Mumbai: The race to acquire one of India’s most popular whisky brands, Imperial Blue, has intensified. Ravi S Deol, a London-based entrepreneur and founder of Inbrew Beverages, is making a strong bid to acquire the brand from French beverage giant Pernod Ricard. Inbrew is not alone, as TPG Capital, a major private equity firm, is also in the running to buy the brand. Due diligence for the acquisition is set to begin soon, followed by the submission of final bids.
Imperial Blue: A Valued Asset in the Indian Whisky Market
Imperial Blue was launched in India in 1997 by Seagram, later acquired by Pernod Ricard in 2002. The whisky, a blend of Indian grain spirits and imported Scotch malts, has built a solid reputation, becoming the third-largest whisky brand in India. With a market share of 8.8%, it trails only McDowell’s and Royal Stag. Despite its strong presence, the brand has faced challenges, with sales volume declining by 5.3% to 22.1 million cases in 2023, according to IWSR data.
High Stakes and Strategic Moves by Pernod Ricard
Pernod Ricard, a global leader in the alcoholic beverage market, is restructuring its Indian portfolio to focus on premium brands. It has appointed Goldman Sachs to oversee the formal sale process of Imperial Blue. The potential sale includes high valuation expectations, ranging between $600-700 million (up to Rs 8,300 crore). This price tag includes assets like distilleries and sales teams, as well as long-term guarantees for Scotch supply, a critical component of Imperial Blue’s blend.
This strategic shift aligns with Pernod’s global strategy, mirroring Diageo’s approach, which focuses on expanding premium offerings like Glenlivet, Chivas Regal, Jameson, and Beefeater. By moving away from mass-market brands, Pernod aims to strengthen its position in India’s growing premium spirits segment.
Inbrew and TPG Capital: The Key Contenders
Ravi S Deol’s Inbrew Beverages has been expanding its footprint in the Indian alcohol market, acquiring over 30 brands from Diageo and the beer portfolio of Molson Coors in recent years. Deol, known for launching India’s first national coffee chain, Barista, in the late 1990s, brings a wealth of industry experience to this bid. Inbrew’s offer for Imperial Blue fits into its strategy to build a strong portfolio of Indian-made spirits.
TPG Capital, a prominent US-based private equity firm, is also eyeing this acquisition. With experience in managing alcohol and beverage assets across countries like Myanmar, Turkey, and China, TPG brings significant financial and operational expertise to the table.
The Competitive Landscape: Other Players and Market Dynamics
Several other players initially showed interest in acquiring Imperial Blue, including Kishore Chhabria’s Allied Blenders & Distillers (ABL) and Radico Khaitan. However, these companies have opted to stay out of the bidding process, possibly due to the high valuation. John Distillers, backed by American spirits company Sazerac, may still enter the race in the coming weeks.
While the high price tag has deterred some potential buyers, industry experts believe the investment could pay off for the right buyer. With India’s whisky market evolving and consumers shifting towards premium options, acquiring a well-known brand like Imperial Blue could provide a strong foothold for any new owner.
Challenges in the Acquisition Process
The valuation of Imperial Blue remains a critical factor in the sale process. Many companies are concerned about the impact of rising input costs on margins, as well as the overall slowdown in sales. The ongoing shift in consumer preferences towards higher-end, premium whisky brands also adds to the complexity of the deal.
Furthermore, questions remain about whether the Seagram’s prefix associated with Imperial Blue will transfer as part of the deal. This branding element holds considerable value and could influence the final bid.
What Lies Ahead for Imperial Blue?
As due diligence begins, both Inbrew Beverages and TPG Capital will assess the assets, market potential, and growth opportunities associated with Imperial Blue. The final bids are expected to reflect the strategic importance of acquiring a brand with a strong legacy and market presence in India’s whisky segment.
Pernod Ricard’s decision to divest Imperial Blue is a significant move that could reshape the Indian spirits market. With increasing competition, evolving consumer preferences, and the potential for market consolidation, the outcome of this sale could influence the broader landscape of India’s alcohol industry.
Conclusion: The acquisition of Imperial Blue represents a unique opportunity for Inbrew Beverages and TPG Capital to strengthen their presence in India’s evolving whisky market. As the due diligence phase unfolds, all eyes will be on the final bids and how this strategic move plays out in the dynamic Indian market.