Higher raw material costs to hit alcohol firms in fourth quarter

Premium segment expected to do better than overall sales

Ram Prasad Sahu Mumbai
alcohol, liqour, drinks, Heineken, Kingfisher, UB, sober curious

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Weak volumes and higher raw material costs are expected to hit the financials of listed alcoholic beverages players. The two largest players within the segment — United Spirits and United Breweries — are expected to post muted growth in volume, and a decline in profitability, while Radico Khaitan is expected to do slightly better on the margin front.
While most fast moving consumer goods (FMCG) companies have benefited from the fall in crude and palm oil prices, there is no respite for the alcoholic beverages segment. Companies in this segment have seen the sharpest fall in gross and operating profit margins within the FMCG space, given rising prices of glass and extra neutral alcohol. These two inputs account for about two thirds of raw material costs. What has compounded matters at the operating profit margin level are higher advertising spends.
Most brokerages expect United Spirits to post a 3-4 per cent year on year (YoY) declin

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First Published: Apr 25 2023 | 9:54 PM IST

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