Largest domestic liquor maker Allied Blenders & Distillers (ABD) today acquired 50 per cent ownership rights in the Dutch liquor major Herman Jansen’s Mansion House brandy and Savoy Club whiskey and gin with full control over production and marketing.
Both ABD and Herman Jansen, however, did not disclose the deal value citing confidentiality as both the parties are privately held entities.
“ABD has purchased 50 per cent ownership rights on the brands Mansion House brandy and Savoy Club whiskey from Herman Jansen Beverages. We also have 100 per cent production and marketing rights here as well as in Southeast Asia,” ABD vice-chairman and chief executive Deepak Roy said announcing the deal in the presence of the Dutch partners.
It can be noted that there is a legal battle going on over the marketing rights over Mansion House in the country, which is the second largest brandy brand here, between ABD and Tilaknagar Industries, both of which claim marketing rights over the Dutch brand in the domestic market.
When asked about this, Roy said, “Though the matter is subjudice, we are confident that the deal will go through. At the same time, let me also add that the court has given an interim injunction in favour of Tilaknagar. But today we also have implead ourselves in the case along with Herman Jansen, the rightful owners of the brand, as we are confident of winning the case.”
He also pointed out that fight over brand ownership is not new either to the company or to the industry and his flagship brand, Officer’s Choice was also a disputed brand.
When asked about the funds for the purchase, Roy said it will be managed through internal accruals. However, he was quick to add that if the deal with Tilaknagar goes through he will have to raise funds through and IPO or from private equity partners. Already the company has two term-sheets from two PE players — Carlyle and TPG, he said.
Last May, Roy had told PTI that the company had two term sheets from Carlyle and TPG and was looking to raise USD 200-275 million in part equity and debt and was ready to divest 10-12 per cent to them. But today he said, “This will happen only if the deal with Tilaknagar happens.”
Roy also expressed his desire to fully acquire Tilaknagar at a reasonable price. ABD has been eyeing to takeover Tilaknagar for quite some time but has been unable to do so over valuation.
ABD is the third-largest and the fastest-growing spirits company in the country today, and its flagship brand Officer’s Choice has become the largest selling mass whiskey brand in the world last year.
Speaking about the deal, Herman Jansen director Henricus Jansen said, “ABD is very strong player in this country with a strong production and distribution network which will provide the required infrastructure to make the Mansion House brand stronger here. This deal is the result of 18 months of negotiations,” he added.
Explaining the rationale behind the deal, Roy said, “Brandy is the fastest growing spirits category in the country today, clipping at over 27 per cent compounded growth during the past five years. From almost having a negligible market share, brandys today control 24 per cent of the overall spirits market today. Against this, our share in the brandy market is minuscule, so we want to enter this business.”
ABD has two brandys, the premium Kyron, which is being sold in Kerala and Andhara and the semi-premium Lord & Master, again present only in these markets.
“With 50 per cent ownership in Mansion House, we want to consolidate and further strengthen our market share in the brandy segment, especially in the four Southern states which account for 98 per cent of the total brandy sales in the country,” Roy said.
But when asked whether ABD is shifting is focus to brandys from whiskeys, Roy answered in the negative saying in the best case scenario, Mansion House and his other brandy brands will contribute about 25 per cent of sales.
On the strategic importance of the Mansion House deal for the company, ABD vice-chairman Upal Ganguly said, “This strategic partnership is an important step to strengthen our portfolio and presence in the premium brandy segment. Our existing strong distribution network and a renowned brand like Mansion House will yield significant results for this partnership.”
Over the past seven years, from being a single-brand company to one with many brands including the world’s largest selling whiskey brand, ABD has come a long way today. Its brands include the famous Officer’s Choice Whisky, theClass 21 Grain Vodka, Wodka Gorbatschow, Jolly Roger rum, Lord & Master brandy, Kyron brandy, Officer’s Choice Black and Officer’s Choice Blue.
ABD is the largest home-grown liquor company and also the fastest growing one with a compounded growth rate of 20 per cent over the last five years. It achieved the 25 million cases sales mark last fiscal with a turnover of Rs 2,750 crore, when its sales grew 24 per cent against the industry’s 2 per cent growth. It has 44 manufacturing/bottling units spanning 22 states and 15 sales offices.
Meanwhile, ABD and Herman Jansen, Amit Dahanukar, CMD, Tilaknagar Industries, said, “The assignment of the trademarks (Mansion House and Savoy Club) during pendency of judicial proceedings is illegal.
“Neither the assignors (Herman Jansen) nor the assignee (ABD) are entitled to use the trademarks Mansion House and Savoy Club as such use would tantamount to violation of TI’s rights in the trademarks Mansion House and Savoy Club which have been upheld by the Bombay high court. As regards future course of action, we will be guided by our lawyers and will do whatever necessary to protect the interest of TI.”