul Desai, FMCG research analyst at JM Financial Institutional Securities, "Radico Khaitan's outperformance stems from stronger sales growth than larger peers and more effective execution of its premiumisation strategy." He believes this trend is likely to continue over the medium term.
For United Spirits, challenges have emerged from multiple fronts. The company faced adverse policy changes in Maharashtra, including a sharp excise duty hike in mid-2025 that pushed Indian Made Foreign Liquor (IMFL) prices up by 30-50%. This forced companies to raise prices by 30-35%, sparking concerns about weaker volumes and potential consumer shifts to cheaper alternatives.
Additionally, the introduction of the Maharashtra Made Liquor (MML) category has created competitive pressures, with industry players raising concerns about fair competition through legal challenges.
Future Catalysts and Growth Projections
Several key factors are expected to influence both companies' performance in the coming quarters:
- Radico Khaitan: Analysts project solid 30-35% earnings growth for FY27, driven by sustained double-digit volume growth in the P&A segment, new product launches, and geographic expansion.
- United Spirits: The potential UK-India Free Trade Agreement (FTA) remains a significant catalyst, with better Scotch pricing expected to lift revenues and margins from Q2FY27 onward.
Ajay Thakur, research analyst at Anand Rathi Institutional Equities, emphasized that "The more premium the portfolio, the stronger the pricing power," highlighting the fundamental advantage both companies are pursuing through their premiumization strategies.
Brokerage Ratings and Investment Sentiment
Current brokerage ratings reflect the market's divided sentiment:
- Radico Khaitan: According to Bloomberg data, the company has received 21 'buy' calls, two 'hold' ratings, and one 'sell' recommendation.
- United Spirits: Out of 30 brokerages, 23 have issued 'buy' recommendations, with three 'hold' and four 'sell' calls.
Notably, Elara Capital upgraded its rating on United Spirits' stock to 'accumulate' from 'reduce' following Q3 results, citing improving risk-reward dynamics and raising its target price to ₹1,500. The brokerage identified the Delhi policy and IPL outcomes as key external triggers to monitor.
Strategic Positioning and Competitive Landscape
ICICI Securities noted in its 21 January report that United Spirits' underperformance compared to peers was "mainly on account of higher exposure to Maharashtra, which faced adverse policy changes." However, the brokerage maintained its 'add' rating, believing the company's strong portfolio could help navigate near-term challenges.
Meanwhile, Radico Khaitan continues to expand its premium offerings, with multiple launches in FY25 and 4-6 new products rolled out so far in FY26 scaling up successfully. The company plans to expand these offerings across more states and geographies throughout the year.
As the Indian alcoholic beverage market continues to evolve, the divergence between Radico Khaitan and United Spirits serves as a compelling case study in how premiumization strategies, geographic exposure, and policy environments can dramatically influence corporate performance in the competitive spirits industry.
